More details of how the secretive Ansbacher deposit system broke down in recent years emerged during yesterday's evidence.
When the scandal concerning payments from Mr Ben Dunne to Mr Charles Haughey emerged, there was still about £17.5 million on deposit in Irish Intercontinental Bank (IIB). That was quickly moved back to Cayman and by the end of 1997 there was only £2.2l million still on deposit. Much of this was being used as backing for loans.
In July 1997 Mr John Furze died. His Cayman Islands colleague, Mr Barry Benjamin, contacted IIB and said he now acted for Hamilton Ross, one of the Cayman companies involved in the accounts. The bank by this stage, however, was concerned the supposedly offshore accounts might belong to Irish residents.
Mr Benjamin agreed not to issue any more instructions in relation to the money and the accounts have been sitting in IIB since, gaining interest. The balance as of November 1999, for both Hamilton Ross and Ansbacher Cayman, was £2.3 million. Who owns the money is not clear.
IIB's involvement began in 1990 when the late Mr Des Traynor approached the wholesale bank saying he wanted to move his Cayman deposits from Guinness & Mahon bank. As IIB director Mr John Reynolds put it yesterday, Mr Traynor was a well known and highly regarded figure. He was a member of the board of significant Irish companies, private, public and semi-state. The bank had no reason to doubt his bona fides. Also, the parent of the Cayman bank was the Henry Ansbacher group, a significant and reputable bank with headquarters in London.
The first deposits were placed with IIB in January 1991 and by the end of that year the balance was £21.3 million. Soon after the first deposit, an approach was made by Mr Traynor for a loan for an Irish property company which was to be backed by funds placed on deposit by Ansbacher.
Although the name was not disclosed yesterday it is understood this loan, for £2 million sterling, was to Lyndon Properties, a company connected with the Cork businessman Mr Clayton Love (70). The negotiations over how this loan was handled acted as a template for all further loans. The loan was to be backed by a deposit, of a similar amount, placed in Kredietbank N.V. of London, the IIB parent, by Ansbacher Cayman.
According to information heard in the High Court last year, this money would have been transferred from Dublin to London, and back to Dublin, starting out in IIB under the name Ansbacher and ending up back in IIB under the name of its London parent.
When IIB drafted the facility letter to cover the first backed loan, Mr Traynor contacted Mr Liam Donlon, an IIB director, and asked that all mention of security be taken out of the document. Mr Donlon did not agree to this, but the bank eventually agreed to a wording which mentioned security but without mentioning cash deposits or anything to do with Ansbacher Cayman.
Mr Donlon said he did not know at the time why Mr Traynor wanted this, but speculated it was for confidentiality. All subsequent loans backed by the deposits followed this model. A total of £24 million sterling was loaned over the following six years, with £17.5 million of this going to companies belonging to property developer Mr John Byrne.
Mr Donlon said the bank wanted to facilitate Mr Traynor as much as possible while still protecting its interests. Mr Reynolds said as the parties involved were substantial, reputable parties, IIB had no reason to believe anything untoward was going on. If the parties had not been known to it, the request to take out all mention of security might have created concern.
The deposits were not significant in terms of the bank's overall deposits. The bank was sorry it ever got involved with Mr Traynor, it was suggested. "You can take it we wish we weren't here," Mr Reynolds said.