Mr Patrick Gallagher gave Mr Charles Haughey a £300,000 non-refundable deposit for land which was never sold because he felt a sense of duty to help clear the former Taoiseach's debt, the Moriarty Tribunal heard yesterday.
The property developer, now based in Zimbabwe, said he was "somewhat in awe" of Mr Haughey and felt obliged to assist him because of their "longstanding friendship".
He described a meeting at Mr Haughey's home in Kinsealy at which he was told the former Taoiseach needed £750,000 "to discharge his debts".
He agreed to donate £300,000, but only in return for a claim to purchase 35 acres of Mr Haughey's land.
Mr Gallagher admitted the agreement was legally unenforceable. However, he never believed the former Taoiseach would renege on the deal as he trusted him.
Mr Gallagher said he first met Mr Haughey when he was about four or five years old. His father, Mr Matt Gallagher, who started the Gallagher group in the 1950s, was a supporter of Fianna Fail and a friend of the former Taoiseach. When he took over the group in 1974, after his father died, Mr Gallagher pledged to continue the support to Mr Haughey. Aged only 23 when he took over the company, Mr Gallagher said he admired Mr Haughey who had a "formidable personality". He met Mr Haughey three to four times a year and used to go shooting at Kinsealy after which he would be entertained in Abbeville. Between 1974 and 1979, he donated about £15,000 to the politician.
On the day Mr Haughey was elected Taoiseach, Friday, December 11th, 1979, Mr Gallagher was invited to an evening party at the Haughey residence. The following Sunday, he was drinking in a local pub with his brother, Paul, when a message came through to say he was wanted at Abbeville.
When he arrived, Mr Gallagher's brother was sent to the drawing room while he was guided to the study, where Mr Haughey was waiting.
Now that he was Taoiseach, Mr Haughey said, he wanted "to tidy up his financial affairs". Mr Gallagher asked what "the bottom line" was and he was told £750,000. Mr Gallagher suggested the new Taoiseach was "well in a position to be able to carry a certain amount of that money himself" and the bottom line was reduced to £600,000.
Mr Gallagher said he discussed the issue with his brother and they agreed to pay half this sum. However, Mr Gallagher told Mr Haughey he needed something tangible in return as the money would be coming from company accounts.
Mr Gallagher suggested purchasing some land at Kinsealy and Mr Haughey agreed to this in principle. The politician said he would get in touch with his personal financial adviser, Mr Des Traynor, to work something out.
Mr Gallagher said the lands at Kinsealy were an "attractive prospect" and would have made a welcome addition to the group's land bank. Mr Haughey was loath to let the lands go and "would not have done the deal with me if he had any alternative", said Mr Gallagher.
He felt obliged to support Mr Haughey because of their "longstanding friendship" and because he had just been elected Taoiseach. However, Mr Gallagher believed he had also got something valuable for the Gallagher group.
He said Mr Haughey was "extremely busy" at the time and all further dealings were with the late Mr Traynor, who had been a co-director of the Gallagher group. Mr Traynor requested that no solicitors be involved as it was a "highly sensitive matter".
Mr Gallagher said he was anxious to acquire lands at Kinsealy adjacent to Feltrim. However, Mr Haughey was concerned about the lands because they were near a stud farm being developed by his daughter, Eimear.
To overcome this, Mr Gallagher suggested procuring another stud farm on less valuable lands within the Gallagher group's land bank. Mr Gallagher said the company had 1,500 acres of agricultural land in Dublin and surrounding counties, and could easily identify a plot which would suit Mr Haughey's tastes.
A clause was written into the contract to say that if the Haugheys were not happy with the stud farm provided they could renege on the agreement.
He admitted the contract had no legal basis but he regarded it as "a matter of honour at the time". He was helping an old family friend out of a serious predicament. It never occurred to him that Mr Traynor or Mr Haughey would abuse his trust.
Because of the sensitivity of the matter, he also felt Mr Haughey would not go to court to contest the agreement.
Mr John Cousins, the former finance director of the Gallagher group, said he could remember Mr Gallagher requesting a cheque for £300,000 "for a deposit on land". He said he believed the cheque was made out to Guinness & Mahon bank and that he gave it to Mr Gallagher. It was his memory that it was one cheque for £300,000 and not one or more for any larger or lesser amounts.