Details of the overdraft facility which Mr Charles Haughey had with AIB in the late 1970s are set to become a major focus of the Moriarty tribunal. Given that the bank had securities over a number of properties owned by Mr Haughey which, according to the tribunal, were worth more than the amount he owed, the settling of the debt was considered surprising. "It is one thing to lend to a business and then it goes bad, but another to give such a level of funding to an individual," a source said. A senior Dublin business figure said that, while it might seem surprising to ordinary people, such settlements were not unusual in certain business circles at the time.
AIB has said the settlement was "commercially justified". Counsel for the tribunal, Mr John Coughlan SC, said on Thursday it will want to examine why a "significant discount" was given "when the bank had securities in excess of the amount of the indebtedness". Land registry files show that AIB lent Mr Haughey £179,000 in July 1975, and took out a charge on his Kinsealy estate and on lands he held in Co Meath.
By December 1979 Mr Haughey owed £1.143 million to AIB. He settled the matter in December 1980, just weeks after becoming Taoiseach for the first time. The terms, as outlined by AIB, were: a write-off of £283,000, bringing the debit balance to £860,000, this to be reduced to £110,000 by mid-February 1980.
"The remaining balance of the indebtedness, namely £110,000, is to be liquidated within a reasonable period of time by the introduction of funds arising from the disposal of part of the property and lands known as Abbeville." Abbeville is Mr Haughey's Kinsealy estate in north county Dublin.
When the debt was reduced to £110,000 the bank would release "the charges on the residence and 248 acres known as Abbeville". At the same time "the associated letter of guarantee for IR£350,000 will be cancelled."
Remaining securities on the island of Inishvickillaun, Co Kerry, a house in Co Sligo, and a life policy for £1,000 were to be held until the £110,000 was paid off. No interest was to be charged in the meantime. However, Mr Coughlan said on Thursday that it "does not appear" the £110,000 was ever paid, "although the bank did comply with its terms of the settlement in releasing security documents to Mr Haughey".
