Derek Quinlan says he got preferred treatment because his role in investing in the London hotels was recognised

FINANCIER Derek Quinlan has insisted that he had never “done anything to unfairly prejudice” the interests of property developer Patrick McKillen over his stake in three luxury London hotels.

Mr Quinlan yesterday began several days of evidence in the case taken by Mr McKillen, who alleges he was improperly blocked from taking control of Claridges, the Berkeley and the Connaught hotels.

In his witness statement to the High Court in London, Mr Quinlan said he had invited Mr McKillen in April 2004 to join the bid to buy the hotels, along with the Savoy.

The invitation came after he had “quite accidentally” come across Mr McKillen’s telephone number in his diary as he was looking for two investors just days before the bid had to be lodged.

Following a quick conversation on the telephone, Mr Quinlan said he went to meet Mr McKillen at his Hume Street office in Dublin where they spent two hours discussing the details.

He rejected as “incorrect” Mr McKillen’s assertions that he had been “instrumental” in raising the finance, saying it was his own company, Quinlan Private, that had carried out this work.

Supporting this, Mr Quinlan said he had received £15 million worth of redeemable preference shares for a fee of £1,000, while he was also granted the right to be the only shareholder to approve a sale of Claridges, if that loomed.

“I was afforded such preferential treatment because it was recognised that I raised the equity and provided the opportunity for other investors to invest in the group,” he said.

Mr McKillen had played no role in the sale of the Savoy hotel, which had been agreed in April 2004, although there was still a dispute with the Saudi buyer, Prince Al-Waleed, about the deposit to be paid.

Mr Quinlan said he met the prince on the latter’s yacht in the south of France, along with Mr McKillen and Mr McKillen’s “very close friend of 20 years”, Bono, who was brought along at Mr Quinlan’s suggestion.

“I recall that I sat beside Prince A1-Waleed and Bono sat next to me. Mr McKillen, on the other hand, sat at the other end of the yacht and made no contribution to the discussion,” the financier said.

Mr Quinlan said the shareholders in Coroin, the holding company for the hotels, agreed that he should receive a £300,000 annual fee for overseeing management, along with a £500,000 success fee for selling the Savoy.

Mr Quinlan said he only became aware in March 2011 that Mr McKillen had bought the hotel shares of his original partner, Pádraig Drayne, saying he had understood originally that no fee had been paid. Instead, he had been told that a “realignment of assets” had taken place in 2007 between Mr McKillen and Mr Drayne, who were partners in other business deals.

If he had known that money had been exchanged in 2007, he would have bought a share of Mr Drayne’s holding, as he would have been entitled to under pre- emption rights granted to the original shareholders.

“It now appears that Mr McKillen deliberately misled the shareholders about the nature of his transaction with Mr Drayne in 2007,” Mr Quinlan said. “Therefore, Mr McKillen’s statement to me in March 2007 that he was paying no consideration for the transfer of the shares from Mr Drayne was a lie.”

He dismissed the assertion that a March 2011 email to him from his associate Gerry Murphy proved Mr McKillen had properly informed him about the arrangement with Mr Drayne.

“I am not sure why Mr Murphy made this comment. I would note that Mr Murphy did not start working for me until May 2009 and would not have had any involvement in the transfer of shares from Mr Drayne to Mr McKillen.

“Mr Murphy was confused and I can confirm that at no point did I tell Mr Murphy that Mr Drayne had been brought out by Mr McKillen,” he said, in one of four witness statements produced.