AIB senior management instructed Mr Charles Haughey's bank manager to get Mr Haughey to "go after" a deal with the Gallagher Group in 1979, instead of sending him a "stiff" letter warning that his cheques would be "dishonoured".
He would also be warned in the letter that the bank would consider "the steps open to it" to resolve the situation if he did not take "realistic measures within two months".
The manager, Mr Michael Phelan, had written to the area advances manager in July 1979, stating that Mr Haughey, then minister for health and social welfare, "does not believe the bank will force a confrontation with him because of his position".
He went on to recommend that the bank should take "firm measures to bring this client to a sense of his responsibilities" and proposed sending a registered letter "fully appreciating that this action may have serious adverse repercussions for the bank".
In June that year, Mr Haughey's debt to AIB stood at £867,000, with £281,000 in interest charges in a suspense account. Mr Haughey was offering to pay £400,000 in full settlement.
Mr Phelan continued: "I feel that until his view in this regard is changed no progress will be made", and added that Mr Haughey said his drawings on the bank would be minimal "but from past experience I could place little credence in this statement".
In his memo, Mr Phelan referred to a meeting with Mr Haughey on July 13th at the Department of Social Welfare offices. The manager mentioned a proposed deal with the Gallagher Group. Mr Haughey had said previously he would consider the deal. When the manager had asked if he had dismissed this deal totally, "he replied `No' but that he would like to keep this as a stand-by. It is my belief that he has not taken any positive steps to progress this suggestion."
Another note of the July 13th meeting said Mr Haughey was "prepared to put his £400,000 in writing as a formal offer despite manager's advice of bank's unfavourable reaction. Funds to come from unspecified land deals. Tax problems to be resolved. Gallagher deal not dismissed by CJH but branch manager's view is that he had not done much, if anything, about it."
A further document on July 23rd, 1979, stated that the letter threatening to return the cheques "is not to be sent yet and Area General Manager instructed that branch manager request CJH to pursue Gallagher deal".
After reading the documents, Mr John Coughlan SC, for the tribunal, said that up to July 1979, while Mr Haughey may have had talks with his financial adviser, Mr Des Traynor, all the dealings with the bank "appear to have been by you personally".
Mr Coughlan said that "you as the customer are dealing and making proposals and listening to suggestions made by the bank about your affairs".
Mr Haughey: "But I would also have been in touch with Mr Traynor."
