Patrick Gallagher

Colm Keena has a good overview of the late Patrick Gallagher. You can read it after the jump.

In December 1979, two days after Mr Haughey was elected taoiseach for the first time, Mr Gallagher agreed to a request from Mr Haughey for help in clearing a £1 million debt he had with AIB.

Mr Gallagher paid £300,000 to Mr Haughey with funds from his massive property development group. He told the Moriarty (Payments to Politicians) tribunal in May 1999, that he approved the payment out of “a sense of duty”. He was 27 years old.

Mr Gallagher was at the time at the head of a property and banking empire that had been created by his father, Matt Gallagher. Matt Gallagher died in 1974, when Patrick was only 22, and the young man took over what was already a huge business and began to expand it further.

In an interview conducted in Zimbabwe in 1998, Mr Gallagher told journalist Frank Connolly, then of the Sunday Business Post, that his father and a few other business figures who used to frequent Groom’s Hotel in Dublin in the 1960s had agreed to finance Mr Haughey while he pursued his political career.

They agreed to provide financial support to Mr Haughey so Mr Haughey could concentrate on “building the nation”, Mr Gallagher said.

Many of the business figures involved made use of the accountancy firm Haughey Boland and, in particular, made use of the services of Mr Haughey’s accountant, the late Des Traynor. Mr Traynor became a director of the Gallagher group and the group’s affairs were eventually run from the Cayman Islands.

“Haughey was financed in order to create the environment which the Anglo-Irish enjoyed and that we as a people could never aspire to,” Gallagher said in the 1998 interview.

“Everything was planned. Someone had to live in the big house and Haughey created a marvellous situation with these projects at Kilmainham, Dublin Castle and the Taoiseach’s office. Our contribution was the RHA.”

He said it was his father who advised Haughey to purchase a house and lands in Grangemore, Raheny, Co Dublin, in 1959, for £13,000. The Gallagher group bought the lands from Mr Haughey in 1969 for £260,000 and Mr Haughey used the windfall to buy his home and estate in Kinsealy, Co Dublin. Mr Haughey and his family sold that property in 2003 for €43 million.

Matt Gallagher was one of the key figures behind the Fianna Fail fundraising operation in that era, Taca. “Fianna Fail was good for builders and builders were good for Fianna Fail, and there was nothing wrong with that,” Mr Gallagher said.

But, he said, no favours were granted in return for the donations given to Mr Haughey. “I was naive enough when I was younger to think I could get a favour, but not a thing. You might be introduced to people who could help, but he was not slow to tell you to go and sort out your own business.”

Mr Gallagher told the Moriarty tribunal that when he took over the Gallagher group from his late father, he pledged to continue supporting Mr Haughey.

On the Friday Mr Haughey was elected taoiseach, Mr Gallagher attended a drinks party at Kinsealy. The following Sunday he was drinking in a pub with his brother, Paul, when he received a message that Mr Haughey wanted to see him. He travelled to Kinsealy where Mr Haughey made the request for money.

Mr Gallagher said that as the funds would be coming from the Gallagher group, he would need something “tangible” in return, and a deal was eventually agreed for the purchase of land from Mr Haughey. However, a clause in the deal allowed the Haugheys to prevent it going ahead, and it never did. Nevertheless the £300,000 was issued as a deposit.

When the banks moved in and the Gallagher group collapsed in the early 1980s, the deal with Mr Haughey came to the attention of the Revenue. Although doubts existed about the bona fides of the deal, the fact that Mr Gallagher was such an unorthodox businessman meant this might be difficult to prove.

The liquidator did not seek return of the money and the Revenue were successful in securing capital gains tax from Mr Haughey.

Mr Gallagher had to sell his home, Straffan House, Co Kildare, which had been bought for him by one of the Gallagher companies, for £1 million.

Unsecured creditors of the Gallagher group were to only receive a few pence for each pound owed. Meanwhile investigations began into the operation of part of the Gallagher group, Merchant Banking Ltd.

Eventually Mr Gallagher was charged with fraud arising out of his dealings on behalf of the Northern Ireland arm of Merchant banking.

The liquidator’s report in the Republic was sent to the DPP but no charges were brought against Mr Gallagher. A large number of depositors lost money when the bank collapsed. One of those who had loans out from the bank at the time was Mr Haughey.

Released on bail, Mr Gallagher sought to raise the £1.2 million which was being sought by the court to recompense former investors. Mr Gallagher sought funds from a number of wealthy acquaintances, including Ben Dunne, who gave him £165,000.

A few years earlier, when Mr Dunne had been kidnapped by the IRA, Mr Gallagher had made cash available should the family wish to pay a ransom. In the event, Mr Gallagher managed to raise £750,000.

In September 1990 he began a jail sentence in Crumlin Road jail, Belfast. He said that while he was in jail he was helped with his sons’ school fees by Sir Anthony O’Reilly.

What I find interesting is that it took the authorities in Northern Ireland to imprison Gallagher. The DPP never acted on the liquidator’s report.