Ansbacher report claims rejected

Multimillionaire property developer John Byrne has lost a High Court attempt to overturn parts of the Ansbacher inspectors' report into illegal offshore accounts, which drew adverse inferences from Mr Byrne's involvement with two Cayman Island trusts.

Mr Justice Paul Gilligan yesterday rejected claims that the inspectors' findings relating to Mr Byrne's involvement with two trusts, the Tristan Settlement (related to Mr Byrne's UK business) and the Prospect Settlement (related to his Irish business), were "unreasonable".

The inspectors had concluded the funds held by the trusts in Ansbacher in Ireland were at all times available for any purpose by Mr Byrne who, subject to a duty to retain sufficient deposits to service a "back-to-back facility", had power to apply those funds as he thought fit. The inspectors also found Mr Byrne was a "category A" client of Ansbacher - category A clients being persons who established trusts and persons who deposited money in a simple account.

In his challenge to the report, Mr Byrne (86), of Simmonscourt Road, Ballsbridge, Dublin, contended the inspectors' adverse findings in relation to him were inconsistent with their finding that he was "truthful". He claimed the inspectors acted in breach of fair procedures and in excess of their powers in relation to how he is dealt with in their report.

The judicial review application was opposed by the inspectors - Judge Seán O'Leary, Noreen Mackey, Paul Rowan and Michael Cush. Their counsel, Lyndon MacCann SC, with Shane Murphy SC, argued that the inspectors were entitled to cut through the legal and company facades in order to report meaningfully to the court in relation to the Ansbacher situation.

In his reserved judgment yesterday, the judge said it was not enough for Mr Byrne to say that, because he told the inspectors he neither controlled the trusts nor received any income from them, their conclusions to the contrary in their report were unreasonable. Mr Byrne had to show "a complete dearth of evidence" to support the inspectors' conclusions and it could not be said there was no evidence on which the inspectors could rely in reaching their conclusions that Mr Byrne did control the trusts.

This evidence included the inability of Mr Byrne to explain, to the inspectors' satisfaction, why he should be called upon to give guarantees for borrowings of companies within the trust structure on many occasions where he had no legal or beneficial interest in the trust, the judge said.

There was also the fact that Mr Byrne started doing business with Ansbacher in 1971, that he was the settlor of the trusts, that he had helped to establish the trusts, that he was the formal settlor of the Prospect Settlement and that he retained the right to appoint new trustees, he added.

Mr Justice Gilligan noted the inspectors' finding that, although John Furze was the formal settlor of the Tristan Settlement, the power to appoint new trustees had been transferred by him to Mr Byrne, the fact that Mr Byrne had accepted that his powers allowed him to replace trustees at any time with new trustees, and the circumstances surrounding a £3,500 payment to Mr Byrne through Guinness & Mahon in April 1990 and an IIB loan for £212,000 advanced in 1994 to Mr Byrne's wife on behalf of Ballymadun stud.

There was no basis to suggest the inspectors had acted irrationally or that they had before them no relevant material to support the decision arrived at, the judge said.

Mr Justice Gilligan also rejected arguments that the inspectors had failed to have regard to Cayman Island law and, therefore, their findings were unreasonable.

It was "important to point out there was no finding, or even a suggestion, that the manner in which the trusts were set up and executed was in anyway wrong", the judge said. The finding of the inspectors affecting Mr Byrne related to "the manner in which the trusts were operated", he stressed.

No allegation was ever made and could not be so found that the trust structures failed to comply with the laws of the Cayman Islands and, in those circumstances, he could not see how those laws could have any relevance.

This was particularly so because the Ansbacher inspectors were being asked to determine, as a matter of Irish law, who the clients of Ansbacher were and, in performing this task, they were looking at who had de facto control over the trust funds. In essence, the inspectors had concluded Mr Byrne had de facto control over the trust monies.

The judge also said he was satisfied that Mr Byrne's evidence to the inspectors that he did not control two trusts and did not derive any benefit from them were expressions of a belief honestly held by Mr Byrne. He was also satisfied the inspectors accepted this was Mr Byrne's genuinely held belief but they also took the view, on the totality of the evidence, that they were entitled to draw an inference that concluded that control of the trust funds rested with Mr Byrne at all times.

The judge said he took the view it was open to the inspectors to draw such inferences adverse to Mr Byrne while at the same time accepting his belief was genuine.