THE REFUSAL by the London high court to allow Belfast-born property developer Paddy McKillen to give some of his evidence behind closed doors in his legal action against the Barclay brothers, David and Frederick, has had one worthwhile consequence. It has enabled the public to gain a greater insight into his financial dealings with Anglo Irish Bank – now the Irish Bank Resolution Corporation (IBRC).
Mr McKillen is suing the Barclays in a dispute about ownership of three luxury London hotels. His personal debts to IBRC, which is State-owned, are estimated at some €300 million, while his associated companies owe the bank a further €1 billion.
Mr McKillen has claimed the Barclays, improperly, prevented him from buying the stake of a fellow shareholder, Derek Quinlan, in the hotels. Last week Mr McKillen gave evidence of his efforts to raise finance for such a purchase. There the court heard details of his portfolio of global assets: stud farms in Argentina and Kazakhstan, property investments in the US and Europe, and more than a dozen properties in Vietnam. The property developer dismissed a suggestion by counsel for the Barclay companies that his desire for secrecy about his financial affairs was because he did not want the Irish taxpayer to know about his overseas assets. Mr McKillen also stoutly rejected claims that he was receiving favoured treatment from IBRC, in the form of a low (4 per cent) interest rate on his loans. He has insisted he retains the full backing of his creditor banks – although one recent repayment due on a Bank of Scotland Ireland loan was not made. He has stated that he enjoys the full support of IBRC chief executive, Mike Aynsley.
Mr McKillen told the court that he has an agreement with the bank to repay personal and company borrowings over the next five years; although without any agreement in writing. Equally, what remains unclear from Mr McKillen’s evidence is why, despite his good relations with the bank, he did not tell IBRC of the €50 million in free cash – net of debt repayments – that he retained following some property sales last year. The money, which could have been used to reduce either his huge personal debts or company borrowings. was reinvested elsewhere.
The Oireachtas finance committee has been asked by Fianna Fáil’s finance spokesman, Michael McGrath, to analyse the evidence to date in the high court case, and to decide whether to invite Mr Aynsley to come before it. As Mr McGrath has said, the IBRC is making judgment calls that involve potentially hundreds of millions of euro for the taxpayer. And the public need to be assured that IBRC, given the small number of very large debtors – mainly property developers – on its books, is making the best possible judgment calls. Mr Aynsley’s attendance should help provide that reassurance, not least to explain why the bank rejected an offer from the Barclay brothers to buy some €300 million of Mr McKillen’s debt. It should also serve to dispel any notion that the IBRC has become the captive of its largest clients.