The chairman of Goldman Sachs International and the former chairman of AIB, Mr Peter Sutherland, was no wizard when it came to his personal finances back in the 1970s, evidence heard by the tribunal yesterday indicates.
In June 1976, Mr Sutherland telephoned the late Mr Ru Leonard, of Guinness & Mahon bank, to say he had bought a house at auction and needed bridging finance. Mr Sutherland ended up having a loan of approximately £18,000 for four years, paying the bank's loan rate rather than the presumably lower rate which would come with a mortgage.
This happened, he said, because he was "dilatory" about addressing the matter.
Internal bank documentation indicates that the loan was backed by an offshore deposit in a Guinness & Mahon subsidiary in the Channel Islands, which was in turn deposited in the Dublin bank.
The name on the account was "Guinness Mahon Channel Islands `P3' ". The account was opened in April 1976 and had a balance of £12,298 by the end of that year.
In a memo written on the afternoon he was first contacted by Mr Sutherland, Mr Leonard wrote: "I indicated to him that I felt the bank would be happy to accommodate him (particularly in the knowledge of his other assets with us which he referred to briefly)."
The security on the 1976 loan was to be a solicitor's undertaking in relation to the deeds of the new house and the term was six months. In January 1977 Mr Sutherland visited the bank and spoke with Mr Leonard, who subsequently wrote suggesting another meeting and that Mr Sutherland see Mr Don Reid before.
A copy of this letter was attached to an internal memo which read: "There is at present a deposit of £12,000 odd and, depending on the outcome of the proposed meeting with Don Reid, the deposit will be increased to cover the borrowings, or alternatively long-term finance, which Peter has arranged, in respect of his house purchase, will be taken up and used to eliminate the loan."
Mr Reid, who is chairman of The Irish Times Ltd and Governor of the Irish Times Trust Ltd, was a tax partner with Stokes Kennedy Crowley then. In evidence yesterday, he said he had never given advice to Mr Sutherland in relation to his loan and could not imagine what advice could be given in relation to it.
About April 1977, it seems approximately £3,000 was lodged to the offshore account bringing it up to a level then approximately equivalent to the loan.
In June 1977, the loan still not having been cleared, Mr Leonard wrote in an internal memo that he had contacted Mr Sutherland. "He confirmed that he would make contact with Don Reid and revert to us." The loan was subsequently extended for a year.
In 1978 it was again extended for a year. The loan was settled in 1980, with funds from a mortgage with the final payment being made on June 18th. The solicitor's undertaking was then released.
It seems from the evidence that earlier, in 1980 or perhaps in late 1979, the Channel Islands account was closed. A new trust was established in January 1980 in the Cayman Islands.
Mr Sutherland in evidence said he knew Mr Leonard from his work as a barrister representing the bank in the 1970s. He had no assets with the bank in 1976 and could not understand the reference to his having assets contained in Mr Leonard's memo of that June. If the bank put security other than the solicitor's undertaking in place, it was without his knowledge. He never had funds with any offshore Guinness & Mahon subsidiary.
Mr Sutherland said it could have been the case that the offshore account referred to belonged to his father-in-law, Mr Cabria. In the mid-1970s he had mentioned Mr Cabria's desire to set something up for his family to Mr Leonard, and a trust was established through Guinness & Mahon bank. Mr Cabria, who is now more than 90, lives in Spain. Mr Leonard got advice on the matter from Mr Reid.
He said it "may well have been that there was a discussion in 1976 that my father-in-law was there in the background" but he could not remember this. He had no beneficial interest in the trust, but did discuss it with Mr Reid.
He had been helped by his father-in-law a number of times and may have been helped on this occasion, but no one could remember. He could not remember anything to do with the April 1977 lodgement but maybe it was required to bring the offshore balance up to the equivalent of the loan.