Celebrity chef Conrad Gallagher was insolvent before he moved his restaurant to the Fitzwilliam Hotel, a jury has been told at the start of his trial for allegedly stealing three paintings.
Michael Holland, managing director of Ampleforth Ltd, owners of the hotel, told Dublin Circuit Criminal Court that Mr Gallagher was Ir£92,000 in debt before he came into the Fitzwilliam Hotel and gave two different explanations as to why the paintings went missing.
Mr Holland said the company loaned Gallagher Ir£50,000 to ease his dire cash-flow problems, waived rent for a period and paid Ir£40,000 for consultants to set up a financial control system for him.
The company had also bought 19 paintings from him for Ir£20,000 which it claims included the three he allegedly stole and sold later after giving two different explanations for their disappearance.
Mr Holland said Mr Gallagher first claimed the paintings had been taken down and sent to a Dun Laoghaire gallery so that security patches could be put on them but shortly after that told him that thugs forced him to hand over the three paintings because of money he owed.
Mr Gallagher, aged 32, formerly of Killiney Hill Road, Killiney, and with an address at Pembroke Road, Ballsbridge, denies stealing three abstract Felim Egan paintings from the Fitzwilliam Hotel on St Stephens Green on dates unknown between November 2 and November 22, 2000.
He has also pleaded not guilty to obtaining money by false pretences on November 21, 2000 at The Lodge, Killiney Hill Road with intent to defraud through getting Ir£9,000 from Mr Bryan Greene by falsely pretending that three Felim Egan abstract paintings by were his property to sell.
Mr Holland told prosecuting counsel Melanie Greally BL that Ampleforth licenced Mr Gallagher to run the entire food department of the Fitzwilliam Hotel.
He operated Christopher's Brasserie from June 1998 and moved his Peacock Alley restaurant to the hotel in October 1998.
The formal agreement with Mr Gallagher was signed in December 1998 and all the fittings in the hotel except for tables and chairs in Christopher's Brasserie were owned by Ampleforth.
Shortly after, Mr Gallagher made them aware of his severe cashflow problems and when Ampleforth asked him for financial figures he said he had none.
His accountants produced figures in March 1999 which showed he was insolvent and had been for some time.
Mr Holland said the accused asked the company to buy some paintings from him and produced a schedule numbered 1-16 but it transpired there were actually 19 paintings on the list.
Mr Holland said it became known to him in November 1999 that three paintings from the Peacock Alley restaurant were missing and Mr Gallagher told him at a meeting they were taken down to have security patches fitted to them in a Dun Laoghaire gallery.
He told the accused he had no right to move them and he promised to have them back within days but when they hadn't come back by November 27 he again spoke to Mr Gallagher who claimed thugs had forced him to hand them over in lieu of money he owed someone.
Mr Holland said Mr Gallagher then offered to replace them with three other Felim Egan paintings but he told him the company wanted the originals back.
He told him the matter was out of his hands and made a verbal complaint to the gardaí.
Mr Richard N Kean SC, defending, suggested to Mr Holland, in cross-examination, that he had pressurised Mr Gallagher into selling the three paintings for IR£9,000 to raise money for an attachment order the Revenue Commissioners had filed against a company Ampleforth co-owned with him and which was set up to run his restaurants.
"There was never any question of me saying to Conrad to do whatever he had to do to raise the money", Mr Holland replied.
On the contrary, he said, Ampleforth had tried to assist Mr Gallagher in many different ways to help
solve his dire financial difficulties.
Mr Kean noted the Revenue Commissioners' order had been for £20,000 and suggested that Mr Holland had demanded that Mr Gallagher immediately "do whatever he had to do" to raise his half of the money resulting in him selling the paintings, which counsel said he thought belonged to him, for
"the princely sum of IR£9,000".
Counsel also suggested to Mr Holland that for someone with a respected business reputation such as himself, having an attachment order against a company that he was a director of and was 25% share-holder of was "a matter of great distress".
Mr Holland said helping Mr Gallagher was in the interest of his company as well because at this stage Mr Gallagher was in charge of all food services at the entire hotel.
Mr Holland said Mr Gallagher was Ir£92,000 in debt before he came into the Fitzwilliam Hotel. Ampleforth had loaned him Ir£50,000 to ease his dire cash-flow problems, waived rent for a period and paid Ir£40,000 for consultants to set up a financial control system for him.
When Mr Gallagher appeared anxious to raise more money and asked Ampleforth to buy paintings from him, it agreed to buy 19 them for Ir£20,000.
Although the list attached to agreement on the purchase of the paintings comprised 19 paintings, they were numbered 1-16.
Mr Holland denied that the first three paintings were not part of the list as the content of the agreement did not refer to '19 paintings' anywhere. It had only discussed the sale of paintings numbered 1-16.
He also said a letter had been given to Mr Gallagher on the same day as the agreement in which Ampleforth said it was willing to sell the paintings back to him for the same price of £Ir20,000.
This, he said, was proof that the company did not have any interest in the paintings per se - the only reason it purchased the paintings from Mr Gallagher had been to help him.
He denied that he had made a complaint to gardaí of his suspicions that Mr Gallagher had stolen the paintings because if his contract with the Hotel was to be terminated he had to be paid Ir£50,000 in compensation.
The only exception would be if he 'brought disrepute to the hotel or if he was charged with an indictable offence'.
Mr Holland denied that he had made the charges of theft against Mr Gallagher to terminate his contract without having to pay the compensation.
"I did not have any financial incentive to make the charges," he said. He said he made the complaint after it was brought to his notice that a 'suspiciously large' amount of money had been lodged into a bank account by Mr Gallagher.
He agreed with Mr Kean that the Ir£9,000 had in fact been lodged into the business account of the company that Mr Gallagher owned 75% of and of which Ampleforth owned the remaining 25%.
Mr Holland said, however, the fact remained that his suspicions that the Ir£9,000 had been raised from selling the stolen paintings, were well-founded.
He also denied that Ampleforth misrepresented the facts of the Hotel to Mr Gallagher. It didn't claim there would be 90% occupancy as no hotel in Dublin would ever claim that.
Mr Holland told Mr Kean that when Mr Gallagher revealed his severe financial problem, he indicated he would clear his debts by selling this old lease for Ir£450,000.
Ampleforth found he had no financial control systems in his business and "picked up the tab" for Ir£40,000 for consultants to work with him to install systems. This work took four months.
Mr Holland said "nothing could be further from the truth" when Mr Kean suggested that when he contacted gardaí he held "considerable animosity" towards Mr Gallagher and that the accused was "a thorn in your side".
Mr Holland said Mr Gallagher owed Ampleforth £148,000 by that time and continued to trade in the Fizwilliam for 18 months afterwards.
A clause in the licence agreement that allowed it to be terminated in the event of an indictable charge being laid was standard and wasn't used to escape paying £50,000 compensation.
He had no reason to apologise to Mr Gallagher as requested by Mr Kean because the allegations relating to the three paintings were accurate.
He was not asked by the gardaí to make a written statement until March 12, 2001 and he made a second one on October 2, 2002 with a third statement to clarify some points on October 14, 2002.
Mr Holland said that while the schedule with the agreement to buy the paintings mentioned numbers 1-16 there were in fact 19 paintings on it and they included the three in the trial.
The agreement might have been clearer if he had got his lawyers to draw it up rather than dictating it himself as he had.
Mr Holland added that he could furnish letters to the court if required which Mr Gallagher wrote to him thanking him for the financial assistance given by Ampleforth to help him over his cashflow difficulties.
The hearing continues before Judge Yvonne Murphy.