The Central Bank gave exchange clearance for £500,000 to be transferred off shore in 1986 based on certification from Dublin auctioneers, Finnegan Menton, without being told its principal, Mr John Finnegan, was the main beneficiary of the deal involved.
It was part of the proceeds of a £700,000 share buyout by builders Brennan and McGowan, from which Mr Finnegan benefited directly.
That was the conclusion put by counsel for the Flood inquiry, Ms Patricia Dillon SC, to Mr Michael O'Shea, of Kennedy McGonigle Ballagh, solicitors for the Guernsey-registered Foxtown Investments Co Ltd, whose beneficial owner was Mr Finnegan, the tribunal established. It had been arranged that the £500,000 would be paid in the form of Irish gilt-edged stock and subsequently converted into cash and transferred off shore with the Central Bank's imprimatur, as an efficient tax-avoidance method for Foxtown, said Mr O'Shea. But before that could happen the Central Bank had requested certification from the solicitors acting for both vendor and purchaser concerning the valuation of the shares. Mr O'Shea, acting for the vendor, and Mr John Caldwell, acting for the purchaser, Rushcliff Ltd - owned by the Brennan and McGowan company Grange Developements - confirmed that it was "an arms' length" transaction. He had indicated earlier to the exchange-control authorities that "there was a relationship" between his client and Amber Trust, he told Ms Dillon.
Finnegan Menton in due course wrote to the Central Bank: "Our solicitors have requested us to write to you to confirm that we advise Foxtown Investments." The price of the deal was not excessive, the letter confirmed, "not more than fair value". There was no indication that Mr Finnegan stood to gain from the transacation.
"A document that purported to be objective," said Ms Dillon, "was prepared by someone who would benefit by £500,000." A "disinterested Government agent" at the Central Bank was not informed by anyone that he had an interest. "It's no more than a sham," she insisted - referring to the chain of ownership that disguised Mr Finnegan's interest.
"Forget all the legalese", said Ms Dillon. "John Finnegan is the man. That's the reality." Although he was not a trustee of Amber or a beneficiary on paper, "his orders were followed by everyone" in connection with Foxtown, she said.
Brennan and McGowan bought out Mr Finnegan's interest for £700,000 in two contracts, one for £500,000 and the other for £200,000.