The US businessmen who built the Holiday Inn hotel on Pearse Street sold it in 1997 to a group of eight partners from KPMG who will cede ownership of the hotel after seven years in 2004, when the associated tax allowances are used up.

It is understood the price paid was approximately £1 million (€1.27 million), representing about half the £2 million in tax relief associated with the hotel which was built in a tax-designated area.

The eight partners, one of whom is Mr Donall Gannon, took out a loan with Equity Bank to finance aspects of the purchase. The company, which took over management of the hotel, Cristeeg Catering, paid rent to the KPMG landlords which was the equivalent of the interest due on the KPMG consortium's loan. The rental payments were assigned to Equity Bank by the KPMG consortium.

US businessmen Mr Kent Gross and Mr Robinson Callen were involved in the building of the hotel and Mr Callen was a director of Cristeeg up to August 1998. Mr Gross is still a director of Cristeeg.

Mr Gannon was not available for comment. The names of the other partners involved are not known. It is understood that further payments to Equity Bank connected to the KPMG consortium's loan were being made by Tara Virgin Resorts Inc. These payments were placed in a sinking fund, a deposit account linked to the KPMG consortium's loan account.

It is understood that after the hotel was built there was an outstanding loan of more than £5 million. This loan was paid off by the KPMG consortium with funding from Equity. In 2004 the tax allowances associated with the hotel will have been used up and the hotel will transfer to the ownership of Tara Virgin Resorts, according to sources. The British Virgin Islands company will take on ownership of the Equity loan, pay off capital with the money in the sinking fund, and then continue to service the loan.