The State official in charge of bankrupts' assets, Chris Lehane, has expressed "considerable concern" about a letter being missing from a solicitor's file he was given last month as part of his inquiries into the affairs of Seán Dunne.
Gleaned from publicly available affidavits of Lehane and a Patrick Doran, the letter gave legal advice to Dunne's solicitor, Donal McAuliffe, of Donal T McAuliffe & Co, about Walford, a house on Shrewsbury Road in Dublin that Dunne bought for €57.95 million in July 2005.
The 2012 letter addresses the fact that, while Dunne had said the property belonged to his wife, there was no legal document showing this. Yet Walford had not appeared in a statement of affairs that Dunne had given to the National Asset Management Agency (Nama) two years earlier.
By the time he went bust, the combative property developer had few unencumbered assets other than Walford and a hotel in South Africa called the Lagoon Beach.
Since Dunne was adjudicated a bankrupt here in 2013, having failed in his bid for bankruptcy in the US, where he declared debts of $1 billion, Lehane has been finding it difficult, to put it mildly, to get clarity about the his affairs.
“The bankrupt has lied in interview to me,” Lehane said in an affidavit sworn last month as part of an application for an extension of Dunne’s bankruptcy period for another five years.
One of the matters that has been taking up Lehane's time is trying to get behind the ownership of Walford, which was apparently sold to Yesreb Holdings Ltd, Cyprus, in 2013. Dunne says that neither he nor his wife, Gayle Killilea Dunne, had any interest in Yesreb.
In November last year, Lehane got wind “from a source” that Walford was on the market for €15 million and that Dunne was in some way involved. Investigators working for Lehane started looking into the report, and discovered that a Dublin businessman, Patrick Doran, flush with cash from the sale of his packaging concern, was a potential purchaser.
Doran, who has sworn an affidavit about the matter, said he was interested in buying the property and knew Dunne was linked to it in some way.
He tried to get to Dunne but, before he did, Dunne contacted him. “We agreed to meet. Our first meeting was in a coffee shop on Leeson Street in or around mid to end-June 2016.”
Dunne made clear that he had no beneficial interest in Walford and that everything would have to be verified by Doran with McAuliffe, who acted for Yesreb.
However, Doran noted, Dunne “did appear to represent Yesreb in some manner as he was in a position to discuss and agree price and closing date details”.
Six meetings
The two men had at least six meetings, at every one of which Dunne started out by saying he did not own Walford. They also communicated by text, email and phone. The issues discussed included price and currency, and a problem to do with stamp duty. Dunne has since said he was acting as Yesreb’s agent.
On December 5th, the two men met at Dunne’s request and Doran was told that a representative of Yesreb was in town. Dunne wanted to close the deal that day, but Doran’s solicitor was not around, and there were still matters to be ironed out.
On the 6th, Doran was told by Dunne that the house had been sold to a third party, but the next day he was told he might be “back in the game”.
Meanwhile, Lehane was trying to ascertain what was going on. On December 9th, he issued proceedings against Yesreb and also registered a lis pendens against Walford. The latter is a notice that there is a court dispute over the ownership of a property. Three days later, when Doran learned of this, he walked away from any purchase, feeling considerable frustration at the time and money he had wasted.
In his affidavit, Lehane said he had interviewed Dunne at some length on June 29th, 2016, about Walford and Dunne had not disclosed that he, at the time, “was actively engaged in the sale of the property”.
Despite Lehane’s efforts, in December, money changed hands in relation to the house. Slightly more than €12 million was paid, and the money net of fees was sent to the client account of Swiss law firm Lenz & Staehelin.
On January 5th, 2017, Lehane was contacted by Suzanne McNulty, who is general counsel with Dermot Desmond's IIU investment group. She said she was acting for Celtic Trustees Ltd, as trustees of the Merdon Trust, and asked that the proceedings against Yesreb and the lis pendens be vacated. Lehane was told Desmond was the settlor of the trust, and that Walford had been bought by it on December 6th. There is no suggestion that Desmond was aware of any potential link between Yesreb and Dunne.
Funds transferred
Correspondence ensued and, on January 17th, it was confirmed that funds had been transferred and had gone to McAuliffe's client account. Surprisingly, according to Lehane in his affidavit, it was also confirmed that the sale had closed on December 15th "in circumstances where the lis pendens and the proceedings were issued on the 9th".
Meanwhile Lehane was examining documents from the files of McAuliffe's solicitors. One document was an email of December 15th, 2016, from an accountant, James Ryan, who acts for the Dunnes, to McAuliffe. It set out the fees to be paid as part of the Walford sale process. These included €80,000 plus VAT (€98,400 in total), for McAuliffe. The net proceeds of €12,000728 were to go the bank account of Lenz & Staehelin, solicitors for Yesreb. Lenz & Staehelin had acted for the Dunnes when they left Ireland and moved to Switzerland, prior to moving on to the US.
Another document he examined was a letter from a barrister in July 2012 to McAuliffe, outlining counsel’s advice in relation to a stamp duty issue associated with Walford. The advice was given in the context of a proposed sale of the property.
Dunne’s position was that he bought Walford in 2005 as a gift for his wife but a key problem was the extent to which this was documented. It seems the file given to the barrister did not show a record of Dunne conveying the property to his wife or holding it in trust for her, yet he had not declared it in a statement of affairs given to Nama.
“I understand that Mr Dunne is reluctant to execute a contract for sale of the property as it is not included in his list of assets which he recently gave Nama,” the letter says. (It is quoted in Lehane’s affidavit.)
“I can’t advise him on his dealings with Nama but if he wants to qualify for stamp duty sub sale relief during a sale to NewCo [a new company] it is necessary that he enter into a contract to sell it on.
“If it would assist Mr Dunne, he could instead of executing a contract for the sale of the property, execute a deed of trust stating that he holds and has held at all times the property in trust for his wife Gayle (assuming that is indeed the case). I do not know if this would overcome the perceived difficulties with Nama.”
‘Considerable concern’
In his affidavit, Lehane said it was a matter of “considerable concern to me that Mr McAuliffe furnished his file pursuant to an order of this court and that this letter was not in it. He did so subsequently, on January 24th, 2017.”
Lehane said he found the 2012 letter on the file in respect of Walford that he got from Whitney Moore solicitors (who were acting for Doran). He said the letter “appears to set out the process whereby Yesreb will be incorporated and the Dunnes will maintain control of it”.
It is “not yet clear to me how that came to be omitted from the McAuliffe file and I will be investigating the same with him”.
The letter referred to Walford being sold at current market value, which was then €8.75 million. McAuliffe acted for Dunne in the subsequent sale of Walford to Yesreb. Lehane believes Yesreb became the NewCo referred to in the letter.
Yesreb, he said, “is a device to put the asset beyond reach”. In his affidavit, Lehane outlines matters concerning the Cypriot entities that act for Yesreb which, he says, support his view that “Yesreb cannot be relied on to tell the truth”.
Lehane has already examined McAuliffe in a court sitting and a further such sitting is expected.
