A COMPANY was set up in the Isle of Man to pay funds from Dunnes Stores to Mr Michael Lowry, the tribunal was told. Mr Ben Dunne said the company, Badgeworth, was set up for Mr Lowry by his (Dunne's) solicitor, Mr Noel Smyth. It had no purpose other than to pay funds to Mr Lowry, who he believed was the beneficial owner.
But Mr Dunne said all money paid to Mr Lowry was part of the business arrangement between Dunnes and the former Minister's company, Streamline Enterprises.
He said he had also agreed to pay for a £200,000 extension to Mr Lowry's home, again as part of their business arrangement. When he heard the work had run over budget, he did not mind because this was normal and Mr Lowry's company had saved Dunnes "hundreds of thousands of pounds".
Detailing his business relationship with Mr Lowry, Mr Dunne said he first met him in the 1980s when he was sales director with a Dunnes contractor, Butler Refrigeration. When Mr Lowry went out on his own he did refrigeration work for Dunnes in Northern Ireland and Britain and Mr Dunne was told by senior management that he was doing a good job and was competitive.
He met Mr Lowry in 1988 and decided to "try him out in Munster. It was later decided that Mr Lowry's company, Streamline Enterprises, should carry out all Dunnes' refrigeration work in the Republic.
The arrangement was that Streamline would do the work for the cost of lab our and materials and then get paid something in addition. The figure initially mentioned was £50,000.
As well as the top up payments, which Mr Dunne agreed could be described as bonuses, it was also agreed to build a storage facility for Mr Lowry near his company's premises. Dunnes paid for the premises but Mr Lowry owned it.
He saw no difficulty about Dunnes benefiting from the arrangement. It was not measurable but anything which helped the maintenance of the company's refrigeration systems helped save losses which occurred whenever there was a breakdown and fresh produce had to be disposed of.
The first bonus payment (£6,000) was made in December 1989. Mr Dunne agreed this was in the form of a Christmas bonus to Streamline staff. Counsel for the tribunal, Mr Michael Collins SC, said the second bonus, this time of £25,000, appeared to have been paid in 1990.
Mr Dunne said he did not recall the details, but he did remember giving £25,000. Asked by Mr Collins why the payment was made in the form of three separate sterling cheques, totalling £25,000, Mr Dunne said he did not know.
Asked why this bonus payment was so much larger than the previous one, Mr Dunne said Mr Lowry's business with Dunnes Stores had developed quickly.
Not only was Dunnes getting work done for the maintenance and labour costs, but Mr Lowry was putting them in touch with suppliers of equipment. The norm would have been for the contractor to buy the equipment and then charge a top up.
"I felt Mr Lowry was saving the company a lot of money and doing a good job for us," he said.
The next payment (£8,500) was made at Christmas 1990. He could not personally recall the details but he accepted that this was also a bonus for Streamline staff.
The next payment (£6,500) was made in June 1991. As this was clearly not a Christmas bonus Mr Collins asked what the payment was for. Mr Dunne said he could not recollect.
Mr Collins then asked about a payment of £40,000 made in August 1991 from one Isle of Man based company, Tutbury, to Badgeworth. Both had accounts with the Rea Brothers bank on the Isle of Man.
Mr Dunne explained that Tutbury was a company set up to receive profits from certain Dunnes Stores trading operations. Badgeworth "was set up by my solicitor, Noel Smyth, for Mr Lowry for funds to be put into it". He could not recall why it was done that way.
He had told Mr Smyth to do it but he believed the details were handled by Mr Smyth and Mr Lowry. Asked by Mr Collins who the beneficial owner of Badgeworth was, Mr Dunne said he believed it was Mr Lowry.
Asked by the tribunal chairman, Mr Justice McCracken, if the company was set up specially to receive funds, Mr Dunne said it was. It had no other purpose.
Asked why such a large bonus was paid at that time for the benefit of Mr Lowry, Mr Dunne said at this stage Mr Lowry's company was doing a "tremendous amount of work" for Dunnes Stores. He was certainly saving the company hundreds of thousands of pounds. "In the context of what we were doing I was paying out a bonus for the work he was doing for us".
The next payment (£8,000) was made in December 1991 and again was a bonus for Streamline staff.
Mr Collins then referred to two payments made to Mr Lowry, one of £50,000 and The other of £40,000, on consecutive days the following May. Mr Dunne said that at this stage the £50,000 top up he had agreed with Mr Lowry was no longer relevant because so much more work than had been envisaged was being done.
Mr Collins asked why the payment of £50,000 was made from Dunnes Stores to Streamline Enterprises, and the £40,000 was paid by Tutbury to Michael Lowry personally. Mr Dunne said he did not know.
On the extension to Mr Lowry's home, Mr Dunne said it was agreed that Dunnes would pay for the work to be done by Faxhill Homes, which was carrying out work at the time at Dunnes' outlet in the ILAC Centre in Dublin. He could not recall exactly who had suggested the idea.
The figure he agreed for the extension was £200,000, which he had no problem with given the amount of work Mr Lowry did for Dunnes' Stores.
Mr Collins said there was some conflict about how much the extension had cost. The figure in the Price Waterhouse report commissioned by Dunnes Stores was £214,000 but the figure on the architect's certificate was £395,000. Mr Dunne said the only figure he was aware of was the former. He had only recently learned of the other one.
Mr Dunne said he had no involvement in the transaction other than the initial agreement with Mr Lowry. It was mentioned to him at some stage that the budget had been exceeded but this did not worry him.
Mr Dunne agreed there was one final payment to Mr Lowry, of £12,000, in December 1993. He had also made a political donation of £5,000, in 1992.