After Tuesday's avalanche of detail concerning Mr Charles Haughey's financial relationship with AIB through the 1970s, the Moriarty tribunal yesterday was a more quiet affair.
Three retired AIB officials gave evidence of their roles in Mr Haughey's dealings with the bank during the 1970s. Mr Michael Kennedy, who was then AIB's regional manager for Dublin west, told of a lunch hosted by the bank and attended by Mr Haughey on September 14th, 1976. Mr Haughey's debt to the bank was then just under £300,000. He was opposition spokesman on health.
Mr Kennedy said that the lunch was on bank premises and originated from a request from Mr Haughey. Present were the then chairman, Mr E.M. O'Driscoll, the then AIB secretary, Mr Derek Moyter, Mr Haughey and Mr Kennedy. Mr Kennedy said that the conversation was general at first and then turned to Mr Haughey's debt. His memory was that Mr Haughey raised the issue.
"He proposed that the debt be allowed out-stand indefinitely, with no proposals for repayment." The bank chairman told Mr Haughey that the proposal would be "of no appeal" to the bank. Mr Haughey, Mr Kennedy said, was "very disappointed".
Mr Kennedy's next involvement in Mr Haughey's affairs came on December 12th, 1979. The situation was much changed by then, not least because Mr Haughey had just been elected Taoiseach. His debt to the bank had risen from £580,000 in June 1978 to £1.143 million by the date of the meeting - it had almost doubled. Mr Kennedy met the late Mr Des Traynor in the AIB branch in Dame Street, Dublin. Also present was the branch manager, the late Mr Michael Phelan.
Mr Traynor was representing Mr Haughey. He offered £600,000 in full and final settlement. Mr Kennedy said that the offer could not be accepted and the bank was losing patience with Mr Haughey. Mr Traynor offered no alternative. There would be no pulling rabbits out of hats or blood from turnips, he said. Mr Kennedy said that the most the bank could do was write off £200,000. Anything else would attract the attention of the auditors. Mr Traynor said that he would have further discussions with Mr Haughey, but he was "far from optimistic" about the then Taoiseach's reaction.
By the following month an agreement had been reached. From evidence heard earlier, it seems that the details were negotiated by Mr Traynor and the then chief executive, Mr Paddy O'Keeffe. Mr Kennedy drafted a letter, at Mr O'Keeffe's direction, outlining the terms. The letter was blank at any point where a name or word would identify Mr Haughey, and these blanks were later filled in by Mr O'Keeffe.
Mr Haughey's debt was being settled in return for a payment of £750,000. It was, as the chairman, Mr Justice Moriarty, pointed out, the halfway figure between what Mr Traynor had offered and what the bank was demanding, i.e. £600,000 and £900,000, respectively.
At about the time the letter from Mr O'Keeffe to Mr Haughey was being drafted, Mr Kennedy took the file on Mr Haughey's affairs from Mr Gerard O'Donnell, the then advances manager for the Dublin west region. Mr O'Donnell had been keeping the file in a cabinet in his office for added confidentiality. Mr Kennedy asked him for the file and told him not to ask why he was doing this. "I felt the less he knew about it the better", Mr Kennedy told Mr John Coughlan SC, for the tribunal. Mr Kennedy agreed that Mr Haughey's settlement was so sensitive that not even a trusted official of the bank should be told. It seems that from 1980 onwards the file was kept in a safe in the chief executive's office.
Mr Kennedy was asked for his view on why the bank had not sought to recover all the money it was owed by Mr Haughey, given that it had securities worth more than the amount owed. "My impression is that there would have been an awful lot of difficulty with the security. The bank would have been faced with a forced sale." Forced sales often created a poor return, he said.
The bank was concerned also about "entering into a confrontation with the Taoiseach". It would be concerned about the "implications and repercussions" which would result from any confrontation "for bank business around the country". Given his popularity, foreclosure on Mr Haughey could have "created great resentment towards the bank throughout the country". The bank had to have concern for all of its business, Mr Kennedy said.
Mr O'Donnell gave evidence yesterday, as did the former AIB chief executive, Mr Gerard Scanlan (who used to keep Mr Haughey's file in his office safe). Mr Scanlan's evidence will continue today.