The Moriarty tribunal today heard that GE Capital Woodchester Bank loaned £420,000 sterling to Mr Denis O’Brien’s accountant, Mr Aidan Phelan, in 1999 without knowing the money was intended for former minister Mr Michael Lowry.
Former bank chief executive (subsequently taken over by Investec), Mr Michael Cullen, said Mr Phelan had secured the loan for the purchase of property at Handford, Manchester, on behalf of a company called Catclause Ltd.
The tribunal was told the loan was secured by the chairman of Catclause, Mr Aidan Phelan, and that Cork businessman Mr John Daly was named as guarantor.
Mr Cullen told the tribunal he conducted several inquiries to discover the owners of Catclause when no repayments were made on the loan after it matured.
Mr Cullen said the bank was surprised when it was informed in February 2000 by the Companies Office in England directors of Catclause were Mr Lowry and his daughter, Lorraine.
Mr Cullen said he asked the Catclause solicitor, Mr Christopher Vaughan, for the registered deeds to the Manchester property and found that Mr Vaughan and his wife were acting as trustees for Mr Phelan.
Mr Cullen told the tribunal he found it very difficult to find out who was behind the company and ultimately, who the borrower was.
Mr Cullen said when the loan was approved, there was a "comfort factor" that it would be repaid because former GE Capital Woodchester executive Mr Michael Tunney had told him Mr O’Brien was aware of the loan application.
The tribunal then heard the minutes of a GE Capital Woodchester meeting on February 28th, 2001, at which Mr Phelan said: "This was a Denis O’Brien transaction and that he would ensure that the Bank would be looked after".
However, Mr Cullen confirmed this afternoon Mr O Brien was not mentioned in legal documents relating to the transaction.
Mr O'Brien has denied any knowledge of this and another property deals involving Mr Phelan and Mr Lowry.
The Companies Office in England issued a dissolution order to Catclause in December 2000.
The loan was repaid in full on March 21st, 2001, by Mr Phelan.
Mr Cullen will continue to give evidence tomorrow.