Mr Charles Haughey warned AIB against taking any drastic action against him over his debts to the bank, saying he could be "a very troublesome adversary", according to a bank document read into the Moriarty tribunal proceedings yesterday.
The document - a report on a meeting between the former Taoiseach and bank officials on October 1st, 1976 - said Mr Haughey also refused to return his cheque book to AIB and "became quite vicious" when asked to do so.
Although his debt stood at almost £305,000, Mr Haughey said "he would not give up his cheque book as he had to live". He added that the bank was "dealing with an adult". The report on the meeting was one of more than 70 documents relating to Mr Haughey's dealings with AIB through the 1970s read into evidence. From January 1974 to January 1980, his debt with the bank rose from almost £20,000 to more than £1 million.
An internal memorandum from January 1975 said Mr Haughey had made an "audacious application" for an additional loan to cover his indebtedness. The application was turned down on the advice of the bank's regional general manager, Mr J.J. McAuliffe, who said: "Mr Haughey is quite irresponsible in money matters. I consider the time has come to insist on his funding the entire debt by borrowing elsewhere."
The memorandum said Mr Haughey was willing to sell Rath Stud as soon as possible to raise funds. However, it noted: "at the same time, he says he is about to commence building a summer residence on Inishvickillane but was extremely vague about source of finance."
A memorandum of an interview with Mr Haughey the following month said that he "unequivocally accepted he was at crisis point and would have to take the most immediate and resolute steps to satisfy the bank".
Yet, in March that year, Mr Haughey informed the bank he was now unwilling to sell Rath Stud or part of Abbeville. Another bank memorandum showed Mr Haughey's personal financial adviser, Mr Des Traynor, had said this refusal to sell was "due not only to the economic situation but also to the reluctance of buyers to invest due to impending wealth tax and inheritance tax legislation".
Details of Mr Haughey's financial circumstances were given in the same memorandum of March 19th, 1975. These showed Mr Haughey had assets worth over £1.25 m, which included Abbeville House, Rath Stud; Inishvickillane Island, Co Kerry; and other lands in Wexford and Sligo.
His expenses on the stud amounted to £27,600 a year, while he also spent £5,000 on domestic staff. His parliamentary salary was £7,000 at the time. During a meeting with the bank on September 24th, 1975, Mr Haughey was advised to seek substantial finance from the Agricultural Credit Corporation (ACC) to enable his indebtedness to be brought back to more manageable proportions. It was also suggested he might seek further finance from Northern Bank Finance Corporation (NBFC), to which Rath Stud was already pledged.
However, "Mr Haughey said that he would be loath to approach ACC" in view of the fact that a senior member of the bank, Mr Collins, had affiliations with Fine Gael. Mr Haughey also mentioned that Mr Peelo of Haughey Boland & Co was about to be appointed to the top job in NBFC and "due to his personal involvement he would be loath at this stage to put any pressure on NBFC to give further monies".
The memorandum of the meeting also said Mr Haughey had indicated "that he owed nobody money except ourselves and the Northern Bank; this, of course, contradicts our information re his borrowings from the ACC. We also believe he owes the Bank of Ireland, Raheny Branch, money through his wife's account there."
In a meeting on September 13th, 1976, Mr Haughey signalled his intention to sell Rath Stud. The sale of the stud had been agreed the following December, at which point Mr Haughey wrote to Mr Michael Phelan, the manager of AIB's Dame Street Branch, saying: "I shall require accommodation of up to £350,000 from your good self for a further two years."
Mr Haughey said he would arrange to dispose of land at Abbeville to discharge this liability.
This application for a £350,000 advance on December 20th, 1976 was approved despite the fact that it was noted Mr Haughey's account "has been difficult to control over the years".
The debt continued to rise to over £445,282 by June 14th, 1978. Mr G.A. O'Donnell, AIB's advances manager, wrote: "It is imperative that Mr Haughey now be interviewed with a view to obtaining his realistic proposals for dealing with his large and unwieldy debt."
