Judge: Bank victim of scam in €7m loan

A HIGH Court judge has said a bank has been the subject of a “scam” relating to a sum of a €7 million loaned by it for a land purchase in Co Offaly and he had been told a “cock and bull story” by a businessman who gave evidence before him yesterday.

Mr Justice Peter Kelly made the comment after hearing evidence from Tony McAuliffe, who had been directed to appear before the court and answer questions arising from the failure to repay €7m to the Irish branch of Investec Bank (UK) Ltd.

The sum was allegedly guaranteed by Mr McAuliffe and his son Dermot in relation to a share purchase agreement with a company involved in the proposed purchase of a 55-acre land bank in Co Offaly.

A solicitor, John Duffy, had also been ordered to appear and answer questions about the whereabouts of a €7m sum but the judge was told yesterday that Mr Duffy, of John Duffy & Co, Main Street, Monasterevin, Co Kildare, had been admitted the previous day to a hospital psychiatric unit. The judge was also told the €7m was never received by Mr Duffy.

In evidence yesterday, Mr McAuliffe said he “never saw the money” and had no idea what happened to it. He could not say why he had engaged a valuer to value the lands in question at a time when there was already a contract for sale of the lands and denied the judge’s suggestion it was “a scam”.

After hearing the testimony from Mr McAuliffe, the judge said the case was “an extremely serious one” where the bank had been the subject of “a scam” and he described the matter as “shadowy, uncertain and unbelievable”.

The judge criticised the failure to produce all documents relevant to the case and he directed that Mr McAuliffe and a number of other persons must attend before him and produce all the documents. He listed the case for mention on Wednesday next.

He warned Mr McAuliffe that if he failed to comply with his obligations, he would be in contempt of court and would be going to Mountjoy Prison.

Yesterday’s proceedings arose after the judge made orders on February 21 last requiring Tony McAuliffe and his son Dermot, of Furze, Kildare, to pay €7m within seven days to Investec.

On March 11 last, he was told no monies had been paid and granted an application to have Tony McAuliffe and John Duffy attend before him.

Investec said it had been told that a deposit of €7m, relating to the share purchase agreement between the McAuliffe’s and another company, was held in the client account of Mr Duffy’s firm. It said it was unclear whether the deposit remained in the hands of Mr Duffy or had been paid by him to the McAuliffe’s.

Investec has claimed it entered into an agreement in late February 2007 with French Furze Holdings Ltd under which it agreed to loan that company €8.825m to assist it with the acquisition of a 55-acre land bank at Kilbeggan Road, Tullamore.

Investec claims the defendants executed a security assignment under which they assigned the interest in a share purchase agreement of February 16, 2007,between them and Conway Clarke Properties Ltd of the entire share capital in French Furze.

The bank claims the share purchase agreement involved the payment of a €7m deposit and a total consideration of €17m for the share capital in French Furze. However, that agreement was not completed on agreed dates in 2007 and Investec consequently exercised its rights under the security assignment.