By Andrew Bushe
Dublin — It seems the skeletons just keep tumbling from Fianna Fail’s cupboard. Now comes the revelation that National Irish Bank wrote off a Fianna Fail backbencher’s debt of a quarter of a million pounds.
In the late 1980s, NIB dropped bankruptcy proceedings against the backbencher, Sligo-Leitrim TD John Ellis, that would have threatened Charlie Haughey’s government.
NIB was taken over by National Australia Bank.
NIB, which is now under investigation for overcharging and facilitating tax evasion by customers at the time of the write-off, had started bankruptcy proceedings against Ellis.
Just months after the formation of Haughey’s Fianna Fail-Progressive Democrats coalition with a one seat majority, the bank accepted £20,000 from the TD to wipe out the debt of more than £260,000 which resulted from disastrous agri-business ventures.
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Ellis said that he understood that at the same time the former taoiseach and then Finance Minister Albert Reynolds "was informing the bank of my dire circumstances and, in effect, pleaded for leniency for me."
Reynolds, who was in America when the details of the controversy became public, initially issued a statement saying he had no specific recollection of making representations but "if the record shows that I did then I fully accept that that is the case."
On his return, Reynolds said he carried out extensive checks. He rang RTE programs three times to say he "clearly had not" made representations.
NIB had no details on record of representations and Reynolds asked the department of Finance to check back on their files and nothing was found.
Reynolds said he also checked with Ellis. "He is quite satisfied that he asked me but he has no way of saying or proving that I ever did anything about it."
Fine Gael had also suggested that another politician made representations on Ellis’s behalf and claimed the Australian bank was told "you are the new kids on the block and it wouldn’t be good business to bankrupt a TD and bring down the government."
Fine Gael offered no evidence in support of "a third man theory" or to any allegations of political threats to NIB.
Taoiseach Bertie Ahern has denied he intervened and he asked Chief Whip Seamus Brennan to individually ring every cabinet member. All denied involvement.
This is the third revelation about a politician getting substantial debts written off. AIB settled a £1.14 million overdraft for Charles Haughey and AIB and Ansbacher Banks wrote off a £200,000 loan for the then retired Garret FitzGerald, former taoiseach and Fine Gael leader, after he had borrowed to invest in the 1992 GPA floatation debacle.
In a statement through his solicitor, Ellis said that on Oct. 16 1989, NIB issued the bankruptcy summons against him for an outstanding loan and unpaid interest totaling £263,541.
He met with then chief executive of the bank Jim Lacey on Nov. 28, 1989 after which the bank did a U-turn. Bankruptcy proceedings were dropped and a £20,000 lump sum payment accepted.
Former PD leader Des O’Malley said he and then ministerial colleague Bobby Molloy had been unaware of the bail-out.
O’Malley contrasted the lenient treatment of Ellis with the eviction of two brothers who owed substantial sums to NIB for a failed farm venture. They were forcibly evicted from their Donegal homes and the sheriff, assisted by balaclava-wearing assistants, repossessed their assets.
Ellis, from Fenagh, Co Leitrim, has been a TD and senator since he was first elected in 1982. The Moriarty tribunal on payments to politicians is already examining aspects of his financial affairs.
Moriarty is also investigating a £1 million citizenship granted to a Haroon Rashid Kahlon under the passports-for-sale scheme. He was a director of the Pakistani Indus Bank. Ellis was also a director of the Karachi-based bank.
Ellis declared this "non remuneration" directorship in the Oireachtas register of interests along with ownership of four parcels of land in Leitrim totaling 152 acres.
Moriarty has already established the Haughey made two payments to Ellis totaling £26,000 in December 1989 and in March 1990. This was paid from the taxpayer-funded party leaders’ account to help avert another bankruptcy move. The money was used to pay debts to two cattle marts. Other debts, including many to farmers, have never been paid off.
The NIB debts arose from the failure of an abattoir and meat exporting business set up by Ellis in 1986. The TD blames bad management and bad luck for the "disaster" of the project.
Consignments of beef to Britain were destroyed and the destruction of another consignment by protesting French farmers left the business with no compensation.
In view of their recent troubles, NIB were not pleased to have been placed center stage again and a spokesman for the current management of NIB said they had no record of the meeting between the TD and the former bank boss.
"People at the bank are just as astonished about what is being alleged as anybody else. Everybody knows that National Irish Bank have been making headlines for all the wrong reasons of late and this latest allegation is one that is embarrassing for us," spokesman Nick Garbutt said.
He said the disturbing element was the suggestion that "political influence had been brought to bear on the bank" and the debts were written off as a result.
He said the bank "had been through the wringer" in recent months and described the latest claims as a "serious matter" that they would be looking into.