A FORMER AIB banker has said he was told the Quarryvale development had high-level government support before he arranged a loan for Luton-based developer Tom Gilmartin.
Eddie Kay, former manager at AIB's corporate bank division in Ballsbridge, said before he was approached by Mr Gilmartin for the first time in December 1989, he had been told by Cork developer Owen O'Callaghan that the Quarryvale development had "strong government support".
He said the bank had a seven-year relationship with Mr O'Callaghan by 1989 and had confidence in him. He was also aware that Mr O'Callaghan had contacts in government, including then minister for the environment Pádraig Flynn and then minister for finance Albert Reynolds.
Mr Kay said when Mr Gilmartin applied for the loan of £8.5 million to develop the Quarryvale project, he assured the bank that he had been in contact with most members of the cabinet and they were supportive of the project.
Mr Gilmartin had also said he had been told by Mr Flynn he would get tax designation status for the site, Mr Kay said. The tribunal had heard that Mr Gilmartin gave a donation of £50,000 to Mr Flynn in 1989.
Mr Kay said part of the reason for granting the loan was the assurance from Mr Gilmartin that the site would get tax designation. He said Mr Gilmartin had offered to get Mr Flynn, who had joint responsibility for tax designations with Mr Reynolds, to phone him for reassurance.
Tax-designated sites had double rent and 100 per cent capital allowances for investors, as well as a rate-free holiday and reduced planning restrictions, the tribunal heard.
"Designation . . . would have enhanced the value of the whole project," Mr Kay said.
He had no doubt at the time that Mr Gilmartin believed the site would get tax designation. "He appeared to have pretty definite assurances from people on high that this would happen."
He said he never called Mr Flynn or the Department of the Environment to inquire about tax designation. "We didn't operate that way," he said.
The £8.5 million loan was approved in February 1990 to be repaid within six months.
When the property market in the UK took a downturn in mid-1990, possible UK investors in the project dried up, tax designation did not materialise and Mr Gilmartin was unable to repay the loan on time, the tribunal heard.
When things began to go wrong, Mr Gilmartin did not make specific complaints about politicians, Mr Kay said, but had said if he told all he knew about politicians he could bring down the government.
The bank exerted strong pressure on Mr Gilmartin to have its debt repaid through refinancing or entering a joint venture agreement, Mr Kay said, and they were eventually given permission by Mr Gilmartin to approach Mr O'Callaghan. Mr O'Callaghan agreed to enter the project and, in 1991, his company Riga Ltd took a 40 per cent stake in the project. The bank took 20 per cent and Mr Gilmartin held on to the remaining 40 per cent.
