Dr Garret FitzGerald has told the Moriarty tribunal he unwittingly worsened his position when he failed to read the small print on a loan agreement before coming to a new arrangement with AIB.
The former Taoiseach was giving evidence on his settlement with AIB bank in 1993. He said he had taken out loans in 1988 and 1989 and had restructured both loans into one in 1992.
Both loans had been used in part to buy GPA shares but part of the 1989 loan did not use Dr FitzGerald's assets as security. However the new agreement left Dr FitzGerald's assets vulnerable in the event of a default.
Dr FitzGerald said had he known he was losing the nonrecourse nature of the previous loan (whereby the bank had no claim on his assets), he certainly would not have agreed to the conditions of the new loan.
Dr FitzGerald also said he had not sold his house to his son for £30,000, as stated by the tribunal team and bank officials earlier this week. He had, in fact, sold the house on Palmerston Road, Rathmines to his son, Mark, for £150,000.
The tribunal was told Dr FitzGerald had been approached by Mr Maurice Foley of GPA to join the company board in 1987. As a board member, he could buy 200 "A preference" shares which could be converted into 6,000 ordinary shares.
Dr FitzGerald bought these shares and, as confidence in GPA increased, he borrowed $281,250 from AIB to buy 20,000 ordinary shares. The last 5,000 shares were acquired to establish a family trust for his six grandchildren and a life trust in favour of a family friend.
His income from lecturing, journalism and consultancy work allowed him to pay off an £80,000 overdraft over 5-1/2 years, as well as $65,000 of the total $313,259 borrowings.
However, the GPA public share offer collapsed in 1992. To improve his financial situation, Dr FitzGerald undertook lectures in the US, Germany and Britain, as well as consultancy work in Russia.
He entered into an agreement with his son, Mark, where Mark and his wife agreed to sell their home in Rathmines and purchase, at an independent valuation, Dr FitzGerald's house.
The house was sold for £150,000, and Dr and Mrs FitzGerald moved to an upstairs apartment. A rent agreement of £6,000 a year for six years was made by Dr FitzGerald. After repaying the mortgage, paying income tax and funding some renovations, Dr FitzGerald was left with a net residue of about £30,000.
He said he was keen to negotiate his loan settlement on an "arm's length" basis so he secured the services of Mr Brian Evans of Price Waterhouse and Mr Patrick Dowling, a former AIB deputy chief executive.
Mr Dowling offered £30,000 to settle the £170,000 debt and on November 17th, 1993, a payment of £40,000 was agreed with AIB. The settlement also included Dr FitzGerald's 21,000 shares in GPA.
