Tribunal has heard from a Dublin accountant who fronted for Denis O'Brien, writes Colm Keena
The ongoing inquiry by the Moriarty tribunal into the £4.3 million Doncaster Rovers transaction has been told that, contrary to what was previously understood, persons other than Denis O'Brien had a financial interest in its outcome.
The evidence heard since the matter was first raised a number of years ago, had indicated that the deal belonged exclusively to O'Brien and that the former communications minister, Michael Lowry, had no involvement.
The evidence still shows that O'Brien has exclusive ownership of the company through which the Doncaster property is owned, however, O'Brien was only entitled to 60 per cent of any profit that was to arise from the project.
The tribunal heard evidence last week from a Dublin accountant, Aidan Phelan, who fronted for O'Brien in the Doncaster deal. He said that a Northern Ireland businessman, Kevin Phelan (no relation), had an entitlement to 40 per cent of any profit that would arise from the Doncaster transaction.
Furthermore, his evidence to John Coughlan SC, for the tribunal, indicated that a profit in the region of £3.45 million was expected from the transaction, within a period as short as nine months.
Kevin Phelan's share of any such profits, therefore, would have been £1.38 million.
The deal involved the purchase of a company, Doncaster Rovers Football Club Ltd (DRFC), which owned the lease on the Doncaster team's home stadium. The idea was to move the team to a new stadium and then redevelop the old stadium as a commercial centre, with the retailer Asda having some involvement.
Aidan Phelan said the key issue was securing planning permission and that he saw it as "a nine-month project".
The deal was brought to his attention, he said, by Kevin Phelan, whom he had not known before then.
Kevin Phelan was to manage the project and to receive his share of the profits upon completion.
The Northern Ireland businessman was not to receive any fees, he said.
Aidan Phelan said the arrangement with Kevin Phelan was an "informal" arrangement and that he, Aidan Phelan, was acting for O'Brien, who was funding the project.
The way the transaction was structured has also been inquired into by the tribunal.
An Isle of Man company, Westferry Ltd, was set up in October 1997 and in January 1998 a British Virgin Islands trust, the Glebe Trust, became the owner of Westferry. Kevin Phelan set up both.
In January or February of 1998 Kevin Phelan raised the Doncaster issue with Aidan Phelan, and Aidan Phelan brought it to the attention of O'Brien. Kevin Phelan was told to negotiate the deal with the owners of DRFC.
On May 8th, 1998, a share purchase agreement was signed between DRFC and Westferry, with Christopher Vaughan, a solicitor based in England, signing on behalf of Westferry. A deposit of £700,000 was paid, with the money coming from O'Brien.
The deal was completed in August 1998. An Isle of Man trust, the Wellington Trust, took over ownership of Westferry and the shares in DRFC were then transferred to Westferry. The beneficiaries of the Wellington Trust are, exclusively, O'Brien and members of his family.
Vaughan has been in communication with the tribunal for a number of years now concerning the Doncaster transaction and two other transactions in England in 1998/1999 with which Mr Lowry (and Aidan Phelan) had an acknowledged involvement. Mr Vaughan has not up to now agreed to come to Dublin to give evidence but at the outset of the current public inquiry into the Doncaster project, the tribunal indicated that that may have changed. The tribunal has in its possession documents and letters produced by Vaughan. In one such letter, dated October 2002 and drafted for, but never sent to an Isle of Man accountant, Peter Vanderpump, Vaughan wrote: "I am quite convinced that, during the course of the acquisition of DRFC by Westferry, Kevin Phelan maintained to me that he was the beneficial owner of a trust called 'Glebe Trust', and also that he had a beneficial interest in Westferry. I am also sure that he made representations to me to the effect that Michael Lowry was also involved in Glebe Trust."
It was the publication by The Irish Timesin January 2003 of the contents of another letter from Vaughan, this time dated September 1998 and addressed to Lowry, that led to the current public sittings of the tribunal. In that letter Vaughan wrote that he had not up to then understood Lowry's "total involvement" in the Doncaster deal. September 1998 was just one month after the completion of the DRFC sale. Vaughan has told the tribunal he wrote the letter while under the mistaken impression that Mr Lowry was involved in the Doncaster deal but has said he has since been instructed that this was not the case. Another letter from him written in October 2002, indicates that he formed his impression of Lowry's involvement, because Lowry had told him he was involved.
The Doncaster stadium is now vacated but there is no plan in place for its redevelopment and no profit has been made on the deal.
Kevin Phelan has not agreed to give evidence to the tribunal. Aidan Phelan is to continue his evidence tomorrow.
O'Brien, Lowry, Lowry's accountant Denis O'Connor, and possibly Vaughan, are to give evidence. Lowry has said he had no involvement in the Doncaster transaction.