Taoiseach Bertie Ahern has promised to make a statement 'somewhere during' the election campaign about his financial affairs. What questions does he need to answer? Colm Keenareports
In 1992 Albert Reynolds was determined to win the Fianna Fáil leadership contest that followed the retirement of the late Charles Haughey, and Bertie Ahern was unsure if he should throw his hat in the ring.
It was in this context that the then Minister of State at the Department of Industry and Commerce, Michael Smith, commented that the people "need to know where the taoiseach sleeps at night". The comment was seen as a warning to Ahern that if he entered the contest, matters to do with his separation from his wife, Miriam, would be used against him. Ahern did not enter the contest and Reynolds became party leader and taoiseach.
Ahern was widely understood to be the acknowledged successor to Reynolds when the time came. In late 1994 Reynolds's government coalition with the Labour Party collapsed spectacularly and unexpectedly and Ahern replaced Reynolds as party leader years before he had expected to. Ahern entered into talks with the Labour Party and, by the weekend of December 3rd, he was expecting to be taoiseach by the following Tuesday. However, he still had no permanent address, and was concerned that this was a political weakness.
In his interview with the Mahon tribunal in April of this year, Ahern outlined how these matters formed the backdrop to financial transactions the tribunal is investigating and in particular to his dealings concerning his house on Beresford Avenue, in Drumcondra, Dublin.
Another part of the backdrop, he said, was the completion in November 1993 of his separation agreement with his wife.
Last year, in an extended interview with Bryan Dobson on RTÉ TV's Six One News, Ahern said he had saved approximately £50,000 in the period between 1986 and 1993. He said that at the time he had no bank account other than joint accounts with his wife Miriam, and seemed to link this to the protracted separation proceedings with his wife that spanned the period.
He has told the tribunal that he kept his savings in cash in safes in his constituency headquarters, St Luke's, and in his office in the Department of Finance.
On Monday, December 27th, 1993, when Ahern was serving as minister for finance in Reynolds's government, he was given £22,500 - £15,000 of it in cash - in what he described as a "dig-out". Ahern told RTÉ the money was given to him by eight "personal friends" and was intended to help him settle legal bills arising from his separation proceedings.
Ahern said a few of the friends knew he had taken out a loan with AIB a few days beforehand, to settle his legal bills. "I had taken out the [ bank] loan so I actually used the [ bank] loan to settle the [ legal] bills," he said. Ahern said he accepted the money from his friends on the basis that it was a "debt of honour" and would be repaid.
Ahern did not use the £22,500 he received from his friends to pay off the loan. Rather he put the money into a special savings account, where the money was left until the following December.
One of the eight donors named by Ahern was the former managing director of NCB Stockbrokers, Padraic O'Connor. O'Connor has since said he gave money after being asked by Ahern's associate Des Richardson for a donation for Ahern's constituency operation. Ahern has said he does not agree with O'Connor.
The next transaction being looked at by the tribunal took place in April 1994, when Ahern lodged £30,000 from his cash savings to the AIB. Most of the money went into the special savings account he had opened in December 1993 and the lodgment brought the amount in that account to £50,000, the limit on the account for the purpose of receiving a special interest rate.
Four months later, in August 1994, Ahern lodged another £20,000 from his cash savings, this time to an account that was to be used for his daughters' education.
IN OCTOBER 1994 a second "dig-out" took place when four friends in Dublin gave £16,500 to Ahern, which he again said he accepted on the basis it was a loan. Also, during a trip to Manchester where he met a number of Irish emigrant business figures, including businessman Michael Wall, another collection was organised and Ahern was given cash of in the region of £8,000 sterling. He said this was a gift.
These two amounts were lodged with AIB on the same date in October. The total amount was £24,838.49.
The tribunal has examined this sum, the sterling exchange rate that was operated on the date in question by AIB, and has put it to Ahern that the entire amount lodged comes to £25,000 sterling when the exchange rate is applied. Ahern has rejected the suggestion that the lodgment was other than as described. His spokeswoman told The Irish Times last week that his position is that the lodgment was "a combination of Irish pounds and sterling".
Ahern told RTÉ last year: "From the time I was Lord Mayor in 1986 I'd saved in the order of £50,000. The trouble was that in the separation I agreed to provide £20,000 for my children to an educational account as part of the agreement that I made. I don't like giving details of the children but for completeness, I did that. I also had to pay off other bills, so the money I'd saved was gone. So my friends knew that. I had no house, the house was gone, so they decided to try and help me."
Ahern's finances are complicated, but from what is known it appears that at the end of 1994 Ahern had taken out a loan to settle his legal bills, had put £20,000 into a fund for his children, and had approximately £77,338 in savings with AIB. Despite his apparently healthy financial position, he still did not buy a house and settle his accommodation problem.
During the first weekend of December 1994 Ahern believed he would become taoiseach on the following Tuesday. The tribunal has been told that Michael Wall had been investigating starting up a business in Dublin, and had decided to buy a house in Drumcondra. In discussions with Ahern, whom he knew and admired and to whom he made political donations, it was decided that Wall would purchase a house, Ahern would live in it, and Wall would stay with Ahern whenever he was over from Manchester. Ahern's then partner, Celia Larkin, was involved in these discussions.
Ahern, Wall and Larkin discussed the matter in St Luke's on the first weekend of December 1994. The tribunal has been told that Wall brought £30,000 sterling in cash to this meeting, in £20 notes in a black briefcase. He gave the money to Ahern, who placed it in his safe. The money was to be used on refurbishment and other work on the house on Beresford Avenue. Wall had just placed a booking deposit on the house, though had not at that stage viewed it. It was agreed at the meeting that Larkin, who had viewed the house for Wall, would oversee work on the house and its refurbishment, and so she was given control of the money.
The sterling cash was lodged by Larkin to an account in her name in AIB O'Connell Street on Monday, December 5th. The tribunal has again examined the amount lodged and the exchange rates that applied on the day. It has put it to Ahern that the amount lodged (£28,772.90) does not equate to sterling £30,000 at the exchange rate that operated on the day. It has put it to Ahern that the lodgment does equate to $45,000 at the dollar exchange rate that operated on the day.
A spokeswoman for Ahern told The Irish Times last week that "the taoiseach's position is that he was not involved in any dollar lodgment".
On that same Monday Larkin also lodged £50,000 to an account in her name.
This money came from two accounts mentioned earlier in this report: £28,000 from the AIB special savings account; and £22,000 from the account into which the Manchester money and the second "dig-out" had been placed.
Ahern has said this £50,000 was also intended for work on the house that was to be overseen by Larkin. The house had been built in 1991 and was being sold to Wall, for £138,000, by its original owners.
Although there was no prospect of Michael Wall completing the purchase of the house in December 1994, Ahern was anxious to be able to point to a definite rental agreement should he become taoiseach on Tuesday, December 6th. Late on Monday, December 5th, the day Larkin made her lodgments with AIB, Ahern was photographed being driven out of Government Buildings with a list of the people he intended appointing to his cabinet. But it was not to be. A report in The Irish Times of that day caused Labour to change tack and go into government with Fine Gael and Democratic Left. Ahern became leader of the opposition rather than taoiseach. Because of this, he told the tribunal, the "urgency" went out of the issue of his accommodation.
The £50,000 that had been lodged by Larkin to an AIB account in her name in December was withdrawn and all or most of it was converted into sterling cash, which Ahern then placed in his safe in St Luke's. Ahern has said he did this because he intended to give the money to Wall and to let Wall oversee the work on the house. He said he changed the money into sterling because Wall was based in Manchester and dealt in sterling.
In the event, Ahern did not give the money to Wall but rather kept it in his safe. Some of the money was spent directly on the house without being re-lodged to any bank account. A lodgment to AIB in June 1995 included £10,000 sterling that came from the safe, and this money was used on the refurbishment of the house. A further lodgment, of an amount equivalent to £20,000 sterling, in December 1995, also came from the sterling placed in the safe.
Wall closed the deal on the house in March 1995. A conservatory was built at a cost of £10,000 approximately and refurbishment and furnishing expenditure came to more than £30,000. A stamp duty bill was settled with money that came from the account opened with the £30,000 sterling on December 5th. Ahern became a tenant in about July 1995 and began to pay £450 a month to an account of Wall's in Galway.
Ahern's friend and solicitor, the late Gerard Brennan, acted for Wall in the purchase of the house. He also acted for Wall when, in 1996, Wall signed a will that dealt only with the Beresford Avenue house. Wall has children and grandchildren and his main will in the UK deals with his UK and Irish properties and other assets. The Irish will left the Drumcondra house to Ahern in the event of Wall's death. In the event of Ahern pre-deceasing Wall, it left the house to Ahern's daughters. Ahern has said he did not know about this will.
In May 1997, against the backdrop of a general election, Brennan drafted a three-year lease agreement between Ahern and Wall, the first such written agreement. The rent was increased and some back money was paid. The general election was held on June 6th and Ahern became taoiseach.
IN OCTOBER OF last year Ahern told the Dáil: "I subsequently bought the house in the autumn of 1997 after I had become taoiseach. Wall would have had a gain of about 30 per cent in the two and a half years. I paid the full market value for the house and I funded it by means of an Irish Permanent loan." Ahern bought the house for £180,000 in October 1997, the house having been valued beforehand by an estate agent. The tribunal has calculated how much Wall spent on the house, taking into account the price paid, stamp duty, mortgage payments, expenditure on the house, and the fees involved in selling it. It has also calculated the amount received by him in rent. Its conclusion is that Wall lost £15,800 when he sold the house to Ahern.
Both Ahern and Wall have said they believe the price paid was a fair one, given that Wall had the use of the house during the period Ahern was the tenant.
After he had paid off his mortgage on the house and other costs, Wall lodged the proceeds from the house sale, in excess of £80,000, to his account in Galway. A month later Wall withdrew £50,000 in cash. He intended to use the money at an auction. However, in the event he didn't and he brought the money back to Manchester and placed it in a safe. It was subsequently spent on various non-receipted expenditures.
The above matters are to be the subject of a detailed statement from the Taoiseach expected next week, and will form part of tribunal hearings due to begin four days after the general election.