A former deputy chairman of Allied Irish Banks has said that Mr Charles Haughey's £1.14 million debt with the bank was "the most sensitive issue which ever came up" during his 23 years service.
Directors of the AIB at the time felt that "the less they knew about this the better", Dr Liam St John Devlin told the Moriarty tribunal.
Dr Devlin described as "unnecessary" an AIB press statement which described a 1983 Evening Press report that Mr Haughey had a debt of around £1 million with the bank the previous year as "outlandishly inaccurate".
But he said he could "understand the panic that would run through the bank" following the article's claim that sources close to the bank had confirmed the extent of Mr Haughey's debt.
Regarding attempts by the bank to get Mr Haughey's account under control, Dr Devlin said it had not been practical to return cheques "because Mr Haughey was a popular and powerful leader and a potential Taoiseach".
Dr Devlin was appointed to the board of Munster and Leinster Bank in 1968 and joined the board of AIB in 1972. He was deputy chairman from 1984 to 1989 and retired from the board in 1991.
Dr Devlin told the tribunal that he recalled being informed of Mr Haughey's final settlement with AIB in which his debt had been reduced to £750,000 on certain terms. He did not remember at which meeting he was told of this.
Dr Devlin said he could not remember if the board had considered a press statement which was issued. It was "unlikely" this would have been referred to the board, he said.
Regarding the suggestion in the Evening Press article on January 28th, 1983, that sources close to the bank had confirmed Mr Haughey's £1 million debt, Dr Devlin agreed that this raised serious concerns within AIB.
Dr Devlin said the issue of confidentiality was a very important one for the directors and there was "a lot of theatre" attached to signing the document of confidentiality. Employees were "bound by confidentiality totally", he said.
The AIB press statement which described the claim about Mr Haughey's debt as "outlandishly inaccurate" looked like the interpretation of an oral discussion, Dr Devlin said. He did not think that this particular phrase would ever have been written down.
However, regarding the article's claim that sources close to the bank had confirmed the extent of Mr Haughey's debt: "It would panic everybody to think that the statement was that sources close to the board gave information about a client."
Counsel for the tribunal, Mr John Coughlan SC, suggested that the AIB press statement flew in the face of the policy of confidentiality.
Dr Devlin admitted he was surprised to see the word "outlandish" in the statement but he assumed, when he saw the document, that it was an internal document.
He said the phrase "outlandishly inaccurate" had been "unnecessary".
Dr Devlin said he had been in banking for 23 years. Mr Haughey's debt was "the most sensitive issue that ever came up in my time and I can understand the panic, if you like, at the statement in the press," he said.
Mr Haughey's debt was never on the board's agenda and never really discussed. "The reason for that is that there was a general feeling among the board directors that the less they knew about this the better," said Dr Devlin. "Quite frankly, if there was a leak, everybody would be suspected. So it was only mentioned in passing, if at any time, at the board," he said.
Dr Devlin said he did not remember the question of a facility for Mr Haughey coming before a board advances committee at which he himself attended.
In his statement to the tribunal, Dr Devlin said there were difficulties being experienced with Mr Haughey's account.
However "one could infer from the general mood of the directors that it was better not to know too much because of the extreme sensitivity of the matter based on Mr Haughey's standing and the extent of national support for him".
Dr Devlin informed the tribunal there was always a fear that there might be a leak and that a board member as well as bank staff would come under suspicion.
As a board member, Dr Devlin had agreed with the consensus that it was a matter for management to resolve. At one time, the management had indicated that an effort would be made to recall Mr Haughey's cheque books in the hope of freeing the overdraft but this was unsuccessful.
