Haughey’s relationship with AIB revealed in documents

By Andrew Bushe

DUBLIN — The scale of the nightmare that former Taoiseach Charles Haughey’s accounts became for his bankers emerged in documents published last week which reveal a so-called “Key Business Influencer” turned rogue who threatened and cajoled as his debts steadily soared.

Starting as a backbencher with a salary of about _7,000, he was a big spender who managed to eventually run up his debts in Allied Irish Banks to _1.143 million in 1979 when he became taoiseach, the Moriarty Tribunal was told.

In today’s money his debt would be the equivalent of _4.3 million and, contrary to his earlier lofty statements of being above it all, Haughey’s involvement with his cash problems was very much a “hands-on” affair.

At the McCracken Tribunal two years ago, Haughey distanced himself from mere money worries saying his late accountant and adviser Des Traynor relieved him of the burden of such anxieties.

“I never had to concern myself about my personal affairs as Desmond Traynor took over control of my financial affairs from about 1960 onwards.

“He saw it as his personal responsibility to ensure that I would be free to devote my time and ability to public life and that I would not be distracted from my political work by financial concerns,” Haughey told McCracken.

Out of control

Now it is clear that the former taoiseach dealt directly with the bank for years. Dozens of letters and memos read into the Moriarty Tribunal record show that he was embroiled in meetings, discussions and negotiations in the 1970s as his spending spiraled out of control.

At one stage he was writing checks at the rate of _2,500 a week when his TD’s salary was less than _140 a week and AIB staff appear to have simply looked on transfixed as red ink flowed all over his bank statements.

Former AIB chief executive Gerry Scanlan described Haughey’s account as a “dream relationship which turned into a banker’s nightmare.”

“In a marketing language which was becoming fashionable in the early seventies, he would have had an acronym of KBI associated with his name which was Key Business Influencer,” Scanlan said.

He added that he thought any banker would have been delighted to have a KBI on his books and Haughey would have been such a valued customer.

In the early 1970s, Scanlan said Haughey was “obviously very prominent, very influential” and had all the appearances of being affluent. His lines of credit at that time were not significantly high.

Scanlan said he was not aware until he read the documents that there was a board decision constraining executives from bouncing checks.

Attitude change

In 1971, Haughey owed AIB _225,000 but by the mid 1970s Haughey’s accounts began to cause concern and the bank’s attitude toward him changed.

His reckless spending was not the way a KBI was expected to conduct his affairs. The bank’s documents reveal how he got away with squeezing huge amounts of cash from the AIB coffers during the years.

In 1974, when he owed _170,000, he wrote promising to eliminate his “temporary excesses” but an internal memo later that year describes his living expenses as “huge” and “quite unrelated to his income.”

He was told his attitude could not be tolerated. He replied that he found any restraint on his accounts “unnecessary and galling.”

The following year the bank’s regional general manager described him as “quite irresponsible in money matters” and his manager recommended sanctions against him, despite the unattractiveness of the proposition as it was likely he would be a “man of influence in the future.”

In 1976 Haughey sought and was granted clearance to overdraw to _350,000 during a two year period. He told his manager that the bank did not make use of his influential position and he would be willing to assist in directing new business for them.

When he was asked to hand in his checkbook he “became quite vicious” and warned that if any drastic action was taken he could be a “very troublesome adversary.”

“We are wondering has he given any indication that he would hand in his checkbook?” a 1977 memo asks. Haughey became Minister for Health that year when Fianna Fail returned to power.

In 1978, his debts had gone up to _445,000 and the following year he owed more than a million.

In December 1979 there was a sharp contrast when his bank manager wrote with “warmest congratulations” when he became taoiseach. “To say the task you have taken on is daunting is an understatement but I have every faith in your ability to succeed in restoring confidence in this great little nation,” the manager wrote.

In the same month, Traynor became involved with the debt negotiations when it stood at _1.143 million. Traynor warned the bank there were “no rabbits to be pulled out of hats or blood to be got out of turnips.”

The following month the bank effectively wrote off move than _450,000 of the debt.

Tribunal chairman Judge Michael Moriarty intervened at one stage to ask Scanlan if there was even a glimmer of truth in the adage one of his legal team had been informed about by a banker: “If you owe us _1,000 it is your problem, if you owe us a million pounds it is our problem.”

Scanlan replied, “The evidence is before us.”