Appendix I

(a) Order of the High Court of 22 September 1999 of Johnson J.

(b) Order of the High Court of 8 December 2000 of Finnegan P.

(c) Order of the High Court of 6 April 2000 of Finnegan P.

(d) Order of the High Court of 25 May 2001 of Finnegan P.

Appendix I (a)
 THE HIGHCOURT

1999 No J6'3COS

Wednesday the 22nd day of September 1999

BEFORE MR JUSTICE JOHNSON' •

IN TUE MATTER OF THE COMPANIES ACTS 1963 TO. 1990

AND IN THE MATTER OF PART II O'F HIE COMPANIES ACTS 1990 AND

Ss.8 AND 17 .

AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED

(FORMERLY GUINNESS
• • MAHON CAYMAN TRUST
•* LIMITED
ANSBACHER LIMITED AND CAYMAN INTERNATIONAL BANK AND

TRUST COMPANY LIMITED)

ON THE APPLICATION OF

THE MINISTER FOft ENTERPRISKXttADE AND EMPLOYMENT

Upon the application of Counsel for the Applicant made unto the

Court on this day pursuant to Notice of Motion hereinfiled on the 30th day of July

1999

The Honourable Mr Justicc Frederick H Morris the President of die

High Couri assigned The Honourable Mr Justice Richard Johnson to hear the

application

Upon reading the said Notice of Motion the Affidavits of service of .

John Lawless Brian Cox Christina Loughlm Ilal McGuckin allfiled in Court on

this day and the documents and exhibits in said Affidavitsreferred to the Affidavit

o f Gerard Ryan filed in Court on this day the Affidavit of Paul Appleby sworn on

The 26th day of July 1999 the documents and exhibits in said Affidavit referred to

the second Affidavit of Paul Appleby filed in Court on (his day .(seeking inrcr alia
t 6.1. THE HIGH COURT
l t* i
*•

a-ivd exhibits ill said Affidavit referred to and on hearing said Counsel there beiiv

no appearance oil behalf of the Company in the title hereof

Tlic Court doth deem good and sufficient" service the scrvicc effected
*

•
by rhe said Hal McGuekin and referred to in his Affidavit filed in Court 011tin's

IT IS ORDERED pursuant to Section 8 of the Companies Act 1990

thai the persons named hereunder be appointed as Inspectors to investigate the

offices of Ansbacher (Cayman) Limited (formerly Guinness Mahon Cayman Trus

•
• Limited Ansbacher Limited and Cayman lnte^national Bank and Trust Company
•
Lima ted)

a) The Honourable Mr Justice Declan CosfeUo

*>) Ms Noreen P Maokey Banister-at-LaW

Paul F Rowan Chartered Accountant

IT IS ORDERED that the said Inspectors investigate and report to the

• Court on the affairs of the Company in the title hereof and in particular

« to examine and define the nature and extent of the Company's Irish

•
business from 1971 to dale ie. the business carried out in the State or

any other business carried out on behalf oflrish residents whether in

the State or elsewhere

« GO to identify as far as possible all of the parties who were either officers

(including shadow directors) and agents of the Company clients of the

Company or who otherwise assisted in the canying out of the business

at the relevant time

(0 to examine whether the Companies Acts 1963-1990 were breached by

•
the Company its officers (including shadow directors) agents or third
 THE HIGH COURT

parties at the relevant time and if so to identify the provisions involve

and the persons in default in each cane

(d) to examine whether the affairs of the Company Were conducted with

intent to defraud its creditors or the creditors of any other person or

otherwise for a fraudulent or unlawful purpose arid if so to identify the

statutory provisions involved and the persons in default in each case

» . •
(e) toreporton any related matters .
XT IS ORDERED that the Applicant be at liberty to furnish to the sole

chairman ofthe Tribunal of Enquuy (Payments to Mr Charles JFfaughey and Mr

Michael J Lowry) the exhibits referred to at paragraph 16 ofthe Affidavit of Paul

Appleby sworn on the 26th day of July 1999

And IT IS ORDERED thai therestrictionson the disclosure of the

exhibits referred toin the said Affidavit of Paul Appleby sworn on the 26th day of

July 1999 be continued save those opened and read in open Court on this day

REGISTRAR
Chief State Solicitor £ GOg&y Whfefc i attfiftt
Solicitor for the Applicant k

»V S^riateacfemt.af

hbl£i3ais
' M k j ^ i • 0(J$/ W THE HIGH COURT
The 22rid day of September 1999

KE:-
THE MINISTER FOR ENTERPRISE
TRADE AND EMPLOYMENT

Nature of D o c m n e n ^ . ^ g g u g ? ^ . ^

ORDER

Entering Fee':-
. THREB

P&ges

Soliciton-
CHIEF STATE SOLICITOR
Address
 1999 No. 163 COS

t THE HIGH COURT

BEFORE THE PRESIDENT

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

AND IN THE MATTER OF PART II OF THE COMPANIES ACTS 1990

AND SS. 8 AND 17

AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED (FORMERLY

GUINNESS MAHON CAYMAN TRUST LIMITED)

ANSBACHER LIMITED AND CAYMAN INTERNATIONAL BANK AND

TRUST COMPANY LIMITED

ON THE APPLICATION OF

THE MINISTER FOR ENTERPRISE TRADE AND EMPLOYMENT

Upon the application of Counsel for the Applicant made ex-parte unto the Court

this day and upon reading the affidavit of Paul Appleby filed in Court this day the documents

and exhibits therein referred to the Order herein dated the 22 n d day of September 1999

appointing Inspectors to investigate the affairs of Ansbacher (Cayman) Limited (formerly

Guinness Mahon Cayman Trust Limited) Ansbacher Limited and Cayman International Bank

and Trust Company Limited as amended by Order dated 5 t h day of October 1999 and on

hearing said Counsel

IT IS ORDERED that said Order dated the 22 n d day of September 1999 as

" amended be varied by substituting His Honour Judge Sean O'Lcary and Mr Michael Cush,

Senior Counsel as Inspectors in place of The Honourable Mr Justice Declan Costello, as from

the date of this Order. ^

 <

IT IS FURTHER ORDERED that the duties pursuant to Section 8 of the

H

Companies Act 1990 imposed upon The Honourable Mr Justice Declan Costello by said

Order dated the 22 n d day of September 1999 as amended be imposed upon His Honour Judge

Sean O'Leary and Mr Michacl Cush, Senior Counsel as from the date ofjbis-Qrder.

REGISTRAR

Chief State Solicitor

For Applicant

-/-^Sttd'Satt oi
Appendix I (c)
 THE HIGH COURT
1999 No. 163 COS

Thursday the 6th day of April 2000

BEFORE MR JUSTICE FINNEGAN

IN THE MATTER OF THE COMPANIES ACTS 1963-1990

AND IN THE MATTER OF PART 2 OF THE COMPANIES ACT 1990 AND

SECTIONS 8 AND 17

AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED

i
!

(FORMERLY GUINNESS & MAHON CAYMAN TRUST LIMITED

ANSBACHER LIMITED AND CAYMAN INTERNATIONAL BANK AND

TRUST COMPANY LIMITED)

AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION

7(4) OF THE COMPANIES ACT 1990

Upon the application of Counsel for Noreen Mackey one of the three

inspectors appointed by the Order herein dated the 22nd day of September 1999 to

investigate the affair of Ansbacher (Cayman) Limited made ex parte to the Court

on this day

On reading the said Order dated the 22nd day of September 1999

whereby pursuant to Section 8 of the Companies Act 1990 the persons named

hereunder were appointed inter alia as inspectors to investigate the onicr«r of

Ansbacher (Cayman) Limited (formerly Guinness & Mahon Cayman Trust Limited

Ansbacher Limited and Cayman International Bank and Trust Company Limited)

(a) the Honourable Mr. Justice Declan Costello

(b) Ms. Noreen P. Mackey, Barrister-at-Law and

(c) Paul F. Rowan, Chartered Accountant

 THE HIGH COURT •
and on reading the affidavit of the said Noreen Mackey made on her own behalf

and on behalf of and with the authority of her fellow inspectors and filed in Court

on this day

IT IS ORDERED that where one or other Inspector has found that a

possible conflict of interest.arises in respect of the investigation of any particular

matter on the examination of any particular witness such investigation or

examination should be undertaken only by the Inspector or Inspectors in respect of

whom no such conflict arises and that the report to the Court insofar as it relates to

the said matter or concerns the said witness should likewise be made only by such

Inspector or Inspectors

AND IT IS ORDERED that in any case where it has not been found

practical for all three Inspectors to be present at an interview where a witness's

evidence is taken under Oath any further investigation in relation to that witness

and any further examination of that witness should be made only by the Inspector

or Inspectors who was/were present and that the report to the Court insofar as it

relates to the said witness should likewise be made only by such Inspector or

Inspectors

Reserving the costs of this application and Order

REGISTRAR

Mary Cummins,
Solicitor

ORDERS12.LWP (33-34)
 THE HIGH COURT
1999 No 163 Cos

Friday the 25th day of May 2001

BEFORE MR JUSTICE FINNEGAN

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990 AND

IN THE MATTER OF PART II OF THE COMPANIES ACT 1990 AND

SECTIONS 8 AND 17 AND IN THE MATTER O F ANSBACHER

(CAYMAN) LIMITED (FORMERLY GUINNESS MAHON CAYMAN

TRUST LIMITED ANSBACHER LIMITED AND CAYMAN

INTERNATIONAL BANK AND TRUST COMPANY LIMITED) AND IN

THE MATTER OF AN APPLICATION PURSUANT TO SECTION 7(4) OF

THE COMPANIES ACT 1990

Upon Motion of Counsel for the Inspectors appointed herein made ex

parte unto the Court this day

And on hearing said Counsel

IT IS ORDERED that this Motion be heard otherwise than in public

And on reading the Affidavit of Noreen Mackey filed in Court this day

and the documents and exhibits referred to therein

And on hearing said Counsel

The Court doth direct pursuant to Section 7 (4) of the Companies Act

1990

a. that where one or other Inspector (hereinafter referred to as "the

'' t Conflicted Inspector") finds that a possible conflict may arise in

respect of the investigation of any particular matter or the

examination of any particular witness such investigation or

examination should be undertaken in respect of that matter or

witness only by the Inspector or Inspectors in respect of whom no

 THE HIGH COURT
such conflict arises (hereinafter referred to as "the Other

Inspectors") and any findings in respect of that matter or witness

shall be made only by the other Inspectors - However the Conflicted

Inspector shall not be precluded from having regard to and relying

on the findings of the other Inspectors in respect of that matter or

witness in making findings and reporting to the Court on any other

matter or witness the subject-matter of the investigation herein

where it has not been found practical for all four Inspectors to be
b.
present at an interview at which a witness's evidence has been taken

under Oath or where that witness has been interviewed prior to the

appointment of a particular Inspector the Inspector or Inspectors

who was/were absent from that interview shall not be precluded

from further examining that witness or reporting to the Court on that

witness subject to the following:-

that the veracity of the evidence given by that witness during the

said interview is not in dispute or if the veracity of the evidence

given by that witness during the said interview is in dispute that the

said interview is conducted in full again with the said Inspector or

Inspectors in attendance

The Court doth reserve the question of the costs of this Motion and

Order

A Gs-py which 8 attest

DD163C0S(DL)
Superintend:; ii af Copyists
 THE HIGH COURT
such conflict arises (hereinafter referred to as "the Other

Inspectors") and any findings in respect of that matter or witness

shall be made only by the other Inspectors - However the Conflicted

Inspector shall not be precluded from having regard to and relying

on the findings of the other Inspectors in respect of that matter or

witness in making findings and reporting to the Court on any other

matter or witness the subject-matter of the investigation herein

b. where it has not been found practical for all four Inspectors to be

present at an interview at which a witness's evidence has been taken

under Oath or where that witness has been interviewed prior to the

appointment of a particular Inspector the Inspector or Inspectors

who was/were absent from that interview shall not be precluded

from further examining that witness or reporting to the Court on that

witness subject to the following:-

that the veracity of the evidence given by that witness during the

said interview is not in dispute or if the veracity of the evidence

given by that witness during the said interview is in dispute that the

said interview is conducted in full again with the said Inspector or

Inspectors in attendance

The Court doth reserve the question of the costs of this Motion and

Order

A Copy which 8 attest

DDI63COS(DL)
Superinto;;k:;ii of Copyists
Appendix II

(a) Extract from Central Bank Inspection Report of Guinness & Mahon Ltd on 31
August 1982

(b) Ninth memorandum of evidence of Sandra Kells to the Moriarty Tribunal

(c) Information Document furnished to the Inspectors by Ansbacher (Cayman) Ltd

27 July 2001
Appendix II (a)
 GUINNESS & MAHON LIMITED

INSPECTION REPORT

AT

31 AUGUST 1982

• tP"* s

Date of Governor's Authorisation 31 August 1982

Date Inspection Commenced 31 August 1982
Date Inspection Completed . 17 September. 1982
Date Report Completed 15 April 1983

Bank Examiners

Neil Kennedy, 15/4/83

Catherine Heery

Reviewed by;

Adrian Byrne
 GUINNESS & MAHON LIMITED

Head Office : 17 College Green, Dublin 2. Phone: 716944

Date of Incorporation : 3 February 1942
General Nature of Business Merchant Banking
Parent Company : Guinness Mahon & Company Limited
(ultimate parent Guinness Peat Group Limited)
«i
J.D. Traynor
Chief Executive :
J.H. Guinness, Chairman
Directors :
*J.D. Traynor, Deputy Chairman
*M.E. 0'Kelly, Managing Director
*G.C.J. McCracken, Secretary
R.D. Fenhalls *D.G. McCleane
A.P.B. Guinness *J.S. Murray
J.E.Ar. Guinness D.T. O'Connor
C.S. Hill *M.J. Pender
J.C. Love B.A. Ursell
•C.I. Marley
* Executive Directors
Auditors : Touche Ross & Co., Dublin
Conditions on Licence Condition restricting branching
Status : (i) Authorised Dealer
(ii) Member of the Central Exchange
(iii) Trustee Status

Main Subsidiaries : Guinness Mahon Cayman Trust Limited

Guinness & Mahon Investments Limited
Guinness Mahon Property Company Limited
Eblana Financial Corporation Limited
Appendix II (b)
 NINTH
MEMORANDUM OF EVIDENCE

of
SANDRA KELLS
GUINNESS St MAHON (IRELAND) LIMITED

The Bank has been requested by the Moriarty Tribunal to consider the following
matters :
1. The general operation of the Ansbacher (Cayman) Limited accounts with the
Bank

2. Details of the balances held in the said accountsfrom 1974 to date

3. Details of how the loans, which were "back-to-back", operated and the
meanings of the expressions "suitably secured" or "considered adequate"
4. Loans to Pruna and Associates

I set out, hereunder, a brief history of Ansbacher and other relevant subsidiaries of the
Bank:

ANSBACHER (CAYMAN) LIMITED

In 1969 Guinness & Mahon Limited (hereinafter called "Dublin") formed a small
investment company in the Cayman Islands. In October 1969 John Guinness, a then
director of Dublin, was approached by John Collins, Manager of the Bank of Nova
Scotia, to know if Dublin would be interested in financing the purchase of some land
in Cayman. This was done and it was the start of Dublin's involvement in Cayman.

En February 1971 Dublin formed Guinness Mahon Cayman Trust as a bank with a "B"
licence. The issued capital was £10,000. The company was managed for Dublin by
the Bank of Nova Scotia, with John Collins and John Furze, two Bank of Nova Scotia
officials, responsible. The operation of the Cayman companies1 accounts with Dublin
was discussed by Mr. Guinness, Mr. Traynor and other officials in Dublin. This is
reflected in Minutes of a Banking Committee Meeting held on 19th November 1971.

On4Jth March 1971 an instruction was given to all departments of the Bank that no
new * urrent accounts or loan accounts could be opened without prior Board approval.

There was a change in the sterling area in June 1972. The effect of this change was
that transfer of monies to Cayman required Exchange Control consent. With the
change in the sterling area in June 1972, Dublin recognised that very little new
business would flow from Ireland In July 1973 it decided to open fully in Cayman
and seek a new "A" licence. John Collins and John Furze joined Caymanfrom the
Bank of Nova Scotia in November 1973. Cayman became authorisedealers, with a
full "A" bank and trust company licence on 1st January 1974. A Category "A"
licence allows a bank to cany on business with residents and non-residents of the
Cayman Islands. A Category "B" licence for the main part restricts a holder to
transactions with non-residents of the Cayman Islands.
Cayman placed monies on deposit with Dublin. These were placed in Sundry Sub
Accounts, which were general accounts through which monies moved, and other
accounts in the name of Cayman, but which were designated by codes, numbers or
initials and/or in the name of different entities.

Examples of such on accounts are as follows:

(a) Guinness Mahon Cayman Trust A/E - this deposit account had a $134,533.15
credit as at 16th June 1976. The Irish customer of Cayman, who placed monies
on deposit with Cayman, also had companies in the Channel Islands, named
Bella Investments Limited and Redshank Investments Limited. The A/E
account was used, subsequently, as securityfor a loan to an Irish incorporated
company, which was owned by the Irish resident.
(b) A/A26 • this account was in Australian dollars and large sums of money moved
through this accountfrom the mid-1980's onwards and,

(c) a deposit opened in 1975 by Cayman was designated as a "G" deposit. This
deposit was used as securityfor a back-to-back loan to a company, Gombrette
Limited, which was incorporated in the Channel Islands.

CHANNEL ISLANDS OPERATION

With the shrinking of the starling area in June 1972, Cayman became unavailable for
use by residents of the scheduled territories. To meet this position. Guinness Mahon
Jersey Trust Limited wasformed in November 1972 to provide an alternative offshore
trust service. It was a wholly-owned subsidiary of Dublin. Two of its directors were
John Collins and John Furze.

In the summer of 1973 it was decided that the Guinness Mahon Group should have a
bank in Guernsey. Guinness Mahon Channel Islands was incorporated in February
1974 as a wholly-owned subsidiary of Dublin and, subsequently, obtained a banking
licence. Due, however, to the downturn in the economic situation, it was decided to
let the licence lapse.

As a result of the decision to introduce a wide range of capital taxes in Ireland, the
need for a separate trust company in Guernsey was recognised and College Trustees
Limited was formed as a wholly-owned subsidiary of Guinness Mahon Channel
Islands early in 1975. John Collins was a director. With the change in the economic
situation,, it .was considered to be appropriate for the Group to have a bank in
Guernsey. In February 1977 Guinness Mahon Guernsey Limited was incorporated as
a wholly-owned subsidiary of Guinness Mahon & Co., Ltd. (hirpinafter called
"London") and a banking licence was obtained

In summary, Dublin had two wholly-owned subsidiaries in the Channel Islands -

Guinness Mahon Jersey Trust in Jersey and Guinness Mahon Channel Islands in
Guernsey, with College Trustees Limited in Guernsey being a wholly-owned
subsidiary of Guinness Mahon Channel Islands. Guinness Mahon Channel Islands
was, since the late 1970's or early 1980's, a non-trading company.
Cayman was a subsidiary of Dublin, as were Guinness Mahon Jersey Trust Limited
and College Trustees Limited. Irish residents, if they were placing money offshore,
may have placed it with College Trustees in Guernsey or with Cayman. The fey'to-fti,™^
day running of College Trustees was provided by Sovereign TrusteeftSuted. The v
directors of College Trustees Limited included Mr. John Lipscombe and a Mr. Brian
Ellis. They were also directors of Sovereign Limited.

College Trustees was sold to Credit Suisse in the late 1980's. Monies could pass
between College Trustees Limited and Cayman. Cayman had accounts with Guinness
Mahon & Co., London. College Trustees could have placed monies in Cayman
accounts via Guinness Mahon Guernsey, which had a banking licence and had
accounts with Guinness Mahon & Co., Ltd., London.

ANSBACHERCAYMAN
Cayman had on deposit with Dublin on thefollowing dates :

£Stg.
30.11.1978 4,834,269
31.12.1978 4,493,397
31.1.1979 4,519,118
29.2.1979 4,498,471
30.6.1979 4,812,438
31.8.79 6,498,101
30.9.1979 6,880,600
31.10.1979 6,896,908
31.12.1979 7,424,612
30.4.1981 9,396,537
30.4.1982 26,980,217
31.10.1984 25,154,068

Dublin is not aware why there was a significant increase in deposits with Dublin
between 1981 and 1982, save that a substantial number of deposits were opened at
that time by Cayman regarding College Trustees Limited. These accounts were in
Sterling, U.S: dollars, Deutsch Marks and Yen. The following is an example of the
type of accounts which were opened and the figure under Amount is the highest
balance on the account at any one time:

Date Deslgnadoa Amount

August 1981 College C/V DM.620,000
September 1981 College B/T DM.2.8 million
June 1981 College A/E $18,000
June 1981 College A/2 DM.570,000
June 1981 College A/K5 DM.2.5 million
June 1981 College Z1 DM.357,000
June 1981 College Z3 DM.795,000
March 1981 College 12 U.S.$ 1,009,000
October 1981 re. College Stg.£1.3 million
June 1981 College B/G $25,000
April 1982 College Y-Seattle
Securities $1 million
June 1981 College J $1.5 million
Cayman funds were held in a large number of different accounts. There wftf..
however, a number of staling sub accounts. One such account was the 602 Account,
of which I have previously given evidence. Another was the 297 Account through
which monies would pass on their way to other Cayman accounts, or were repatriated
to Cayman via the Nostra Account which Dublin had with Guinness Mahon & Co.,
Ltd, London.

There was also sundry sub accounts - Cayman re College - and these appear to have
been used to dischargefees to College Trustees and various expenses incurred with
regard to a number of the trusts and companies established in Cayman, Jersey or
Guernsey.

The Role of Guinness, Mahon <k Co., Ltd., London

At all relevant times London was the parent of Dublin. Dublin reported weekly on
credit issues to London. From September 1979 Dublin could approve loans up to
£100,000 in relation to property backed loans and up to £250,000 in relation to non-
property backed bans. After every Executive Directors Meeting which dealt with
credit applications, Dublin would report to an official of London. This official, based
in London, was also a director of Dublin. The report would contain details of the
loans approved which met the above criteria. The report was in a setformat - copies
herewith. The official in London knew the operation of the Cayman system, as he
himself had a Cayman Trust account. Cayman also had deposits with London.
London, post end September 1984, owned Cayman through a wholly-owned
subsidiary. Cayman had monies on deposit with London in various categories of
accounts. London supplied a number of directors over the years to the Board of
Dublin. From the books and records of Dublin, it is clear in a number of cases that
Irish incorporated companies borrowed moniesfrom London. These were secured by
deposits placed by Cayman with Dublin. There are also examples in the books and
 records of where English entities borrowed from London, secured by a guarantee
from Dublin. The real security, however, was deposits by Cayman with London. In
one of these cases Desmond Traynor, in June 1984, stated that Dublin guaranteed the
facility and was charging .5%for the guarantee. He said that the guarantee was for
cosmetic purposes.

The Role of Desmond Traynor

Mr. Traynor was appointed a director of Dublin in 1969 and remained a director until
3rd May 1986. It is Dublin's understanding that Mr. Traynor left it as a result of a
large commercial loan which went wrong

Mr. Traynor's role, besides being an executive director of Dublin, was Chairman of
Cayman and one of its representatives in Ireland From the mid-1970's Mr. Traynor
utilised a number of accounts with Dublin to facilitate the operations of Cayman and
the other subsidiaries in the Channel Islands. In 1976 he opened accounts with
Dublin in the names of Amiens Investments Limited, Amiens Securities l imits
Desmond Traynor S Account and Desmond Traynor SS Account. These accounts
allowed Irish residents to give money to Mr. Traynor which was then lodged to the
accounts. Their accounts would be credited with the lodgment in Cayman or in the
Channel Islands under the Memorandum Account System maintained by Mr. Collery.
Mr. Traynor then paid out of these accounts to other Irish residents monies when they
requested. Their account would be debited with the withdrawal in Cayman or in the
Channel Islands under the Memorandum Account System maintained by Mr. Collery.
The net effect of these accounts was that Irish citizens could deposit or withdraw Irish
pounds in Dublin and have the benefit of interest on the said monies, without
requiring Exchange Control clearance or bringing the fact of the existence of the
monies to the attention of the Revenue Commissioners.

In late 1979 Mr. Traynor opened a Special Account in his name and it was this
account which was used for the payment to Allied Irish Banks of £750,000 in the
months of January and February 1980. The Amiens Accounts continued to operate
until early 1990. At that stage Mr. Traynor utilised a company which had been
incorporated approximately fourteen years earlier, namely, Kentford Securities
Limited, but, in effect, it had not traded as a vehicle to replace Amiens. Dublin has
now located various memorandafrom Mr. Collery to Mr. Traynor for 1982, which
give clear indication of how the Memorandum System operated. You will see from
the attached memorandum of 15th July 1982 that Guinness Mahon Cayman Trust
deposit A/B5 was debited £2,450, and Amiens was credited with £3,000. You will
also note the debiting of GMCTS" with Stg.£399.54 regarding Canadian $500 to
CJH.

The memorandum dated 3rd August 1982 shows that Mr. Collery debited on the
memorandum accounts a number of Cayman coded accounts and credited Amiens
withfour entries and Amiens Investments with one.

The memorandum dated 1st December 1982 shows that Mr. Collery had debited an
Irish Resident account, with IR£5,934.84 and credited GMCT's Sundry Sub Account
with Stg.£5,000.
 These reflect the nature of the memorandum accounts which were kept by Mr.
Traynor and Mr. CoIIery. These accounts are referred to in the Internal Audit Report
prepared by Mr. Barrett Thaacker of London Internal Audit Department, in February
1989. Mr. Thaacker's report came about as a result of an interview he had with Mr.
Collery.

A further example of how Amiens Securities Limited's accounts were used is as

follows: On 20th November 1986 Irish residents transferred from their account in
Dublin £30,278.32 to Amiens Securities Limited's No.2 Account No. 10407006. On
the same day £28,764.40 was debited from the 602 Account, converted into Irish
pounds and lodged to a new Cayman Irish Pound Account The net effect of the
transactions was that the two Irish residents had transferred £30,278.32 to Cayman.

In February 1989, when an internal audit was prepared by London on Dublin,

Cayman had on deposit with Dublin deposits equivalent to ER.£38 million. These
monies were subsequently gradually withdrawn and the majority went to Irish
)
Intercontinental Bank.

From the available books and records, it appears that in the yean ending 31st March
1975 to' 30th September 1984, thefollowing profits were made by Cayman. All the
figures are in sterling :

1974 £242,890
1975 £125,926
1976 £157,636
1977 £179,989
1978 £87,424
1979 £226,405
1980 £504,695
1981 £482,810
1982 £764,653
1984 £1,835,338

) Cayman was sold on 29th September 1984 to Guinness & Mahon Overseas
Investments Limited, a wholly-owned subsidiary of London..

In 1987 Cayman was sold to Henry Ansbacher and a management consortium,

including the late J. D. Traynor. In June 1987 the late Desmond Traynor informed
Dublin that Dublin would be losing substantial deposits.

As at 31st August 1994, the date on which Dublin was acquired by Irish Permanent
Building Society, Cayman had on deposit just over £1 million. As at today's date,
Cayman has nil on deposit with Dublin.

BACK-TO-BACK OPERATION^
A number of loans which were advanced by Dublin to its customers, whether the
customers were individuals or corporates, were designated "suitably secured" or
"considered adequate". It appearsfrom the books and records of Dublin that "suitably
)
 secured", or."considered adequate" meant that the loans were cash-backed This
meant that monies were placed on deposit with Dublin which equalled the anoint 0 f
the loan advanced by Dublin to its customers. "Suitably secured" 'appears to have
ceased to be used from August/September 1978. "Considered adequate" was used
from the mid 1980's onwards.

It would appear from enquiries made by Dublin that, in the mid 1970's,
documentation was in place, showing that the loans were hypothecated, i.e., the loans
were secured, in that Dublin had a lien, in effect, over the monies lodged as deposits
with it by Cayman and the Channel Islands subsidiary on behalf of their customers. It
appearsfrom the books and records of Dublin that specific deposits were made by
Cayman and the Channel Islands and these accounts were blocked

Subsequent to the late 1970's, it appears that specified deposits were not made as
frequently by Cayman or the Channel Islands subsidiaries, but monies were lodged
into the Sundry Sub Accounts by them. This meant that monies were placed on
deposit by Cayman or the Channel Islands subsidiary with Dublin, but Dublin did not
have a specific charge or lien over the deposits. Dublin, in effect, was relying on the
good offices of the late Desmond Traynor to ensure that monies were kept on deposit
with Dublin until the particular loan to the customer was cleared by the said customer.
These accounts may have been in the name of Cayman or Cayman re. College
Trustees. The attached note to Mr. Traynor, dated 1st June 1982, shows that an Irish
incorporated company had a loan of £373,487.08 The person controlling the
company had two deposits with Cayman, identified as P and P3 and deposits with
Guinness & Mahon Guernsey identified as A/K and A/K2.

The attached letterfrom Mr. Traynor on Cayman, dated 9th January 1990, requesting
balances of various customers of Dublin and Dublin's reply of 12th January 1990
shows how the system operated in the mid-eighties onwards.

The exception to this practice was where bans were made by Dublin to American
residents or entities based in America, hi those cases specific deposit accounts were
opened by Cayman regarding the particular borrower and the monies were lodged in
Dublin. Dublin, in effect, had control of the monies and would ensure that no monies
were releasedfrom the deposits until the loans advanced to the specified American
customers had been discharged.

In 1991 Dublin requested the late Mr. Traynor to arrangefor sub participation to be
created in relation to borrowings, particularly to American customers. This was done
and the appropriate documentation was entered into by Cayman dealing with a
number of American customers.

It would be exceedingly difficult to ascertain the amount of the back-to-back loans

which Cayman and the Channel Islands subsidiaries had with Dublin. Furthermore, it
would be even more difficult to break down the back-to-back loans to identify
whether the monies were placed by Cayman or by the Channel Islands subsidiaries.
rn

> PKWA* associates

On 15th January 1985 John Furze wrote to Dublin, informing it that some time ago
Cayman had set up a $200,000 loan for a Cayman entity which was to follow the
usual "back-to-back" procedure. Unfortunately, the security was neverfolly agreed
by Cayman's client and, as a result, Dublin was never advised The loan, which was
made by Cayman, had since been repaid.

Advances were made asfollows :

1.4.84 $40,000
9.4.84 £100,000
3.5.84 $60,000.

The loans were at 14% per annum, with a 2% differential in the value shared equally
between Dublin and Cayman. Cheques totalling $327,299.92 were enclosed with the
letter of 15th January 1985. There were three cheques, all made payable to Dublin.
They were drawn by Maxima Investment Corporation, Florida. Mr. Fernando Prima
was the President and Chief Executive of the said Maxima Investment Corporation.

On 22nd February 1985 Dublin credited Cayman's account with Guinness Mahon &
Co., Ltd. in London with the sum of $325,349.96, representing the balance plus
interest on the backing deposit accountsfor Maxima Investment Corporation. The net
effect of this, it would appear, was that Cayman entered into transactions, using
Dublin, without notifying Dublin of thefeet. The three cheques had to be put through
Dublin, as they were made payable to Dublin.

Dublin made a series of loans to Mr. Fernando Pruna and his wife, Edulia. The
maximum amount outstanding at any one time by them in their own names was
$1,068,000. These bans were secured by deposits by Cayman with Dublin.

Dublin agreed to advance the sum of U.S.$75,000 to a Mr. Jesus and Maria Barrios.
This was secured by a property in Dade County, Florida. A deposit was also bdged
) by Cayman with Dublin as security.

In August 1985 Dublin appeared, according to correspondence, to have offered to

make available to a Mr. and Mrs. Andreas Pruna the sum of U.S.$70,000, secured on
a property in Miami Beach, Fbrida. The Bank has checked the Credit Committee
Minute Books for 1985, the Executive Directors Minute Book for 1985 and cannot
find any reference to any loan to Mr. and Mrs. Andreas Pruna. The Bank,
furthermore, cannot locate any statement of accountfor such a loan. The Bank does
not believe that such a loan was made by Dublin.

In November 1985 Andreas Pruna wrote to Dublin, saying that he would not be able
to make thefirst interest payment and that he had serious doubts that he could make
the principal payments when they were due. As a solution, he offered to transfer the
deeds of his property in Fbrida to Dublin in lieu of foreclosure.
 In December 1985 Dublin wrote to Mr. and Mrs. Andreas Pruna stating that, in lieu of
foreclosure proceedings, they would take in Dublin's name or that of its nominee
company, the title to the property.

In December 198S Dublin arrangedfor the title to the property belonging to Mr. and
Mrs. Andreas Pruna to be registered in the name of Mars Nominees Limited, which is
a wholly-owned subsidiary of Dublin. Subsequently, Mr. and Mrs. Pruna tendered a
quit claim deed in favour of Man Nominees.

I believe that Cayman was using the notepaper of Dublin to conduct business and
such notepaper was used in relation to Mr. Andreas Pruna.

In December 1986 Dublin agreed to advance to Raymond G. Fitzgerald $243,000.

This loan was made at the request of Cayman. It replaced a loan of $243,000 made to
Mr. Fernando Pruna and his wife. The loan was secured by a deposit by Cayman with
Dublin and a mortgage over a property in Florida.

In September 1987 Dublin wrote to an Attorney in Florida, instructing him to draft a

warranty deed, wherein Man Nominees Limited conveyed the property surrender by
Andreas Pruna to Maria Isabella Moore de Pruna, the wife of Andreas Pruna.

The warranty deed was duly signed and sealed by an officer of Man Nominees
Limited on 25th September 1987 in favour of Mrs. Andreas Pruna. It was then
returned to the Attorney or to Andreas Pruna. It is not certain who obtained same.

In September 1987 John Furze wrote to Padraig Collery regarding Dublin's advancing
U.S.$2.1 million to Northside Management & Development Company. This company
was involved in a property development in Atlanta, Georgia. Dublin would receive
corporate guaranteesfrom Maxima Investment Corporation, of which Mr. Fernando
Pruna was President, as well as Barrows Holding Limited (a Channel Islands
company). Dublin would also receive a depositfrom Cayman of U.S. $2.1 million,
which deposit Cayman would hypothecate infavour of Dublin.

On 1st October 1987 Cayman wrote to Dublin, informing it that they had advanced
U.S.$2.1 million, held m escrow, pending the closing on 2nd October of the
transaction in Atlanta, Georgia.

On 1st October 1987 Dublin agreed to advance to Maxima Investment Corporation a

sum of U.S.S2.1 million. A deposit was placed by Cayman with Dublin.

On 4th February 1988 Dublin wrote to Cayman, saying that there were no payments
since 28th July 1987 on the Raymond Fitzgerald ban. On 10th February 1988
Cayman wrote to Dublin. They stated that they had received no responsefrom Mr.
Raymond Fitzgerald and suggested that Dublin would write the loan off against the
deposit at a value dated 3rd February 1988.

On 3rd June 1988 the U.S.$700,000, being the balance of the loan to Mr. and Mrs.
Fernando Pruna was discharged.
On 9th September 1988 a firm of lawyers, Wallace, Engels, Perteaoy, Martin &
Solowsky, baaed in Miami, Florida, wrote to Cayman. They informed Cayman that
Grand Jury Subpoenas had been served on theirfirm regarding Cay&an, Dublin and
Mars Nominees Limited The Assistant U.S. District Attorney overseeing the
investigation stated that he was interested in obtaining documents from the three
companies and that he might issue additional subpoenas to the companies themselves
for the production of the documents. The Assistant U.S. Attorney had apparently,
received information that Mars Nominees Limited was a subsidiary of Cayman and
that it held property in Dade County, Florida. Mr. Wallace of the firm was the
Registered Agent for Cayman and Dublin and therefore the service of the subpoenas
on him was valid as against Cayman and Dublin.

The Subpoenas sought -

1. All documents and records pertaining to loans made to Fernando Pruna,
Andreas Pruna and their wives/or other family members, including all
correspondence related to such bans.

2. All documents and records pertaining to bans made to any corporation, other
business entity to which Fernando Pruna or Andreas Pruna was an officer,
director or major stockholder

3. All documents, correspondence and other records pertaining to any transfer of

property, either real or personal, between Fernando Pruna or Andreas Pruna and
either Guinness Mahon Cayman Trust Limited Dublin or Mars Nominees
Limited

4. All documents, correspondence and records pertaining to Man Nominees

Limited

5. All records pertaining to any account in name or names of Fernando Pruna,

Eudalia Pruna, Andreas Pruna, Maria Isabella (nee Moore) Pruna or any person
or entities acting as nomineesfor any of those named persons, including without
limitation, (a) accounts statements, (b) certificates of deposit and (c) deposit
books, box records.

6. Allfinancial statements prepared by or on behalf of Fernando Pruna, Andreas

Pruna or any corporation or other business entity in which Fernando Pruna or
Andreas Pruna is an officer, director or major stockholder.

The period covered by the subpoenas was 1st January 1981 to 1st September 1988.

The subpoenas were to be complied with by 23rd September 1988.

On 20th September 1988 Mr. Wallace wrote to the Assistant United States Attorney,
raising issues as to jurisdiction and whether or not the subpoenas were binding on
Cayman, Dublin or Man Nominees Limited

On 22nd September 1988 Cayman changed its namefrom Guinness Mahon Cayman
Trust Limited to Ansbacher Limited and wrote to the late Desmond Traynor. Mr.
Furze, who was the author of the letter, stated that the Pruna brothers had been clients
for a number'of years. Although not mentioned in the correspondence, Cayman was
fairly certain that the subject of the Grand Jury investigation was narcotics. This was
because the subpoenas were served by a U.S. Federal Customs Agent as well as local
police information that the Prunas involvement was with illegal substances.

Mr. Furze stated that Dublin were involved, since at one time Cayman maintained a
back-to-back situation with Fernando Pruna and his wife, which has been been
cleared by the sale of the property in Miami Mars Nominees was involved by virtue
of the fact that Andreas Pruna, registered the Florida property in that n a ^ . a fact not
known by Mr. Furze. Although Mars Nominees executed a transfer over the property
a year ago, apparently the documentation was never registered. Mr. Furze's
understanding was that Andreas Pruna was in custody in a Federal penitentiary and
that the United States Government was pursuing extradition proceedings against
Fernando Pruna, who was in Argentina. Mr. Furze was copying the letter to Padraig
Collery to put him on notice.

On 22nd September 1988 Cayman wrote to Padraig Collery, enclosing a copy of a

letter to Desmond Traynor. He said that he had discussed the situation with Des
Traynor, as a result of which they were of the view thai, if Padraig Collery were
approached by any person or entity in relation to the ownership of the property by
Mars Nominees and the intended sale of same, Mr. Collery should merely indicate
that he had received no instructionsfrom his client and was therefore unable to be of
any assistance.

On 27th September 1988 Cayman wrote again to Padraig Collery and referred to a
telephone conversation between Mr. Collery and Martin Lanigan-O'Keeffe with Mr.
Furze.

On 18th October 1988 Mr. Wallace of Wallace Engels wrote to Padraig Collery
regarding the subpoenas. He stated that, unless there were special circumstances, his
suggestion was that Dublin expeditiously furnish the records which had been
subpoened.
On 23rd March 1989 Dublin signed a quit claim deed on the property in Atlanta,
wherein a ban had been paid by Dublin to Northside Management & Development
Company.

On 18th July 1989 Cayman wrote to Dublin, stating that the U.S. Government had
filed an arrest warrant against the property in Atlanta. Northgate Investments Limited
(a Cayman company managed by Cayman) being the ultimate beneficial owner of the
property had relinquished any claim which it might have to the property and did not
intend to contest theforfeiture action.

On 21st July 1989 Dublin wrote to the Attorneys acting in Atlanta, informing the firm
that Dublin did not intend to contest theforfeiture and, accordingly, would be grateful
if the firm of Attorneys would take no action to contest same. Any claim which
Dublin may have had in the property was thereby relinquished and they would be
grateful if the Attorneys could forward the appropriate quit claim deed for execution.
 On 20th November 1989 the Attorneys in Atlanta received a quit claim deed for
submission to Dublin.
i

On 22nd November 1989 Cayman wrote to Dublin, enclosing a copy of the letter
from the Attorneys in Atlanta. They stated that Mr. Collery would know the "back-
to-back" loan was dischargedfrom the deposit proceeds some time ago. Therefore
the execution of the deed would not now involve Dublin in any further participation
with the particular real estate development.

On 30th November 1989 the U.S. States Attorney for the Southern District of Florida
served a complaint on Dublin's Secretary. The complaint wasfor the forfeiture of the
property previously owned by Mr. and Mrs. Andreas Pruna in Miami, Fbrida.

On 30th November 1989 the U.S. States Attorneyfor the Southern District of Fbrida
served a complaint on Mars Nominees Limited's Secretary. The complaint W as
seeking theforfeiture of the property owned by Mr. and Mrs. Andreas Pruna.

On 8th December 1989 Cayman wrote to Mr. Wallace, the Attorney in Fbrida. They
stated that they were aware of the propertyforfeiture notice but, since the client was
in jail and that all Cayman's other records had been surrendered to the U.S.
Authorities under the Narcotics Agreement in 1984, Cayman suggested that no action
betaken.

On 12th December 1989 Cayman wrote,flgafry to Mr. Wallace. They said that in or
around 1984 they had been associated with Andreas Pruna and had various business
dealings through a Cayman company known as Fathom Five Rims Limited At the
time of their association Mr. Pruna owned the property in Miami ha 1985, unknown
to Cayman, Mr. and Mrs. Pruna transferred the property to Mars Nominees Limited a
company wholly-owned by Dublin. Cayman was advised after the fact and in
September 1986, on instructionsfrom Cayman, Mars Nominees Limited transferred
title to the property, by executing under seal a quit claim deed which was delivered by
John Furze to Andreas Pruna, with instructionsfor the transfer to be registered Such
registration, however, did not happen - hence the reference to Mars in the arrest
warrant. Cayman said that Dublin was concerned at the allegations that Mars was
owned by Pruna. Their concern was that, by mention being made in the complaint,
the name has become tainted and associated with Pruna, asidefrom the statement that
the company was owned or controlled by Pruna. Cayman was seeking advice on
three issues -
(i) what action, if any, did Mr. Wallace recommend to be taken to correct the error
in the complaint relative to Mars Nominees Limited?

(ii) to what extent might Mars Nominees Limited be adversely affected i^ in any
foture transaction in the U.S. by virtue of having been named in the complaint?

(iii) Dublin had been served with the arrest warrant and complaint, as naturally had
Mars Nominees Limited To what extent should they acknowledge the service
process?

In January 1990 a partner of Mr. Wallace, Jay Sobwsky, wrote to Cayman and copied
the letter to Dublin. Mars Nominees Limited had been listed on the Drug
Enforcement .Administration, Naddis, computer. He advised that, if Mars Nominees
Limited had future transactions in the U.S., it was possible that the transaction would
be considered suspect.

On 2nd March 1990 Mr. Solowsky wrote to Cayman, saying that he had spoken with
the Assistant U.S. Attorney. She had requested that the Attorney prepare an affidavit
disclaiming any interest in the property. Mr. Solowsky would send the Affidavit to
Cayman shortly. Subsequently, Dublin returned to Mr. Solowsky the Affidavit and
Waiver of Claim

On 23rd March 1990 the United States District Judge for the Southern District of
Florida made an order that a Letter Rogatory be entered into and that same be
delivered to the Assistant United States Attorneyfor transmission to suitable channels
of the appropriate judicial authorities in the Republic of Ireland. The letters Rogatory
stated that the United States Attorney is conducting an investigation of an alleged,
organised crime drugs smuggling operation, headed by Fernando Pruna. An
indictment had been handed down and it charged Pruna and the members of his
organisation with crimes including operating and conspiracy to operate a continual
criminal enterprise dedicated to the importation of cocaine and marajuana into the
United States, from 1981 to 1988. The U.S. Attorney was informed that evidence
relevant to the investigation might be located at a bank in Dublin, Guinness & Mahon
Limited, 17 College Green, Dublin 2. Evidence that had developed so far showed that
the alleged organisation utilised several bank accounts located at Guinness & Mahon
and Cayman Trust Limited in the Cayman Islands to deposit profits from alleged drug
smuggling operations and to facilitate the movement of the profits from drug
smuggling to other bank accounts located in countries throughout the world. This
Cayman Trust was a subsidiary of Guinness Mahon Limited, a Dublin bank at 17
College Green. The Dublin bank had now sold the Cayman Trust to Ansbacher
Limited. The Dublin headquarters of Guinness & Mahon Limited held certain
mortgages for the Pruaas and their associates and made loans and hypothecated
deposits made by the Prunas. Correspondence concerning these matters passed
between the Trust in Grand Cayman and the offices of Pat O'Dwyer, J. D. Traynor
and Padraig Collery and others in the Dublin bank. These deposits and transactions
were not only in the Prunas' names and their associates* names but also in the names
of their nominees' operations. For example, records show that Guinness & Mahon
Limited held mortgages or interests in Pruna property. The entities and persons that
they were the subject of the request were as follows:

1. Fernando or Eudulia Pruna

2. Ixora mortgage
3. Andreas Pruna
4. Mars Nominees
5. Westwind Investment : Maxima Investment : Northside Management &
Development, Northgate Investments Limited, Texas ATM Ranch, Barrow
Holdings Limited, Westfare Condominium Project
6. Jesus Barrios and Maria Barrios.
On 5th November 1990 Mr. Justice Lavin in The High Court in Dublin made an order
that Martin Lanigan-O'Keeffe or another official of Dublin, nominated by Mr
O'Keeffe, attend before the President of the District Court on 23rd November 1990 to
be examined under Oath touching upon the testimony in the Letters Rogatory. The
Bank is not aware of the outcome of the hearing in the District Court.
Appendix II (c)
 Confidential

INFORMATION FOR THE ASSISTANCE OF INSPECTORS

(APPOINTED BY THE IRISH HIGH COURT ON

22 SEPTEMBER 1999)

ANSBACHER (CAYMAN) LIMITED

27 JULY 2001
CONTENTS

SECTION 1 1

INTRODUCTION 1

SECTION 2 7

GENERAL BACKGROUND 7

SECTION 3 19

THE EARLY MANAGEMENT OF A(C)L AND BACKGROUND TO THE IRISH BUSINESS.... 19

SECTION 4 31

THE MEMORANDUM ACCOUNTS 31

SECTION 5 48

ALLEGED DESTRUCTION OF DOCUMENTS 48

SECTION 6 50

CURRENT BUSINESS 50
SECTION 1

INTRODUCTION

1. It is intended that this document will provide the Inspectors with Ansbacher's perspective and

- understanding of the Irish business conducted by the late Mr Des Traynor and the late Mr

John Furze during the period that they were directors of Ansbacher (Cayman) Limited

("A(C)L") and the more extensive earlier period when they were directors of Guinness

Mahon Cayman Trust Limited ("GMCT"). This document distinguishes between A(C)L and

GMCT depending upon the period of ownership in question. Where reference is intended to

be made to the bank over the entire period, this document makes reference to

"GMCT/A(C)L". In addition, this document addresses the specific queries raised by the

Inspectors in their letter of 31 May 2001 to Mr Bryan Bothwell, the Managing Director of

A(C)L.

2. As previously stated, A(C)L does not accept that it conducted business within the Republic of

Ireland and does not consider itself to be subject to the Irish Companies Act 1990. However,

A(C)L has sought (and continues to seek) to provide assistance to the Inspectors wherever it

properly can. Accordingly, this document is prepared and submitted voluntarily by A(C)L.

3. A(C)L is concerned that serious allegations have been made in the Republic of Ireland by

various investigating authorities regarding the use of coded accounts (the so called

"Ansbacher accounts") and other structures to evade tax and to make payments to politicians

(most notably to Mr Charles Haughey, the former Taoiseach of the Republic of Ireland).

These allegations have been made absent A(C)L's observations; it is hoped that the

information contained in this document will help to redress that imbalance and assist the

Inspectors. Further, A(C)L is concerned at the routine misuse of its name in connection with

matters properly the responsibility of the Guinness Mahon Group.

Similarly, unsustainable assertions and allegations have been made that the activities of Mr

Traynor and Mr Furze can be identified with or attributed to GMCT/A(C)L. Whilst it is

correct that Mr Traynor and Mr Furze were directors of GMCT, and that after the sale of

GMCT to Ansbacher in 1988, Mr Traynor held the positions of non-executive Chairman

(until 27 April 1993) and then non-executive director (until his death on 11 May 1994) and
•t

Mr Furze held the position of executive director (until his resignation on 28 April 1995), it is

important to recognise that both gentlemen acted in a variety of capacities at various times.

Thus for example they acted for two Cayman Companies, Hamilton Ross Limited ("HRL")

and Poinciana Fund Limited ("PFL") (referred to below) in their dealings with Irish clients.

In addition, in certain Tespects they clearly acted on their own behalf, such as (for example) in

the sale of their shares in GMCT to Ansbacher. Ansbacher does not accept, save so far as is

made clear in this document, that the acts or omissions of Mr Traynor and/or Mr Furze can be

imputed to GMCT/A(C)L or that they were purporting to act on behalf of GMCT/A(C)L.

A(C)L has not sought in this document to offer a general treatment (even in so far as it is

able) of the matters being investigated by the Inspectors. In particular, it has not sought to

address every allegation which (from earlier reports or from newspaper reports) has been or

may have been made. Similarly, it has not sought to set out lists of persons and functions or a

general history (save where necessary), on the basis that the Inspectors will be very familiar

with such matters. A(C)L has, rather, sought to address the issue of its (and, so far as it can

be discerned, GMCT's) involvement in the matters under investigation, by reference to the

documents held by A(C)L and the internal inquiries undertaken. In seeking to achieve this,

A(C)L has avoided the disclosure of any client confidential information given the provisions

of the relevant Cayman legislation to which A(C)L is subject (the Confidential Relationships

(Preservation) Law (1995 Revision)) and in light of the recent Cayman judgment of The

Honourable Mr Justice Smellie, the Cayman Islands Chief Justice. Whilst by order dated 24

May 2001, A(C)L is directed to divulge certain documents relating to business conducted by
 GMCT/A(C)L with Irish residents to the Inspectors, it has been ordered to redact these

documents in order to prevent the identification of customers. The Inspectors have

acknowledged and accepted this restriction on the scope of the information which may be

contained in this document.

6. It was after the appointment of the McCracken Tribunal in 1997 that reports were received of

a concern within the Irish Republic that some of Ansbacher's Irish business involved the

making of "payments to politicians". The Ansbacher Group gave assistance to the

McCracken Tribunal. On two occasions Mr Peter Greenhalgh, the then Group Compliance

Director, gave evidence to the Tribunal in London. He did this at a very early stage of this

matter, without the benefit of the facts and matters which have since come to light and, on the

second occasion, without legal representation. In this document, A(C)L has taken the

opportunity to indicate (by way of footnotes) where the information given now differs from

the preliminary views of Mr Greenhalgh.

7. Allegations of wrong-doings other than payments to politicians such as tax evasion and

breach of exchange control were first made in detail against GMCT/A(C)L in the Ryan

Report which is dated 22 June 1999 (summarised in the Affidavit of Paul Appleby swom on

30 July 1999). It was said that banking and trust structures and loan arrangements made

available by GMCT/A(C)L facilitated a scheme of tax evasion by Irish residents (and that

GMCT/A(C)L conspired with them in that tax evasion), and were used to make payments to

Mr Charles Haughey and other Irish politicians.

8. In light of these allegations, A(C)L, supported by the Ansbacher Group, carried out a review

of the Irish business which had been conducted by Mr Traynor and Mr Furze. As part of its

own review, GMCT/A(C)L's records have been considered and legal advice has been received

from lawyers in a number of jurisdictions where appropriate.

Whilst an enormous amount of time and cost has been committed to the process of this review

(legal fees together with court applications etc amount to about US$4 million), it has been

recognised that a complete understanding of the Irish business conducted by Mr Traynor and

Mr Furze will be impossible because:

9.1 Mr Traynor and Mr Furze died in May 1994 and in July 1997 respectively. The clear

impression gained by the review is that Mr Traynor was the primary contact with

Irish clients and was, by virtue of his professional expertise and standing in the Irish

business community, the impetus behind the various arrangements and structures that

were established. Mr Furze's contact with clients was necessarily less than that of Mr

Traynor simply because Mr Furze was based in Cayman, making visits to Dublin

once or twice a year. The inability of A(C)L to question Mr Traynor and Mr Furze

means that it cannot know why certain steps were taken, with the result that

alternative explanations cannot now be tested;

9.2 inevitably, over a 30 year period, documents have been lost or destroyed. Since the

practical merger in the early 1990's of A(C)L and Cayman International Trust

Company Limited ("CITCO"), A(C)L has maintained a policy of not destroying any

documentation. It is believed that some archived documentation may have been

destroyed before A(C)L moved to its new premises in 1990. The absence of certain

(in some cases, important) documents after searches leads to the conclusion that they

have been either lost or destroyed;

9.3 in addition, it is alleged in the McCracken Report that Mr Furze destroyed some files

following Mr Traynor's death. No evidence has been located to support such a

contention, and it is not possible to identify which documents might have been

destroyed by Mr Furze. This is a matter dealt with in greater detail in section 5 of this
importantly, A(C)L and its legal advisers are unable to determine whether any

allegations that Mr Traynor and Mr Furze assisted clients to evade Irish tax are

correct because A(C)L does not and cannot know whether those clients were (or are)

liable to pay Irish tax. In addition, A(C)L understands that during the period under

review by the Inspectors, legislation was introduced to charge to income tax assets

which have been transferred abroad and a very wide ranging general anti-avoidance

provision has also been introduced. There have also been a number of tax amnesties.

To investigate this issue comprehensively and properly, given the time span of over

30 years, is not feasible. A(C)L has no entitlement to the records of third parties and

moreover it would be unusual for them to be given. In the absence of those records

(and Mr Traynor and Mr Furze), it is not possible to ascertain whether there was ever

any intention by them to evade payments of Irish tax. The difficulty of responding to

such allegations is compounded by the fact that tax legislation and the circumstances

of the individuals concerned would have changed significantly over the extensive

period under review. The latter general proposition was recognised in the Ryan

Report. As a matter of revenue law this is an issue (if relevant at all) between the

individual taxpayer and the revenue authority;

the then current records of HRL and PFL were transferred to Mr Furze as part of the

exercise of disposing of the business of HRL and PFL in 1992. Some historical

records relating to those companies were left at A(C)L, although these appear

incomplete. As with the allegations dealt with above, this lack of documents,

combined with the inability to interview Mr Traynor and Mr Furze about the

activities of HRL and PFL, introduces a regrettably unavoidable degree of conjecture

and speculation into any conclusions drawn in relation to these two companies;

additionally, in the 1970s and 1980s the standard of record-keeping and the way

business was conducted in offshore financial centres was less diligent than today,
particularly in areas of client identification and the implementation of financial

controls. This was an industry matter and not something specific to GMCT or

Ansbacher. Mr Traynor appears to have been poor at maintaining documentary

records of his activities. Accordingly, it is often difficult to assess from the

documents that still exist the intention of those involved in taking any particular step

or steps.
SECTION 2

GENERAL BACKGROUND

10. GMCT was incorporated as part of the Guinness Mahon Group on 25 January 1971 and

remained part of that group for 17 years until mid 1988. More specifically, from

incorporation until 1984, GMCT was a wholly owned subsidiary of Guinness & Mahon

(Ireland) Limited, an Irish Bank based in Dublin which was then part of a larger group headed

by Guinness Mahon Limited, a London merchant bank. GMCT also had a wholly owned

subsidiary, Overseas Nominees Limited, which, as the name suggests, was established (on 4

April 1972) to provide nominee services (an entirely usual service for a company such as

GMCT to offer). It provided these services to all clients of GMCT who required them, not

just Irish clients.

11. In 1984, the shares in GMCT were transferred to Guinness Mahon Overseas Investments

Limited, an English company. It is understood from Mr Fenhalls, a former Chief Executive

of both the Guinness Mahon Group and the Ansbacher Group, that the shares were sold at his

suggestion (with the knowledge and approval of the Irish Central Bank) because Guinness &

Mahon (Ireland) Limited had made a series of disastrous venture capital investments which

made a total loss of some IR£7 million which threatened the solvency of the bank. The price

paid by Guinness Mahon Overseas Investments Limited for GMCT offset the venture capital

loss. As noted above, the company is referred to as GMCT or A(C)L depending upon

whether the context is before or after the acquisition of a 75% shareholding in GMCT by

Henry Ansbacher Holdings Pic (now called Ansbacher (London) Limited) in 1988, or

collectively as GMCT/A(C)L.

12. In one form or another, the Guinness Mahon Group owned GMCT's operation from January

1971 to mid 1988 (in other words, for a period of some 17 years). The accounts or

memorandum accounts (which are referred to in more detail below) should therefore be more
 accurately and appropriately referred to as the "Guinness Mahon accounts" rather than the so-

called "Ansbacher accounts". This inaccurate description of the accounts has appeared

consistently in media and other reports since at least 1997. Even the Eleventh Schedule to the

report of the McCracken Tribunal incorrectly and misleadingly carries the banner headline

"Extract from 1987 Audit Report of Ansbacher Cayman Limited" when it should refer instead

to the 1987 Audit Report of GMCT not A(C)L.

13. After its incorporation in 1971, GMCT was granted a restricted class "B" licence under the

Cayman Banks and Trust Companies Regulation Law 1967. GMCT initially obtained the

whole of its business from the Guinness Mahon Group, it having been incorporated by

Guinness & Mahon (Ireland) Limited to provide trust and other corporate services to wealthy

customers of the Guinness Mahon Group. Between its incorporation in 1971 and 1973 (when

it was granted a full unrestricted class "A" licence), the local administration of GMCT was

carried out by the Bank of Nova Scotia Trust Company (Cayman) Limited, which acted as

"authorised agent" of GMCT and provided administrative services. These services were

performed on a non-exclusive basis by a number of different Bank of Nova Scotia employees

including Mr Furze and Mr Collins1, who were nominated by the Bank of Nova Scotia to act

as directors of GMCT, the provision of local directors being part of the administrative

services which that bank had contracted to provide to Guinness & Mahon (Ireland) Limited.

The contract between Bank of Nova Scotia and Guinness & Mahon (Ireland) Limited was

terminated in 1973 by Guinness & Mahon when GMCT set up its own offices with its own

staff. Messrs Furze and Collins, together with two other Bank of Nova Scotia staff, then

became employees of GMCT. Mr Furze and Mr Collins continued as executive directors of

GMCT/A(C)L until April 1995 when Mr Furze resigned and Mr Collins became a non-

Neither Mr Furze nor Mr Collins were Irish. This corrects the view given by Mr Greenhalgh to the McCracken Tribunal on 8
May 1997 at pages 14/15,. Lines 46 to 57 and lines 1 to 23 respectively. This view was considered correct by some at the time
but is not.
 executive director. Mr Furze died in July 1997. Mr Collins resigned his position on 31

October 2000.

14. Mr Traynor had been a director of Guinness & Mahon (Ireland) Limited since 1968, and

before that a partner in the then leading Irish accountancy firm of Haughey Boland (now

Deloitte & Touche), a firm in which Mr Charles Haughey had also been a partner. Mr

Traynor had been the de facto Chief Executive officer of Guinness & Mahon (Ireland)

Limitedfrom 1976 until his resignation from Guinness & Mahon in 1986. He was originally

introduced to Mr Collins in the late 1960s by Mr Lindsey Welner who was then manager of

the Bank of Nova Scotia's office in Dublin. It is not known when Mr Traynorfirst met Mr

Furze.

15. On the date of Mr Traynor's appointment as a non-executive director of GMCT on 18 March

1981, the board of GMCT (whilst wholly owned by Guinness & Mahon (Ireland) Limited)

passed a resolution stating that:

"....the duties of. Mr J D Traynor will be performed solely in the Cayman Islands

and that the authority of the appointee to act on the company's behalf is limited

accordingly".

^ 16. There was therefore a clear intention on the part of GMCT to ensure that all activities

undertaken by Mr Traynor for GMCT were effectively taken in Cayman, and to ensure that

the "mind and management" of GMCT was wholly resident in Cayman.

17. GMCT remained a subsidiary of Guinness Mahon Overseas Investments Limited from 1984

until June 1988, when it was purchased by a company called Chichester Investments Limited

incorporated in Cayman, the beneficial owners of which were Mr Traynor, Mr Furze, Mr

Collins and Mr Hugh Hart. In August 1988, four companies (representing Messrs Traynor,

Furze, Collins and Hart) sold 75% of their shareholding in GMCT to Henry Ansbacher
 Holdings Pic (now called Ansbacher (London) Limited). It is not clear how the shares in

GMCT which were sold by these four companies were acquired by them from Chichester

Investments Limited. In January 1989 (as part of a re-organisation of the Ansbacher Offshore

Group) that majority shareholding was transferred from Henry Ansbacher Holdings Pic (an

• English registered company) to Ansbacher Offshore Holdings Limited (now called Ansbacher

Trust Group Services Limited) in Guernsey. On 30 April 1993, the company which is now

Ansbacher Trust Group Services Limited had transferred to it all of the remaining shares in

A(C)L (to which see below) and on 30 September 1995 all of the issued shares in A(C)L were

transferred to Henry Ansbacher Holdings Limited (now called Ansbacher Holdings Limited).

There have been no ownership changes since that date.2

18. Mr Fenhalls, who was, as stated previously, a former Chief Executive of the Ansbacher

Group, knew Mr Traynor because, prior to his appointment at Ansbacher in January 1985, he

had taken over as Chief Executive of Guinness Mahon Limited in London in 1981. Upon his

appointment at Guinness Mahon, Mr Fenhalls, as part of his appraisal of the group, made

contact with the Irish Central Bank in order to assess their opinion of the directors of

Guinness Mahon's Irish subsidiary Guinness & Mahon (Ireland) Limited.

19. Mr Fenhalls had the advantage of a very good working relationship with the Central Bank of

Ireland. Some years before joining Guinness Mahon Limited, Mr Fenhalls had been

involved in the rescue of Irish International Bank which became known as Irish

Intercontinental Bank. He was a director of Irish Intercontinental Bank from 1971 to 1976.

In particular, Mr Fenhalls had worked with Mr Bernard Breen of the Irish Central Bank on the

rescue of Irish International Bank and they remained on good terms when Mr Fenhalls left

Irish Intercontinental Bank.

This (together with the previous paragraphs) corrects views expressed by Mr Greenhalgh on 1 May and 8 May 1997 concerning
the background and history of A(C)L. Mr Greenhalgh has based his comments on a precis document made available to him
which had been prepared for another puipose. See 1 May 1997, page 2, lines 16 to 36 and lines 55 to 57; page 3, lines 1 to 26.
20. In 1981, having joined Guinness Mahon Limited, Mr Fenhalls, accompanied by his

colleagues Mr James Guinness (a director of Guinness Peat Group Pic, London) and Mr

Graham Hill (the Chairman of Guinness Mahon Limited and Guinness Mahon Holdings

Limited, London), visited Mr Breen in Dublin. There they received glowing reports about

Mr Traynor and they were assured of his good standing by Mr Breen. It was during this visit

in 1981 that Mr Fenhalls first met Mr Traynor.

21. During his appraisal of Guinness & Mahon (Ireland) Limited following his appointment to

Guinness Mahon Limited, Mr Fenhalls first became aware of GMCT and, in very broad

terms, the business conducted by it. He knew that it had deposits in Ireland with Guinness &

Mahon (Ireland) Limited and that it provided trust and managed company services to clients

of the Guinness Mahon Group. He did not however, as Chief Executive of Guinness Mahon

Limited in London, receive detailed information concerning the business conducted by

GMCT; there was however, a management reporting line which ran through Guinness &

Mahon (Ireland) Limited to Mr Donald Robson a member of the Credit Committee in

London, who had previously been a very senior manager with NatWest. Mr Robson received

monthly reportsfrom Dublin, but these were focussed upon credit issues. Whilst at Guinness

Mahon Limited in London Mr Fenhalls met with representatives of the Cayman regulators,

the then Inspector of Banks, on about ten separate occasions. At no stage was the business

conducted by GMCT (a regulated bank in Cayman) ever raised as a problem.

22. After Mr Fenhalls moved to Ansbacher in early 1985, he decided, in consultation with his

fellow directors, that the bank should expand its offshore banking group because, given its

relatively small size, it would struggle to compete if it remained as little more than a London

merchant bank. This was a common strategy at the time as other international merchant

banking groups were expanding their offshore operations (most already had), especially into

See 8 May 1997; page 2, lines 21 to 25; page 11, lines 20-47; page 12, lines 14 to 49; page 25, lines 52 to 57; page 26, lines 1 to
the Channel Islands and Caribbean. At the time of his arrival, the Ansbacher Group had an

underdeveloped offshore banking structure. It had a Guernsey bank and trust administration

company with capital of £7m, a small trust administration company in Gibraltar and a small

management company in Monaco. Ansbacher identified Cayman as an obvious location for a

significant offshore banking presence. Given his knowledge of the existence of the Cayman

operation in GMCT, Mr Fenhalls told Mr Traynor that if the Guinness Mahon Group was

ever interested in selling the Cayman business, Ansbacher would be interested in purchasing

it.

As part of the planning for a larger offshore group, thought was given to establishing an Irish

holding company for all of the Ansbacher offshore companies. This was to take advantage of

the tax reliefs which the Irish government was offering to set up in the Irish International

Financial Services Centre and also the good quality labour and communications. Whilst it

was clear that the Central Bank of Ireland would not sanction a mere investment holding

company, on 9 November 1989 Mr Fenhalls met with Mr Tim O'Grady Walshe, a Director in

charge of banking supervision at the Central Bank, at which meeting they discussed the

possibility of establishing a back office services company which might, in time, grow into a

branch. Mr Fenhalls asked if there would be any objections to Mr Traynor taking charge;

Mr O'Grady Walshe said there would be no problem with this at all. Ansbacher, which was

still planning how to expand its Offshore Group at the time, eventually decided not to proceed

with an Irish presence and decided that the Offshore Group would instead be held using a

Guernsey registered company.

After joining Ansbacher in 1985, Mr Fenhalls stayed in contact with Mr Traynor. In late

1987, Mr Traynor contacted him and asked whether he remained interested in purchasing

GMCT. Mr Fenhalls said that Ansbacher would be interested. When Mr Traynor explained
that he, together with other directors of GMCT, were purchasing it and would be prepared to

sell a majority shareholding to Ansbacher,. Mr Fenhalls asked if it would be possible to buy

GMCTdirectly from the Guinness Mahon Group. Mr Traynor said no; a deal had been agreed

between the directors and the Guinness Mahon Group and the directors did not want to

change that arrangement.

On 11 May 1988, the Guinness Peat Group Pic issued a document which was an interim

statement and proposals for a number of issues including the disposal of GMCT. The

document sets out that the disposal of GMCT was in keeping with the "stated policy" of the

group to place more emphasis on earning profits in London. It recites conditional agreements

signed on 20 April 1988 for the disposal of the whole of the issued share capital of GMCT,

the proposed purchaser being Chichester Investments Limited, the shareholders of which are

recorded in the document as "Mr J Collins and Mr J Furze, two directors of GM Cayman".

The consideration for the sale was stated as £5.86 million in cash payable on completion (due

to take place in June 1988). The document further reported that the net assets of GMCT were

£6.66 million at the balance sheet date and further recorded that following the year end, the

net assets had been reduced by £1.04 million as a result of a sale by GMCT to Guinness Peat

(Bermuda) Limited, of an investment in a "United States oil and gas company". It was also

noted that historically substantial sums had been placed on deposit by GMCT with members

of the Guinness Mahon Group on arms length terms and that deposits would be retained with

the Guinness Mahon Group on a transitional basis.

Mr Fenhalls recalls that GMCT was attractive to the Ansbacher Group because of its

profitability and stable deposit base. The wisdom of that view was demonstrated in the

recession of the early 1990's: while other banks suffered a fall in deposits , those of A(C)L

peaked at just over US$400 million after consolidation with CITCO (disregarding fiduciary

deposits). In short, Mr Fenhalls recalls that he felt this was a first class acquisition and one

that he thought would be of great importance to the expanding Ansbacher Offshore Group.
 As a result of trading in Cayman for a number of years the deposit base was, of course, not

just Irish.

27. During negotiations for the purchase of a majority shareholding in GMCT (handled in the

main by Mr John Button, a director then within the Ansbacher Group), Ansbacher was

informed by the directors of GMCT that it was making profits of £450,000 per annum (after

adjustments) and that they were prepared to warrant earnings of at least that amount to 30

June 1989. Ansbacher estimated a valuation for the Cayman bank of £4 million. This was

based on the profit of £450,000 and a multiple of 8.9 which was in accordance with industry

norms at the time. Ansbacher was aware that the capital of the bank had been reduced to £1

million as a result of the management buyout and the restructuring of the shareholding of

GMCT. It was intended, as part of the purchase, that Ansbacher would (with a contribution

from the vendors) recapitalise the bank to a figure of £6.5 million so returning the capital to

approximately the level recorded at 31 December 1987 (ie when the bank was still part of the

Guinness Mahon Group). Ansbacher was then, together with the minority shareholders,

committed to investing a further £5.5 million in the bank (see later).

28. In addition to the stable deposit base and its profitability, GMCT was also attractive to

Ansbacher because of the expected synergy between its existing business and that of the

acquired bank. For example, it was recognised that GMCT had a deposit base of

approximately £105 million and a loan book of £23 million of which £8 million was secured

against cash deposits. If a significant part of the deposit base could be held by Henry

Ansbacher & Co. Limited (and assuming a l/8th of a per cent margin was made on deposits)

it would give rise to additional earnings for the group. If £100 million of deposits were held

in this way it was calculated that it would give rise to earnings of £125,000 per annum. It was

accepted that because of the transitional agreements made with the Guinness Mahon Group,

such earnings could not arise in full in the first two years. In addition, foreign exchange

transactions could be transacted through Henry Ansbacher & Co. Limited; that could give rise
to further earnings of approximately £50,000. Also, loans might be offered by Henry

Ansbacher & Co. Limited to GMCT customers. Ansbacher estimated that such loans could

also earn some £75,000 per annum. Finally, there could be additional earnings to the

Ansbacher Group from business referred by GMCT, but no estimate was made of that

amount.

The majority shareholding in GMCT was acquired by Henry Ansbacher Holdings Pic in

August 1988. Payments for the existing shareholding and payments by way of additional

capitalisation were agreed as follows:

29.1 Consideration for a 75% shareholding in the existing shares of GMCT was £750,000

cash plus shares in Henry Ansbacher Holdings Pic valued at £2.25 million. This was

divided equally between the four companies representing Messrs Traynor, Furze,

Collins and Hart. Each of the companies was therefore to be paid £187,500 in cash

and to receive 703,125 shares in Henry Ansbacher Holdings Pic.

29.2 Henry Ansbacher Holdings Pic took £2.25 million worth of shares in GMCT on a

new issue. An additional £750,000 worth of new shares was subscribed for by the

four vendor companies in equal parts.

29.3 As agreed by Henry Ansbacher Holdings Pic, Henry Ansbacher & Co. Limited in

London injected a further £2.5 million into GMCT through subscription for

subordinated loan stock.

To clarify the makeup of the investment of additional capital of £5.5 million in A(C)L, the

equity at paragraph 29.2 above accounted for £3 million of the contribution, the remainder

being by way of the £2.5 million subscription for subordinated loan stock set out at paragraph

29.3 above.
Q
31. In addition to clauses dealing with the consideration, warranties were given by the vendors.

There were also provisions dealing with the future buyout of all or part of the remaining 25%

shareholding retained by the vendors by way of put and call options.

32. Judgingfrom documents which were created at the time, significant thought appears to have

been given to the structure of the deal. Ansbacher retained the services of Linklaters &

Paines (as they then were), a major City of London firm of solicitors in relation to the

transaction and significant fees were incurred as part of the purchase. Ansbacher also

informed the Bank of England about the proposed purchase. This was done at a meeting held

on 16 June 1988 at the Bank of England attended by Mr Fenhalls and Mr Kevin Mortell (the

then Finance Director at Henry Ansbacher & Co. Limited) for Ansbacher and Mr Ian Cobbold

and Mr Jeremy Stockwell for the Bank of England. The matter passed without more than

noting Ansbacher's intentions,

33. Although formal due diligence was not carried out, specific investigations were made into the

business of GMCT, most notably an investigation of the loan book by KPMG Peat Marwick.

The review of the loan book focused on the recoverability of loans and whether the loan

documentation required under Cayman law was in place. Also, Ansbacher personnel headed

by Mr Kevin McAuliffe (the Ansbacher Offshore Group's then Financial Director) visited

Cayman to conduct a review. This review focused on the degree to which Ansbacher could

rely on the information provided by the Directors of GMCT and which was being warranted

by them (eg profits), the strengths and weaknesses of the organisational structure, systems and

controls within GMCT and the compatibility of GMCT with the Ansbacher Offshore Group.

Whilst the review identified matters which were not up to the standards expected by

Ansbacher of its own business (eg too much independence for the directors (caused, it was

said, by "the lack of parental interest and supervision in recent years in the operations of

GMCT..."), lower than expected internal control, documentation and co-ordination of

activities and a slightly stagnant flow of business) and led to a number of recommendations,
nothing was disclosed which jeopardised the transaction. In particular, nothing was found

which raised a question or doubt regarding the business conducted with Irish resident clients.

In particular, Mr Fenhalls and Mr Button discussed the findings of Mr McAuliffe's report but

felt the problems could be remedied.

Mr Fenhalls has confirmed that, in fact, it was he who decided upon the level of due

diligence. Mr Button wanted to go further but Mr Fenhalls, based upon the received industry

wisdom at the time, thought that unnecessary. In common with most bankers at the time, he

believed that a bank could only fail if its loans collapsed (ie through non repayment for

whatever reason). Corporate transactions were not seen as a likely cause of failure. Here,

GMCT had a large deposit base (largely placed in the money markets) but, importantly,

relatively little advanced in commercial loans. Having satisfied himself about the loan book,

there seemed to him little need for any more comprehensive due diligence.

Reference has been made earlier in this document to the Eleventh Schedule to the McCracken

Report which is headed, incorrectly, "Extract from 1987 Audit Report of Ansbacher Cayman

Limited". As well as pointing out that this should refer to the 1987 Audit Report of GMCT, it

is also important to note that no evidence exists of this document having ever been seen by

the Ansbacher Group until its publication in the McCracken Report. Mr Fenhalls has

confirmed, in particular, that he has no recollection of this document, whether before, at or

after completion of the acquisition of the majority shareholding in GMCT.

Following the share sale, GMCT changed its name to Ansbacher Limited on 29 August 1988,

remaining under that name until November 1992 when it became known as Cayman

International Bank and Trust Company Limited. The bank assumed its present name of

Ansbacher (Cayman) Limited in September 1994.

37. In terms of reporting lines, after the acquisition in August 1988, the directors of A(C)L (as

part of the expanding Ansbacher Offshore Group) were required to report directly to

Mr Button (head of the Ansbacher Offshore Group) rather than Mr Fenhalls.

38. After Ansbacher acquired its 75% shareholding in GMCT, Messrs Traynor, Furze, Collins

and Hart retained minority shareholdings through individual companies owned and controlled

by each of them. The 25% shareholding in GMCT/A(C)L owned by Messrs Traynor, Furze,

Collins and Hart was acquired by Ansbacher Trust Group Services Limited (as it is now

called) on 30 April 1993.

39. The shares of Henry Ansbacher Holdings Plc were acquired on 20 January 1993 by First

National Bank of Southern Africa Limited which thus became the owner of the Ansbacher

Group. First National Bank was, in essence, Barclay's former operation in South Africa.

40. Thefinancial interests of Rand Merchant Bank Holdings and Anglo American were merged

to form FirstRand Limited with effect from 1 April 1998 which then acquired the shares of

First National Bank of Southern Africa Limited and thus became the new owner of the

Ansbacher Group.
SECTION 3

THE EARLY MANAGEMENT OF A(C)L AND BACKGROUND TO THE IRISH BUSINESS

41. GMCT was thefirst of two businesses purchased in Cayman by Ansbacher. On 31 January

1989, Ansbacher Holdings Limited (as it is now called) acquired ( both directly and through

other companies) all of the issued shares in CITCO. On 9 March 1990, A(C)L became the

100% shareholder of CITCO, and thereafter consolidated accounts were produced for the two

businesses. CITCO nonetheless remains a separate legal entity and a subsidiary of A(C)L.

From January 1989 to October 1990, the two businesses remained physically separate. In

October 1990, CITCO and A(C)L moved into a single new premises in George Town, Grand

Cayman, and began the process of merging the operations of the two businesses. Whilst the

process of merging the businesses was hampered by the fact that each business had a different

computer system and by the management structure, it was practically implemented so that, for

example, one trust officer could be administering one trust of which A(C)L was the trustee

and another of which CITCO was the trustee. Whilst CITCO also had wholly owned

subsidiaries providing nominee services, it was Overseas Nominees Limited which was

chosen after the merger to provide such services to clients of the merged bank.

42. GMCT was, in essence, run as a quasi partnership. Of the "partners", Mr Traynor remained

based in Dublin, although he would visit Cayman at least three times a year for board

meetings and to work with Mr Furze on issues such as the reconciliation of client accounts

(referred to further below). Mr Furze, conversely, visited Mr Traynor once or twice each year

in Dublin. The two executive directors, Messrs Furze and Collins, worked in the offices of

GMCT in Cayman. There was some formal division of responsibilities between those two

individuals but with considerable "blurring" at the edges reflecting the partnership nature of

the organisation. For example, Mr Furze was mainly responsible for administration and in

effect acted as the account manager for Irish clients, and in particular those introduced by Mr
Traynor, whereas local Cayman public relations and marketing were mainly the responsibility

of Mr Collins. Mr Collins never introduced or managed any Irish business, although from

time to time he did complete administrative tasks on such accounts in the absence of Mr

Furze. In terms of new business, Mr Collins with Mr Hart concentrated on Jamaica and the

Americas.

Messrs Furze and Collins relied heavily for administrative assistance on their personal

assistants, Mrs Cavell Serrant and Mrs Delrose Williams. With the exception of Mr John

James, who was recruited shortly before the Ansbacher takeover as a trust manager (and was

later to become the Compliance Officer, a position he retained until his retirement aged 65

years in 1998), the remaining staff of GMCT, until the merger of its business with that of

CITCO in 1990, were at trust/corporate officer or trust/corporate assistant level. The files

suggest that trust/corporate officers were often not given any great responsibility for running

client matters on behalf of GMCT. Very detailed instructions would often be given by either

Mr Furze or Mr Collins and it was expected that trust/corporate officers would simply execute

those instructions.

As noted above, prior to establishing its own physical presence in 1973, GMCTs business

was referred to it solely from within the Guinness Mahon Group and not surprisingly a

significant proportion of this early business was of Irish-origin rather than of UK-origin. The

incorporation of GMCT in Grand Cayman in 1971 coincided with the reduction in the

territories comprising the Sterling Area. Thereafter, the Guinness Mahon Group's Irish and

UK sourced business tended to be referred to Guinness Mahon (Jersey) Limited (as Jersey

was in the reduced Sterling Area) in preference to the Cayman Islands and other offshore

centres. A(C)L cannot provide any information regarding the operation of the Jersey

company, Guinness & Mahon (Channel Islands) Limited or College Trustees Limited; it has

neither the documents nor other knowledge now (even if it ever did) which would enable it to

so comment. By the mid 1970's GMCT was attracting a significant amount of business from
other areas. It is estimated by Mr Collins that GMCT's Irish sourced business in the mid-

1970s accounted for no more than 20% of the total.

From the records reviewed, it appears that GMCT had four distinct areas of business in the

years prior to and including 1988:

45.1 Business generated from the Americas and Caribbean. Mr Hart appears to have been

particularly active in generating worV. from the Caribbean whilst Mr Collins

concentrated on sourcing work from the Americas. This category represented the

bulk of GMCT's business. By definition, this category of work has no Irish origin;

45.2 Business originatingfrom Ireland (whether introduced by Mr Traynor or not) which

was administered in Cayman, some of it with little or no reference to Mr Traynor.

This business was largely trust business, sometimes with associated companies, and

often involved the use of "Red Cross trusts", a subject discussed in more detail below,

but there were also many administered companies which were not associated with

trust structures. By the 1980s this represented a small and declining proportion of

GMCT's business;

45.3 The PFL business originatingfrom Ireland (via Mr Traynor) which was administered

by Mr Traynor and by Mr Furze to the practical exclusion of any other personnel in

Cayman at any senior level. Messrs Traynor and Furze transferred most of the PFL

business to HRL in or about September 1988. The HRL/PFL business primarily

concerned the deposit of monies in what have now become inaccurately termed the

"memorandum accounts" but which were in practice coded accounts held with

GMCT in Cayman. From GMCT's point of view, the value of this business was

never significant. The total of deposits held through PFL rosefrom about GBPfl.l

million in 1 April 1980 to about GBP£6.5 million in September 1988 when most of

the business was transferred to HRL. The amount held through HRL was only about
 GBP£7.5 million in March 1992, the year A(C)L terminated the business. This

category of business is dealt with in greater detail later in this document; and

45.4 Business generatedfrom the UK and Europe which was only a very small proportion

of the total.

46. It would seem that the majority of the work falling within the third category (paragraph 45.3)

emanatedfrom personal contacts, acquaintances ;nd friends of Mr Traynor.

47. It is important to emphasise Mr Traynor's professional standing, as it is relevant to what

follows. Mr Traynor was a well regarded member of the Irish financial community; he was a

highly gifted and respected chartered accountant specialising in tax matters and a banker. He

had considerable personal charm and intelligence. He inspired very considerable trust

amongst clients. For example, it appearsfrom the files that many clients allowed Mr Traynor

almost unlimited control over funds deposited with GMCT and appear to have required or

expected very little by way of documentary evidence of his dealings with their funds on their

behalf. It is likely that many had been clients of his whilst Mr Traynor was a partner in

Haughey Boland. The clients would say of Mr Traynor that he was a person to be trusted

absolutely- it is not believed that this view has changed.

^ 48. When Mr Fenhalls, a former Chief Executive of the Ansbacher Group, met Mr Traynor for

the first time in 1981, he recalls that Mr Traynor was a director of Cement Roadstone

Holdings Pic, Ireland's largest company. He was on the board of Aer Lingus and of New

London Insurance. When, in 1990 Ansbacher's Corporate Finance Department had

instructions to convert the Irish Permanent Building Society from a mutual society into a

bank, they considered candidates for the position of Chief Executive for the new bank and Mr

Fenhalls approached the Central Bank of Ireland to discuss potential candidates. Mr Bernard

Breen of the Central Bank again gave Mr Traynor a glowing recommendation. Given the

scale and importance of the conversion of Irish Permanent into a bank, that recommendation
was a significant endorsement of the Central Bank of Ireland's high regard for, and trust in,

Mr Traynor.

Mr Furze arrived in Cayman in 1967 and was considered in Cayman one of the "pioneers" in

the evolution of the Island as an offshore financial centre. He was active in civil and

community affairs; he was a leading member of the Rotary Club. A report of his funeral

which appears in the Irish Times of 4 August 1997 records a leading Caymanian politician

describing Mr Furze as "among the best of persons who emigrated to the Cayman Islands".

A striking characteristic of the third category of business (ie the PFL and HRL business) was

the extent to which Mr Traynor effectively retained control. Mr Traynor appears to have been

assisted by Mr Padraig Collery, who acted as his personal assistant. Mr Traynor appears to

have known Mr Colleryfrom their time at Guinness & Mahon (Ireland) Limited. From the

available documents, it would appear that Mr Collery took an active role in the Irish business

sourced to Cayman by Mr Traynor. However, Mr Collery was never an employee of

GMCT/A(C)L; it would appear that he was paid by Mr Traynor personally. (He was however

paid a retainer by A(C)L for a time after the death of Mr Traynor in 1994 to ensure an orderly

transition in respect of A(C)L's dealings with Irish clients.) Mr Traynor's communications

with GMCT/A(C)L in relation to this type of business appear to have been primarily, if not

exclusively, with Mr Furze. Whilst Mr Furze made visits to Dublin once or twice each year

to undertake work with Mr Traynor relating to these clients, the extent of Mr Furze's contact

with the clients is not known. It was clearly secondary to the contact and confidence enjoyed

by Mr Traynor. The documents suggest that Mr Traynor kept this category of business

separatefrom other GMCT/A(C)L business and, save to a limited extent with Mr Furze, did

not communicate with others at GMCT/A(C)L in relation to it (other than in relation to the

execution of simple instructions).

51. As the Irish business conducted through Mr Traynor was, in practice, known largely to him

(together with Mr Furze), the Ansbacher Group relied on Mr Traynor to act properly. Indeed,

as he was so respected it was assumed that he would so act. On the few occasions he was

asked by senior management for assurances that the business (ie the depositing of money in

Cayman received from Irish residents and the provision of funds to clients in Ireland) did not

contravene Irish exchange control regulations (for example at a meeting which Mr Fenhalls

had with Mr Traynor in November 1989) he gave unequivocal assurances that it was perfectly

legitimate business which took advantage of wholly lawful exemptions. When asked if there

were tax consequences for the clients he expressed the view that this was entirely a matter for

them to deal with.

The Assimilation of the Businesses of GMCT and CITCO

52. Following acquisition of the majority shareholding in August 1988, the Ansbacher Group

believed that it had made an extremely valuable addition to its Offshore Group. However,

senior management in both London and Guernsey were mindful of the concerns raised by

Mr McAuliffe and the recommendations which had resulted from his consideration of the

business (described in paragraph 33 above). Soon after the acquisition (in early 1989), the

weaknesses observed by Mr McAuliffe were confirmed when actual examples began to arise

of just how different the management of GMCT had been (and remained) as compared to the

standards required by the Ansbacher Group. For example, A(C)L repeatedly exceeded the

limits (set by the Ansbacher Group) on the amounts which could be deposited with various

banks and the management returns which were provided to the Ansbacher Group in relation to

A(C)L's activities often contained inaccuracies. It was quite clear that greater internal

controls were required. However, it should be repeated that the problems highlighted did not

raise a question or doubt as to the propriety of the business conducted with the Irish resident

clients.
53. Attempts were made to bolster the internal controls through visits by Mr McAuliffe during

which he sought to better understand the reasons for the failings and to remedy them. It must

be remembered that at the time of acquisition the management of GMCT had been in place

for very many years and had, it would appear, enjoyed a very great degree of autonomy from

Guinness & Mahon (Ireland) Limited. It was therefore hardly unexpected that difficulties

would be encountered assimilating this business into a group which required far greater

management discipline.

54. It should also be remembered that, during the mid 1980s, a decision had been taken by

Mr Fenhalls and his fellow directors to expand the Ansbacher Offshore Group. GMCT was

neither the only nor the main acquisition at the time. In 1989, the Ansbacher Group

purchased the International Trust Group which included Bahamas International Trust

Company, the International Trust Company (British Virgin Islands) and (as previously

mentioned) CITCO. A sister company (GRATCO in the Turks and Caicos) was also

purchased but later sold on. Accordingly, at the time, management focus within the

Ansbacher Group was on assimilation of those businesses into the Ansbacher Offshore

Group. Specifically, in Cayman, the need to rectify the management failures within A(C)L

was less of a priority than the need to merge the business of CITCO with that of A(C)L.

Mr Fenhalls has explained that the head of Ansbacher's Offshore Group, Mr Button, and his

staff were focusing on merger rather than management practices within A(C)L and CITCO.

55. After the acquisition of CITCO, the combined CITCO and A(C)L business had three

managing directors in Cayman (Mr Furze and Mr Collins from GMCT, and Mr Bryan

Bothwell from CITCO). The two businesses of GMCT and CITCO were initially run, in

essence, as separate businesses. Only in October 1990, did the two businesses move into a

single premises. However, the effective merging of their operations was hampered by the two

companies having to continue to operate on completely separate computer systems until the
 end of 1993 when a new system was installed which could accommodate the transfer of the

accounting records of both businesses.

The need for a full operational merger of the two businesses was increasingly prioritised by

the Ansbacher Group. It was the recognition of this need to accelerate the merger (in the face

of significant hostility, particularly from Mr Furze) which, combined with a growing

recognition during the period 1989 to 1991 of the degree of autonomy enjoyed by Mr

Traynor, persuaded the then Chief Executive of the Ansbacher Group, Mr Fenhalls, of the

need to second Mr Jennings and Mr McAuliffe to Cayman in early 1992. This course of

action was decided upon rather than continuing in the hope that visits by Ansbacher personnel

would resolve the merger situation and it was also recognised that there was a need to impose

tighter internal controls.

57. Mr Jennings and Mr McAuliffe were both very senior within the Ansbacher Group. Mr

Jennings (like Mr Fenhalls) had been employed by Guinness Mahon Limited in London (in

his case until 1986). He joined Henry Ansbacher & Co. Limited in 1990 as Managing

Director with Treasury responsibility. He remains Managing Director of Ansbacher in

London as at the date of this Information Document. As stated previously, Mr McAuliffe was

then the Ansbacher Offshore Group Financial Director. He left the Group on 31 December

1998.

58. Mr Jennings was made a managing director of A(C)L as part of his secondment. His role was

to effect a practical merger of the two businesses on a day to day basis and to review A(C)L's

loan book and general operating procedures. At this time, the main concern as it related to Mr

Traynor's activities was one of internal control. The business undertaken by Mr Traynor was

investigated by Mr Jennings, who additionally reviewed the business as part of the due

diligence exercise undertaken preparatory to the acquisition of the Ansbacher Group by First

National Bank Holdings of Southern Africa. The internal control issue insofar as Mr Traynor
 was concerned was confirmed to the Ansbacher Group as something requiring investigation

by reason of a management letter to the board of A(C)Lfrom KPMG Peat Marwick in 1991.

In essence, this highlighted a concern about the system of reconciling what was held in the

Nostro accounts (as to which see later) at Guinness & Mahon (Ireland) Limited in Dublin to

the accounts held in Cayman. It was recommended that one person be delegated to review the

reconciliations and post the figures to the client accounts. It was, therefore, a matter raised in

the context of internal controls, being an issue Mr Jennings had been asked to investigate and

remedy as necessary.

59. As explained below, although Mr Jennings' investigations did not yield a fully comprehensive

explanation of the purpose and business of HRL and PFL (nor could they have done), he

understood that these two companies were vehicles associated with Mr Traynor and/or Mr

Furze and with the operation of the memorandum accounts. These findings confirmed the

original concerns about GMCT/A(C)L's lack of control over the business being undertaken by

Mr Traynor which originated from Ireland and Mr Traynor and Mr Furze were instructed to

remove the HRL and PFL businessfrom A(C)L. That removal was effected very quickly,

being substantially completed within two weeks. Thereafter, further efforts were undertaken

to merge fully the two businesses. Continued resistance was maintained, particularly by Mr

Furze, and this, combined with the unease caused by the discovery of something of the

unusual nature of the HRL/PFL business (to which we return in the next section of this

document), was one of the reasons which (together with the implementation of plans drawn

up after the acquisition by First National Bank) caused the company which is now called

Ansbacher Trust Group Services Limited to seek and complete an early buy out of the

minority shareholdings in A(C)L in 1993.

60. First National Bank of Southern Africa Limited was advised of the findings of Mr Jennings.

Indeed, in late September/early October 1992 Mr Fenhalls visited Mr Traynor with Mr Brian

Lavelle of First National Bank. Mr Traynor gave an unequivocal assurance that the business
 with Irish residents had neither breached Irish exchange control regulations nor constituted

banking business which required a licencefrom the Irish Central Bank.

61. Following the severing of links with HRL and PFL in 1992/1993, Mr Jennings concentrated

upon making sure that A(C)L became operationally better structured, employed more suitable

people and complied with Ansbacher Group-wide policies and procedures (which had

undergone some change following acquisition of the Ansbacher Group by First National

Bank). As mentioned, Mr Traynor stepped down as non-executive Chairman in April 1993,

became a non-executive director, and subsequently died on 11 May 1994. Whilst senior

management within the Ansbacher Group would have preferred Mr Traynor and Mr Furze to

have ended their connection with the bank at an earlier time, it had to be accepted that a

sudden departure of both directors might have had a significant detrimental impact upon the

standing of A(C)L both with clients and the market. As a matter of practicality, the way in

which business had been conducted with some Irish (and other) clients meant that it needed a

period of transition to allow others within A(C)L to gain an understanding of the business.

62. After Mr Traynor's death, Mr Jennings, during a trip to Dublin to improve A(C)L's knowledge

of its customers, was introduced to Mr Sam Field Corbett. Until meeting Mr Field Corbett,

Mr Jennings had never heard of him and had no contact thereafter. A(C)L cannot provide any

information as to the role which may have been played by Mr Field Corbett in relation to

GMCT/A(C)L's business with Irish customers. He also met Mr Jack Stakelum. Other than by

reference to evidence given publicly in Ireland, A(C)L has no knowledge of the role Mr

Stakelum allegedly played in payments to politicians or as to any other business dealings he

may have had with Mr Traynor.

63. By 1995 at latest, it was felt by Ansbacher Group senior management that matters of concern

in Cayman (which very largely related to the business which had been GMCT and included

the business conducted by PFL/HRL which had been removed in September 1992) had been
 satisfactorily addressed. Further, it was felt that the bank, which by then constituted the

merged firms of the old GMCT and CITCO, was conducting its business in a regular and

acceptable fashion, with the Irish business having been further reduced either by being

managed out or because it had come to a natural end. However, the situation changed

significantly following allegations made in Ireland concerning, initially, payments to the

former Irish Taoiseach, Mr Charles Haughey. The Irish investigations which have followed

have been accompanied by extensive press coverage within the Republic of Ireland. It was

only through the Ryan Report in June 1999 that the Irish authoritiesfirst set out, formally and

in detail, allegations other than payments to politicians and, in particular, those relating to

purported tax evasion.

64. A(C)L is currently administering only a few client relationships which fall within the

definition of "Irish business" contained in the Irish High Court's order of 22 September 1999.

Most, but not all, of these relationships were originally administered by Mr Furze with the

involvement of Mr Traynor. The way in which this business is administered today is very

different from the way in which Messrs Traynor and Furze administered it. As with any

business, A(C)L is prepared to retain it only on the basis that it complies with current best

practice, including the anti-money laundering regulations and "know your client" guidelines3.

For example, the relationship with HRL and PFL (and the memorandum accounts) was

terminated in 1992. Payment of the retainer to Mr Collery to ensure an orderly transition in

respect of A(C)L's dealings with Irish clients (which had started after Mr Traynor's death in

1994) was terminated in 1997. A(C)L insisted that all clients of Mr Traynor/Mr Furze deal

with the trust officers in Cayman, either directly or through professional advisers such as

solicitors and accountants whose role is clearly understood. All A(C)L's Nostra accounts

A(C)L has strict internal guidelines regarding such matters which were alluded to by Mr Greenhalgh in his evidence to the
McCracken Tribunal on 8 May 1997, namely, unilateral spot checks carried out by compliance (see page 10, lines 32 to 36; page
11, lines 1 to 13).
with its correspondent banks in other jurisdictions, including Ireland, are controlled directly

by A(C)L in Cayman.
SECTION 4

THE MEMORANDUM ACCOUNTS

Use of the Memorandum Accounts

65. There is no doubt that the way in which A(C)L conducted business with Irish residents was

influenced by Mr Traynor's presence in Ireland. Until 1986, Mr Traynor was an executive

director of Guinness & Mahon (Ireland) Limited. By the time A(C)L became part of the

Ansbacher Group in 1988, Mr Traynor was based at the offices of Cement Roadstone

Holdings Pic at 19 Lower Pembroke Street, Dublin. A(C)L understands that in 1989 he

moved to the new offices of Cement Roadstone Holdings Pic at 42 Fitzwilliam Square,

Dublin.

66. Mr Traynor was the principal point of contact for many (but certainly not all) Irish resident

clients. He was assisted by Mr Collery and, it is understood, Mrs Joan Williams in Ireland.

Whilst A(C)L can comment very little on what Mr Collery is said to have done in Dublin, it

can say nothing about Mrs Williams; its knowledge of her alleged role is derived from the

evidence and reports made public by the authorities in Ireland. It would appear that any detail

which may have been known about why particular funds were being received in and were

required to be paid out on behalf of certain Irish customers was knownfirst and foremost (and

possibly only) to Mr Traynor. In particular, from the available documents it would appear

that GMCT in Cayman was often unaware of transactions until several weeks after they

occurred.

67. The Ryan Report alleges that whilst at Guinness & Mahon (Ireland) Limited, Mr Traynor,

assisted by Mr Collery, maintained memorandum accounts completely separately from the

other records held on the Irish bank's computer system and that these records were not

disclosed to Guinness & Mahon (Ireland) Limited's auditors. A(C)L is not able to confirm or

deny this. It is said that Mr Traynor's Guinness & Mahon Irish clients were each allocated a
 code and that whilst the accounts held by GMCT (later by A(C)L) at Guinness & Mahon

(Ireland) Limited would provide little or no clue to what was going on, Mr Traynor would,

through the memorandum accounts, be aware of how much money had been deposited and

withdrawn in relation to each particular client account. Mr Traynor or Mr Collery (and no

others) would then provide GMCT (later A(C)L) with sufficient instructions to make the

necessary subsequent entries in the books held in Cayman which would reflect movements in

the GMCT (later A(C)L) accounts held by Guinness & Mahon (Ireland) Limited in Dublin.

68. In around 1978, there was a change to the system. In practice, the GMCT accounts held at

Guinness & Mahon (Ireland) Limited in Dublin were, until 1978, in the form of coded sub

accounts of the Nostra accounts (ie the accounts would, on the face of records held by

Guinness & Mahon (Ireland) Limited, bear a client code). From, it would seem, 1978

onwards Guinness & Mahon (Ireland) Limited held uncoded Nostro accounts in the name of

their Cayman subsidiary bank, GMCT, which could be operated by Mr Traynor using

information held by him.

69. It is important to remember that every bank has Nostro accounts. This is standard banking

practice. Such "Nostro" accounts are, put simply, certain of GMCT's own bank accounts with

other banks which included, at the relevant time, those with Guinness & Mahon (Ireland)

Limited. Nostro accounts are a vital part of the banking system by which funds are

transferred. In the case of GMCT's Nostro accounts with Guinness & Mahon (Ireland)

Limited, some of these formerly comprised investments in the form of interest bearing

deposits.

70. GMCT (just as every other bank) had Nostro accounts with a number of banks in various

currencies. There were a number of Sterling Nostras held for GMCT at Guinness & Mahon

(Ireland) Limited which, from 1977, Mr Traynor could operate as a sole signatory. Each

Sterling account in the records of Guinness & Mahon (Ireland) Limited was recorded (and
reflected) in GMCT's general ledger. Looking at the statements of Guinness & Mahon

(Ireland) Limited and the GMCT general ledger entries, this would appear to be standard

Nostro practice. For example, on receipt of a sterling cheque with an instruction to remit this

to the account of GMCT (for the ultimate credit of a customer), the Guinness & Mahon

(Ireland) Limited statement for the relevant period (received in Cayman) would show the

receipt as a credit in favour of GMCT on its Nostro. A corresponding debit entry for the same

amount would be made in the GMCT general ledger (ie the ledger used to record sums

credited to and debited from its Nostro accounts with Guinness Mahon (Ireland) Limited).

The relevant client bank account, a sub-account of the general ledger account 779-990 would

be credited to reflect the transaction. The balances in those client bank accounts would be

aggregated into ledger account 779-990, the balance of which reflected GMCT's overall

liability to clients in Sterling.

GMCT/A(C)L also kept, for administrative purposes, general ledger accounts for clients'

structures, so as to collect together the various entries (on a ledger basis) which made up the

structures (ultimately to prepare statements for the structures) . So, therefore, for the clients

in question, in order to record funds received into their account with GMCT/A(C)L through

the Nostro accounts with Guinness & Mahon (Ireland) Limited in Dublin, a debit entry would

be made in the individual structure's general ledger account of its account with

GMCT/A(C)L, with a corresponding credit to the relevant account, for example, in the case of

HRL/PFL, the "S" and "AA" series of accounts (which are recorded under PFL and HRL,

those companies being the clients of GMCT).

In 1991, A(C)L began the process of closing its Nostro accounts with Guinness & Mahon

(Ireland) Limited and opening accounts with Irish Intercontinental Bank. Mr Fenhalls has

explained that he had been concerned at the time whether Guinness & Mahon (Ireland)

Limited would remain creditworthy, given that Guinness Mahon Limited in London had been

suffering huge losses. Its owners, the Bank of Yokohama, had undertaken to support the
Guinness Mahon Group but Mr Fenhalls was concerned that the Bank of Yokohama might

not be large enough to honour that undertaking if required. He felt that A(C)L's exposure to

Guinness Mahon had to be terminated and accounts moved elsewhere. As he knew Irish

Intercontinental Bank (and believed its parent, Kredietbank, creditworthy), Mr Fenhalls was

content that it should handle such accounts as were necessary in Dublin.

The standard practice in relation to GMCT's Nostro accounts with Guinness & Mahon

(Ireland) Limited and Irish Intercontinental Bank was that GMCT was not, it would appear,

generally aware of what funds were expected into the Nostro accounts held in Ireland or of

payments which were to be made out of the Nostro accounts. The practice was for

Mr Traynor (with assistance from Mr Collery and, it is believed, Mrs Williams) to record

movements in the Nostro accounts using his own ledger system (ie the memorandum

accounts). Thus, if a payment was credited to one of GMCT's Nostro accounts at Guinness &

Mahon (Ireland) Limited, GMCT would not generally be expecting that payment, but Mr

Traynor would be. The necessary entries to the GMCT ledgers and client bank accounts

would then be made in the way explained in the previous paragraphs.

Often, GMCT and latterly A(C)L in Cayman would not be in a position to book receipts into

its ledgers for some weeks. Typically, Mr Traynor would arrange for regular batch

reconciliation reports to be sentfrom Dublin to Cayman. The purpose of these reports was to

inform GMCT how, in relation to sums received through each particular Dublin-held Nostro

over a period of time, the amounts were to be allocated to each individual coded client

account in Cayman. It was that information which allowed GMCTs banking department to

record the funds through the general ledgers, the client bank accounts and through to the

individual client ledger accounts. Similarly, where monies were required to be paid out on

behalf of customers, Mr Furze would receive a request from Mr Traynor to give instructions

to the Irish correspondent bank to make a payment or (particularly in the case of PFL and

HRL) GMCT would receive notification from Mr Traynor that money had been paid from a
particular Nostro account and then, often several weeks later, GMCT's ledgers would be

written up to reflect this payment. At no time would GMCT (save for Mr Traynor, to the

extent (if at all) he acted for GMCT in this capacity) appear to have had any direct contact

with those making deposits into or receiving payments from the PFL and HRL accounts

(unless there was separate contact because they also had trusts or companies administered by
4

GMCT). However, it must be remembered that since these transactions were effected,

banking technology has improved dramatically, the net result being that transactions can now

be processed much more quickly and provide an inherently more effective control

mechanism.

It has been alleged in the reports of the McCracken Tribunal and the Authorised Officer,

Mr Ryan, that payments to the Nostro accounts were often routed through intermediary

companies such as Amiens Securities Limited, Amiens Investments Limited and Kentford

Securities Limited, in order to disguise the source of funds. A(C)L cannot comment upon

that; it has no documents which cast light upon the movement of funds before they reached

the Nostro accounts or reasons behind those movements in such cases. It cannot comment

because of a lack of knowledge upon the ownership of the companies mentioned above, the

reasons for their existence or the part allegedly played by them.

After 1978 (from which time coded sub-accounts were being phased out) funds were

transmitted through the Nostras in the name of GMCT at Guinness & Mahon (Ireland)

Limited and, after that, at Irish Intercontinental Bank in order to be credited to the accounts

held in Cayman. The memorandum accounts were, it would appear, personal ledger records

maintained by Mr Traynor presumably in order that he would be in a position to monitor and

control precisely what money had been credited to and debited from the individual clients.

Being simply records, they were never accounts in the accepted banking sense of the word,

but rather duplicates of the coded accounts of PFL and HRL held in Cayman. It must be

remembered that Mr Traynor (who had always lived and worked in Ireland), was the
principal, if not only, point of contact for Irish customers. The maintenance of such records

in Ireland does not appear to A(C)L to be inconsistent with the fact of accounts being held

offshore; presumably, maintaining such records was part of the service for which clients paid

Mr Traynor who, as an experienced accountant, was well able to provide this. Mr Collins has

also explained that while GMCT was originally a subsidiary of Guinness & Mahon (Ireland)

Limited, its accounting system was very unsophisticated and unreliable compared to that of

its parent. Also, in the very early days of its existence, GMCT was merely a presence in

name only (Bank of Novia Scotia providing the few staff necessary to deal with its business)

becoming then a small operation (with its own staff) before it grew larger in the 1980s. It

would seem that GMCT made very few administrative changes after it ceased to be a

subsidiary of Guinness & Mahon (Ireland) Limited and probably this lack of satisfactory

accounting systems was simply 'inherited' from Guinness & Mahon (Ireland) Limited and

continued for some time thereafter. Communications with Cayman at this time were slow and

expensive.

Accordingly, these ledgers may well have been created by Mr Traynor during his time at

Guinness & Mahon (Ireland) Limited (whether with or without the knowledge of other senior

management at the Dublin bank) simply to provide himself with a current and confidential

record. The extent (if any) to which the operation of the memorandum accounts came to do

more than merely preserve the confidentiality of the clients cannot now be tested. At this

distance in time and absent Mr Traynor, it is simply not possible to say with certainty what

his reasons were for setting up and operating the memorandum accounts other than to provide

an accurate personal record of the affairs of those who chose to entrust him with their

finances.

There was one further structural layer which distinguishes this business, and that was the

interposition, as the clients of GMCT/A(C)L, of HRL and PFL as holders of most of the

coded accounts in the Cayman ledgers (as described above). HRL and PFL were therefore
 integral to the operation of the memorandum accounts but were unknown to senior Ansbacher

management outside Cayman until their role came to light after Mr Jennings began his

secondment in 1992. As mentioned, many of the alleged recipients of monies paid out of the

coded client accounts were not, on the face of it, the holders of accounts in the books and

records of GMCT/A(C)L. The coded client ledger accounts appeared ostensibly to be

accounts of HRL and PFL in the books of GMCT and latterly A(C)L. HRL and PFL were

customers of GMCT and latterly A(C)L, and most probably the bulk of the funds held by

HRL and PFL were in fact held on afiduciary basis for undisclosed third parties who were

not recorded as customers of the bank.

79. The deaths of Messrs Traynor and Furze and the absence of probative documentation make it

very difficult, if not impossible, to come to definite conclusions regarding the role played by

HRL and PFL. However, Mr Traynor told representatives of the Ansbacher Group in the

autumn of 1992 that HRL was holding deposits in its name for third parties, being clients

whose business would not justify the formation and use of separate companies. This would

support the analysis set out above, and A(C)L for its part has seen no evidence which would

support any other interpretation.

80. By early autumn 1992, Mr Jennings and others focused on HRL and PFL. Specifically, HRL

^ and PFL appeared to be both clients of A(C)L and to have had their own clients whose

interests were represented by the coded ledger accounts. There was a clear internal controls

issue; the detail of the business was known only to Messrs Furze and Traynor and the

Ansbacher Group did not otherwise know the clients. This was inherently unacceptable to the

Ansbacher Group and exposed A(C)L to the possibility of unknown risk. At this time, the

Ansbacher Group, in common with other banks and banking groups, was concerned with the

issue of anti-money laundering and any significant lack of knowledge or control was deemed

unacceptable. A(C)L concluded, with the benefit of legal advice, that the HRL and PFL

business was not business which A(C)L should be doing and that it should be disposed of
 without delay. The start of the process of transferring out the HRL/PFL business began

immediately and was substantially completed by the end of September 1992.4

81. In 1991, KPMG Peat Marwick, in their management letter to the board of A(C)L raised the

issue of the reconciliation of the Nostro accounts held at Guinness & Mahon (Ireland) Limited

arid the accounts held in Cayman. The real issue concerning the reconciliation (as was

common at the time) was the length of time it took A(C)L to reconcile between those

accounts. This problem was largely dealt with when Mr Jennings instigated the removal of

the HRL/PFL business in late 1992/early 1993. The Ansbacher Group Audit Committee was

rightly concerned to ensure that these matters of reconciliation were resolved satisfactorily.5

82. There is a further concern regarding the misuse of Ansbacher's name in relation to this aspect

of the matter. Until publication of the McCracken Report, A(C)L had not seen the document

exhibited at the Twelfth Schedule (nor, indeed, would it have been expected to). It is

unfortunate that the author of that document stated, mistakenly, that Mr Collery was somehow

acting for Ansbacher in relation to the bureau (ie memorandum) accounts. Mr Collery has

never been employed by A(C)L nor has he acted for A(C)L in relation to the bureau (ie

memorandum) accounts. For the avoidance of doubt, he was paid (until 1997) a retainer by

A(C)L after the death of Mr Traynor in 1994 for the purpose of an orderly transition in

respect of A(C)L's dealings with Irish clients.

PFL

83. PFL was incorporated as an non-resident Cayman company on 9 December 1976. Until 5

April 1993, GMCT/A(C)L supplied its directors and the registered office. The original

This clarifies the answers given by Mr Peter Greenhalgh to the McCraken Tribunal on 8 May 1997 at page 15, lines 51 to 57;
page 16, lines 36 to 56; page 23, lines 6 to 77 and lines 54 to 57; page 24, lines 1 and 2; and page 26, lines 23 to 26.
This clarifies evidence given by Mr Greenhalgh to the McCracken Tribunal on 8 May 1997 at pages 15, lines 12 to 23 and lines
28 to 45; page 16, lines 1 to 56; page 18, lines 1 to 56; page 19, lines 1 to 24 and lines 50 to 56; page 20, lines 23 to 31; page 22,
lines 21 to 57 and page 23, lines 23 to 27.
 directors were Mr John Collins, Mr N. Millward and Mr M. W. Shield all of whom were

GMCT employees. Mr John Furze became a director on the resignation of Mr N. Millward

on 5 April 1979. Mr Guy Dotchin became a director on the resignation of Mr M. W. Shield

on 8 March 1989 and he, in turn, then resigned on 25 June 1991 to replaced by Mrs Cavell

• S'errant. Although these directors were employees of GMCT/A(C)L, it is clear that they did
i

not perform any executive role; they merely performed administrative tasks on the

instructions of Mr Furze. Following A(C)L's termination of the PFL business, the A(C)L

directors (Mr Collins and Mrs Serrant) resigned on 5 April 1993. Mr Furze was joined by his

wife Mrs Ingrid Furze a director of PFL. On 5 April 1993, the registered office was

transferred from the address of A(C)L to PO Box 355. On 27 October 1993, the registered

office was transferred again to P O Box 30580 (being the postal address of Mr and Mrs

Furze).

The only reference to PFL in the Ryan Report is in relation to its alleged role in a scheme to

support the share price of an Irish company. That is alleged to have

occurred before the acquisition of GMCT in 1988 and then again in or after late 1992/early

1993 when links between A(C)L and PFL had been severed. This matter is dealt with in

greater detail later in this section.

The true beneficial ownership of PFL has not been definitively established. It was treated as a

client in the books of GMCT/A(C)L. The available evidence points to the conclusion that it

was owned by a trust, of which Mr Traynor was a principal beneficiary. Certainly, that is also

the view of Mr Collins. However, we understand that when Mr Furze met with an employee

of A(C)L in 1997 he indicated that PFL was by then beneficially owned by another trust

called the Poinciana Trust. No documentation has been found which would substantiate that

claim. Whatever the truth of the beneficial ownership, A(C)L believes that both PFL and

HRL were controlled by Mr Traynor (and possibly Mr Furze).

Until September 1988, PFL was recorded in the books of GMCT/A(C)L as a customer,

having deposits under both the prefixes "S" (eg the account S8 which is mentioned in the

Ryan Report and "A/A"). Between September 1988 and October 1988 the accounts show

that the A/A accounts moved to HRL, leaving the S accounts within PFL until September

1992 when all of the PFL business (with the exception of a small deposit which was closed

and transferred in January 1993) was removedfrom the books of A(C)L. The then current

records of the PFL business were transferred to Mr Furze.

Amongst the Cayman documentation, there still remains some profit and loss accounts,

balance sheets and statements of affairs relating to PFL. All of the available statements of

affairs indicate that the company was split into three parts.

87.1 There was a portfolio section which showed, amongst other things, two of the coded

"S" accounts.

87.2 There was a Sterling section which recorded that PFL held a number of trust

accounts. It also had various trust deposits coded "S".

87.3 There was also a Dollar section. The trust accounts as at 31 March 1992 show four

suspense accounts represented by bank accounts coded "AA" and "S".

PFL may also have been used by Mr Traynor for personal transactions (for example,

purchases of real estate) and other loans and investments. There is very little detail in relation

to these transactions on the files of GMCT/A(C)L: essentially, any details established have

been takenfrom the various annual accounts. These refer to a few properties which personnel

at A(C)L believe to have been owned by, or used by, or otherwise connected with Mr

Traynor. As the business of PFL was transferred out of A(C)L it has no way of knowing

whether any of these properties remained as Mr Traynor's or his estate's after his death.
89. On the face of the records which remain at A(C)L, PFL made profits. Some of those profits

are likely to have comefrom fees or an interest rate differential charged for holding the trust

deposits.

HRL

90. HRL was incorporated as an ordinary non-resident Cayman company in 1981. Until early

1993, its directors were provided by GMCT/A(C)L and its registered office was the address

of GMCT/A(C)L. The original directors were Mr Furze, Mr J. D. Ashenheim and Mr P. A.

Harty, all employees of GMCT. On 18 September 1992, Mr I McCulloch and Mrs Cavell

Serrant became directors on the resignation of Messrs Ashenheim and Harty. On 5 April

1993, the A(C)L directors (Mr I. McCulloch and Mrs Cavell Serrant) resigned and Mr Furze

was joined by his wife Mrs Furze as a director of HRL. At the same time, the registered

office was moved to PO Box 355. On 29 October 1993, the registered office was changed to

PO Box 30580 (being the postal address of Mr and Mrs Furze).

91. Until 1 January 1988, HRL was beneficially owned by US residents. It remained a shell until

October 1988 when the A/A accounts were transferred from PFL. Its beneficial ownership

from that date onwards has not been definitively established. It was treated as a client in the

books of GMCT/A(C)L. Again, it would appear profits are likely to have comefrom fees or

an interest rate differential charged for holding the trust deposits .

92. When HRL's accounts were transferred from A(C)L in September 1992 new accounts were

opened in the name of HRL and PFL at Irish Intercontinental Bank, and the A(C)L Nostro

accounts which had been used previously to transfer money to the S and A/A accounts in

Cayman were closed.

"Back to back" loans

93. The Ryan Report asserts that some of the funds deposited by Irish residents with

GMCT/A(C)L were used as security for loans back to them either directly or indirectly (in

financial terms, back to back loans), in a scheme which in effect not only allowed the

depositors (or companies connected with them) to bring their funds back into the Republic of

Ireland but at the same time enabled them (or companies connected with them) to claim tax

relief on the interest payments on the money borrowed back.

94. Back to back loans are a common source of funding and security. They are widely used and

accepted in thefinance sector. There are perfectly legitimate reasons to use them particularly

in transactions of a cross border nature. For example, a bank may only be willing to loan a

company money where a director or third party deposits an equivalent sum with a bank. The

latter then takes a security charge over the deposit to secure the company's liabilities. The

propriety of their use will depend, in thefirst instance, on the individual depositor/borrower's

circumstances although there may be tax consequences which impinge upon the

commerciality of such loans.

95. It is not possible for A(C)L to determine the tax consequences relating to the monies which

were lodged in Cayman with GMCT/A(C)L (and used as security). Similarly, it cannot

comment on the validity or otherwise of claims which may have been made by Irish residents,

whether individuals/companies, for tax relief on interest payments as it is not aware of the

totality of the factual circumstances relating to the individuals/companies involved.

96. The fact that Mr Traynor took steps to ensure that the facility letters did not disclose the

existence of cash deposits used as security may be explicable by a desire to retain client

confidentiality given Cayman law. If so, the non-disclosure of the existence of the cash

deposit may be entirely innocent. To understand whether tax had been avoided or evaded,

each client's individual tax obligations and returns would need to be analysed. The situation
wt
is also clouded by the fact that there have been a number of tax amnesties in Ireland over the

period in issue which may have affected the obligation to pay tax due. However, what A(C)L

can say is that back to back loans are common banking practice which are not tax evasive in

themselves.

97. The fact that Mr Traynor was involved in the negotiation of facility letters must raise a

question as to exactly who he was acting for. His high degree of involvement suggests that he

was acting on behalf of the borrowers for at least some purposes, but again, in light of the

inability to question him on this point, it is not possible to reach any firm conclusions.

Alleged Sham structures

98. It is alleged that GMCT/A(C)L provided banking, corporate services and lending structures

which were designed to evade tax payable in the Republic of Ireland.

99. It is important to distinguish between a "sham" document (eg a sham trust deed) and an

attempt to establish a trust which fails for some other reason, thus rendering the trust invalid

(eg a failure to settle trust assets or one which is void for reasons of uncertainty of objects). A

deed of trust is only a sham if neither party intends to be bound by its terms and the parties

have instead entered into some other agreement which is inconsistent with the deed. In other

words, a trust deed is said to be a sham if the parties execute it for the purpose of concealing

and/or misrepresenting their true agreement. Whether or not a deed is a sham is a question of

fact in each case. No evidence exists to suggest that the Red Cross trusts used for Irish

resident clients were shams, or that GMCT/A(C)L did not intend to enter into the terms of the

trust as stated. Certainly, all the evidence shows that GMCT/A(C)L have consistently acted

on the basis that the Red Cross deeds created trusts which were valid and binding on the

parties.
 100. The distinguishing feature of Red Cross trusts is, at least in some cases, the absence of the

name of the person who provided the initial trust property (the subject of the trust) and, more

importantly, an exhaustive list of the beneficiaries (the objects of the trust). Many Irish

clients had trusts which are of a more usual form where the beneficiaries are named. Red

Cross trusts are simply a form of discretionary trust whereby a trust is constituted for the
«t

benefit of a named beneficiary (such as the Red Cross), but this is coupled with an overriding

power vested in the trustee to add beneficiaries and then make distributions to them. In these

cases, a beneficiary had to, inter alia, produce a receiptfrom the Cayman Red Cross before he

or she could become a beneficiary. Those who are intended to benefit are not named in the

^ deed as beneficiaries and the power to add them may not be exercised until many years after

the deed was executed. In practice, this can only be achieved by means of a comprehensive,

albeit non-binding, letter of wishes. Such trusts were widely used in all the leading offshore

jurisdictions during the 1970's, 1980's and, indeed, the early 1990's. Whilst they are used less

frequently today, we understand that at least one large international trust corporation still uses

them today on a regular basis.

101. An Opinion of Mr Rink of Counsel dated 10 November 1970 was found amongst GMCTs

records. This would appear to have been obtained by GMCT although it is not possible to say

whether as a result of instructions given by GMCT or is simply a copy of advice given to

someone else. Whilst Mr Rink's Opinion does not expressly refer to the Red Cross trust (this

name appeared after Counsel had written his opinion), it approves as valid a trust which

names only one beneficiary but which reserves the right to add undisclosed beneficiaries at a

later date. The Opinion was written shortly after (and indeed cites) the leading case of Re

Baden's Trust Deed [1969] Ch 388. It may well therefore be that GMCT proceeded on the

basis that this Opinion confirmed the validity of Red Cross trusts.
102. A(C)L has been advised that if a Red Cross trust (or indeed, a standard discretionary trust)

was established prior to 1974 it is capable of conferring lawful tax advantages upon an Irish

resident settlor. Indeed, there is an argument that even after the legislative changes enacted in

1974, a conventional discretionary trust is still capable of conferring a legitimate tax

advantage on the settlor, provided that all assets are held through an underlying company. It

is not the case that these advantages can only be achieved by using a Red Cross trust, the

function of which is to a large extent to make it more difficult for the taxing authority to argue

that any particular beneficiary who subsequently receives a distribution had a prior interest in

the trust. Since Red Cross-type trusts were widely used throughout the industry during the

period under review, A(C)L cannot draw the inference that the use of the Red Cross trust deed

is, per se, evidence of an intention to defraud the Irish Revenue. We have not been able to

identify from our review of thefiles reasons why a Red Cross trust was used as opposed to

other forms of trust but one reason could have been administrative convenience; it would have

avoided the need to create a separate trust deed on each occasion a trust was established7.

Another possible explanation is that it merely reflected an attempt by GMCT to satisfy

conventional professional wisdom at the time. Many settlors may have accepted the Red

Cross trust without applying their minds to its possible advantages and disadvantages.

However, some settlors may have chosen the Red Cross trust because it offered a very high

degree of anonymity. Whatever the case, in the 1970's, Cayman Islands public policy

favoured structures designed to achieve a high degree of confidentiality, as evidenced by the

fact that the Confidential Relationships (Preservation) Law was passed in 1976 for the

purpose of criminalising a breach of confidentiality.

Onereasonmay be inherentflexibility. The settlor's wishes regarding the beneficial class can be changed easily and cheaply as
compared with the more traditional forms of trust which require deeds of appointment and trustee's minutes.
Share Support Schemes

103. It is alleged in the report of the Authorised Officer, Mr Gerard Ryan, that GMCT/A(C)L were

involved in a scheme to support the share price of These allegations, which

are contained in chapter 17 of the Authorised Officer's Report, fall into two parts. The first

part deals with alleged activities between 1984 and 1987. These activities took place prior to

the acquisition of a shareholding in GMCT by the Ansbacher Group in 1988. No documents

have been found in Cayman which shed any light on the alleged scheme of share support and

Mr Collins is unaware of it. Accordingly, A(C)L finds it impossible to provide any comment

on the alleged activities of GMCT during this period.

104. The second period of activity is alleged to have taken place in 1994 through further purchases

of loan stock. The two companies alleged to be involved at this stage are

PFL and HRL. By 1994 A(C)L had ceased to have any involvement in those two companies.

Any activities undertaken through those companies at this time (by either or both Mr Traynor

and Mr Furze) were done for their benefit and/or the benefit of third parties and were not done

by A(C)L or for the benefit of A(C)L. Accordingly, A(C)L cannot, again, provide any useful

input on this alleged course of conduct.

105. Finally, A(C)L must point out that in relation to this second period of activity involving the

shares of the report of Mr Gerard Ryan notes that a payment of IR£2million

made in April 1994 was made from money held in a call account with HB in the name of

HRL. On the assumption that this is correct, it is highly regrettable that in the final paragraph

of Chapter 17 of the report of the Authorised Officer, it is stated that the IR£2million came

"from deposits held by Ansbacher (Cayman) Limited in DB". That plainly self-contradictory

statement is inaccurate and highly unfortunate; if such a sum were used to purchase shares in

in April 1994, it did not originate from monies held at HB in the name of

A(C)L. Unfortunately, this incorrect reference to A(C)L has been picked up by articles in the
 Irish press which have therefore linked A(C)L, in error, to the alleged system of share

support.

106. The alleged share support scheme in relation to is the only such allegation.

A(C)L is entirely unaware of any other such allegations.

 SECTION 5

ALLEGED DESTRUCTION OF DOCUMENTS

107. It has been asserted by Irish investigating authorities that ACL behaved improperly by

destroying documents which had been in the possession of Mr Traynor at the time of his

death. We are, however, not aware of any basis upon which it can be said that ACL has acted

improperly in this regard. Mr. Traynor died whilst a non-executive director of A(C)L. He is

likely to have had in his possession documents belonging to A(C)L or relating to its affairs

which he may have kept in his office at the premises of Cement Roadstone Holdings Pic in

Dublin. We do not know what documents he had in his possession. We expect that some

related to the Irish resident clients for whom he was the point of contact, although it is by no

means clear that such documents would be A(C)L documents. We also expect that he had

documents relating to other aspects of GMCT's or A(C)L's business. Whilst we are not in a

position to say exactly what documents (if any) Mr Furze may or may not have destroyed or

why he destroyed them, we are advised that the McCracken Tribunal investigated this issue

and we believe that its findings are largely based upon evidence given by Mr Collery.

108. We have noted and have no reason to doubt the accuracy of the McCracken Tribunal's

conclusion which was that Mr Furze destroyed documents which he considered were no
/-N
longer of any relevance. Documents which were still of some relevance were apparently

delivered to Mr Collery, who was paid (until 1997) a retainer after the death of Mr Traynor in

1994 in order to ensure an orderly transition in respect of A(C)L's dealings with Irish clients.

A(C)L took control of all the records in his possession and brought them back to Cayman. By

that time the McCracken Tribunal had reported and the Moriarty Tribunal had been

appointed. Mr Collery's solicitors had contacted the McCracken Tribunal before releasing the

documents to A(C)L; the Tribunal informed Mr Collery's solicitors that it had no objection to

that course of action. We have no reason to believe that if and to the extent Mr Furze
destroyed documents this was because they were either no longer required or duplicates of

documents held in Cayman, as would be usual in the ordinary course of any business. There

is no evidence of which A(C)L is aware of any destruction of documents which suggests in

any way unusual or improper conduct in the circumstances. If he destroyed records for any

other reason, he did so without A(C)L's express or implicit authority or approval. Ultimately,

however, A(C)L is not in a position to say whether any documents which were destroyed

would have been relevant to the investigations now being conducted by the Inspectors.
SECTION 6

CURRENT BUSINESS

109. A(C)L is regulated locally by the Cayman Islands Monetary Authority and the Ansbacher

Group is regulated on a consolidated basis by the Financial Services Authority. The First

Rand Banking Group is regulated by the South African Reserve Bank. As one would expect,

there are regular meetings with these regulators, particularly the FSA on a consolidated basis

where these particular issues have been, and are discussed.

110. As stated earlier in the document, A(C)L has very few remaining clients which would fall

within the relevant definition of Irish business. The remaining business was, in any event,

small in number following the removal of the business of HRL and PFL in 1992/1993. It was

after this that steps were taken to integrate the remaining business into the other business

conducted by A(C)L.
Appendix III

(a) 'Note to John Furze'

(b) Internal Audit Report on Guinness & Mahon dated February 1989

(c) Extract Central Bank Report dated 29 February 1976

(d) 1974 Guinness & Mahon Statement of GMCT account

(e) Statements of Ansbacher's accounts in IIB from 1992 to 1996

(f) Letter dated 25 March 1975; Guinness & Mahon - D.H.A. Cecil

(g) Extract Central Bank Report dated 25 January 1978

(h) Extract of Minutes of Meeting held 7 March 1979, Guinness & Mahon and
Central Bank
Appendix III (a)
NOTE TO JOHN FURZE

15/9/1983^
>
John I have set down blurb respresenting my understanding of the position
in relation to the formation of a Discretionary Trust arrangement.

This material is based primarily on my discussion with yourself yesterday

but also to a secondary degree on an earlier discussion with some mutual
acquaintances of ours.

I took you up on your offer of talking to you by-phone so that I could

check out my understanding of this overall matter and put specific questions
to you.
 CONTENTS

Definitions or Notation

The Steps involved in creating a Trustee Arrangement

How can the Client influence the Decisions of the Trustees?

Usual Features of Trust Deeds

Note re Letter of Wishes

Note re Ongoing Operation of Trust

Planning for Death

Note re the C.I. situation

Note re Confidentiality Position

Towards minimising the Footprints

Discretionary Trust...Pros & Cons

Note re Irish Tax Implications

Note re Irish Exchange Control Regulations

Note re Richie Ryan 1974 Act

Risks

Fees and Costs

 DEFINITIONS OR NOTATION

1 TRUST

A Trust is" something created by deed whereby somebody gives property

to somebody else to hold for the benefit of certain specified beneficiaries.

2 CLIENT

The person giving the property to the Trustee shall for the purpose of
this note be referred to as the Client.

3 DISCRETIONARY, NON-DISCRETIONARY & OPEN TRUSTS

A Discretionary Trust is one in which discretion in relation to the

decisions affecting the property or it's transfer to potential beneficiaries
are legally at the discretion of the Trustees and where the Client abdicates
all legal control in relation to such decisions from the point at which
the Trust arrangement comes into b e i n g .

In a Non-Discretionary Trust the Client retains the right of instructing

the Trustees.

In an earlier note I had a reference to an Open Trust and I do not know

what that means.

TRUSTEE

The Trustee is the party in which there has been vested the authority
to hold property for the benefit of certain specified beneficiaries and
which is being trusted by the Client to make decisions in relation to the
holding and transferring of the property in accordance with the wishes of
the Client.

5 SETTLOR

The Settlor is the executive or administrator who gives effect to the

steps necessary to bring a Trust arrangement into being.

A Settlor will usually be a professional person engaged inter-alia in

the activity of creating Trusts and Trust arrangements.
 6 TRUST DEED

The structure and operation of any Trust in the Cayman Islands must
operate in accordance with the Trust laws of the Islands.

In the cade of a specific Trust arrangement the activities of the

Trustees are also guided and governed by a Trust Deed and a supplemental
deed .

The Trust Deed is the principal document and as I understand it the

principal feature of this Deed is that it specifies all those who can be
beneficiaries under the Trust but does not specify the specific rules
to be adopted in making decisions in relation to the property held by
the Trust.

The Trustees can at any time in their absolute discretion transfer part
or all of the property to any beneficiary or beneficiaries under the
Trust Deed that it wishes but it cannot settle property on any party
other than a party specified as a beneficiary under the Trust Deed.

7 SUPPLEMENTAL DEED OR LETTER OF WISHES

The Supplemental Deed is also called the Letter of Wishes and it is

the letter written in the first instance by the Settlor to the Trustees
indicating his wishes with regard to the operation of the Trust.

As I understand it the Trustees can disregard the Letter of Wishes even-

though the normal practice is that they take full account of the Letter
,„.iv of Wishes.
-

It is my understanding that legally the Trustees are not under any

obligation to abide by the wishes of the Settlor.
 w>

QUESTIONS RE SECTION (A)

A - Q.I :- In anearlier discussion there wasreference to an

A - Q.2 :- In that earlier note it wasstated that the Trust and

As I understand it the Trust is a legally created entity

A - Q.3 :- What else does atypical Trust Deed sayother than to

A - Q.4 :- Would it bepossible to send meafew examples of Trust

A - Q.5 AmI right in understanding that the Trustees canlegally

A - Q.6AmIrightinunderstandingthattheTrusteescansettle

A - Q.7 :- Theearlier note stated that the beneficiaries had to be

 A - Q.8 :- The earlier note stated that the Trustees had to be

A - Q.9 :'- In the earlier note there wasastatement that oncethe Trust

R ^ E S FROM JOHN FURZE TO A-QUESTIONS

 B

THE STEPS INVOLVED IN CREATING A TRUSTEE ARRANGEMENT

The Client authorises a Settlor to create the Trust arrangement.

The Settlor creates the Trust arrangement by

(a) drawing up the Trust Deed;

(b) obtaining the agreement of a selected Trustee to act as

Trustee;

(c) arranging appropriate engrossment of the Trust Deed;

(d) preparing and sending a Letter of Wishes to the Trustees,

The Settlor and the Client arrange the transfer of the appropriate
property to the control of the Trustee.
 B - Q.I :-Is the content of this Section (B) correct?

:PLIES FROM JOHN FURZE TO B-QUESTIONS

 HOW CAN THE CLIENT INFLUENCE THE DECISIONS OF THE TRUSTEES ?

As already stated the Client has no legal control over the decisions of
the Trustees.;

The practice however is that the Trustees will fully accept the wishes
expressed in the Letter of Wishes provided doing so is not in contravention
of the appropriate Trust laws.

Usually at the outset the Letter of' Wishes will contain the wish that the
Trustees should in the future be guided by the day-to-day instructions of
some specified person and that specified person would be the Client or
" omebody acting to the order of the Client.

The Settlor has in the first instance the power to change the Trustees at
any time but at the time of creation of the Trust he renounces his right in
favour of the Client.

Because the Trustees will acknowledge the wishes contained in the Letter of
Wishes and will therefore recognise the day-to-day instructions of the Client
or somebody operating under the Client's instruction.it is therefore
possible for the Client to give instructions-in-effect to the Trustees with
regard to the allocation and transfer of the property held by the T r u s t .

However since the Trustees cannot legally settle any part of the property of
the Trust on anybody other than somebody specified as a beneficiary of the
Trust it is important kt the time of inception of the Tryst that the Client
arranges with the Settlor that all parties will be named as beneficiaries to
•the Trust that he can anticipate as people to whom he might like to transfer
funds at any time in thefuture both before his own demis and subsequent to it

J. order to give him maximum flexibility in this respect it would be usual

^hat one of the beneficiaries under the Trust would be specified as anybody,
whether corporate or individual, w h o would subscribe $10 to the Red Cross
and would be able to deliver a certificate of subscription to the Trustees.
 c - Q.l :- You stated that cut the outset the. Settlor mold renounce.
. , his light to change the TAiuteeA and that he muld renounce
it in favour of the Client.

How would a Client change the Tru6tee6?

Would new Th.uAte.ej> operate to the same original Trcust Veed ?

^ c - Q.2 :- you 6aid that: anybody can become a. beneficiary cut any
time by 6ub6cribing $10 to the Red Cro6s and 6hoioing a
certificate to that effect to the Trustees. U this
connect?

This doe& apply whether the sub6criber is a corporate

person OA. an individual?

Q.3 :- On the surface there 6eems to be a vulnerability in that

anybody famillar with TfuiAt arrangements could 4afa4cAx.be
f10 to the Red Cao&a and dimply ihow a certificate to the
Trustee*.

I imagine this Is covered by the fact that the Trustee*

will not register or List any iucn person as a beneficiary
without the approval of the Client.

c - Q.4 :- A& I understand it an Iri&h Individual If listed cu a

beneficiary would be in contravention of Irish law,
even if a legitimate beneficiary under Cayman I6land6
law and under the rule* of the specific Tru6t arrangement.

Am I correct in this?

C - Q.5 :- If I am correct in C - Q..4 above then in the Irish situation _

U Jut not 60 that individuals cannot be listed cus beneficAxwceA.

REPLIES FROM JOHN FURZE TO C-QUESTIONS

 D
V

USUAL FEATURES OF TRUST DEEDS

The principal feature of the Trust Deed is that it contains a list of

beneficiaries an whom the Trustees can settle property at their absolute
discretion at any time.

The fact that somebody would be named as a beneficiary would not

necessarily mean that any money would ever be settled on the person from
the funds owned by the Trust.

Recurring features of Trust Deeds are as follows :-

;i) A Trust Deed might include as beneficiaries a list of all the

parties which the Client feels he might like to have funds
settled on at any time in the future, either before his demise
or afterwards. Therefore the list might include people like
himself, his wife or his childredn..

(ii) Sometimes instead of putting down the names of himself and

his family a Client will use nom-de-plumes and in practice this
is acceptable to the Trustees.

(iii) Sometimes it is specified that anybody will be a beneficiary under

the Trust who subscribes $10 to the Red Cross and delivers a
certificate to the Trustees to that effect.

(iv) It would be usual that there would be a company listed amongst

the beneficiaries'called (X) Limited which had subscribed to the
Red Cross and had produced a certificate to that effect.
 D - Q.L Is it Correct that the fiact ofi being Listed as a benefiiciaAy
do2.6 not necessarily mean that money firom the. fiund mutd
ever be. settled on such person?

D - Q.2 :- I Mould tike, to talk a little, mo fie. about how the nom-de~ plumes
arrangement works.

D - Q.3 Can there be any number ofi company (X) 's lUted as
benefiixuxiM.es provided they make the $10 contribution?

D - Q.4 :- Am I Aight in thinking that you can put in a new company (X)
ah a benefiixitary at any time provided such company (X)
makes the (10 contribution and-provided the Trust Veed
states .in the fiiASt place that anybody putting fiommAd
a $10 contribution can be a beAefiicJLary.

REPLIES FROM JOHN FURZE TO D-QPESTIONS

 E

NOTE RE LETTER OF WISHES

At the time of creation of the Trust the Settlor completes the creation
task by renouncing in favour of the Client his right to change the Trustees
and by writing a Letter of Wishes to the Trustees in which he expresses
his wishes to the Trustees.

In practice "the wishes expressed by the Settlor to the Trustee are those
specified by the Client.

According toK/2 the document would say "If I had the power to instruct you
what to do with the funds I would say that you should take the advice of
Joe Bloggs or whomsoever".

Frequently the person specified in the Letter of Wishes as the person to

give instructions to the Trustees will be the client himself. However it
could be anybody else that the client might nominate.

This Letter of Wishes might also specify what should be done in the event
of the demise of the client although that is something that the client could
give the Trustees instructions on at any later point. However it is advised
that that would be dealt with at the very outset in order to cover the
possibility that the client dies immediately after the creation of the Trust.

//
 E - Q.i :- In the zaAJLieA note. It was stated that In sending the
Letter ofi Wishes to the Trustees a Settlor begins tooth
the words "Ifi I had the power to tell you what to do
I would teJUL you this".

Is this correct?

PLIES FROM JOHN FURZE TO E-QUESTIONS

/a
 NOTE RE ONGOING OPERATION OF TRUST

1 WHO GIVES INSTRUCTIONS?

In practice the Trustees will do nothing except as instructed by the

Client or by such person as is nominated by the Client.

A nominated person could be nominated by the Client indirectly through

the Letter of Wishes in the first instance or at any subsequent timfi
through new instructions by him to the Trustees.

^ METHOD OF COMMUNICATION

In practice Clients do not like committing instructions to the Trustees

to paper and therefore it is quite usual that instructions would b e
given by phone.

Telephonic recognition of the Client's voice by an executive operating

for the Trustees would ordinarily be sufficient but if it were somebody
who was not known to some executive of the Trustees then he might be
asked to name an identification number or perhaps to give his own
passport number.

In any case there probably would be some conduit between the Client and
the Trustees such as Mr X(l) for example in the case of the GMCT.. •

WHO RECEIVES INSTRUCTIONS IN GMCT SITUATION?

Initially the communication would be directly to JF but in due course

it could be directly to any one of three or four people working with
him. The principal of these would be his partner who is PC and is
joint M . D . of the GMCT.

A WHAT TRANSACTIONS CAN BE DONE DIRECTLY BY THE TRUST

The Trustees will allow the Trust to own any assets except property
assets because there are difficulties with that and if funds entrusted
to the Trust are to be used for the purpose of purchasing a property or
fixed asset then it would ordinarily be done through a company which would
be a wholly-owned subsidiary of the Trust (not a beneficiary of the Trust).

/S
ADMINISTRATIVE CAPACITY OF TRUSTEES

If the Client wished the Trustees to purchase shares with the funds
entrusted to the Trust or to put the funds on deposit in Bank X or
to change the funds to another bank or to transfer the funds to a
company, the Trustees have the administrative capacity to give effect
to all, of these instructions.

TAX IMPLICATIONS OF SETTLING ON A BENEFICIARY

If funds are transferred from the Trust to an individual or to a company

then the question of whether there are tax implications for the beneficiary
of such transfer depends on the tax laws appropriate to the residence of
the person who is receiving the transfer from the Trust, i.e. is there
a capital acquisitions tax implication or a gift tax implication or a
benefit-in-kind implication or whatever?

EXAMPLE

If the Client wants Billy Bloggs to have $10,000 in a bank account in

the South of France the Trustees would settle that amount in (X) Limited
which would be a beneficiary in the list of beneficiaries on the Trust
Deed.

(X) Limited would then transfer funds to whatever account it wished.

The money has not been settled on B Bloggs and therefore the operation
of the Trust is not in breach of any law.

What might then happen is that (X) Limited might engage Bloggs for
a job in the South of France and pay him $10,000 for doing that job..

If Bloggs were an Irish resident and if he did not declare receipt of the
money and bring it back he would be in breach of taxation and exchange
control law.

THE INVESTMENT COMPANY

The Trust would own an investment company and this investment company
would do the job of investing funds of the Trust. As I understand it
the investment company would not own the investments so created but
would simply be a management company in the same way that the investment
department of IBI manages funds on behalf of the clients and invests
cn behalf of clients.

i:
i
F - Q.i :- What risk is there in practice of voice, impersonation
in the situation where voice identification is adopted
as a means of communication?

F - Q.2 :- Ks 1 understand it the problem about the Trust holding

properties Is that circumstances could arise where the
owner of a property could be subject to legal action
and that all the assets of the Trust could become
vulnerable to such action and therefore that it is
appropriate that a wholly-owned subsidiary should be
inserted between the Trust and the property being
acquired.

Is this the problem?

If it is it surely must apply to certain other assets
also e.g. a piece of machinery which could incur a
public liability problem.

I would like to clarify this question a bit.

F - Q.3 Am I right in thinking that It is a wholly-owned subsidiary

o f the Trust that would acquire a property rather than a
company listed as a beneficiary under the Trust.

IS
 F - Q.4 What limits are thzrz on thz administration 6QJwic.z
potzntiaJULy provided by the Tmstzzs?

For zxamplz

(i) will they fiotot Cayman Island companies;

(ii) Mill they zngagz solicitor;

Oil) mill they managz thz Izgal gymnatics ofi

acquiring a property.

F - Q.5 :- Is my undzrstanding ofi thz tax implication in thz casz

ofi settling on a benzfiiciary corrzct?

F - Q.6 :- Havz you any commznt on an thz zxamplz set out in

F. (7).

F - Q.7 Spexiifiically is my statzmznt in thz last paragraph in

relation to Bloggs being in breach ofi Irish law corrzct?

F - Q.8 Am I right in understanding that thz Trustzzs asz an

investment or management company to managz thz afifialrs
ofi thz Trust?

REPLIES FROM JOHN FURZE TO F-QUESTIONS

It*
 PLANNING FOR DEATH

Provided that the Client has arranged that one of the beneficiaries listed
in the Trust Deed is an (X) Limited then he can use that company as a conduit
through which funds could be transferred from the Trust to anybody he would
like for as long as he is alive.

However he might wish to have specific rules adhered to following his death and
not to leave the allocation of benefit to be determined by decisions taken after
his death and for that reason therefore he would very probably be happier that
it would be possible for him to arrange that in the event of his death funds
would be settled in an appropriate way on those people that he would like to be
b*.Asficiaries after his death.

:ause the Trustees cannot settle money on anybody who is not listed in the
Irust Deed as a beneficiary it is of value therefore that at the time of
inception of the Trust arrangement in the first place the Client specifies as
beneficiaries in the Trust Deed anybody whom he might ultimately want to be
beneficiaries after his death.

It seems to me however that he could still do it through Company (X) L i m i t e d .

He could specify to the Trustees that in the event of his death a certain amount
of money should be settled in (X) Limited and he could provide instructions to
the Directors of (X) Limited with regarjd to how those funds would be allocated
in the event.

If (X) Limited were an Irish company or UK company then it seems to me that the
settling of such money on such a company would be subject to gift tax w i t h i n
the rules of the gift tax legislation of these countries and I wonder therefore
whether it would be normal that (X) Limited would be a Cayman Island registered
company.

xt were a Cayman Island registered company and if such settlement were

.arefore free of any tax implications it would remain -for the Directors of that
company to distribute the funds in accordance with the wishes of the C l i e n t .

It seems to me that the tax implications for the recipients of such money w o u l d
b e the same whether the money w a s settled on them by the Trust or transferred to
them by (X) Limited. I can see however that the settlement of funds on them by
the Trust could be hidden and not necessarily disclosed by the receipie'nts
whereas the transfer of money by (X) Limited might create a record of transactions
in the records of (X) Limited which might prejudice that position.

The Client would have great flexibility in the form of the instruction that he might
give to the Trustees with regard to what should happen in the event of his d e a t h .

He could for example arrange any of the following in relation to a specific

beneficiary:-

(i) that an amount of money would be settled on that beneficiary;

(ii) that an amount of money would

- be retained and invested for the
benefit of that benefici y on the basis that the income would be
paid Co that beneficiary on an ongoing basis;
 (iii) that the money would be held for the benefit of that beneficiary
and that the actual transactions in relation to that money in
the event would be done on the instruction of some specified
person.

If it was intended
; that there would be three parties who could give
instructions in relation to the funds in the Trust on the basis of a certain
allocation of the overall fund then it would simply be arranged that in the
event of the death of the Client each party could give direct instructions
to the Trustees. The instructions would relate only to the proportion of
the overall original fund applicable to that person.

Ordinarily it would not be arranged that three new Trust arrangements would
be created to reflect this position and it would be unnecessary to do so.
Neither of the three parties would know anyting about the amount of funds
lyAthat had been in the earlier Trust arrangement or what the allocation of the
overall Trust fund-was on the .death of the the Client. The GMCT "is a legal
body which deals with multiple Trust arrangements and it would simply see
itself here as dealing with three separate Trust arrangements eventhough it
would be guided by one original Letter of Wishes and one Trust Deed.

If the Client were to die and if he had specified that monies would be settled
on certain beneficiaries or that certain beneficiaries would benefit in some
way from monies held by the Trust then any onfe of those beneficiaries would
be entitled to see the Trust Deed but would not be entitled to see the Letter
of Wishes. ;

Therefore at the time of setting out the beneficiaries in the Trust Deed it
must be anticipated that any one of those people ultimately benefitting after
the Client's death would see the list of beneficiaries. It would be
important therefore to leave out mistresses and such like.

The Trust Deed would not specify the amount of money that had been transferred
^ to the Trust in the first place and there would be a record of that only in
the Trust accounts.

Nobody would be entitled to see the Trust accounts.

The original Trust Deed and the wishes of the Client expressed either through
the Letter of Wishes or subsequently would constitute the rules to be
'applied by the Trustees in relation to the particular amount of funds to be
managed for the benefit of a particular beneficiary and the Trustees would
simply manage that particular amount in accordance with the instructions
given to them either in the first instance by the Client or subsequently
by such person as would b e empowered to give instructions to the Trustees.

It would be possible after the death of the Client that eventhough one beneficiary
e.g. a wife, would be a beneficiary only in relation to a part of the overall
Trust fund that she could specify that any part of her particular proportion
could be settled on any other beneficiary under the original Trust Deed.
 G - Q.l Am I right in understanding that when the Trust settles
money on an individual or an entity the individual or
entity is subject to the tax laws ofi the country ofi
' ' residence ofi that individual or entity tlvxt are apfjroprlate
to the receipt ofi money fior non-consideration as would
apply in the case ofi settlement firom the Trust.

;>< G - Q.2 :- Can you tell me about any problem re the use ofi companies
listed as benefiicAAJu.es to the Trust as a means ofi
conducting money in the event ofi death to an intended
individual benefiiciary other than those problems that
I have listed here.

G - Q.3 :- Are the tax implications fior the recipient ofi monies
by an individual firom the Trust whether befiore the Client's
death or afiterwards the same, whether the money comes firom
a Trust or firom a company which would be a benefiiciary
under the Trust.

G - Q.A :- I £ they are the same are there any advantages not refi erred
to by me in having a. settlement direct firom the Trust
rather than through a company which would be a benefiiciary
under the Trust?
 What parties may have nights on entitlement to see the.
Trust Veed and in what circumstances would they have,
such night?

Can that night apply to the wife of the Client on the

death of the Client even if she has not been listed as
a beneficiary on if thene one no pnovisions made fon hen?

Can any beneficiary be entitled to see the Trust Veed on

the death of a Client or at any othen time even if it Is
not intended that that beneficiany would have any money
settled on him/hen/it?
Would a beneficiary due to have money settled on him/her/it
be entitled to see a copy of the Trust Veed?

Am I night in understanding that nobody in any circumstances

is entitled to see a copy of the Letter of Wishes except the
Client 1

Am I night in understanding that nobody Is at any time and

in any circumstances entitled to see the Tnust Accounts?

In the event that after the Client's death there is some

beneficiary with an entitlement to a pnoportion of the
Trust fund and with a night to give instructions to the
Tnustees with negard to the management of that funds, can
thatbeneficlary instruct the Trustees to settle money on
any other beneficiary under the earlier Trust Veed?

FURZE TO G-QUESTIONS
 H

NOTE RE THE C.I. SITUATION

C.I. is a Crown Colony. There are 15,000 people in it and there

is a representative elected to the Legislature from each of the different
districts.
.i

Altogether there are 14 elected representatives to the Legislature.

4 are elected to form a governing body.

Only the Legislature has the power to change the laws of the Island and
the British Government cannot require a change of law without their consent.

"'here is no taxation in the C . I .

.nere is always an individual in office in the C.I.

Such an officer has in the past been affiliated either to the Bank of England
or to the IMF. In the last two situations the man has been affiliated to
the Bank of England. This person could demand all the documents related to
any Trust arrangement at any time he wished to do so.

Such an officer is however sworn under the Secrecy Act as all others involved
in Trust arrangements are.

The principal economic activities in C.I. are tourism and finance and finance
is probably the major one and therefore there is a big incentive on the part
of the Legislature not to make unfavourable changes in the laws governing
financial matters.

The Cayman Islands is to be favoured relative to the Channel Islands because:-

»»

(a) they already have an efficient organisation of 30 people and they

are very good;

(b) it is felt that the Channel Islands is more vulnerable in the sense
that there is a suspision already that the Authorities in the Channel
Islands and the Authorities in the "UK exchange information. There
are threatening sounds being made by the UK on a continuing basis
about altering the taxation status of transactions and entities in
the Channel Islands..

If the exchange of information were to become more general there

would be a major problem.

(c) The Cayman Islands is farther away and more remote.

(d) There is legislation in the Cayman Islands to safeguard secrecy

J/
 H - Q.l :- 1s it correct that the British. Government cannot change
the laws ofi the Cayman Islands?

H - Q.2 -: Is it correct that there is no taxation ofi any kind in

the Cayman Islands?

H - Q.3 :- Who' has the authority to appoint the supervisory ofifiicer

refierred to in this Section?

Where does that authority ultimately come firom?

H - Q.4 :- Are there double taxation arrangements between the Cayman

Islands and Ireland or the Cayman Islands and England?

Ifi there are could I obtain copies ofi them?

H - Q.5 :- Can the supervisory ofifiicer refierred to In this Section

take copies ofi Trust documents out ofi the control ofi
the GMCT or is he allowed only to examine then, within
the precincts ofi GMCT?.

REPLIES FROM JOHN FURZE TO H-QUESTIONS

QJL
 NOTE RE CONFIDENTIALITY POSITION

1. There is a Secrecy Act in the C.I. and all officers involved

with Trust arrangements and indeed the overall officer with
responsibility for supervising the operation of Trust
arrangements in the C.I. are sworn by the Secrecy Act.

2. In practice in the GMCT situation only very senior officers

have privy to the Trust documents.

3. In the case of a Dublin situation the only parties who would

be aware of a Trust arrangement would be X(l), X(2), JF and
perhaps 3 or A of his officers.

.A. None of the Trust documents are public documents or are registered
anywhere.

5. The making of arrangements with the Trustees with regard to the

disposition of funds in the case of the death of a Client can be
given effect to without going through a Will which must be probated
and would be a public document.

Even in the C.I. a Will would be a registered public document

and the tax authority in any part of the world would be free to
look at i t .

6. Nobody in Dublin other.than the two principals would know about any
Trust arrangement and there would be no record of any kind anywhere
in Dublin or any reference in any correspondence between GMCT and
Dublin in relation to any Trust arrangement.

7. In order that any interested party could identify a possible linkage

between an individual and a particular Trust arrangement it would
be necessary that one or other of the parties who are aware of this
arrangement would disclose that or that through detection work or
theft or accident that sight would be obtained either of the Trust
Deed or the Letter of Wishes or any other correspondence pertaining
to the Trust arrangement.

8. If all the money were moved from the Trust at any point in time and
if the Client wished to discontinue the operation of the Trust it
would be legally possible for him to recover the Trust Deed and the
Letter of Wishes and any other correspondence and to obtain a
certificate from the Trustees that there were no copies anywhere.
9. There are no duplicate copies of Trust documents anywhere outside
of the GMCT. Consideration is being given to having a set of
duplicate copies somewhere but no decision has been reached on it,

•(^Si
I - Q.l :- la/hat sanctions or penalty apply In the event ofi someone
breaching the Secrecy Act?

I - Q.2 :- Am I right in thinking that it is not a very efifiective

deterrent in any case because anybody who wishes to
transmit infiormatlon could do so anonymously?

I - Q.3 :- Are there many Irish people employed in GMCT?

I - Q.4 Am I right in understanding that there is no record or

note, ofi any kind in relation to any aspect ofi a Trust
arrangement in the ofifiic.es in Vublin ?

J2s
 Am I right in understanding that the only people
Likely to be truly aware o^ a specific Trust arrangement
would be X(l) and X(2J.

Am I right In understanding that the Client can at

any stage decide to terminate the use of the Trust
arrangement and to recover the letter of Wishes and
Tnust Veed and to obtain a certificate that there are
no copies held anywhere?

EPLIES FROM JOHN FURZE TO I-QUESTIONS

 J

TOWARDS MINIMISING THE FOOTPRINTS

I discussed with JF various possible ways in which it could be arranged

that sight of either the Trust Deed or the Letter of Wishes would not
provide clues as to the linkage between the Client and the Trust arrangement.

On the basis of my discussion with JF it seems that the following things

might be possible :-

(i) If it is correct that any individual could be named as a

beneficiary upon subscribing $10 to the Red Cross then at the
time of creation of the initial Trust Deed it would be
j/**^ possible to leave out names of any connected parties but
still have the option of putting them in later by arranging
that they would subscribe $10 to the Red Cross.

This would mean that the problem was deferred until a later
point but it would bring with it the risk that the Client
might die before he gave effect to satisfactory arrangements.

(ii) Equally it could be arranged that there could be a list of several

(X) companies in the original Trust Deed and that at a later
point each one of these could be assigned to a potential
individual beneficiary and that money could be settled indirectly
on those beneficiaries through the (X)-company route.

This however would have the difficulty implicit in transferring

money from a private company to a shareholder or to an unconnected
third party whatever" those difficulties might b e .

In the case of the company registered iri Ireland or the UK there

would be tax implications but presumably there would not be if
it were a company registered in the Cayman Islands.

If the Client were to go the route of using a series of (X)

companies the onus would then fall on him to make sure that the
officers of those companies would carry out his instructions
with regard to transfer of monies to the intended beneficiaries.
Of course the intended beneficiaries could be shareholders or
Directors or both.

It would be an implication of this that the confidence which the

Client had in the reliability of the Trustees to discharge his
wishes after his death would be lost and that he would be
substituting for that such confidence as he could have in the
officers in the company and perhaps that might not be as good.
(iii) The Letter of Wishes in the first place might specify that
the Trustees should accept the instructions of a partner in
a law firm in New York or in London.

A problem arises if such a partner were to die. However this

might be covered by having it specified that the Trustees should
accept the instructions of either of two or three or four
persons. They could be different persons in the same law firm
or persons from different law firms.

(iv) If that were to be done the Client would have to have

confidence that the people specified could be relied upon to
behave properly and not to give instructions to the Trustees
to transfer funds somewhere without the Client's authority.

* In following this route the Client is losing the insurance which

he has that thie Trustees are reliable in relation to acting in
accordance with the wishes of the Client and that in any case
there is insurance cover in relation to potential erratic
action on the part of the Trustees.'

Perhaps he can satisfy himself that in the case of the persons

nominated that he can have total reliability but if there were
a doubt about that it could be dealt with by arranging that
Trustees could only act when an instruction from a specified
person was confirmed by some other specified person.

In this situation the Client could then select two unconnected

people e.g. from two different and unrelated law firms and he
would therefore cut down sharply whatever probability there might
be that one of the nominated persons might give a misguided or
irresponsible instruction to the Trustees.

^ If the route were being followed that the Trustees could only
act on instructions when they were confirmed by a second party
then it would be necessary to have a number of pairs to cover the
possibility of somebody dying.
 j - Q.l Vera talked about insurance cover. I imagine this is
insurance taken out by the GMCT in relation to mis-
appropriation ofi the Trust Funds by any ofi It's ofifiicers.

Am I right In thinking that no Client uxiuld have any

legal recourse to GM in relation to the proceeds ofi such
insurance but would simply be depending on the Trust
arrangement to operate to his benefiit in the same way
as in all other circumstances?

R E ' ^ S FROM JOHN FURZE TO J-QUESTIONS

 DISCRETIONARY TRUST PROS & CONS

PLUSSES

(i) Money can be moved, invested or divested from time-to-time

simply through a telephone call to a contact operating on
behalf of the Trustees. A Bank will not do that without
drawing up time-to-time documents of authority.

(ii) In theevent of demise it is possible to give effect to the

Client's wishes without drawing up a will and this is of
advantage because a will has to be probated and is a public
document and any authority or .tax authority anywhere can go
and look at the details of any will whether it be registered
in the Cayman Islands or anywhere else.

(iii) Because assets held in a Discretionary Trust are legally not

at all under the control or ownership of the Client it is
therefore factually and legally correct to state that the
Client does not own any of the assets held by the Discretionary
Trust and is therefore not in breach of exchange control
regulations. The Bank in Ireland can swear to the Revenue as
to the non-connection in the legal sense between any parties
it might be enquiring about and any legal Trust.

MINUSES

though many of the footprints can be erased it is still true that a

.amber of individuals will know who the effective Client is in the case
of any Trust. It is always possible therefore that due to error or
investigation of a sufficiently thorough kind that the true Client might
be identified by an interested party as being connected with a Trust.

On the other hand if an Irish individual who held undisclosed funds were
to hold them to his own account in an overseas bank then it is much less
likely that anybody would learn about the matter eventhough he would be
in breach of various Irish laws.

The problem about a tax official identifying through research or investigation

who the real Client was in the case of any Trust arrangement is not that he
can claim that the Client is the owner of the assets in the Trust because he
cannot do that because he legally is not the owner, but rather that he knows
that the assets of the Trust arose in the first instance through a transfer
to the Trust from the Client and he will suspect that the assets in the first
instance may have been generated by the Client without paying the appropriate
amount of tax and that might lead to an investigation of the Client's affairs
of a sufficient degree to track down what the assets might have been.
 K - Q.I I Mould Like, to cZarifiy a bit further what sofut ofi
transactions a bank will not do that the. Trustees will
do.

EPLIES FROM JOHN FURZE TO K-QUESTIONS

 L

NOTE RE IRISH TAX IMPLICATIONS

 M

NOTE RE IRISH EXCHANGE CONTROL REGULATIONS

 N

NOTE RE RICHIE RYAN 19 7 A ACT

RISKS
FEES & COSTS

3C
Appendix III (b)
 Report No.6/Feb. 1989

INTERNAL AUDIT REPORT

fey

GUINNESS & MAHON LIMITED

DUBLIN

[04711]
 GUINNESS & MAHON LIMITED, DUBLIN

INTERNAL AUDIT REPORT

i

Introduction

W e h a v e c o m p l e t e d a r e v i e w of G u i n n e s s & M a h o n L i m i t e d in
a c c o r d a n c e w i t h o u r p r o g r a m m e of r o u t i n e audits.

Purpose and Scope

The o v e r a l l o b j e c t i v e of the r e v i e w was to e v a l u a t e the

i n t e r n a l c o n t r o l s w i t h i n the b a n k for a d e q u a c y and
effectiveness.

Our a u d i t i n c l u d e d t h e f o l l o w i n g m a i n a c t i v i t i e s of the b a n k
t o g e t h e r w i t h the r e l a t e d s u p p o r t functions:

(1) F o r e i g n E x c h a n g e and M o n e y M a r k e t Trading.

(2) Security Trading

(3) Credit Administration

In a d d i t i o n , we r e v i e w e d c a s h , p a y r o l l , c o m p u t e r s e c u r i t y and
other s u n d r y a c t i v i t i e s of the b a n k . The Cork office was
also visited.

The b a n k ' s Loan p o r t f o l i o w a s n o t r e v i e w e d b y us on this

o c c a s i o n a s in r e c e n t m o n t h s it h a s b e e n the s u b j e c t of
d e t a i L e d e x a m i n a t i o n b y the e x t e r n a l a u d i t o r s a n d b y the
credit controller (London Office).

We h a v e a l s o a v o i d e d r e p e t i t i o n , as far as is p o s s i b l e , of
the p o i n t s raised b y the e x t e r n a l a u d i t o r s in t h e i r draft
management letter of 12 D e c e m b e r 1988.
C. Overall Conclusions
V

W h i l s t in r e c e n t m o n t h s t h e r e h a v e b e e n m a j o r organisational
c h a n g e s w i t h i n the B a n k , we found that s t a f f m o r a l e had
r e c o v e r e d and g e n e r a l l y t h e r e w a s g o o d a p p r e c i a t i o n of
control disciplines. /

T h e r e a r e , h o w e v e r , a n u m b e r of i s s u e s r a i s e d in t h i s report
which require attention. A m a t t e r of p a r t i c u l a r c o n c e r n to
us r e l a t e s to the m a n a g e m e n t and c o n t r o l o f t h e A n s b a c h e r ,
C a y m a n d e p o s i t s , a m o u n t i n g to n e a r l y I R £ 3 8 M a n d constituting
a l m o s t 35% of the B a n k ' s l i a b i l i t i e s . These deposits are
u n d e r the sole c h a r g e of the A s s o c i a t e D i r e c t o r of t h e Bank
w h o a l s o a c t s , in p r a c t i c e b u t n o t o f f i c i a l l y , as a Dublin
based r e p r e s e n t a t i v e of A n s b a c h e r L i m i t e d a n d n e g o t i a t e s the
r a t e s w i t h G + M in that capacity.

T h e A s s o c i a t e D i r e c t o r , a d d i t i o n a l l y , m a n a g e s the related
anonymous off-shore "customer" d e p o s i t s , o n b e h a l f of
A n s b a c h e r , almost entirely on his own without any evident
a c c o u n t a b i l i t y to the B o a r d . In this r e s p e c t t o o , h e a c t s a s
a D u b l i n b a s e d a g e n t of A n s b a c h e r w h i l s t b e i n g a full-time
e m p l o y e e of G + M . This dual role, which involves him in
a c t i n g on behalf of b o t h the p a r t i e s to t h e t r a n s a c t i o n with
l i t t l e i n t e r n a l c h e c k , not o n l y c r e a t e s s e r i o u s c o n f l i c t s of
i n t e r e s t buT"~aTso e x p o s e s t h e B a n k to u n a c c e p t a b l e r i s k s of
fraud.

W e h a v e dealt w i t h this m a t t e r in d e t a i l u n d e r s e c t i o n 1 of
this report. T h e r e are s e r i o u s legal and o p e r a t i o n a l risks
a s s o c i a t e d with this a c t i v i t y w h i c h need to b e e v a l u a t e d by
t h e B o a r d so as to cover a g a i n s t p o t e n t i a l l o s s o r
e m b a r a s s m e n t to the B a n k .

T h e following is a b r i e f s u m m a r y of the o t h e r m a i n issues

r a i s e d in this r e p o r t :
 (1) T h e f o r e i g n e x c h a n g e and m o n e y m a r k e t d e a l e r s c a r r y o u t a
n u m b e r of f u n c t i o n s w h i c h a r e i n c o m p a t i b l e , w i t h t h e i r
i.
, . m a i n s t r e a m t r a d i n g a c t i v i t y ; for e x a m p l e , t h e i r o t h e r
'responsibilities include effecting payments on the
Central Bank and US Dollar nostros, nostro
reconciliations, confirmation sending and receiving and
a c c e s s to the t e s t k e y s . T h e r e is t h e r e f o r e a r i s k that
a major irregularity may not be prevented or detected.'

(2) S e c u r i t y t r a d i n g t r a n s a c t i o n s a r e n o t e n t e r e d i n t o the
computer system on the contract d a t e . T h e e f f e c t of t h i s
is t h a t the r e l a t i v e c o m p u t e r r e p o r t s m a y b e o u t of d a t e
for u p to t h r e e weeks.

(3) T h e i n v e s t m e n t d e a l e r s d o n o t a l w a y s a l l o c a t e d e a l s to
c u s t o m e r s at t h e t i m e t h a t t h e y a r e d o n e . There is
t h e r e f o r e a p o s s i b i l i t y of a c o n f l i c t of i n t e r e s t in the
e v e n t of m a t e r i a l p r i c e c h a n g e s p r i o r to t h e allocation.

(4) W e h a v e s u g g e s t e d that L o a n O f f i c e r s s h o u l d n o t b e
a u t h o r i s e d to i s s u e c h e q u e s r e l a t i n g to t h e l o a n s u n d e r
their responsibility. T h i s task s h o u l d b e p e r f o r m e d b y a
. . . i
more formal Loan Administration Section reporting direct j /H-
to the M a n a g i n g D i r e c t o r .

(5) T h e r o l e of t h e F i n a n c i a l C o n t r o l l e r s h o u l d b e e n h a n c e d
so as to e n c o m p a s s c e r t a i n i n d e p e n d e n t monitoring
ii
functions In p a r t i c u l a r , m o n i t o r i n g of t r a d i n g limits,
•Jr m
• f .\mmoonniittoorriinn g and e n s u r i n g p r o m p t r e s o l u t i o n o f o u t s t a n d i n g
iI V"~f
L items
terns oonn s u s p e n s e a n d n o s t r o a c c o u n t s , m o n i t o r i n g of FX
» i. revaluations, etc. These will improve supervisory
controls within the Bank, particularly where staff
c o n s t r a i n t s p r e c l u d e e f f e c t i v e s e g r e g a t i o n of duties.

(6) A t p r e s e n t the n o s t r o a n d s u s p e n s e account

reconciliations are performed by various people spread
I t h r o u g h o u t the B a n k , a n d t h e r e f o r e s u p e r v i s o r y controls
n e e d to be e s t a b l i s h e d in o r d e r to e n s u r e that the
M'' a c c o u n t s are r e c o n c i l e d regularly and all outstanding
items are i n v e s t i g a t e d and r e s o l v e d promptly.
 (7) C e r t a i n p r o c e d u r e s r e l a t i n g to the t e l e x p a y m e n t messages
n e e d t o b e t i g h t e n e d in o r d e r to i m p r o v e control.

(8) 'in r e s p e c t o f new s t a f f , s t a n d a r d p r o c e d u r e s s h o u l d b e

established requiring written references and evidencing
of v e r i f i c a t i o n o f a c a d e m i c a n d professional
qualifications.

W e w o u l d l i k e t o p o i n t o u t t h a t o u r r e p o r t is m a d e o n a n
exception b a s i s , and therefore highlights the points of
w e a k n e s s e s only. O v e r t h e last 12 m o n t h s , a considerable
management effort has gone into improving procedural controls
w i t h i n t h e B a n k in g e n e r a l a n d p a r t i c u l a r l y in t h e B a n k i n g jf.
Department.

We w o u l d l i k e to e x p r e s s o u r g r a t i t u d e for t h e a s s i s t a n c e and
co-operation afforded us during the review.
 kui"-

D. Findings, Conclusions and Recommendations

1. Ansbacher Limited, Grand

— . —
Cayman
: /
A n s b a c h e r L i m i t e d , a c o m p a n y ' b a s e d in G r a n d C a y m a n , h a s
deposited, by way of call and fixed deposits, amounts
equivalent to IR£38M with the Bank ("Ansbacher Deposits").
T h e s e d e p o s i t s e q u a t e to f u n d s l o d g e d o n o f f - s h o r e c a l l and
fixed d e p o s i t a c c o u n t s w i t h A n s b a c h e r L i m i t e d ("Customer
Deposits") by Dublin-based customers.

T h e l e d g e r a c c o u n t i n g r e c o r d s of the C u s t o m e r D e p o s i t s are
m a i n t a i n e d b y t h e B a n k o n a " B u r e a u S y s t e m " w h i c h s h a r e s the
s a m e h a r d w a r e a s , b u t is t o t a l l y i n d e p e n d e n t o f , the IBIS/38
system of G + M , D u b l i n . Thus the Ansbacher Deposits held on
••/the B a n k ' s c o m p u t e r s y s t e m a r e r e p r e s e n t e d b y the Customer
' I Deposits held on the Bureau System.

T h e B u r e a u S y s t e m is o p e r a t e d a n d c o n t r o l l e d s o l e l y , o n
b e h a l f of A n s b a c h e r , b y t h e A s s o c i a t e D i r e c t o r , O p e r a t i o n s
(DPC) a n d n o o t h e r s e n i o r o f f i c i a l of t h e Bank h a s a c c e s s to
that system. C u s t o m e r n a m e s a r e n o t h e l d on t h e s y s t e m b u t
e a c h d e p o s i t is i d e n t i f i e d b y a c o d e . We understand that DPC
is a w a r e o f t h e i r names.

D P C d e a l s d i r e c t w i t h t h e c u s t o m e r s or t h e i r a g e n t s . He
_ negotiates call/fixed d e p o s i t interest rates with them. He
. a l s o n e g o t i a t e s , o n b e h a l f of A n s b a c h e r L i m i t e d , w i t h G + M
dealers the rates payable on the Ansbacher Deposits ensuring
!
. /] t h a t the t o t a l i n t e r e s t r e c e i v e d b y A n s b a c h e r L i m i t e d agrees
i I w i t h t h e t o t a l i n t e r e s t p a i d o n the C u s t o m e r D e p o s i t s . If
the t o t a l s d o n o t a g r e e , a d j u s t i n g e n t r i e s are p a s s e d in the
Bank's books by DPC. We understand that Ansbacher Limited is
r e m u n e r a t e d b y w a y of a fee o f 1/8% p e r a n n u m c a l c u l a t e d on
the t o t a l d e p o s i t s a l t h o u g h w e h a v e n o t seen a n y legal
d o c u m e n t a t i o n to t h i s effect.

I {- ;• U~ - s -
 D P C a l s o r e c e i v e s a n d p r o c e s s e s the p a y m e n t i n s t r u c t i o n s in
r e s p e c t of C u s t o m e r D e p o s i t s . T h e p a y m e n t s a r e in fact m a d e
from t h e A n s b a c h e r D e p o s i t s h e l d in t h e B a n k ' s b o o k s . The
i.

corresponding book-keeping entries debiting customer

i
accounts, which are technically off-shore, are then made on
the B u r e a u S y s t e m t h u s m a i n t a i n i n g t h e e q u a t i o n of A n s b a c h e r
Deposits w i t h the Customer Deposits.

In p r a c t i c e (but n o t o f f i c i a l l y ) , t h e r e f o r e , D P C a c t s a s a
Dublin b a s e d agent of Ansbacher Limited i n s o f a r as t h e
m a n a g e m e n t o f C u s t o m e r - a n d A n s b a c h e r D e p o s i t s is c o n c e r n e d ,
a l t h o u g h h e is e m p l o y e d f u l l - t i m e b y t h e B a n k . All
t r a n s a c t i o n s r e l a t i n g to t h e s e d e p o s i t s a r e i n i t i a t e d and
processed by DPC. In a d d i t i o n t o n e g o t i a t i n g w i t h b o t h the
p a r t i e s to t h e t r a n s a c t i o n s , h e r a i s e s a c c o u n t i n g e n t r i e s and
p r e p a r e s i n p u t v o u c h e r s , d e a l s l i p s e t c for b o t h the p a r t i e s
(G + M a n d the c u s t o m e r s of A n s b a c h e r L i m i t e d ) . T h e r e is n o
internal check on his activity.

It s h o u l d a l s o b e n o t e d t h a t s t a n d a r d c o n t r o l s generally
a p p l i c a b l e w i t h i n t h e B a n k to C a l l a n d F i x e d D e p o s i t s a r e not
applied to Ansbacher D e p o s i t s . For example, with respect to
money market deals done with Ansbacher Limited, DPC, not the
dealer, completes the deal slips; no counterparty
c o n f i r m a t i o n s a r e r e c e i v e d and t h e B a n k ' s outgoing
c o n f i r m a t i o n s a r e s e n t n o t to A n s b a c h e r L i m i t e d b u t t o D P C .

As m e n t i o n e d b e f o r e , D P C t o g e t h e r w i t h c e r t a i n a g e n t ( s ) of
the c u s t o m e r s , n e g o t i a t e s n o t o n l y i n t e r e s t p a y a b l e o n t h e
C u s t o m e r D e p o s i t s b u t a l s o i n t e r e s t p a y a b l e o n the A n s b a c h e r
Deposits. T h i s t o g e t h e r w i t h t h e a b i l i t y to i n i t i a t e a n d
p r o c e s s p a y m e n t i n s t r u c t i o n s o n the A n s b a c h e r D e p o s i t s with
no e f f e c t i v e i n t e r n a l c h e c k c o n s t i t u t e s a s e r i o u s control
weakness^. For e x a m p l e , i n t e r e s t r a t e n e g o t i a t i o n s could
easily be manipulated so a s to c r e a t e a s u r p l u s of interest
c r e d i t e d to A n s b a c h e r C a l l D e p o s i t A c c o u n t s o v e r the a v e r a g e
interest payable on the corresponding Customer Call Deposit
 Accounts. A s t h e f u n c t i o n o f m a i n t e n a n c e and o p e r a t i o n o f
the d e p o s i t s is v e s t e d in o n e p e r s o n o n l y , t h e s u r p l u s may
easily be misappropriated without detection because the
e q u a t i o n o f b a l a n c e s o n C u s t o m e r D e p o s i t s w i t h the A n s b a c h e r
Deposit will be maintained.

It s h o u l d b e p o i n t e d o u t t h a t w e h a v e n e i t h e r d e t e c t e d nor d o
we h a v e a n y r e a s o n to b e l i e v e t h a t t h e r e h a s b e e n a n y
i r r e g u l a r i t y w i t h r e s p e c t to A n s b a c h e r D e p o s i t s . However, as
the C u s t o m e r D e p o s i t s c o n s t i t u t e r e c o r d s of A n s b a c h e r Limited
(and n o t o f G + M , D u b l i n ) t h e y h a v e n o t b e e n s u b j e c t to o u r
review. We h a v e a l s o not reviewed the procedures involved in
''opening o f n e w C u s t o m e r D e p o s i t s , if a n y n e w d e p o s i t s are
,(indeed t a k e n . F u r t h e r , w e h a v e n o t s e e n a n y m a n d a t e s for the
>.f/
operation of the Ansbacher Deposits and Customer Deposits.

In our o p i n i o n , lack of i n t e r n a l c o n t r o l o v e r t h i s activity

coupled w i t h the fact that the Ansbacher Deposits constitute
n e a r l y 35% of t h e B a n k ' s l i a b i l i t i e s e x p o s e t h e Bank to
serious r i s k s of loss and e m b a r a s s m e n t . These risks together
w i t h t h e l e g a l p o s i t i o n of t h e B a n k v i s a vis the m a i n t e n a n c e
of o f f - s h o r e C u s t o m e r D e p o s i t s b y a B a n k e m p l o y e e a n d o n t h e
B a n k ' s p r e m i s e s n e e d t o be e v a l u a t e d b y t h e B o a r d .
/<
In the m e a n t i m e , the f o l l o w i n g m e a s u r e s s h o u l d b e t a k e n in
order to s a f e g u a r d t h e i n t e r e s t s of the B a n k .

(i) T h e s i t e of the B u r e a u S y s t e m , i n c l u d i n g the

A n s b a c h e r s t a t i o n e r y , d o c u m e n t s and v o u c h e r s relating
t o t h e C u s t o m e r D e p o s i t s s h o u l d be r e l o c a t e d aK
e l s e w h e r e , a w a y from t h e B a n k ' s p r e m i s e s . When this
has been accomplished it s h o u l d be e n s u r e d t h a t the
B a n k ' s c o m p u t e r h a r d w a r e is n o t l i n k e d to a n y
t e r m i n a l o u t s i d e the B a n k ' s p r e m i s e s u n l e s s d u l y
authorised by a Managing Director.
 I d e a l l y , no B a n k e m p l o y e e s h o u l d be i n v o l v e d in t h e
m a n a g e m e n t and m a i n t e n a n c e of the C u s t o m e r Deposits.
I f , h o w e v e r , t h i s is n o t p r a c t i c a b l e , t h e n the
e m p l o y e e s i n v o l v e d in m a n a g i n g and m a i n t a i n i n g the
C u s t o m e r D e p o s i t s , a n d h e n c e a c t i n g o n b e h a l f of
J
V Ansbacher Limited, should not be the same as those
a c t i n g for G + M a n d m a n a g i n g a n d m a i n t a i n i n g the
\!l Ansbacher Deposits. The former should ensure that
t h e c u s t o m e r s a r e a w a r e of t h e i r r e l a t i o n s h i p with
Ansbacher Limited, Grand Cayman. a
a
(iii) T h e B a n k s h o u l d o b t a i n from A n s b a c h e r L i m i t e d a
mandate specifying authorised signatories empowered
to issue payment instructions on the Ansbacher
Deposi ts.

(iv) Standard controls applicable generally to Call

Deposits and Fixed Deposits should also be applied to
the Ansbacher D e p o s i t s , unless the e x c e p t i o n s are
duly authorised by a Managing D i r e c t o r . / ' The
(jU (/dealings b e t w e e n A n s b a c h e r L i m i t e d a n d G + M should
l/be s e e n to b e o n a n a r m ' s l e n g t h b a s i s .

(v) S t a t e m e n t s of A c c o u n t s r e l a t i n g to A n s b a c h e r Deposits
s h o u l d be s e n t t o A n s b a c h e r L i m i t e d o n a m o n t h l y
ba s i s . ^ V ^ "
•hr U^iL
(vi) T o the e x t e n t t h a t A n s b a c h e r D e p o s i t s form security,
s t e p s s h o u l d b e t a k e n to a c c o u n t s e p a r a t e l y for t h e s e
d e p o s i t s so as n o t to w e a k e n the e x i s t i n g q u a l i t y o f
the security.
V

Response; fe- . .iW Implementation Date:

V
2. Foreign Exchange and Money Market Dealing

W h i l s t t h e B a n k p a r t i c i p a t e s in t h e s e m a r k e t s p r i m a r i l y to
s e r v i c e t h e r e q u i r e m e n t s of c u s t o m e r s , the f o r e i g n exchange
d e a l e r t r a d e s a c t i v e l y in the s p o t m a r k e t d u r i n g t h e d a y
while g e n e r a l l y m a i n t a i n i n g s q u a r e o v e r n i g h t p o s i t i o n s . The
trading limits are prescribed by the London office.

Our r e v i e w h i g h l i g h t e d w e a k n e s s e s in c o n t r o l a s follows:

2.1 Segregation of incompatible duties

T h e c u r r e n t o r g a n i s a t i o n s t r u c t u r e d o e s not ensure
e f f e c t i v e s e g r e g a t i o n of t h e d e a l i n g functions from
the following activities which are either carried out
b y t h e f o r e i g n e x c h a n g e d e a l e r or t h e d e a l i n g room
p e r s o n n e l r e p o r t i n g to h i m :

(i) Confirmation Sending and Receiving.

(ii) Nostro Reconciliation (Sterling).

(iii) C o n t r o l o v e r the C e n t r a l B a n k p a y m e n t s and

account reconciliation.

(iv) T r a n s m i s s i o n of U S D o l l a r (Manufacturers
Hanover) payment messages.

(v) C a l c u l a t i o n of t e l e x t e s t keys.

U n d e r t h e p r e s e n t s y s t e m t h e r e is t h e r e f o r e a r i s k
that m a t e r i a l dealing room irregularity may not be
p r e v e n t e d or d e t e c t e d a n d h i g h l i g h t e d promptly.

W e r e c o m m e n d that the a c t i v i t i e s and organisation

s h o u l d b e r e s t r u c t u r e d s o t h a t t h e r e is a d i s t i n c t
s e p a r a t i o n of d u t i e s b e t w e e n t r a d i n g , accounting,
confirmation and payment functions.
In o r d e r to e n s u r e e f f e c t i v e s e g r e g a t i o n of duties,
the following changes should, inter alja, be
considered:

(i) T h e r e p o r t i n g line of the F X s u p p o r t clerk

( A i d e e n T i e r n e y ) s h o u l d b e to t h e Operations
Manager.

(ii) T h e p e r s o n n e l e n g a g i n g in d e a l i n g room
activity should not:

(a) h a v e a c c e s s t o the t e l e x t e s t k e y s and

Manufacturers Hanover electronic payment
message system,

(b) be o n t h e list of p e o p l e a u t h o r i s e d to
sign payment documents (e.g. Central Bank
Debits),

(c) b e i n v o l v e d in p r e p a r i n g a n d controlling
outstanding i t e m s on n o s t r o reconciliations.

(iii) The Manufacturers Hanover electronic payments

s y s t e m s h o u l d b e r e l o c a t e d o u t of t h e d e a l i n g
room.

(iv) D i s c r e p a n c i e s f o u n d in c h e c k i n g incoming
c o n f i r m a t i o n s s h o u l d b e r e p o r t e d to a s e n i o r
o f f i c i a l i n d e p e n d e n t of the d e a l i n g activities.

Implementation Date:
 2.2 Revaluation of FX positions

' '• F X p o s i t i o n s are r e v a l u e d d a i l y a s t o s p o t r a t e s a n d

w e e k l y a s to forward r a t e s . However, the profits/
losses are booked on a weekly basis.

T h e e x c h a n g e rates for r e v a l u a t i o n a r e p r e p a r e d by
t h e F X d e a l e r and t h e r e is n o independent
v e r i f i c a t i o n of t h e s e rates.

We recommend that the r e v a l u a t i o n r a t e s p r e p a r e d by

the FX d e a l e r should be verified b y the Financial
Controller with sources independent of dealers at
least once a month; this will ensure objectivity
w h i c h is e s s e n t i a l in c o m p u t i n g d e a l i n g profits.

Response: Implementation Date:

2.3 Reconciliation between Currency Positions Report 13A

and Foreign Exchange Revaluation Report 074A

It w a s n o t e d that t h e 'Net P o s i t i o n a t S p o t Rates'

c o l u m n in R e p o r t 7 4 A d i d n o t a g r e e w i t h t h e 'Net
P o s i t i o n ' c o l u m n o n R e p o r t 13A as at 30 D e c e m b e r 1988,

The reason should be investigated in o r d e r to e n s u r e

t h a t the two r e p o r t s s h o w the s a m e figures.
 3. Security Trading

The'securities most commonly traded by the Bank are

i

government stocks and equities. Dealing on the Bank's own

a c c o u n t is d o n e t h r o u g h a n o m i n e e c o m p a n y ( E b l a n a ) w i t h t h e
o v e r a l l o b j e c t i v e o f b e n e f i t i n g from s h o r t - t e r m fluctuations
in the m a r k e t . T h e r e f o r e , a h i g h p r o p o r t i o n of t r a d i n g is
done within account p e r i o d s . The investment dealers also
m a n a g e four m a j o r c l i e n t portfolios.

3.1 Limits on Trading

T h e b o a r d h a s e s t a b l i s h e d l i m i t s for t h e g i l t and
equity trading and these limits are generally being
adhered to b y the Treasury D i r e c t o r . H o w e v e r , at
p r e s e n t t h e r e is no i n d e p e n d e n t m o n i t o r i n g of the
limits.

We noted that the A s s o c i a t e Director, Operations

reviews and signs each internal investment contract
n o t e a n d h e n c e m o n i t o r s t h e v o l u m e and t h e n a t u r e o f
the trading a c t i v i t y . However, this procedure will
v""**" n o t n e c e s s a r i l y d e t e c t e x c e s s e s o v e r the a u t h o r i s e d
limits.

We t h e r e f o r e recommend that the Chief Accountant/

Financial Controller should monitor the Security
Trading Limits in o r d e r t o e n s u r e that t h e y a r e
w i t h i n t h e p a r a m e t e r s p r e s c r i b e d b y the board.'
 3.2 Daily Security Trading Profit Reporting

A t p r e s e n t t h e T r e a s u r y D i r e c t o r d o e s 'not r e c e i v e any
I B I S R e p o r t s o n the d a i l y p r o f i t / l o s s figures arising
from security trading activity.

We recommend t h a t the T r e a s u r y D i r e c t o r s h o u l d review

t h e d a i l y p r o f i t f i g u r e s as r e p o r t e d b y IBIS a n d
e n s u r e t h a t t h e y are in l i n e w i t h t h e profits/losses
as calculated/assessed b y the d e a l e r s .

Response: Implementation Date;

3.3 Input to IBIS system

O u r r e v i e w r e v e a l e d t h a t the d e a l s a r e n o t entered
i n t o the c o m p u t e r s y s t e m o n the c o n t r a c t d a t e s . The
i n p u t c l e r k w i t h h o l d s t h e input u n t i l n e a r e r the
s e t t l e m e n t d a t e in o r d e r to a d j u s t t h e tax o n t h e
» transactions closed out within the account period.
T h e e f f e c t of t h i s p r a c t i c e is t h a t t h e d e a l input
v»
A^ / m a y b e d e l a y e d for up to t h r e e w e e k s a n d t h e relative
A- M /
/
/ IBIS reports may therefore not be up to d a t e .

We also noted that when forward gilts are sold short,

the deals are not input until the short forward
positions are closed. T h i s is b e c a u s e the input
c l e r k d o e s n o t p o s s e s s the n e c e s s a r y a u t h o r i t y to
o v e r r i d e t h e s y s t e m c o n t r o l p r e v e n t i n g the i n p u t of
deals creating short positions.
 W e r e c o m m e n d t h a t the p r o c e d u r e s h o u l d b e r e v i s e d to
e n s u r e that the deals are entered into the system on
*

the contract dates.

Implementation Date

Allocation of deals to customers

W e noted that the dealers do not always allocate

d e a l s t o c u s t o m e r s at t h e time t h a t t h e y a r e done.
Under these circumstances t h e r e is a p o s s i b i l i t y of
c o n f l i c t of i n t e r e s t s if t h e p r i c e s v a r y favourably/
u n f a v o u r a b l y p r i o r to the a l l o c a t i o n t o customers.

W e r e c o m m e n d t h a t the d e a l e r s s h o u l d a l l o c a t e deals
to c u s t o m e r s at the t i m e that t h e y a r e done.

Implementation Date;

Completion of Deal Sheets - Dealers

A t p r e s e n t , t h e d e a l e r s m a y e n t e r up to t h r e e days'
deals on each deal sheet. This introduces a control
w e a k n e s s in t h e o p e r a t i o n s a r e a in t h a t t h e r i s k of
duplicated i n p u t or m i s s i n g i n p u t is increased
b e c a u s e the i n p u t c l e r k s a c t o n p h o t o c o p i e s rather
t h a n the o r i g i n a l d e a l sheets.
 We recommend that only one day's deals should be
entered on each deal sheet. Consecutive lines should
V

b e u s e d and a n y u n c o m p l e t e d lines at the e n d o f the

d a y should be ruled o f f . The dealer should sign each
d e a l sheet on completion.

Response; Implementation Date:

3.6 Completion of Deal Sheets - Operations

Inpfit c l e r k s t i c k e a c h e n t r y o n t h e d e a l s h e e t to
e v i d e n c e t h a t t h e d e a l h a s b e e n i n p u t to t h e system.

W e r e c o m m e n d t h a t i n s t e a d of t i c k i n g t h e "Deal
Confirmation" column to evidence input, the input
c l e r k s should enter a sequential IBIS Deal Number.
T h i s w i l l e n h a n c e t h e q u a l i t y of the a u d i t trail.

Response: Implementation Date:

I

3.7 Incoming Brokers Contract Notes

A l l deals on the d e a l sheets are matched with the

incoming contract notes and appropriately
referenced. However, discrepancies found in c h e c k i n g
i n c o m i n g c o n t r a c t n o t e s a r e r e p o r t e d d i r e c t to the
dealers by the o p e r a t i o n s clerks thus reducing the
e f f i c a c y of t h i s i n d e p e n d e n t control.
 We recommend that the o p e r a t i o n s c l e r k s s h o u l d be
instructed to refer all discrepancies found in
c h e c k i n g i n c o m i n g c o n t r a c t n o t e s to t h e A s s o c i a t e
Director, Operations.

Response: Implementation Date;

3.8 IBIS-generated Contract Notes

A t p r e s e n t , two files o f I B I S - g e n e r a t e d contract

notes (held in d e a l n u m b e r s e q u e n c e ) a r e maintained.

W e r e c o m m e n d that a s e c o n d c o p y of t h e c o n t r a c t notes
s h o u l d b e f i l e d in the r e l e v a n t B r o k e r s ' files,
r a t h e r t h a n in s e q u e n t i a l order.

Response; Implementation Date;

3.9 Brokers" Commissions

A t p r e s e n t , the B r o k e r s ' c o m m i s s i o n s a r e a n a l y s e d and

reviewed by the Associate Director twice a y e a r .

W e r e c o m m e n d that s u c h a r e v i e w s h o u l d b e c a r r i e d out
at l e a s t q u a r t e r l y r a t h e r t h a n six-monthly.

Response: Implementation Date:

 3.10 Review and Reconciliation of Brokers' Unsettled
Bargains Report t

' A l t h o u g h we are advised that the B r o k e r s ' Unsettled

B a r g a i n s R e p o r t is r e g u l a r l y r e v i e w e d a n d t h a t it is
p e r i o d i c a l l y checked against the individual brokers
a c c o u n t s , these checks do not appear to be evidenced.

We recommend that the review of the Brokers Unsettled

B a r g a i n s R e p o r t s h o u l d b e e v i d e n c e d at l e a s t w e e k l y
and that the check against the individual brokers
accounts should be evidenced monthly.

Response; I m p l e m e n t a t i o n Date:

Banking Department

4.1 Issue of Cheques

A n u m b e r of l o o s e c h e q u e s a r e k e p t in the Banking
D e p a r t m e n t , w h i c h o n o c c a s i o n s a r e u s e d in c o n n e c t i o n
with loan drawdowns etc. We consider that Loan
O f f i c e r s s h o u l d n o t b e p e r m i t t e d to i s s u e a n d sign
c h e q u e s r e l a t i n g t o loans u n d e r t h e i r c o n t r o l . The
i s s u e of c h e q u e s s h o u l d b e t h e r e s p o n s i b i l i t y of a
d e p a r t m e n t o r s e c t i o n , s e p a r a t e from the L o a n
O f f i c e r s , w h i c h is a b l e t o v e r i f y i n d e p e n d e n t l y that
 t h e p a y m e n t is c o r r e c t l y a u t h o r i s e d , t h e necessary
d o c u m e n t a t i o n and s e c u r i t y h a s b e e n c o m p l e t e d a n d , in
the case of loan drawdowns, the c o n d i t i o n s precedent
i have been m e t . This may be achieved b y according the
Loan Administration Section a formal status under Jim
H e n r y , r e p o r t i n g d i r e c t to the M a n a g i n g Director.

Response: Implementation Date:

4.2 Out-of-Order Account List

The complete out-of-order account list produced by

t h e c o m p u t e r is o n l y p r i n t e d m o n t h l y . At the time of
o u r r e v i e w t h e m o s t r e c e n t list c o m p r i s e d 7 2 p a g e s
a n d c o v e r e d a p p r o x i m a t e l y 200 c u s t o m e r s . This
e x c e s s i v e n u m b e r is p a r t l y e x p l a i n e d b y interest
h a v i n g b e e n a p p l i e d to a c c o u n t s a t t h e e n d o f
December. In a d d i t i o n a d a i l y l i s t is p r o d u c e d
showing customers whose accounts have become
,;] out-of-order the previous d a y . W h i l s t t h i s l i s t is
w e l l c o n t r o l l e d , we c o n s i d e r t h a t a d d i t i o n a l controls
s h o u l d b e i n t r o d u c e d to e n s u r e t h a t a n y necessary
corrective action has indeed been taken, b e c a u s e at
p r e s e n t if t h e a c c o u n t r e m a i n s o u t - o f - o r d e r for m o r e
t h a n one d a y it w i l l n o t be h i g h l i g h t e d a g a i n until
t h e m o n t h l y list is p r i n t e d .
 We recommend t h a t the l i s t s h o u l d b e r e d e s i g n e d so
that new out-of order positions remaining irregular
s h o u l d c o n t i n u e to a p p e a r o n t h e d a i l y ' jList u n t i l t h e
, *

m o n t h l y l i s t is p r i n t e d . Alternatively, the reviewer

s h o u l d m a i n t a i n r u n n i n g r e c o r d s of i r r e g u l a r accounts
w h i c h should be reviewed in the s a m e m a n n e r as t h e
d a i l y l i s t
* j ^ r

Reponse; Implementation Date;

cr

4.3 Diary Record Cards

W e a r e p l e a s e d to n o t e t h a t a c e n t r a l d i a r y card
system has been introduced within the Banking
D e p a r t m e n t a n d is n e a r i n g c o m p l e t i o n . Whilst this is
a b i g a d v a n c e , w e c o n s i d e r t h a t s o m e of t h e c a r d s
c o u l d b e m o r e e x p l i c i t r e g a r d i n g the t a s k t o b e
u n d e r t a k e n , rather than just being a reminder note
for the p e r s o n u s u a l l y p e r f o r m i n g the task.

W e recommend that the cards should be completed in

such a way that other p e r s o n n e l can carry out the
t a s k in c a s e o f n e e d a n d t h a t the n e c e s s i t y t o m a k e
f u r t h e r r e f e r e n c e t o f i l e s s h o u l d be k e p t to a
minimum. For example, the cards should indicate how
t h e i n t e r e s t , c o m m i s s i o n or f i n a n c i a l i n f o r m a t i o n is
usually requested and might also include contact
names, telephone numbers and addresses. The reverse
of t h e c a r d s h o u l d b e u s e d to r e c o r d a c t i o n t a k e n a n d
s h o u l d form a p e r m a n e n t r e c o r d o f , for e x a m p l e ,
g u a r a n t e e c o m m i s s i o n r e c e i v e d o r the v a l u e of
securities at a given date.
 In o r d e r to f u r t h e r i l l u s t r a t e t h i s recommendation,
w e e n c l o s e , as A p p e n d i x A , f u r t h e r n o t e s o n t h e
s u b j e c t , t o g e t h e r w i t h e x a m p l e s of d i a r y r e c o r d cards.

Response: Implementation Date:

r i ^ A

4.4 Procedures Manual - Banking Department

W e note that various revised p r o c e d u r e s , as set out

in A n d y O ' D o n n e l l ' s m e m o r a n d u m d a t e d 8 t h December
1987, were introduced in t h e B a n k i n g Department
during 1988.

W e u n d e r s t a n d t h a t t h e r e a r e f u r t h e r p l a n s to s e t o u t
t h e e x i s t i n g p r o c e d u r e s in d e t a i l a n d for n e w a n d
r e v i s e d p r o c e d u r e s to b e a g r e e d a n d i m p l e m e n t e d . We
a g r e e w i t h the m o v e t o w a r d s a p r o p e r l y structured
a p p r o a c h and r e c o m m e n d t h a t a u s e r s p r o c e d u r e s manual
should be produced for t h e Department.
:V

Response: Implementation Date:

pl/L. QlK

5. Control over telex payment messages

O u r r e v i e w of c o n t r o l o v e r t e l e x p a y m e n t m e s s a g e s highlighted
the following matters where procedures should be enhanced in
o r d e r to i m p r o v e control:
 5.1 Test Key Arrangements

5 . 1 . 1 . T h e c u s t o d i a n of t h e t e s t k e y t a b l e s s h o u l d b e
provided with a list of people with authorised
a c c e s s to the t e s t k e y s . T h e list s h o u l d b e
r e s t r i c t e d to a m i n i m u m p o s s i b l e n u m b e r of
p e o p l e , with the d e a l i n g room staff excluded
from the list.

5.1.2 A review should be carried out to ensure that

3 all test keys w i t h o u t a variable number
component are replaced by the G + M test key
s y s t e m b e c a u s e t h o s e k e y s a r e e a s y to c r a c k
and therefore p o t e n t i a l l y insecure.

5 . 1 . 3 . A r e g i s t e r of t e s t k e y a r r a n g e m e n t s s h o u l d b e
prepared. It s h o u l d detail:

Customer Name
Telex Number and Answerback
D a t e the t e s t k e y n u m b e r w a s last changed

T h e r e a f t e r , it s h o u l d b e e n s u r e d t h a t the
fixed n u m b e r w i t h e a c h p a r t y is c h a n g e d at
least o n c e a y e a r .

5 . 1 . 4 . The members of staff responsible for

c a l c u l a t i n g and d e c o d i n g t e s t s s h o u l d b e
instructed not to write the calculations and
components making up the test number on copy
telex messages. All calculations must be
destroyed. O t h e r w i s e , t h e r e is a r i s k that
t h e s e c r e c y of t e s t k e y n u m b e r s w i l l b e
compromised.
Response: Implementation Date:

5.2 Reconciliation with Nostro Transfers

In o r d e r t o e n s u r e t h a t a l l t r a n s m i t t e d payment
messages have been duly processed through the
a c c o u n t i n g r e c o r d s , the n o s t r o r e c o n c i l i a t i o n clerk
should agree all copy payment messages (telex,
M a n u f a c t u r e r ' s H a n o v e r s y s t e m , e t c ) to t h e respective
nostro account movements.

Response; Implementation Date:

5.3 Security of Telex Equipment

T h e t e l e x m a c h i n e is l o c a t e d in an o p e n p l a n office
and readily accessible. It w o u l d t h e r e f o r e be
d e s i r a b l e if the m a c h i n e w a s p r o t e c t e d b y p a s s w o r d
control.

A l t e r n a t i v e l y , m e a s u r e s s h o u l d b e t a k e n to s e c u r e the
m a c h i n e at c l o s e of b u s i n e s s a n d at p e r i o d s during
t h e d a y w h e n the m a c h i n e is u n a t t e n d e d .
6. Nostro Reconciliations

6.1 Non Reconciliation of Main Sterling Account

i.

' A l t h o u g h m o s t of t h e n o s t r o a c c o u n t s (Guinness &

Mahon's accounts with other banks) have been
reconciled regularly, we were concerned that Guinness
& Mahon's sterling account with Guinness Mahon,
London had not been fully reconciled for several
w e e k s a n d t h a t at the t i m e o f o u r r e v i e w the
unreconciled balance exceeded £300,000. We were also
a d v i s e d t h a t a full r e c o n c i l i a t i o n is o n l y conducted
monthly.

A s t h i s is o n e of the two m o s t a c t i v e n o s t r o accounts

w e c o n s i d e r t h a t it s h o u l d b e r e c o n c i l e d o n a d a i l y
basis. Otherwise errors (or e v e n f r a u d ) m a y n o t b e
detected promptly and unnecessary interest costs may
b e i n c u r r e d b y the Bank.

Response: Implementation Date:

6.2 Segregation of Duties - Reconciliations

T h e r e c o n c i l i a t i o n of t h e a b o v e - m e n t i o n e d sterling
nostro account with Guinness Mahon, London is
currently carried out b y the Chief Dealer, David
Murray. T h e r e c o n c i l i a t i o n of the IR£ a c c o u n t s is
c o n d u c t e d b y L a u r a C o s t e l l o , w h o is a d e a l e r in the
d e a l i n g r o o m and b y E i l e e n K a n e , the c a s h i e r . The
Foreign Exchange Dealing Sundries Counterparty
S e t t l e m e n t A c c o u n t is r e c o n c i l e d b y A i d e e n Tierney,
w h o is a l s o in t h e d e a l i n g room.
 It is i m p o r t a n t t h a t n o s t r o a c c o u n t s a r e reconciled
b y p e r s o n s i n d e p e n d e n t o f the d e a l e r s a n d those
i n v o l v e d in e f f e c t i n g a n d r e c e i v i n g p a y m e n t s . We
therefore recommend t h a t the d u t i e s s h d u l d b e
* rearranged accordingly.

Response: Implementation Date;

6.3 Control over Reconciliations

The nostro reconciliations are performed by various

p e r s o n n e l t h r o u g h o u t t h e B a n k a n d f o r w a r d e d to t h e
A s s o c i a t e D i r e c t o r , O p e r a t i o n s for h i s examination,
w h i c h is e v i d e n c e d . In a v e r y few c a s e s , s u c h a s t h e
I R £ a c c o u n t w i t h B a n k o f I r e l a n d , C o r k a n d t h e CAN4>
a c c o u n t with the Royal Bank of C a n a d a , we found that
no recent examination of a reconciliation had b e e n
carried out. T h e e x a m i n a t i o n is a n i m p o r t a n t quality
c o n t r o l in t h a t a s e n i o r m e m b e r of staff should
ensure that the o u t s t a n d i n g items are being properly
\ i n v e s t i g a t e d and p r o m p t c o r r e c t i v e a c t i o n is b e i n g
taken.

In o r d e r t o e n s u r e t h a t a l l r e c o n c i l i a t i o n s a r e b e i n g
c o n d u c t e d at r e g u l a r i n t e r v a l s and b e i n g e x a m i n e d by
a senior p e r s o n , we recommend t h a t a c o n t r o l list of
all nostro accounts should be maintained and that a
date should be placed against each account name when
the reconciliation is s i g n e d o f f as examined.
 6.4 R e d u c t i o n in t h e n u m b e r o f n o s t r o accounts

The Bank maintains nearly forty accounts with other

banks. W h i l s t most of t h e s e a r e n e e d e d , it m a y b e
p o s s i b l e t o r e d u c e a d m i n i s t r a t i o n b y c l o s i n g a few
accounts. In p a r t i c u l a r , in a d d i t i o n t o t h e r e b e i n g
several US Dollar, £ sterling and IR£ a c c o u n t s , we
n o t e t h a t five D e u t s c h e M a r k s a c c o u n t s a r e maintained
a n d t w o e a c h in the c a s e of C a n a d i a n D o l l a r s , Swiss
Francs and Australian Dollars.

I M
W e r e c o m m e n d t h a t t h e f e a s i b i l i t y of c l o s i n g s o m e of
the a c c o u n t s s h o u l d b e considered.

Reponse; Implementation Date;

7. Suspense Accounts

S u s p e n s e A c c o u n t s n e e d to b e c l o s e l y c o n t r o l l e d as t h e y
p r o v i d e a n o p p o r t u n i t y for u n a l l o c a t e d losses, expenses and
c o s t s to b e h i d d e n . Credit balances also require to be
c a r e f u l l y c o n t r o l l e d to p r e v e n t u n a u t h o r i s e d debits.

7.1 Controls over the Accounts

Following the recent p e r s o n n e l changes,

r e s p o n s i b i l i t y for e a c h s u s p e n s e a c c o u n t n e e d s to b e
clearly defined. We recommend that the
r e c o n c i l i a t i o n of the b a l a n c e s s h o u l d b e controlled
in t h e s a m e w a y as t h a t r e c o m m e n d e d for n o s t r o
accounts (section 6.3).

Response; Implementation Date:

 7.2 The Need for the Accounts and Entries over them

, . We consider that there may be an opportunity to

' r e d u c e a d m i n i s t r a t i o n a n d t h e r i s k s to the B a n k by
r e d u c i n g t h e n u m b e r o f s u s p e n s e a c c o u n t s and entries
over them. W e recommend that consideration should be
g i v e n to whether a n y accounts might be cleared and
closed and to whether the use of suspense accounts
m i g h t b e a v o i d e d b y d i r e c t a l l o c a t i o n of an i t e m to,
for e x a m p l e , a n o s t r o a c c o u n t ( S e c t i o n 14.6 s h o w s a n
J e x a m p l e of w h e r e w e c o n s i d e r a n o s t r o a c c o u n t should
be used).

Response: Implementation Date:

8. The Role of the Financial Controller

The Bank h a s recently recruited a Financial C o n t r o l l e r . It

may be desirable for t h e B a n k t o e n h a n c e h i s role so a s t o
encompass certain independent monitoring functions:
V- /
(i) M o n i t o r i n g of t r a d i n g l i m i t s o t h e r t h a n t h o s e
r e l a t e d to c r e d i t risk.

(ii) E n s u r i n g r e g u l a r r e c o n c i l i a t i o n and p r o m p t
r e s o l u t i o n o f i t e m s o u t s t a n d i n g on n o s t r o a n d
suspense accounts.

(iii) R e v i e w of r e v a l u a t i o n s o f f o r e i g n e x c h a n g e a n d
security positions.

(iv) M o n t h l y m o n i t o r i n g of b r o k e r s ' commissions.

 (v) M o n i t o r i n g and r e p o r t i n g o n t h e profitability
of A n s b a c h e r D e p o s i t s a n d c a l c u l a t i o n of fee.

1,

The^.e f u n c t i o n s w i l l i m p r o v e s u p e r v i s o r y c o n t r o l s w i t h i n the
b a n k p a r t i c u l a r l y in the areas w h e r e s t a f f constraints
p r e c l u d e e f f e c t i v e s e g r e t a t i o n of i n c o m p a t i b l e duties.

Response: Implementation Date;

w
9. Cashier

9.1 Control over Cash

A c a s h c o u n t was c o n d u c t e d d u r i n g o u r v i s i t w h e n t h e
balances held were IR£15,234 and £ 1 5 , 7 7 0 . Other
c u r r e n c i e s a r e no l o n g e r h e l d . The records were
found to be accurate and well kept.

In a s m a l l o r g a n i s a t i o n m a n y of t h e u s u a l controls
through segregation, such as each cashier having
t h e i r o w n t i l l and p r o h i b i t i o n o f a c c e s s to t h a t till
b y o t h e r s , a r e not p r a c t i c a l at t h e t i m e of h o l i d a y s
or sickness. The B a n k h o w e v e r , is d e p e n d a n t u p o n t h e
cashier to reconcile the b a l a n c e s under h e r control
with her manually kept ledger and the computer
records each day.

Although independent counts take place when a

d i f f e r e n c e is r e p o r t e d o r w h e n v i s i t s a r e m a d e b y t h e
e x t e r n a l a u d i t o r s , long p e r i o d s o f t i m e m a y elapse
between such checks. We therefore recommend that the
c a s h s h o u l d b e c o u n t e d b y an i n d e p e n d e n t p e r s o n a t
r a n d o m at least o n c e a m o n t h a n d t h a t t h e c h e c k
should be evidenced.
- 27 -
 s t o c k s s h o u l d b e c o n t r o l l e d and t h a t a n y loss should
be detected. W e recommend that the stock should be
c o u n t e d a n d s u b s t a n t i a t e d w i t h the r e c o r d s at least
i:
once a month b y a person other than the person who
u s u a l l y maintains the records.
Implementation Date:

Policy Regarding Stocks Held

A t t h e t i m e of o u r r e v i e w t h e s t o c k of F r e n c h Franc
travellers cheques had been exhausted and no decision
h a d b e e n m a d e r e g a r d i n g its r e p l a c e m e n t . We also
n o t e d t h a t t h e r e w e r e v e r y few t r a n s a c t i o n s in
Deutsche M a r k s , Swiss Francs and Canadian Dollar
travellers cheques. In the c a s e o f S w i s s Franc
t r a v e l l e r s c h e q u e s t h e last t r a n s a c t i o n w a s in
O c t o b e r 1 9 8 8 a n d t h e p r e v i o u s o n e in M a r c h 1985.

W e r e c o m m e n d t h a t in v i e w of the n e w p o l i c y regarding
r e t a i l b a n k i n g , it s h o u l d b e c o n s i d e r e d w h e t h e r there
is s t i l l a r e q u i r e m e n t to h o l d t r a v e l l e r s c h e q u e s in
the above-mentioned currencies.

Implementation Date:
11. The Strongroom

11.1 Keyholders ,

An 'A' a n d a 'B' k e y h o l d e r a r e c u r r e n t l y r e q u i r e d to
g a i n a c c e s s to the s t r o n g r o o m a n d t h e k e y h o l d e r s are
as follows:
A B

Chris Waite Padraig Collery

Anna Margetson Marie McKiernan
Niall Ryan Aideen Tierney

N i a l l R y a n is t h e r e f o r e a b l e to g a i n a c c e s s t o the
strongroom with either Marie McKiernan or A i d e e n
Tierney. All three are employed in the Treasury
A d m i n i s t r a t i o n a r e a of t h e B a n k . In o r d e r t o ensure
effective access control through segregation we
r e c o m m e n d t h a t N i a l l R y a n s h o u l d b e a 'B' k e y h o l d e r
and that Padraig Collery should be an 'A' k e y h o l d e r .

Response: Implementation Date:

11.2 The Security Register

It h a s p r e v i o u s l y b e e n r e c o m m e n d e d t h a t t h e Banking
Department security register should be locked away
e a c h e v e n i n g and w e n o t e t h a t it is now k e p t in the
strongroom. H o w e v e r , w e c o n s i d e r t h a t the register
s h o u l d n o t b e k e p t in t h e same l o c a t i o n as t h e items
r e c o r d e d in it, b e c a u s e in c a s e of fire or o t h e r
d i s a s t e r , b o t h the r e g i s t e r a n d t h e r e c o r d e d items
w i l l be s u b j e c t to t h e s a m e risk.
 We therefore recommend t h a t an a l t e r n a t i v e secure
l o c a t i o n s h o u l d be f o u n d for t h e register.
i
R e s p o n s e I m p l e m e n t a t i o n Date

12. Personnel

12.1 References on new Personnel

W e understand that although telephone references on

new p e r s o n n e l are o b t a i n e d , w r i t t e n references are
not always taken and file notes are not always made
of the telephone c o n v e r s a t i o n s . We are advised by
G u i n n e s s M a h o n I n s u r a n c e S e r v i c e s t h a t t h e t a k i n g of
a w r i t t e n r e f e r e n c e for a l l n e w s t a f f is a c o n d i t i o n
o f t h e f i d e l i t y i n s u r a n c e t h a t h e a r r a n g e s in r e s p e c t
o f the s t a f f in D u b l i n . We therefore recommend that
w r i t t e n r e f e r e n c e s s h o u l d b e t a k e n , in a d d i t i o n to
any references obtained by telephone. At the same
t i m e it s h o u l d b e e n s u r e d t h a t a n y a c a d e m i c a n d
p r o f e s s i o n a l qualifications of new staff are verified

Response; Implementation Date;

 12.2 Holidays

It is a l s o a c o n d i t i o n of t h e above-mentioned
«

f i d e l i t y i n s u r a n c e t h a t s t a f f m e m b e r s {fake a t least
i ten consecutive working days h o l i d a y each year.
A l t h o u g h t h e o f f i c e r s in D u b l i n a r e w e l l a w a r e of
t h i s r e q u i r e m e n t and it is i n c l u d e d in t h e staff
h a n d b o o k , we understand that d u r i n g 1988, due to
p e r s o n n e l c h a n g e s , it m a y n o t h a v e b e e n strictly
enforced.

(j. /' W e r e c o m m e n d that this r e q u i r e m e n t s h o u l d b e d r a w n to

t h e a t t e n t i o n of the s t a f f a n d e n f o r c e d d u r i n g 1989.

Response; Implementation Date:

 Vie recommend that periodically/ suitably worded,
w r i t t e n r e m i n d e r s s h o u l d b e s e n t to a l l e x s t a f f with
«

l o a n s in d e f a u l t to e n s u r e t h a t it is C l e a r l y
u n d e r s t o o d t h a t it is t h e B a n k ' s i n t e n t i o n t o c o l l e c t
these loans.

Response: Implementation Date;

 14. Cork Branch
!

14.'1 Loan Documentation

i

We examined the question of s e c u r i t y and disaster

procedures for C o r k B r a n c h a n d , g i v e n t h e risks
i n v o l v e d , c o n s i d e r them t o b e generally
satisfactory. However, whilst the accounting records
a r e m a i n t a i n e d o n the D u b l i n c o m p u t e r , C o r k k e e p s the
d o c u m e n t a t i o n r e l a t i n g t o its o w n c u s t o m e r s . We note
t h a t a l t h o u g h the o r i g i n a l d o c u m e n t a t i o n r e l a t i n g to
l o a n s a n d o t h e r f a c i l i t i e s is k e p t in a strongroom,
c o p i e s a r e not always placed on the customer file.
W e r e c o m m e n d t h a t s i g n e d c o p i e s of a l l important
l e g a l d o c u m e n t a t i o n s u c h as f a c i l i t y letters,
g u a r a n t e e s , m e m o r a n d u m of d e p o s i t , charges,
a g r e e m e n t s , e t c should b e p l a c e d o n t h e c u s t o m e r file
in o r d e r t o m a i n t a i n a c o m p l e t e r e c o r d a n d a l s o a s a
s a f e g u a r d a g a i n s t loss of t h e originals.

Response: Implementation Date;

14.2 Computer Terminal Facilities

A t p r e s e n t C o r k staff h a v e t h e a b i l i t y t o i n p u t t o
and a c c e s s a c c o u n t s m a i n t a i n e d w i t h D u b l i n . Whilst
it m a y b e d e s i r a b l e t h a t Cork s t a f f a r e a b l e t o
o b t a i n a c c e s s to D u b l i n ' s a c c o u n t s in o r d e r t o c a r r y
o u t t h e i r d u t i e s , we c o n s i d e r t h a t t h e i r input
c a p a b i l i t y s h o u l d be r e s t r i c t e d t o C o r k c u s t o m e r s and
c e r t a i n o t h e r a c c o u n t s , for w h i c h it is n e c e s s a r y t o
/^s a l l o w t h e m to o p e r a t e .
 Response; Implementation Date:

14.3 Facsimile Payment Instructions

C o r k B r a n c h n o w h a s a fax m a c h i n e w h i c h it u s e s to
send payment instructions to Dublin and these
|...... J messages contain a test key number. This includes a
f i x e d n u m b e r , w h i c h is a s e c r e t c o d e d e s i g n e d to
guard against fraud. W e r e c o m m e n d t h a t for security
p u r p o s e s t h e n u m b e r s h o u l d b e c h a n g e d at l e a s t six
monthly.

Response; Implementation Date:

14.4 Tested Telexes sent to London

Cork Branch sends tested payment instructions direct

to London after first having obtained a test number
from D u b l i n b y t e l e p h o n e , w h i c h it i n c l u d e s in the
message. We recommend that Cork Branch should have
its o w n t e l e x t e s t i n g a r r a n g e m e n t s w i t h L o n d o n to
improve security.
 Customers Account Statements

i
C u s t o m e r s ' s t a t e m e n t s for c u r r e n t a c c o u n t s , although
prepared in D u b l i n , are f o r w a r d e d t o C o r k B r a n c h for
s u b s e q u e n t m a i l i n g to the c u s t o m e r . We recommend
t h a t a s a n a d d i t i o n a l c o n t r o l o v e r the e n t r i e s being
p a s s e d t o t h e a c c o u n t s , s t a t e m e n t s for a l l accounts
m a i n t a i n e d a t Cork B r a n c h s h o u l d b e d e s p a t c h e d direct
to t h e a c c o u n t h o l d e r s f r o m D u b l i n . In o r d e r to
a s s i s t t h e M a n a g e r of C o r k B r a n c h in c o n t i n u i n g to
monitor the business transactions being conducted by
h i s c u s t o m e r s , consideration might be given to paid
c h e q u e s b e i n g forwarded t o C o r k B r a n c h for retention,
w h i c h is n o w the more u s u a l p r a c t i c e r a t h e r than
r e t u r n i n g t h e m to the a c c o u n t holder.

Implementation Date:

Cork Suspense Account/Fixed Deposit Accounts

Maturing f i x e d d e p o s i t s a r e c r e d i t e d to t h e Cork
S u s p e n s e A c c o u n t w h i c h is t h e n d e b i t e d a g a i n w h e n new
i n s t r u c t i o n s are r e c e i v e d . There are about 25-30
s u c h r o l l o v e r s each w e e k .

W e r e c o m m e n d that w h e r e p o s s i b l e t h e s e i t e m s should
b e p a s s e d o v e r the c u s t o m e r ' s c a l l d e p o s i t o r current
account. Alternatively, a specific counterparty
a c c o u n t s h o u l d be u s e d .
 Response; Implementation Date:

14.7 Outstanding Drafts Cork

T h e b a l a n c e of the a b o v e a c c o u n t is m a d e u p of d r a f t s
issued by Cork Branch since 1979 w h i c h h a v e not been
C p r e s e n t e d for p a y m e n t . Thirty one of these drafts
(total value IR£28,215) are over six years old,
a l t h o u g h w e u n d e r s t a n d t h a t m o s t of t h e m a r e k n o w n t o
still exist and are held by two firms of solicitors.
W e recommend that drafts o u t s t a n d i n g for m o r e than
twelve months should be transferred to a separate
account over which additional controls regarding
debit entries are p l a c e d .

Response: Implementation Date;

14.8 Travellers Cheque Stocks

S t o c k s of t r a v e l l e r s c h e q u e s in U S D o l l a r s , F r e n c h
Francs, Deutsche Marks and Sterling are maintained at
C o r k B r a n c h a n d a r e r e c o r d e d in a m a n u a l l e d g e r . Our
c h e c k of the s t o c k s a g a i n s t t h i s l e d g e r r e v e a l e d a
n u m b e r of i n c o r r e c t p o s t i n g s , b r o u g h t forward
f i g u r e s , e t c , w h i c h w e r e c o r r e c t e d a t t h e t i m e of our
visit. Although travellers cheques are not paid for
b y the B a n k u n t i l i s s u e d , it is i m p o r t a n t t h a t the
s t o c k s s h o u l d be c o n t r o l l e d a n d t h a t a n y loss should
be detected.
We recommend that t h e s t o c k s h o u l d b e c o u n t e d and
s u b s t a n t i a t e d w i t h t h e r e c o r d s at l e a s t o n c e a m o n t h
b y a p e r s o n o t h e r t h a n the p e r s o n w h o 'usually
m a i n t a i n s the records.

Implementation Date
 APPENDIX 1

DIARY RECORD CARDS

T h e s e caxfds a r e c o m p l e t e d from i n f o r m a t i o n c o n t a i n e d in t h e
d o c u m e n t a t i o n w h e n t h e f a c i l i t y is first a g r e e d w i t h t h e c u s t o m e r
and a m e n d e d a n d a d d e d t o a s a n d w h e n n e c e s s a r y d u r i n g t h e life of
the f a c i l i t y .

1. INTEREST RATE FIXING

T h i s c a r d s h o u l d b e c o m p l e t e d for a l l a c c o u n t s o n w h i c h t h e r e
is a f l o a t i n g i n t e r e s t r a t e a n d filed in c h r o n o l o g i c a l o r d e r
in t h e d i a r y c a r d b o x for t h e n e x t d a t e of a c t i o n . T h e c a r d
Qv ; should c o n t a i n all the information necessary to complete the
' i n t e r e s t r a t e f i x i n g in c o n j u n c t i o n w i t h t h e d e a l e r s .

T h e d a t e for a c t i o n s h o u l d b e at least 2 b u s i n e s s d a y s b e f o r e
t h e r a t e f i x i n g is d u e . It s h o u l d b e n o t e d t h a t c u r r e n c y
loans a r e f i x e d t w o b u s i n e s s d a y s b e f o r e t h e e f f e c t i v e d a t e .
It m a y b e d e s i r a b l e t o file e a r l i e r if it is n e c e s s a r y to
c o n t a c t t h e b o r r o w e r t o a s c e r t a i n the n e x t i n t e r e s t p e r i o d
s e l e c t e d . A r e c o r d of the r a t e s fixed s h o u l d b e k e p t o n the
r e v e r s e o f t h e c a r d . ( E x a m p l e s 1)

2. COMMISSION COLLECTION

T h i s c a r d is u s e d t o m o n i t o r t h e c o l l e c t i o n o f a l l
c o m m i s s i o n s p a y a b l e t o t h e B a n k for e x a m p l e :

Guarantee Commission
Commitment Commission
Management Fees/Other Flat Fees

T h e c a r d s s h o u l d b e filed in t h e d i a r y c a r d b o x in
c h r o n o l o g i c a l o r d e r for the d a t e on w h i c h a c t i o n is n e x t
d u e . T h i s m a y b e b e f o r e t h e d u e d a t e if it is n e c e s s a r y to
r e q u e s t p a y m e n t in a d v a n c e . A r e c o r d of c o m m i s s i o n s
r e q u e s t e d a n d r e c e i v e d is k e p t on the r e v e r s e of t h e c a r d .
( E x a m p l e s 2)

3. FINANCIAL INFORMATION

T h i s c a r d is u s e d t o m o n i t o r t h e c o l l e c t i o n o f f i n a n c i a l
i n f o r m a t i o n a n d c e r t i f i c a t e s r e q u i r e d d u r i n g t h e l i f e of t h e
facility. For example:

A n n u a l A c c o u n t s of B o r r o w e r / O b l i g o r and G u a r a n t o r ( s )
I n t e r i m A c c o u n t s of B o r r o w e r / O b l i g o r a n d G u a r a n t o r ( s )
O t h e r s t a t e m e n t s f r o m B o r r o w e r / O b l i g o r a n d G u a r a n t o r ( s ) such
as other financial information, certificates, statistics,
r e p o r t s e t c c a l l e d for in a g r e e m e n t .
 T h e a g r e e m e n t o f t e n s p e c i f i e s the d a t e b y w h i c h i n f o r m a t i o n
is r e q u i r e d a n d t h i s s h o u l d be r e c o r d e d o n t h e d a t a
monitoring card.
i
It is u s u a l t o o b t a i n the a n n u a l a u d i t e d a c c o u n t s for a l l
corporate borrowers/obligors/guarantors r e g a r d l e s s of whether
t h i s is s p e c i f i e d in the a g r e e m e n t .

T h e c a r d s s h o u l d b e filed in t h e d i a r y c a r d b o x in
c h r o n o l o g i c a l o r d e r for the d a t e u p o n w h i c h a c t i o n is n e x t
d u e . W h e n i n f o r m a t i o n r e q u e s t e d is a w a i t e d t h e c a r d s h o u l d
b e filed for a few d a y s f o r w a r d w i t h a p e n c i l n o t e i n d i c a t i n g
the s i t u a t i o n .

A l l data received should be recorded on the r e v e r s e of the

c a r d a n d g i v e n t o t h e r e l a t i v e loan o f f i c e r for a c t i o n .
Recent f i n a n c i a l reports should be filed on the c u s t o m e r
f i l e . (Example 3 )

MONITORING CARD

T h i s c a r d is u s e d to m o n i t o r a l l o t h e r a c t i o n r e q u i r e d not
already c o v e r e d . For example:

C o l l e c t i o n of i n t e r e s t ( a r r a n g e c o l l e c t i o n a n d e n s u r e
receipt).
R e c e i p t pf r e p a y m e n t s
R e c e i p t o f m o n i e s a s s i g n e d to b a n k (eg c h a r t e r h i r e s )
V a l u a t i o n s o f S e c u r i t y (eg s h a r e s a n d o t h e r t a n g i b l e a s s e t s
h e l d as s e c u r i t y )
I n s u r a n c e R e n e w a l s / P a y m e n t of P r e m i u m a f f e c t i n g t h e b a n k ' s
s e c u r i t y (eg l i f e p r e m i u m s , fire i n s u r a n c e for p r o p e r t i e s a n d
shipping insurances - marine risks, war r i s k s , P & I ,
mortgagees interest)

T h e a b o v e l i s t is i n t e n d e d as a g e n e r a l g u i d e a n d is n o t
e x h a u s t i v e . The documentation should be s c a n n e d to ensure
t h a t n o t h i n g t h a t s h o u l d b e d i a r i s e d for a c t i o n d u r i n g the
life of t h e f a c i l i t y h a s b e e n o v e r l o o k e d .

T h e c a r d s s h o u l d b e filed in the d i a r y c a r d b o x in
c h r o n o l o g i c a l o r d e r for t h e d a t e u p o n w h i c h a c t i o n is n e x t
due.

W h e r e a r e q u e s t h a s b e e n m a d e (for e x a m p l e f o r i n t e r e s t ) a n d
r e c e i p t is a w a i t e d t h e c a r d s h o u l d be r e - f i l e d t o m o n i t o r
r e c e i p t . T h e b a c k o f the c a r d s h o u l d be u s e d t o i n d i c a t e
what has been requested and when received. (Examples 4)
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SPECIAL TERMS RELATING TO

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COMMISSION
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example 3 front:

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4 ' —
•
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ANNUAL REVIEW DATE FINANCIAL OATA REQUIRED

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31 DEC. CH AATSAH>*t~ A'JT OTHER S T A T E M E N T S OTHER STATEMENTS
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- NARFC* T JOIJC , S£P7. HIE,

NAME OF DAYS GRACE DATE DATE

AS A T
STATEMENT REQUIRED PER TERMS REQUIRED BY RECEIVED

•
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REVIEW PROCEDURES

O C T A I L S OF O P E R A T I O N T O Of C A R R I E D OUT

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OATE DATE OATE
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ACTION DUE ACTION TAKEN ACTION DUE ACTION TA'.EN
P-JOZ. AX
njajn UUCl j J/i/r,

ft-..
 STRICTLY PRIVATE & CONFIDENTIAL

GUINNESS MAHON GROUP

MEMORANDUM

TO: Michael Pender FROM: Bharat Thakker

CC: Geoffrey Bell

Ian D i n w i d d i e
P a t r i c k1 M o o r s o m
Andy O Donne11
Rob Philipson-Stow DATE: 15th February 1989

Internal Audit Report

Guinness + Mahon Limited, Dublin

I e n c l o s e f o u r c o p i e s o f the r e p o r t f o l l o w i n g o u r r e c e n t r e v i e w of
the D u b l i n O f f i c e . A s y n o p s i s of the r e p o r t h a s a l s o b e e n
attached to this m e m o r a n d u m .

Bharat Thakker

BT/gmh
 SYNOPSIS

INTERNAL AUDIT REPORT

GUINNESS & MAHON LIMITED, DUBLIN

Our r e v i e w h a s h i g h l i g h t e d a n u m b e r of a r e a s w h e r e p r o c e d u r e s
s h o u l d b e r e v i s e d in o r d e r to i m p r o v e c o n t r o l . H o w e v e r , a m a t t e r
of p a r t i c u l a r c o n c e r n to us r e l a t e s to the m a n a g e m e n t a n d c o n t r o l
of A n s b a c h e r , C a y m a n d e p o s i t s , a m o u n t i n g to n e a r l y I R £ 3 8 M and
c o n s t i t u t i n g a l m o s t 35% of the B a n k ' s l i a b i l i t i e s . T h e s e d e p o s i t s
are u n d e r the s o l e c h a r g e o f the A s s o c i a t e D i r e c t o r of the B a n k
w h o a l s o a c t s , in p r a c t i c e (but n o t o f f i c i a l l y ) , as a D u b l i n b a s e d
r e p r e s e n t a t i v e o f A n s b a c h e r L i m i t e d and n e g o t i a t e s t h e r a t e s w i t h
^ G + M in t h a t c a p a c i t y .

The A s s o c i a t e D i r e c t o r , a d d i t i o n a l l y , m a n a g e s the r e l a t e d
a n o n y m o u s o f f - s h o r e c u s t o m e r d e p o s i t s , on b e h a l f of A n s b a c h e r ,
a l m o s t e n t i r e l y o n h i s own w i t h o u t a n y e v i d e n t a c c o u n t a b i l i t y to
the B o a r d . In t h i s r e s p e c t t o o , h e acts as a D u b l i n b a s e d a g e n t
of A n s b a c h e r w h i l s t b e i n g a f u l l - t i m e e m p l o y e e o f G + M . This
d u a l r o l e , w h i c h i n v o l v e s h i m in a c t i n g o n b e h a l f of b o t h the
p a r t i e s to t h e t r a n s a c t i o n w i t h l i t t l e i n t e r n a l c h e c k , n o t o n l y
c r e a t e s s e r i o u s c o n f l i c t s of i n t e r e s t b u t a l s o e x p o s e s t h e B a n k to
unacceptable risks of fraud.

W e h a v e d e a l t w i t h t h i s m a t t e r in d e t a i l u n d e r s e c t i o n 1 o f t h i s
r e p o r t . T h e r e a r e s e r i o u s l e g a l and o p e r a t i o n a l r i s k s a s s o c i a t e d
w i t h t h i s a c t i v i t y w h i c h n e e d to b e e v a l u a t e d b y t h e B o a r d so as
to c o v e r a g a i n s t p o t e n t i a l loss o r e m b a r a s s m e n t t o t h e B a n k .

The o t h e r a r e a o f w e a k n e s s i n v o l v e s i n a d e q u a t e s e g r e g a t i o n o f
d u t i e s w i t h i n t h e F o r e i g n E x c h a n g e and M o n e y M a r k e t d e a l i n g a r e a
{ e n a b l i n g the d e a l e r s t o e f f e c t p a y m e n t s and c o n t r o l c o n f i r m a t i o n s .

W e h a v e s u g g e s t e d t h a t the r o l e of f i n a n c i a l c o n t r o l l e r s h o u l d be
e n h a n c e d so as to e n c o m p a s s c e r t a i n m o n i t o r i n g f u n c t i o n s and
thereby provide independent supervisory control.

W h i l s t in r e c e n t m o n t h s t h e r e h a v e b e e n m a j o r o r g a n i s a t i o n a l
c h a n g e s w i t h i n t h e B a n k , w e found that s t a f f m o r a l e h a d r e c o v e r e d
and g e n e r a l l y t h e r e w a s good a p p r e c i a t i o n of c o n t r o l d i s c i p l i n e s .

[04871]
Appendix i n (c)
 j OFFSHORE SUBSIDIARIES

Guinness i> Mahon Cayman Trust Ltd. (incorporated in the Cayman Islands)

j Guinness S Mahon Jersey Trust Ltd. (incorporated in Jersey)

| Guinness & Mahon Channel Islands Ltd. (incorporated in Guernsey)

The directors of the bank were initylJL^ rel^ctant to give information about
| the activities of these companies to the Central Bank because of_ fears that
the information might be conveyed to the Revenue A u t h o r i t i e s ^ With regard
^ J L ^ t o cases where leans by Guinness & Mahon (Dublin) were secured by .complex
1
v.J back to buck grrflng'"^*'"*"' of deposits in these companies, we were given

I eight of copy security ^curaents but were requested not to note the names

in which the deposits were held. This we agreed to do. No files or records
• relating to customer transactions with these companies are retained in
( Dublin. The bank-fears that the retention of such files would give grounds
£ to the Revenge to claim that the companies are managed by Dublin and also
I individual files might come into the hands of the Revenue Authorities.
i
j The largest of the three companies is Guinness & Mahon Cayman Trust Limited
(G.M.C.T.). This company, which is registered in the Cayman Islands,.was
set up in 1971. Initially, it operated on a 'B' banking licence which
restricted its activities to offshore business. In 1973, an 'A' licence
was obtained which allowed the company to carry on full banking business.
I t The licence costs £10,000 per annus. The directors of the bank are John
i) Collins and J . Furze (both British) and a Frenchman. M r . Traynor.and M r .
Guinness resigned as directors following the decision in the Clinch Case in
England where a director of a company registered in the Cayman Islands who
is resident in the U.K. was held to be an accountable person to the Revenue
Authorities on the activities of the Cayman company.

The function of the Cayman company is summarised briefly as follows:-

(1) Prior to 22 June 1972 when the Cayman Islands ceased to be part
of the Scheduled Territories, Guinness & Mahon (Dublin) arranged
for the transfer of funds to a Cayman registered discretionary
trust of which Guinness & Mahon (Cayman) was the trustee. The
use of the trust funds was totally at the discretion of the
trustees (G.H.C.T.). A Cayman company was formed which was
r controlled by the trust and A deposit placed in the Cayman bank
in the name of the Cayman Company. The customer in Dublin, whose
funds had been transferred, would then apply to the Dublin bank
for a loan equal to the funds deposited by the Cayman company.
Before the loan was advanced the Cayman company signed an
Appendix III (d)
 r iatm C«iti Howfl) omounl "SET* ilimir
GUINNESS MAHON CAYMAN TRUST L wi7*74 J,50CU<3 JOIS xoo 10)0
t2,106J& .000 59 M 4,07 IJ4 177,2
dof. «od« toiMlow|2) omount twtlbolonc. limit (2) doK/b
W^Uff' I MT~ ff.OM 7/10/^tAO,J/1 rrpr t4Uf OfM U»N(I •((IMH ACCtUtD Mill
P.TO7 I'll' 12,706.27 • 41.'
w 4,079.5
9HU1 774 59.! t> 4,079.)
P-WV1174 IMT FROM 7/IO/7ft TO 7/11/7ft -709/9 £3,406.96 • 623 ^4,079.9
NOV 12*74 PER S • 15rt jOO
NOV 1274 PER A/W! '108.75
VW1274 PER A/Z! '545JS
?*)V1274 PER V3 Wil.Jhl £6,925.74 • 63 J 4,079.9
WW 1274 PER J5 295J5
"WV1274 RE EOUINOX TOREV TRANSFER < ICO AO
9WIV1274 LODGED HE J A F f7,21«.92 • 63.1 \r 4,079.9
-303.00
<0*1374 V/D 30/9/7ft TSFO FROM A/R I
9WV1374 V/D 10/$/7U TSFO FROM S/G £7,997.99 • 64.6* £.4,079.9
^ 615.06
NOV 1474 FIFTY POUHOS RE '5008
NOV 1474
,V. NOV 1474 CHQ KEMID TO LLOYDS BK EKflELO HI001 '4,219^1
f>i,**u*1474 EQUITY a '1,054.* 66.4 >*'4,079J I
PER r r
.40* 1874 M « 30.9.7* ' " ' 'TOOjOOm
•<0V 1874 /.D. 3 0 . 9 . C A S H •1,750.00s
<0* 1874 JANKERS PAYMENT
1 TO . 3,330-00
v.. •' <0*1874 Y.D. 30.9.7 * PER Z 1 ' . -300j006
.«*1874 .0. 30.9.7'! PER A/U : 'fOOMu,
<0*1874 .0. 30.9.7* PER K ; /.C -TiOJCQ*
10* 1874 y.O* 30.9.7ft PER Y 1 * -'\.v • 500.001.
WO* 1874 /.D. 30.9.7ft PER O.E •MO.OOV
.10*1874 J.O. 30.9.7ft CASH 500AO*, I12W13.W • 70.61 A 4,07934
'43* 11*74 £1^713* • 127.5
10* 2074 rnSFO FROM G.H.C.TJ ft. J.*0 CXT CALL 0 /A '700.00 133.11
'<3* 2174 CASH TO A.f.6.0UMOALK *330u80
>3* 2174 REV OF EMTRY 131.J 4,07lf
KO* 2574 >ER P 0/A 12449
.«* 2574 rSFD PER 8/C 258.99
401 25V4 >ER B/F 105.53
*l* 2574 >ER A/0 17357
ro 7t J&J& f7.<16.H '» 141.421 <079.941
m
irmou b(»if iNltmt CKttxf SKXtINC (OUIVAtf NT
M <MMI btitne* • <r«*1 W m u NOUS No Authority to iiupply inform,
tn IntMMi cm commimon over phono or to audi torn, note B%
le^granl ear IM* an<M>M>ji
cb dxqw* bo<A to tundmf ord* fixod. Int, qrt. on 31«t March fe OOHOI
:il«t Doc. «nch yoar. Intorom rato Willi l«IHI
A 11 A
Tho Socrotary, Guinness & Mahon Ltd rfiiotod in ruMaln unlonn to honr to
tho contrary ropayablo In Irlwh
Guinness Mahon Cayaan Trust Ltd., ircoiieaeoft«N DUBUNS
Thin account 1« Hon nonldont nnd
P.O. Dox 887,
Grand Caynan, dotall* ol Int. In not thoroforo to
BRITISH WEST 1KDIES. dlfcclotfo to tho Rov. Authorities
TELEPHONE 7«J KntrioM to tliln account aunt
( 5
V J;- TELEX ( orlKlnato Iron Tfl.L, If nor roforv
Appendix III (e)
 ANSEACHCP (CAYMAN) UTU IRISH INTERCONTINENTAL BANK LTD
*EF: GRP-MG 91 Mem on Square
ATTN MK MICHAEL CIAY Dublin 2.
PO 60X 867, GRAN
. U CAYMAN Telephone: (01)6619744
CAYMAN ISLAHUS Telex: 333::
A/C: C2/01J87/&1 Facsimile: (01)6785034
vjor
uEP CL DEM NUN ?ES « ARCHIVE COPY «* S T A T E M E N T DATE
27F£3V7
PAGE NO: 000
VALUE CREDIT BALANCE
DETAILS DATE

03JAN96 BROUGHT FCSNASD VI, 2C<S.2C

Cf. 1662*9 C3JAN94 1/051.15
CN 164310 03JAN96 21,953.15
CN 160311 0 3 JA NVo 41,094.01 46,207.89
: l-FEgyiJ V NC 20131s ChARGfcj TO 13F£eVo 35.0 0 i!f>,l>2.S<9
31/2/9o
i 31MARV6 INTEREST TO 31MAH9O 31MAS96 HC5.71 26, 528.67
i 27KAY50 C/N 175»1<: «A»-[i.T0f. S05a 27~*Y»c l,25u.JC; 27,778.67
. 3 0 J u N ? 6 I i.TcRcST TO 3CJUh9o 3GJONy6 3 n 7 . 001 25,165.67
I 2 a J u L V o C/N 1 7 S v 7 2 ANSoACnE* iCAYrlA,,) 25JoLVft. 1,259.00 I >f,915.67
| 2sSEP56 C/u l f c 2 l l e
I ANSSALHC* (V.AY.-.ANJ 25Sc PVa 26,0CC.00 915.67
: 30S £PV6 30SEP96 3 7".. i 3 1,290.20
INTEREST TO 3CSE>'°FC 3iusC9o. 16.70 1,303.90
! 3iDcC»o
Il.TcPEST TC JluEC9o

IN THE EVENT OF QUERIES PLEASE WHITE O V E R D R A W N BALANCES ARE MARKEO OR

T O OUR INTERNAL AUOIT DEPARTMENT
PIMM not* that cradlla rmlwii line At

AKSSACMS15 (OYPAMJ LTC'

rEF : vjSf -M r»L,
ATTN n'. I CnAcL L)A Y
PL' =0A aiT > OH AN0 CAYMAN
CAYrA.-, IS(.A:.0i /goo IT*

REG. No. 40537 R.I

 ANSBACHER (CAYMAN) LTD
KEF: GRP-Mj IRISH INTERCONTINENTAL BANK LTD
ATTN MR MICHAEL LlAY
PO 30X 687, VJRANU CAYMAN
CAYMAN ISLANDS
op 91 Morion Square
Dublin 2.
Telephone: (01)6619744
A/C: 02/U10S7/81 Telex: 33322
oBr
Facsimile: (01)6785034

UEP CL OtH fiON Hi; ** A r: C h I V £ CjPY a s STATEMENT OATE:

PAGE Nu: 0U0 04JjL9»

VALUE
OATt
OCTAILS DATE
DIBIT
CREDIT BALANCE

: 05APR95 briObGljT FCR«Ar\L> '/2*?,37i.2»

:OoAPR95 St JT 156 71 7 -ITHiJFtAwAL 06Ar";v5 i',4o2.5t
R£ uT 156 71b I ThuRAa'AL ioA?fi95 26/175.39 i/?s:/737.67
i 1UAPS55' RE. CT lit 979 ;
i WIT nORAWAL 1oAP9V5; 2/ls5/075.i3 io/tial.52
i 0JMAY95I Rc i;T 15j00i LOuGc"rM 05'-«Y95
I . RE UT licOOl
SJlSSi FICLtS TrfUST 05-IAY95 i l/OuC.Ju 60I.82
i 04KAYV5 Oh'PuSIT C/i. 11999c 30A15 S95 3<5,;i3.0y
• OErOSIT F/a C/N 199V9o 3oApny51 j25,il3. -i,6sl.!i;
0VMAY95; C/N 154027
I LCi.uEf£NT Cayman
ILTC C/iV 11990c OyiAY95 i I
15MAY95I CN 15a021 CnE IrO llfc LTD 1v/"*HYV5 j Is,372.14
31MAYV5! CN 159152 A;.SiACr£? CAYiAh 31MAYV51 1,133.75.:
i RE JV 1V5230 Ch*Gs AP* ANL.
I MAY 95 30-.AYV5 : :5.CJ 17,951.92
01JUNV5. Rc UT 15917h '_0uti-i':T 0UU.NV5 • 43,95C.92
C2JUN45! FX C/N 6i9u5i j 2 J wrt» 5 | l/i24.0u 42,926.02
2VJUN95I1fiejT 158021 n£vEr\S*L Tu
CANCEL V/L 10u595 2 5,uOU.uu: 07,926.92
30JUNJ5! I«TcRtST Tu 3 0JjNy 5 72,071.41
laJuL95l JV 19t>416 Cn.Suij TO laJ7«i loAjCVJ 2.5c 72,068.83
29SEP95I DEPOSIT
3 C/N 9»5i77 2yS£P95•
I CE OS IT F/A C/" 1.S177 2yS;P95 2,45C,UC.0u 2,»91,V9H.vI! 114,0o2.
30S £P95i INTcPtST TL i;icr°s 3uic,?y5 . 1,051.15 ' 115,113.99
10UCT55! Cll lo4Sfi9 1 sL'L Ty 5 93,6 59.02
2JOCT95 OEFOSIT C/>. llSaSv
. OcPuSIT F/A C/'. 19?:ii? lc-vTyJ 5 39, 72o.c3 V3,771.74
17NUVV5 JV HO 195663
; charges tc 17/11/95
17 ,;vvs 15.90 V?,756.14
29NOVV5. C/N 1663 3 » 2V-.LVV5 •5°, ><06 .64
' AnSC*C>*!;R CCA ) uTj 310zCv? vi,2u6.2o
31J tiC »5 IiiTtREST TO JIjEC^J
IN THE EVENT OF QUERIES PLEASE WRITE OVERDRAWN BALANCES ARE MARKED OR
TO OUR INTERNAL AUOIT DEPARTMENT.
P i n t * MM lhal cradlu m M MMr « w
•bow* d t l t do nol appaar on mka alatemant

A.lScACHif- (CAYKA.'i) lTj

sATTN HP -ICttAiL 2AY
0 dOX ac.7, G^AnO CAYnA'.
C»Yr».> ISI_an;j

RER. No. 40937 R.I.

)
 anSoaCiiEK (Cayman) LTD IRISH INTERCONTINENTAL BANK LTD.
HSF: 3itP«Mi< 91 Meriion Square
ATTN MR MICHAEL OAY Dublin 2.
PO BOX S&7, uRANu CAYMAN Telephone: (01 >6619744
CAYMAN IiLANUS Tele*: 33322
1 G2/Ulu37/al
A/C: Facsimile: <01)6785034
oar
J z P CL D£M \ u « SiS s>» AnCrll v£ COPT STATEMENT DATE:

PAoH NO: 009

JULYS
VALUE
I DATE DETAILS DATE

: 06MAS95 • BH0U6NT FCR-ARTL, 2,14-:,1?2.6 =

1JMAR95 RE Jv 1V075U ChuS P£ F i s lGlA&rJ xO.Ci
21«Afi'>5 cUl.%7 ;
2<!MAR95 0T 156257 »I THI1KAI.AU 21-aSVS, 2/9*5.2a :
. DT 156256 WlTrtuKA.Al.
. OT 15o259 WJTnDnA.Aw «lf.„n*5 IC .GU
; DT 1562OG -I Trl'j.tAwAL 21IA*V5 • : 1 9 , ,
• CT 1562O1 .ITrt.THAaAL 21:iaF.'-J5 12.T2S.t5 ;
0T 15o2u2 wiTnL* r%A.Au j
. 0T 1562 «>3 21-A«9S• i°,oV4.1» •
CT 15o2o4 m I T rl"rs A .A i. 21" Arii : I'WQJJ . 5o
0T 15o2o5 L'JUUC.IENT Sl-AnVS : 13 o mZh
1 UT 15o271 L JOuElE'.T 211AK55 • J b 4.» C
: ST 15e272 o2 o. OS
i DT 15e273 LJLOErtE.'.T ii x~V5 i J.74
1 CJT 156274 L J'!?OE*E.'T 21 T A « 5 5 ; 2»55i.iS
' 0T 15e275 3,207.05
: DT 156ei6 LuJJC^ENT 211A S V 5 ' 3,a3J.07
: ST 15"O2O5 Ir'O CA'.K JF
IK£LANC 21-A395 ' l,Ci0,3U0.3u
: dT
•Crij IF0 cAi*. -jr 1<1'J 0.51/
• Jy 19«4a9 5 17c uJA-iAl.TcS
j FEES LODGED 11 1 2 - - 95 22~.„*v5 : ?,5u0.90 1,021,395.07
23MARV5'REVERSAL 21"A t i95 1,050/000.JG
| i Cn 1562&S CAY.TA l.OiO.'Ju 2,070,345.07
| 27MARV5| CM 1563O1 RsS 2,0o3,9V1.21
2onARV5i Rt CT 15s55 5 I T «AL la* kZ'i5 3,c«o.a« 2,060,991.21
SlMAfiVSi CN I S 3 3 7 ! -.ir CA=:^l3Li ALiTcAy
i REvcfiSAi. j 31-'.AnV5 • 5 w 2 / 1 - 3. s 7
:
C.N 15 5372 S i ? Cn<i.I aLc «L;>Ti*iJ ! JI-.A;:*5-
;RE"e'»AL DePUSIT C/>. I * j l 7 7 ; 3i-^v5 oo,77i.»7
1 INTEREST Ti il J 31-A^-iS 2 V,570.73 2,?-.7,553.9b
03APHi5 0T 156711 TrlA.'.SFSr. I0iA-r,5 5J4,212.u?
•rtAT.&i'. limits ajAf-*5 334,i37.ia 2 , 2 4 7 , g 7 S . 29
0>Ai-SV5 Kt LlT 13 6 74U T-A'.J'ES 31-.A-V? 5 j C. 0 2,247,378.29
IN THE EVENT OF QUERIES PLEASE WRITE OVERDRAWN BALANCES ARE MARKED DR
TO OUR INTERNAL AUDIT DEPARTMENT.
P I H H iwta thai m d M i i m l i r t aft* M»
ihm dm do not r Ihlo
on otalmonL

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ATTN M» -ICoAtL I'AY
' T" PC TW* at 7, G.-.A.N: CAYKAJ.
' CAYM:, :Si.A,.i;

RER.No. 40S37R.I.
 ANSSACnEri (CAYMAN) LTO
R E F : GRP-MO IRISH INTERCONTINENTAL BANK LTD
A T T N MR M I C H A E L « A Y 91 Morion Square
Dublin 2.
PO BOX 887, iaHANu CAYMAN
Telephone: (01)6619744
CAYMAN 1 5 U A : ; J 5
Telex: 33322
A/C: 02/01037/81
Facsimile: (01)6785034
O E P CL P£M N u N P.tS
» » ARCHlvH C OP r STATEMENT DATE
PAGE Nu: 000 •KJuLT

j DATl OETAILS VALUE DEBIT CREDIT BALANCE

OATE
: 3 0 N 0 V 9 4 - BROUGHT FCP.ARO 3 / 1 : ? . 2 - 1 .15
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! F x C/N 6e3406 02sJtCV4 1/321.In 3/15C/7y; . to
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T O OUR INTERNAL AUDIT DEPARTMENT
Pirn* net* that cradlu rac.lv»d allaf tha
•bm dala do nol appaar an (hla lUIMMnL

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ATT.N IF ICHA£L DAY
Pu 3*7, ui».ij CnYnA'.
CnYH»ri i j L A,-.:i

REG. No. 40537 R.I.

 ansbachE* (Cayman) ltd
IRISH INTERCONTINENTAL BANK LTD
KEF: GfiP-HO 91 Menion Square
A T T N MR M I C H A E L D A Y
Dublin 2.
P O 5 u X 8 6 7 / G R A N u CAYMAN
Telephone: 101)6619744
CAYMAN I S L A N U S
Telex: 33322
A/C: 02/01067/81
Facsimile: 101)6783034
•o3P
JEP CL DEM SON RcS OS ARCHIES CJPT »» STATEMENTOATE
0-JjLV*
HAuE NO: OoO
VALUE
OATE DETAILS OATE (ALANCE
26SEPV4 , oRC'uGnT POFhAkD p - -,?9<.,OOC.17
26SEPV4 Dcr wSTT F/A C/n 199a65 :2c5t V4 j2O / SZ*.*.
30SEP94 INTEREST TO 303E»9«. .305EPy4 57/341.79 4,»;*,4*n.4<,
050CT94 JV 18e367 CHARGES St® 1994 !03JCT»4 39.7
07QCT94 DT 149479 7/F :070CTV4. lC/0UC.0u0
. DT 149525 CriS IFC
. CriEDIT SUISSE FICLES TKUST
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10UCT94 !
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DT 144632 Rc T/F 100CT94 445.95 4/03;,£19.3j
270CT94'OT 15C1V2 CnS IFO e u l
CREDIT CAxO SERVICES 27C'CT-»4 9;>0.52
;
RtN tWAL l> cP<j5 IT C/l. Iy4 j7 j 270CTV4i 13i.se
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10NCV94I FX 'C/N 9 e 2 i 0 o 10 I u V V 4 ' 5,>-0.00 4/032,3af.94
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21NOV94I RE C/N 12 0 s 27 C3VjV»« . 6-1/Ovl.lii
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I 30NDV94. Dt° JSIT C /•< l v 9 i 9u ' 2h!.jV94 :74/4sl.-e
Dc G CSIT F/a 9V<?590
Z/t. c •• \ j w * 4 3,152,241.15
IN THE EVENT OF QUERIES PLEASE WRITE OVERORAWN BALANCES ARE MARKED OR
TO OUR INTERNAL AUDIT OEPARTMENT
PIMM nolo ItulcMdlUraealvadPM
l f DM
• b m d a u do not appMr on Ihla alalomonL

A.»S 3 A v n 1c KAYMA'O LTO

= F : t^i
ATT^ - I C n A t L DAY
Pu eCX o a 7 , cr.AMC CAY»<A\
CAYPAr. iSu»:.:>J

REG. No. 40537 R.I

 ANSSACHEK (CAVMAN) LTD IRISH INTERCONTINENTAL BANK LTD
rtEF: GKP-HD 91 Memon Square
A T T N MR M I C H A E L U A Y
Dublin
PO d u X 8 o 7 , u R A N i ) CAYMAN Telephone: (01)6619744
CAYMAN I b L A N j S Telex: 33322
A/C: C2/viia37/81 Facsimile: (01)6785034
u5P

UcP CL DcM SON RcS «3> A - i C r l l v E CUPT STATEMENT OATE:

0*JdLVs
PAuE OJO 1
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DETAILS VALUE OEBIT BALANCE
OATE OATE CREDIT
:01JUL9A i S C U u H T F 0 s •> A R L .60
DT 1 4 5 7 ^ 9 T/ F £ c 01JOL94 *0,0wC.10 *,151,5*4 .oo
04JUL94 R £V £R5A LCF OU'LICATEI, 01JJL94 . 375.oC 4,152,171 .6s
INSTRUCTI ON Or 22/J4/9*
05 J U L > 4 . J V 1 S 6 C 1 7 04JuLV4 7e. 5» 4,152,092 .12
Rt CHAEUEJ
0 7 J U L 9 4 OT 1460*6 T/F 07JJL9*• 2,179.13
DT 146C 40 P£T/F
CIoTi. C7JUL94
07jJL»4 ioi.o o
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37JoL*4 9,44o.50
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DT 1 4 6 0 . 2 c e CliTC
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07JoL94; ' , 236. 2 i
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313,129.32
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3uJ u 9 * 3J. 3 , 1 . 3 i
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3,535.7U
4,160,356 .88
2 2 J U L 9 4 ! Ct, 1 4 o 7 o 4 RC.S
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4,149,462 .89
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DT 1 4 6 9 a l T / F c ° 27JvLi* 19..31
27JULV4 12*.^3 4,149,914
DT l * o s a 2 T/Fcf- .6d
03AuG94 JV 156175
CnARGiS ' i JULY 199* 4,149,850 .26
CI = TC si.42
U 3AUuy4 t> L»AL .,3 I T C / - - 1 9 ° y < > 0 4,149,948 .92

IN THE EVENT OF QUERIES PLEASE WRITE OVERDRAWN BALANCES ARE MARKED OR

TO OUR INTERNAL AUDIT DEPARTMENT. Ptoaa* not* that cradlla n o a l w d i l l M A t
•bovo data do nol i p f t t l en this ttalawianL

A,,S2*C*c- (CAYMAN) LTu

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r* j 5*1 a a e 7 , C j K A N j C A Y r t A N
C - » Y r A r . 1 Si. * u D
:

REG. No. 40537 R I

 ANSaACriEn (CAVMAN) LTD
C/U CORPORATE SERVICES IRISH INTERCONTINENTAL BANK LTD
nzf: MAIN A/C 91 Memon Square
Dublin 2.
Telephone: (01)6619744
Telen: 33322
A/C: 02/01037/81 Facsimile: (01)6783034
uif v.L Ct« '.JN RcS »» ArtCH I Vc CuPr STATEMENTDATE p
r'AoC NI: 000 2j r595
VALUE
DETAILS DATE DEBIT CREDIT
BALANCE

2<.MAY9<. oRG u6.nT F ClmAni «./la-/771.15

26.1AY94 JT 26rAYv4 19/4*9.31 4.1o4/921.»i.
. 0JJUN94 01 143J47 »'|TP0:VA»AL. 0 jJJf.v- l/OVS.Ou
DT 143a*5 «lTnl^*«AL 05JUIW4 441.00
1 CT 143:4c - I T rOn A « A O3JuN9*. 2/0OC.90
J« Ib3si- CnAn^iS -i "\AY 1994 03JJN»4: 17.20 4/1ol/463.6*
113JU'1>4 JT 14j2i9 i TflC'1 A M A(_ 1JJ»N94 <•>.3.70 4,161/019.94
'loJUN?4 „T 1453*2 1GJU.\T4 • 7i 7 , 2 4 | 4,lo0/2 o 2.7 C
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CT 1457ae T/* r 3uJuNvA i6/ 3i5.Sc.
I.sTEr EST TC ;Cji.N -. bu JLl'i/4 54/706.21 i 4,191.596,66

IN THE EVENT O f QUERIES PLEASE WRITE OVERDRAWN B A L A N C E S ARE MARKED OR

TO OUR INTERNAL AUDIT DEPARTMENT
PIMMnot* that eradlliracalvadalur MM
•bw« data da nol appear en thla alatamant

CifJ.M: LTj
C/L C.'--:-IT: SC. -VICIA
fev...

REn. No. 40937 R.I.

 ANSBACHER (CAYHAN) LTD
C/0 CORPuRATE SERVICES IRISH INTERCONTINENTAL BANK LTD
rtEF: MAIN A/C 91 Memon Square
Dublin 2.
Telephone: (01)6619744
Telex: 33322
A/C: 0 2 / 0 1 0 S 7 / 8 1
G5P Facsimile; (01)6783034
uEP CL OtM Hun R i S
as AnCrilVE COPY «« STJCTSMENT O A T E :
PAoE Kb: 000 20F£.=>95

| OATE DETAILS 1 I DEBIT CREDIT BALANCE

VALUE >
OATE
0oAPR94 BROUGHT F ORVANO ''271,12:. 32
.OoA PR94 DT 142903 WTRLORA.AL 08APR94 2/715 .10 4.2O7,415. 17
! 1VAPR94.DT 143256 WITHDKABAL •

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| 22APR94; DT 14 3*ol CNEAIUC L O J G E L 1
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27APS94' RENEWAL DCPUSIT C/L. 194473 27AK=IV4; 43,093.»3 j
RENEWAL D£°JSIT C/'' 9110*0 2 7AKS94 I I82.93 |
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2_>r.*Y94.DT 144529 Cn. IFC; sol M
CREDIT CARD SERVICE 23. .AYV4 1,3<:9 .OU
DT 144530 1/0 GJERSS;Y 13,215.O7
FX C/i« 677t,61 23-1AYV4 • OJ 4,lo3,565.94
2 4."! A Y 9D4T 14450J 'H NT- NOSS 2*-IAYT* 1,KG5.il 4,la*,771.15
IN THE EVENT O f QUERIES PLEASE WRITE OVERDRAWN BALANCES ARE MARKED OR
T O OUR INTERNAL AUDIT DEPARTMENT.
P I M M nol* thai cradlla l a c w w d ana* lh*
•bow* d*l« d o n o l appoar on Ihl* i m a n r n l

A . - i 3 j A C n = .- U*YKA\) LTO
C/0 C^K^U^ATS. SiSvlCEa
-£F: r. A I A / C

REfi. No. 40537 R.I

 ANSBALHCR ILAtnANi til)
C/0 COKPGRAU 5EHVICES
kEF: MAIh A/C
Telephone: (01)6619744
Tele*: 3332;
A/Cs 0 2 / 0 1 0 8 7 / 8 1
Facsimile: (01)6783034
u3P

OCP CL DEM NON RES

• * ArtCrllVE COPY ** STATEMENT DATE.
PAGE Nu: 000 20FE395
VALUE
DATE OET AllS OATE
CREDIT •A LANCE

J 4 J1A R 9 4 , S k O u f i r i T F C R x A H O 4,572,974.2^
J.0KAR94'C T 1 4 1 9 0 ! T R A N S F E R '10MAR94• 5 7 5 . 0 0
20,260.82
OT 141911 TSANSFEit ;10MAR94:
DT 141911 T-< A N S r E K j lutlAS** | 2 0 , 2 s 0 . 5 2
DT 141? 10 TRAr.SrER . i l()!nARV4 3 0 , 0 0 0 . 0 0
CT 1419u9 TRANSFER 10MAR94| 5,0o0.00
TC REVEKSE ENT*Y 10MAR9A j 20,280.92 4 , 5 1 7 , 1 1 8 . 4 7
1AMAR94: DT o75174 TRANSFER 14MAR94 i 4,1127.50 4 , 5 1 2 , 2 9 0 . 9 7
_OHAR*4. JV 180974 LOuuc.IENT n 670
16HARV4 | 197.54
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22-AS94 j 6aa.6o 4,7*6,303.4a
i*rtARv4)D T 1 4 2 3 4 7 J I T n O ^ A - A L l V 9 a i 5 2*sj,S94; 9a.47; 4,746,401.95
OMA394I Cut»UE iFC EarnESS

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DT 1 4 2 3 4 9 JLTNONAWAT 25 A R94 , 359.91
DT 14*1352 TO'ITHDRTA.AL
i 143,379.17
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CT
L L . C . 9 4
1 4 2 I 2 9 LODOERC<T
2oP£594 100,743.15
4 , 6 0 2 , 1 * 8 . 5 1
4 , 7 0 2 , 8 9 1 . 6 6
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0 OUR INTERNAL AUDIT DEPARTMENT.
P l u w i w w ihalcradlta i m t i i i i H n :
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A.,SiACliE- (LAYMAN) LTU

C/O C^POnATE SE3VICE3
R'EF : MAIN A/C
 ANSBACNE* (CAYMAN) LTD
IRISH INTERCONTINENTAL BANK LTD
C / 0 CORPORATE SERVICES
91 Memon Square
REF: MAIN A/C
Dublin 2.
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Tele* 3332:
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OBP
OEP CL CCM NON R E S
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PAGE NO: 030 20 F : •? •

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i THE EVENT OF QUERIES PLEASE WRITE O V E R D R A W N BALANCES ARE MARKED

O OUR INTERNAL AUDIT DEPARTMENT.
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DcP CL DEM NuN RES
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A'.SiACHc^ (CAY1A-.) LTu

sC / sC CURFOIATE ST'VLUI
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en. No. 40537 R.I

 CAYMAN INTERNATIONAL SANK 4 IRISH INTERCONTINENTAL BANK LTT
TRUST COMPANY LIMITCU 91 Memon Square
C/O COHPORATC SERVICES Dublin
ATTN MR « REJUONU Telephone: (01(6619744
Tele* 3332:
A/C: 02/01087/81 Facsimile: (01)6785034
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STATEMENT DATE
DEP CL DcM NUN fiiS »* ANCnlVE CCPY • »
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I THE EVENT OF QUERIES PLEASE W R I T E O V E R D R A W N SALANCES ARE M A R K E I

3 OUR INTERNAL AUDIT DEPARTMENT.

PIMMMM ttMleradllaraeolvedanor
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CAYN.A:. INTERNATIONAL JAI.A &

T^uiT CJ-VANY LI-.ITtO
C/0 CuRi-OnATt Si-vILEa
 & I A I EMCIM I C A Y M A N I N T E R N A T I O N A L BANK i
T R U S T COMPANY LIIITEJ
C/O CORPORATE S E R V I C E S
A T T N MR n R E O M O N O
Telephone: 101)6619744
Telex: 3132:
A/C: 02/01087/81
Gap Facsimile: (01)6783034

JEP CL DEM NON RES »» ARCHIVE COPY »*

STATEMENT DATE

PAGE NO: 000 OiOCT?i

VALUE
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CAYrAn I N T E R N T I O N A L SAHK »
T I . O i T COMPANY L l « I T t J
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TRUST COMPANY LIMITED
C / 0 CORPORATE S E R V I C t S
ATTN MR li REUHUNO
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A/C: 02/01037/81
Telex: J33Z2
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OEP CL OcM NUN RES

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O OUR INTERNAL AUOIT DEPARTMENT PIMH nolo thai credits rocolvod altar II
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EN. No. 40537 R.I

 CAYMAN I N T E R N A T I O N A L BANK 4 IRISH INTERCONTINENTAL BANK LTT
T R U S T COMPANY L L M L T E U 91 Memon Square
C / O CORPORATE S E R V I C E S Dublin 2
A T T N MR « R E U ^ O N J Telephone: (01)6619744
Tele* .1332:
A/C: 02/01087/81 Faciimile: (01)6785034
GBP
V S T A T E M E N T OATE.
OEP CL SEP UN -icS *>* A rc C rt I v/ £ CuPY »»
PAuE Nu: OuO
VALUE DEBIT CREOIT BALANCE
OATE DETAILS OATE

J0JUL93 BrtOOGnT FCRdAriC

t 5 , 6 u 3 , 7 4 T .c
FA C/N a i o 4 o t 0 2 A •„ S v 3 4,314.0s t\ *
0T 133107 ^ i T rtOrv A* AL D3AuG»3 216.13
,»AU<S93 CT 133105 - l T n D n A . A i . 04AUG93• 1 3 , 0 iC.C- J
OT 1331o6 «ITnOnA»AL 04AUG93 633."x
F» C/N 6 6 0 6 2 5 04AJG93 | 5 OO.4 u 5,5ai, lu5.
l l A v , 0 9 i OT 1337U2 VI TnGrtAnAv. T/FEn
AKTi o o l S . O t , fc712.5 13AUG93; 11,327.50
OT 1 3 3 7 0 1 »ITnL"sA«AL 13AuG93 i 14,650.6O 5,5t?,lie. e•
10«.U6V3 OT 133714 L0Ja;-lE;.T loAVji*! • , 0 0 i .30
FA C / \ c c c ' t i 5,5il,324. 7.
xvAuOVS Ci. 133.' u l wlTnC-nAwAt IVAUCY;. J 2 j 1. 1
FtVcRiAL HAv»«i*I £ 31 - o l ,
Cl. 1 3 3 S o l '»ITriL'nA.Aw Tn;_
bANH OF IRE^AN: j 241.01
CI. 1 3 3 s - 2 « I TrurtA-Au IVAVJGTJ ' 75,Jo0.jo S , 4 o o , Ov*. 7i
• *
2«.AUU»3 Rc"' i «AL O E ' j S I T C/'. <>99^05 2*4u (5V3 - • ilC •o 5
Ci. 1340 71 "ITnunAaAL
Cn» SAI.'.T MAJT1 SOnuCL 25AuGv3i 1,(135.19 5,4c5,3et. 3C
23AUO93I CR KATE 5.4573uOCu 2iAuG»3 5 . 4 s 5 , 3 o 6 . Xi
3
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3
SsueWAL 2 t u S l T C / \ 9V1039 264*09 3 75 , 5 C 3. 0 6
rtc'.t'-AL L ' c 6 u S l T C / ' 911 o 4 u 2oAjjvl i 4 o .40
Cl. 134135 WIThORA.iy. 2oAjt»3 7,643.34
FA C/N 6 e7a ?7 2oAuG*3 ^.4,616.5', 5,549,130. O;
27AOG93: Cl. 1 3 4 2 1 1 . I T n U r t A . A L
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31AuGV3i *IT(iLRA-AL T / r vT l U t t c 2x/*G»2 . 4, 7 j 5 . 0 0 5 , 5 4 3 , 5 7 6 . 57
JISCP iZ' Rii.c-AL : i ? u 5 1 T C/>. 99'V54o UlSrPvJ " 3 • *7 5,533,670. 5'
0oScP93 C,. 1345<2 RC TKISTA, siCUi. OoS i P» 3 1 9 1 , 749 . 1 0
Ci. 1 3 4 5 2 3 -ITnuiCA.i^ 0o5;r93 io9,lt5.Gi. 5 , 5 1 o , 2 V 4 . 6<.
3 7 S t P v 3 i wITnwfilwiL PAY l A r . A A l i L .
Pf.Oi'EnT 1 >JC OT 1 3 4 5 3 3 07S£Pv3 '.,000.03
J< 1 7 7 4 j 1 Cuortlc 5 : C ^ n . - . S !.
>-r . J V r.'..C>. j f . l . - . l - S 1 1 . ? 7 4 - Qi
fi7 i;' r j„. 7 O V E R D R A W N BALANCES ARE MARKS'
N THE EVENT OF QUERIES PLEASE WRITE
O OUR INTERNAL AUDIT DEPARTMENT.
Ploaa* nol* thai e n d l t t i«c*lv«d alloc
•bovo d a n da nol appaar an Mila alalam

CAYCA;, l:JTEn-<ATil"..«AL &

T.-.UiT Cu:VAr>Y L i I TCO
C/'„ CorVf-r-ATE Se.-.rfKEo

EO. No. 40S37 R.I.

 d l A I CMtlM I CAYMAN I N T E R N A T I O N A L BAN*, I IRISH INTERCONTINENTAL BANK LTD
T R U S T COMPANY LL * I T E J 91 Memon Square
C / U CORPORATE SERVICES Dublin 2.
fm*» A T T N C H rs R E U M O N U Telephone: (01)6619744
Telex: 33322
A/C: 02/01037/ol Facsimile: (01)6713034
G6P
JEP CI £/C NuN RES « ARCHIVE COPY « S T A T E M E N T DATE.

PAiiE Nu: 000 OoOCT94

VALUE OEBIT CREDIT
OATE DETAILS OATE BALANCE

V
J^JUL93 aRCJGMT FCRdARD 1. o,75?,60? .63
R E '„T 1 3 1 a l u • d T H u S A W A L V A L
2IC o 9 i 3vJON93 375,000.Ov
lit u T 1 j l a U V . I T H i - R A W A L V A L 3 0JUN93 5u0,C0C.C J 5,"77,60?
2 90 o 9 3
. 2 J u L 9 3 WlThuFiA.AL uT 131652 02JuLV3 3,922.91
F A C/I. 6 o4 7 4 2 02JuLV3 °VS.o7 5,e 72,6a2 .05
O J J L 9 2 fit'- C n « A T E 5 • 6 d 75 O n O 0 03JuL93'
FA C/N u6 5202 0iJuL92: 4,7a3.00
FA C / i . o o 3? 0 3 OSJULJJ 9,l*o.i7 5,i5a,75 5 .ie
- 7 J u L 93 C T 1 2 1 - & 1 LJOviEIEI-T 07jv<LJ3 *23. s
3 T 12l9e4 LuOjf.^El»T 07JJLV3• 1,*01. *3
UT 121962 LullotnE.'.T 07JJL»3' a53. o3
OT 121*02 LwC'uE.'.E-T 0 7 J - L 5j 7CC. 71
•:T I ' l ' o O -IThL^A-AL. 0 ?JuL »3 2,03 6.21
OT 131959 L u O u E l E r . T 07JUL*3 2 * , 3 0 0 .0 0
RE OT l J l i s a L O - G L " ; - ' . ' T 0 7 J u L »3i 1 , * 0 1 •4 3
RE j T l i l y o o uCuGc^tNT 07JOLV3> 2 , 1 0 2 . 14 5*8 8 7 * 7 7 9 . 9 5
jaJuL92 .ITnCinA.AL j T 13222c 0oJuL*3; A,545.
. I T r C n A . A l . uT 1:2227 0oJuL93 4,5*5.*?
u T 1322»4 « iTrtiJr;A»Au OoJJL52 A 77.27
FA C/J. OO5210 GOJULTS
331,53=.50
5 6 3 . 09 5,875,793 .43
5,547,214 .93
y y J U L 9 3' FA v./N ooa21a OVJuL-f 3
Rc uT 15221s «ITH^-AWAL 12J-LT3 l - O uG . 0 0 5,5*6,234 .93
. i J u L 9 3 ; Rc l-T 1 3 2 2 1 9 LOuGc"cM 13JUL93 2 , 0 0 0 . 00
; -<c JT 1 3 2 < 1 7 .ITm^SAWAL 13J-L*2 40,330.00 5 , 5 2 8 , 184 . 9 3
L»JUL93 R E JT oo5 7* 1 TSA'.JFI C ivJuLV2 4 , 4 2 4 . 47

r A C/f. tiS/41 19JJLV3 4,6o0.3t. 5,527,949 .40

i j J L , L » i FA C/r. as574 3 20JuL»2 1 4 , 3 3 O . 99
f'L wiT 1 3 2 3 3 * L O o G c - t N T 20JuLV3• 75,\lOO. 00 5,617,4a8 .39
:T 1 3 2 5 5 . I TrtC.iA.A,. 22JJL r3 1,517.07 5,615,971 .32
itJUL93 24,000.0-
s J J U L 9 3 i CT 122?30 . I T N O N A . A I . 23JUL?3:
CT 1 3 2 5 o l - lTrtCrtAwA;. 2 aJJL9 3
23JvL*2
1,30 0.00
9*5.30
FA C/i. s o o l J t 5,590,026 .32
•JVJJLYJ F^ £/'• S C S ' S A ... -. 3UJUL/2 13r7l4.C4 5«.dfi,3r7<i0 . S o
I THE EVENT OF QUERIES PLEASE WHITE O V E R D R A W N BALANCES ARE MARKED :
3 OUR INTERNAL AUOIT DEPARTMENT.
Plwaa MM thai eradka malmd altar *
abeva data d« not appaar an IMa alatam*

CAYrx,', INTER'-ATIONAL SAN*. >

T.-.'JaT CunF AL>Y LlrtlTi..,
C/i CoRr'CriATE Sci'VlcEa

:B. No. 40537 R.I.

d I H I CIVICIV I CAYMAN I N T E R N A T I O N A L B A N * i IRISH INTERCONTINENTAL BANK LIT
T R U S T COMPANY LIMITEJ 91 Memon Square
C/O CORPJRATC, S E H V I C E S Dublin 2.
ATTU MR B REURTO'tJ Telephone: 101)6619744
Tele*: 3332:
A/C: 02/01087/61 Facsimile: (01)6785034
•oiiP
CL DE-" NUN RiS »» ANCNLVE COPY <*«
S T A T E M E N T DATE

PAGE KU: OUS

VALUE
OETAILS DATE CREDIT BALANCE

17JUN93 BROUGnT FCR.ARD

17.1^93 OT 1 3 1 2 3 ° LOPoEnEuT GOUJ.93
0T 121237 ulTfiDRA.At 17JUN93 14A/0UC.3-
: F A C/N 6o4 222 17JON93 9,S35.0* 7,775,175.-*
UJUN93 0 T 1312C2 WITnORAXAL 10JUN9:
DT 131203 »ITHD«A«AL LDJUN9I :4, 5u0. ; u
FX C/N o 6 » 7 0 5 21JUN93
222.o2 7, * i:, • v -. 5;
; i J U N 9 3 ; WITHDRAWAL OT 131417 2iJwNv3 -"»0.77 I 7 / t t l , Vi-1.7t
. • 3 J U N 9 3 WITHDRAWAL OT 1 3 1 2 0 o 25JUN93I 135.Ou 7 , * a l , 7 _ ; . 7-

;„junv3 ,DT »• ITHDRA-.AL 0T l i l ^ O v 3ujuN93• 125.0K ;

1 3 1 8 j * « ITrtDiAwAL 3mJWN9I 1.'-O7,OI5.«O
OT 131845 LoOUE-.EI.T 3CJUN»3. 6*,iov.x 5
INTEREST TO 40JUU»^ 3KJUNV3 •»», 72a.20 6/75?,6U?.: :

i THE EVENT OP QUERIES PLEASE WRITE O V E R D R A W N BALANCES ARE MARKEC

0 OUR INTERNAL AUOlT DEPARTMENT.
P I M M M M Kwieradlla ncotn4«nm

CAY.-/., i'-TEr.NATIO.NAL 3AN<

Tr.JjT Cvl.lPAhY Ll-UTfj
C/r. CORrC-iATE SiR/ICEo

•0. No, 40537 R.I.

A I M I CIVICI* I CAYMAN INTERNATIONAL BAN*. (. IRISH INTERCONTINENTAL BANK LTD
TRUST COMPANY LlMlTEu 91 Memon Square
C/0 COKPORATt SERVICES Dublin :.
ATTw .In n rcEjIONJ
Telephone: 10116619744
Tele*. 333;;
A/C: C2/013i7/al Facsimile: lOl 16783034
JEP CL C;" Nun StS
STJCTEMENT OATE
AnCnlV: Cu=Y we
PAoE Nu: 0J1

OATE 06TAILS VALUE OEBIT CREDIT

DATE BALANCE
-2JUNV3 BROuOnT FC -AnD
c V
1: 0/527,0cs-
CT 130623 .'IThO^AWAL 02JUNVI 4 ,LJ9.;W * . 5 I'I,' .
JuU93 WT' wITnO-iA«AL OiJuNVl 1/319/634.7*
OT 130I 32 LUL jE:iE..T PI W A Y 1A
I l»T l 03JUN93 1/319,634.79
OT 130831 LuJuCiEi.T LAY-.AJ.
I;;T l 03JUNV3 i,Jly,o3».7u
0T 130534 1 T/iDnAWAl C'4J'JNR? • 4,0j0.00
DT 1304o2 LODurNCNT 0»J jf.V J 0 u ( l/I20.37 I
FA C/I. 06Y7 04juf.;3 / lC.3u I 5,lvl,lo7.0.
10JUN93 DT 130*30 LuOo: 1E..T Rc L A Y \ * 1 1
I..TL :3JJF.V3, 1/3LV/ = 3*. 7"| .
DT 130330 LuOviT-lE'.T - ^
CAT ' A ; .
I..TL v0 yiJjl\i3 I.:IY/;3-.79 7,£II,4J7.1:
iy JO:NV3
0T 1305ol .ITnihA.AL J u r. V 3
FA L/N 06 35 21 OyJuf.VJ 7,82J,7O1.CC
l i j j:.9i CT 13 0 S 7 0
. IT.IJ^APAI. liJU'.yl 1/OoJ.Uo 7,o27, 75 6.6IR
I-.JU.N93 FA C/H SE<-3O5
14 J U *N V 3 7,8,7o':.t :
iiJuNVi. DT 13oi»3 - I Tn'.-rtA»- L liJo'iyJ •
DT 130394 .ITnJ-.A.Ai, 13 J . j y 3 13 B / 0 O C . j j 7 , „ ' n ,7o6 :
.0JUNV3 Jv 174;Of C n»uu;i N
.,CH
CAY.IAN I STL IcJ-'.V 3 I 5 . VJ 0

J» 1746.10 CnA^SiS ~i.

CAY.IA.N
rz IOJvNVJ -4.5X
Jv 174612 CnAnoiS ru r. AY ! loJoNVZ 2*5.
CYA.-1NA I M TL 7,6V4,412.1r
I7JL.NV3 i.T 1312 5 ; » i TnuRA'Ai- i
17 Ju.N V 3 1, 2 £. 5 7
1
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CT 131233 -ITn^r.A-i!. i 1/JU-.93 4/730.0«
0T 131243 LUR-JETE'.T 1 D"» jjr.v Z 137,545.«1
0T 13124? -ITrOnA.AL ji 0„Ju:.93 4,=o5.0J
1 74,.12.J2
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O ^ J J ' . »". 4 . 9 s « .'j 1,
JT I 1 1 I -I 1 - I T p . -i A - A J . , ,
t THE EVENT OF QUERIES PLEASE WRITE OVEROflAWN BALANCES ARE MARKEf
3 OUR INTERNAL AUDIT DEPARTMENT.
P I M M not* thai ciodlta raeaWad a«ar
•bow data do nol appoor en ttila n a M

CAY-A:, I:. T e R .*• A TI 'J A w j U i 1

Ti.-Jsl C-"fA.lY L l - l T t J
C/C '^"rOiATC SE-.VICis
 CAYMAN I N T E R N A T I O N A L BANK I IRISH INTERCONTINENTAL BANK LTD
T R U S T COrlPANY L l l I T E u 91 Memon Square
C/U C O R P O R A T C S E k V I C E S Dublin 2.
A T T N MR n H E j r J N y Telephone: (01)6619744
Telex: 33322
A/C: C2/»1047/B1 Facsimile: 101)6783034
ui>P
S T A T E M E N T OATE
jEP CL 0 c * *UN RiS AnCHlvE CuPT
PAuE Nu: 000 yu
VALUE
DETAILS DATE DEBIT CREOIT

i 4 M A Y 9 3 i f l n O J G r t T FFRWAKD 6 / 1 * 2 / 13^ . 5
JVNAY 53 3 T 12-V72o LUDUEIFNT 04MAY92 : 7 . A 5>
11.17 C«1*2/
FA C / H 6E294* 0*.I«Y93
05.-AYV3 • 5,922.00
WIT.. 2>
.IHA/93 FA C / N AO 2 9 * 3
UT 129723 .ITnDnA-AL 05^AY93 .
50,000.0 0
OT 12974* wlTnunA.AL 0 5 * TV? ' 110/l<3.o 3
CT 129723 .ITHOAA-AL 05HAY93; 50/0 JO.00 17? . I :
,UKAY>3 IT 129956 .ITMCRA.AL 10 M A
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./r AYVZ -AT • CEP. 999O0V» 17»AYV31 A5/o6o.l* 5 / ° A . - / 3 W Z. 4 "

'.ir. AYV3R AL/N 06 *0 'J 1 1 y'1 A YV5 ' 2/9al.vo J / "o5/3* - .55

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21'AYV; 3/065,
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n i ' T.AL D c ' j a l T C/:- 1 2 0 a 2 o 2j-„.Y93 • l/a0u/753.«2
RC jT liC26S HAF ILTO.. R.JaS 2 51".« Y 9 2 700/753.C 2
FA C / N 6o3*7o 2 5^AYy 3 15/0yO.f. 4
I FX C / N 6c402t 25.-1AY93
2/931.OJ 0/546/ 672 . 1 7
a r A Y 9 2 F.T" £v AL ? E ° u S l T C/»- I V A a72 2o"cYy? 19 Y.» 2
R C ' C ' - A L 0E°J5IT c/'- y l l v A O 2o«AY>3 152.15
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' CT 130341 - I T H O - ^ A - A L 7,000.0u
OT 1303*2 - I T H ' : K A . A I . 2c-inYy:
CT 1 2 0 3 * 2 » i Tnuri A » A L 2O'
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2A:-IAYVI
A/000.00 LOU/UOO.UC
CT 1 3 0 3 * 5 L-..0 JEDE.'.T
CT 1 3 o 3 » 9 . I TN!_ AA .AL 25-AY92
A 3 A.!) — 6/631/ 250 . 6 2
27.1 AY y3 JT 130 3 - 4 » ITN'.'TAI 27"»Y93
1/5 7 6 . 7 4
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- 4 J J'IV.3 C I '-AT-- i.r74iK a; JJ.NYJ 0.1 r a .
M THE E V E N T OF QUERIES PLEASE WRITE (
O V E R O R A W N BALANCES ARE MARKE
0 OUR INTERNAL AUOIT DEPARTMENT.
Plaaao net* thalciadlla taeahad attar
abowa data d o not appaar o n M a atatar

C A Y r A . I MTEnN A T I ON AL j A . i A &
TnL-aT C j ^ r A . . * L l ' l T c J
C/C C^rO'-iATE Sc'-rlCaa

ER. No. 40937 R.I.

d I M I CMera I CAYMAN INTERNATIONAL BAN*. i IRISH INTERCONTINENTAL BANK LIT
TRUST COMPANY LIMITED 91 Memon Square
C/U C C R P O R A T t SEnVlCES Dublin
ATTK MK R KEUMUNY Telephone: (01)6619744
Telex: 333::
A/C: 0 2 / 0 I 0 8 7 / A I Facsimile: (01)6785034
I16P
STATEMENT OATE:
UcP CL Ccf ('ON R E S M ARCnl»E C0°Y *»
0*" A°»4
PAiiE NC: COO
OATE DETAILS DATE DEBIT CREDIT BALANCE

E
6 , 1 5 , 4 9 4 . 9
. 4A V 3 T / F Pc n A P l L T O N RviSS JV 173o82 13AiJR53 9,2s5.1i
LCucEfEhT jT 12j75e l*AiJR»3 1,70 j. - 0
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a & J i . c/.'. J E P O J I T 3 1 S 3 V 3 0 1 0 * 9 3 01APR93 82 . 1 9
01 129027 - i T n u i A . A L 1*APR93; 4,017.12
DT 1 2 9 0 c s L O D G E M E N T 14APH93 99g • o0
0 T 129026 wITriDnA»Ai. 1*AP R 9 3 ' 1,500.00 |
DT 129C*9 W l T H D n A . A u 15APR93I 407.70 6 / 1 * 6 / 0 5 7 . 1 2

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. - J A H R V S ; R» L / N 06 2**'"' 2uArr93 | 5,020.30 1

FA CJ T/ N c :oo62220C5; 0 ZuA?R*i 1,2/0.1*
Rc 21*/ > : 5v3 ; 139.14
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^1APS93 « I T nDnAuAi. 1<;925-. 21AiiRV3 5,500.0U
h A I. l ' t ° . 995103 21Aprt93 I 28O,OC£ 6/1*0/436.23
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: 7 A R ' R V 3 ' N £ DT 1 < 9 * 9 5 LCL/CE^;NT 2oArR93 2 , 2 iO.32
R Z DT 1 2 9 * 9 1 L C J C c i c K T 2oAPSv3 ' 1 , , 3 o .7®
5 z DT 1 2 9 4 9 * . . C i / G c ' i . ' . T 2 o A r 1 F. 9 3 1 , 5 2 0 .<:3 6 / 1 * 5 , 1 1 8 . 5 7
;oA?R93! uT 1292i5 . I T n O n A . A L 2iiA?r9 3 9,000.Ou
F X C/N se«i*5 2 1 . 127 . 3 8 6 / 1 3 6 / 3 A 5 . 9 5
: » A H R 9 3 ! DT 1 2 V 5 7 9 • I T n u n A . A L 25A|3R»2 1,000.0J i
J T i 2 v 5 3? - I T M ^ A . A . A L 2»APR 93' 1/075.9o
DT 1 2 9 3 c 4 . I T n u i i A . A i , 29APc<3. 12 5 . 0 C
TO n E v E - i S c C'.TI-Y 5VArrt*3 • 125 . 0 0
D T _ 2 v 3 & * « 1 Tnl!-. A * A L 3uAri.V J 1*5.30 6 / 1 3 4 / 1 * 4 . 9 7
j u A ?-.fZ w I T r w n A o - A L u T 30AFRV2 luO,OOC.OO
l l o , 1 5 o . 12 b/l44,2»5.7v
MAT• D E ' 5 . 99C-0C 3<IA?"9 3 6,1*4,295.79
j j r A Y9 31 'IS» CR H A T L 5..H.C03O00 03-.AY93
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DT 1 2 9 7 * 7 LUDUE-.E:<T C n Y h A t i
I NT L a*»AYY "i : 543 . 7 5
OVERDRAWN BALANCES ARE MARKEC
. THE EVENT OF OUERIES PLEASE WRITE
0 OUR INTERNAL AUDIT DEPARTMENT. PIMM now thoterodtu »»MT»a<»Hot
•bovo M i a d o nol o p p M r o n IMa I M M

CAYfAr. international o*N«. :

T n U j T CJIPAI.Y L I N I TED
C/J CO'TRU-VATE SE.'VLLEO
O I A I cmciv i CAYMAN INTERNATIONAL SANK 4 IRISH INTERCONTINENTAL BANK LTD
TRUST COMPANY LlrtlTEi) 91 Memon Square
C / 0 CORPORATE SERVICES Dublin 2.
ATTN MR n REu.10.NJ Telephone: 101)66)9744
Telex: 33322
A/C: 02/010!7/al Facsimile: (0116783034
GbP
STATEMENT DATE
JEP CL DEM NON «ES s>« AnCnlvE CuPY »*>

HA«E NO: 003

3.-»«••».
VALUE
DETAILS
DATE
DEBIT BALANCE

)V*AR5I. EKCUGHT FOP-ARO S,ls7,5il .4'.

;or.Ag93 R c OT 12 7 Sac . I T H C J I A W a L . 1V''.AR93 6si.6o
JV 1727&7 LuOuEnEl.T
< VALUE CATE 19/2/93 :26FE3V3 4=0.70
-1MAP.93 FA C/f. 063 563 I111ASV3 50,753.0*
j.OMAP.93 OT 127916 . IThDRAwAL 15 •'•AR93 ' 41,000.0b
OT 127918 WITHCRABAl. 1OMAHV3: 30,00C.-10
OT o605o3 C A N C E L L C ? 11«ASV3 50, 75j.00 j
JV 1729^2
T/F isma^VJ '• 1,237.75
•JV 172913
T/F la' nS-iS . i,437.79| o,13:,57<-.i:
anAR93 DT 12filo9 ITnui»A»Ai. 2 2 • A r.»j 7t,3al.7a
DT 12el9C .'iTn'"iVA.Ai. 22'»iV3 »7,5 a5.1 7 5,9o4, 65.-..21
23.-IAR93! DT 126153 - ITn.M».AL 2 i •> A r. r i ' 9jl.a5
CT t o l 4 i l T u A . S r E r 24 .Aiyj i5a.l7j 5,4 o4,1x4.jV
2 a « A R ' » I l F * C/N o 6 1 5 i c 2 O" A u y 1: . 1,5o3.--
WITrtOKA.Au uT 14635c 25? aS»: ! liS.'o 5,<>62, 39t.21
2 v n A R V 3 i OT 126359 « I T n l riA»>L 29»aiVJ 6,->VO.fj
OT 1 2 c 3 o C . I T n i n A . A L 29» A'.vZ 2 , 5 u 0. 0 v 5,952,899.31
j j r t A R V 3 : OT j.2a577 . lTni-nAwAt. Ju^RV?c, 12,3*0.44
• OT 12o57t> * ITTI'.'IA.AL. i 3C."lA r? 2,295.53
• OT 1 2 i 5 s 7 . l T R r - , A . A l •: 3 0 - A T V I 4,5 J 0. 5 » 5,033,712.Sc
i l i A H 9 3 - OT o 6 1 4 i l n t V a ' a A i . ;22'ARy; 3a'. 17
.' R c jV 1 7 3 1 2 « T r E n | Jl^'Airi 141,167.>0
: P i JT l i H i l i .ITHUAA-AL ] 31' • A r. 9 3 125.0j
F x C/N 0ol421 i 22*'A"v3 44U.3*
'•• I i . T E R t S T TC 31-.Arv9i I ilw.vi 9 o , 3<.e.v3 6,173,OOo.50
J 1 A P R 9 3 ' F * C/N o 6 i s i 5 j OlAr-.-iyJ 1,545.36 0,174,549.
j 2 A ? R v 3 h c « CF F-ATE 5 . 7 j J u J u C * i olnr i«vl
DT 1 2 a t V 0 CAY.iA,, I 01Ar-iy 3 2 j.17
Fa C/h 6ele67 i OiAiJSyl , 15,075.-0 6,159,4V-.03
^ o A P R v 3 ' - I T r i O R A - A u « E CT 1 2 o 9 a l ; O - AJr - 5 : 0,154,496.03
l 4 A r R V 3 : T / F JV I 7 i t o 0 1a A n4 I •j, jOa. yC 1
T/g r- h<»i- Tt.'. g.-iV. 7-,-s-.: . ft,
V THE EVENT OF QUERIES PLEASE WRITE O V E R D R A W N BALANCES ARE M A R K E D
0 OUR INTERNAL AUDIT DEPARTMENT.
P I H H note ttwl cradlla n c a l v k illar II
• k o w d a l t d o n o l appaar a n Mila atalama

c A Y \ ime^-.AT i:.->Au uA.<«. i.

T"u5T CofV A:,Y L i ' l T t j
C/? Cj'lrOnATE SE" v IC£ a
 O I N I CIVICIV I CAY«AN INTERNA!!UNAL SANK t IRISH INTERCONTINENTAL BANK LTD
TRUST COMPANY LIUTEJ 91 Memon Square
C/0 CORPORATE ScnviCES Dublin 2.
ATTN MM ri KEOMONu Telephone: 101) 66)9744
Tele*. 33322
A/C: 02/01037/41 Facsimile: 101 >6785034
OoP

D?P CL DEM NUN RES ARCHIVE COFY « • *™™«NTOATE:

PAuE NLi: 000

VALUE
; DATE DETAILS DEBIT CREDIT BALANCE
DATE
/

• 0 5 F E B 9 J ! BROUGHT F C R - A K D 6/400/324 . 4 1
O v F c ^ v J F A C/N o 5 8 9 4 1 09FEJ93 230 , 0 JO . 3 0
F X C/N 65*94. 09Fc.a93 a l 4 • 3o 6/170/93? 71
' l o F i b S S . R c DT 1 * 6 599 L O O G E I C N T 1UFES93• 7,51* • o4 6 / 1 7» / 4 51 . 4 1
. 1 * F E 4 9 3 F X L/t. o 5 9 7 i ? . 12rc=93 2,3o2 .63 6/17o,Uf .7-
1 3 r £593 RENEWAL D E b O S I T C/N 99«t>0o 15F&B93 5,oo9 6 / l o 2 / 0 1 7 • 9o
! l o F £ s 9 3 DT 12t'J»2 Rc u A T K A N INTL. loFctt93. 17.285 . y l
i 0T 126045 . I T n O n A . A L 16FE393 1 #237 . 7 9
i DT 126644 L Q O u E ' F N T l o r £ £93: 10/500 .oO
i D T 1 2 6 0 4 6 « I Trtui< A . A L lor££93 7 #056 .30
1i F x C/N 659746 loF£593' 7 #262 .50 o , l v . / 2 . 7 .5c
! 1 9 r E a V 3 : Cl. 1 2 7 0 3 0 W I T r t O W A . A u 19F£=VIi 5*3 .51 •
1 F X C / N O6U175 lrrLr5J 2o0 •7u
| : F x C/N o 6 0 l s O 19S£ oy3 * 39 • 60 6/193/382 .17
Zcf c b v 3 ; A'EN EWAL D £ ° J S I T C / N 9 9 9 a 65 2*rt:v3 10 i • y 6 6/193/489 .13
2 4 F E S 9 3 Sc. I T l < 7 0 A f . I T M D F A W A L 2 . F t 3y3 2*0 . 0 o 6/193/2o" .13
2 5 F E 3 9 3 ' R E OT 1 2 7 2 7 s » I T i > u r A « A L 25r=.£v3 155 . S o 6/193/114 .13
2 o F £ d 9 3 ' R£ DT 1 2 7 3*2 u S i / C - c H i K T 2cr£3y3 7i</ 5 20 . 5 5
Rt u T 1 2 7 * 8 1 » I T n j K AWAL 2o?ciy"3 i 1*5 . 3 0
I R E N E W A L D E ' U S I T C/:• 1 9 4 4 7 3 2o"£;93. *73 .30
• RENEWAL D c P W S I T C/N 9 1 1 0 4 0 c 6F£ i.y 2 * 23. 1 1
••
R E N E W A L D E P O S I T t/.V 9 V 1 0 3 V 2o?cJV2 43a .38 6 / 2 6 4 / 4 9 4 .47
G 1 M A R 9 3 R'CNE'.AL S s P U S I T C / N 9 9 0 u 0 2 01fA«y3 20 . o 4
RENEWAL D E P o S I T C/N 9 y 9 5 4 0 OlrARVJ 135 • * 4
N £ - CR R A T * 5.9/OJOJOO 01 l A ^ V S 6 / 2 o4 , 6 5 0 .55
0 * M A R 9 3 ! R t O T 12 7 45 3 . - I T n U r A W A L a*-,A?v3' 50 , 00 0 . 0 0
R t UT 1 * 7 45 i . I T H f ' A W A L 32~>ARV2 5 .30 6/209,650 .55
0 i r t A R v 3 i DT 1 2 7 » o 0 L-Civ>CnE.»T 3/300 .00 6/214/650 .55
05-(AR93 J v 1 7 2 7 5 3 CnArtOES 5 C JA:»
:
CAYMAN I M T L •:4«Ai93 92 . 0 7
J V 1 7 2 7 5 1 C A Y - i X : , LT*' L u A R < I £ S
"ic u E C 0V'AS93 138 . 1 1 o#214,420 .37
.
0aMAR»3' F A C/i. 66<.ci>5
0 yM AR 93' F x C / N o 6 u t V 6
3av.„f-v2
OV 1AR93
11 » 2» 7 . 5 u
15 , a o 2 . 2 - .
6,203,172 • ^7

JV - . 7 k 7 c 5 T.-s*;.SrE.. 09 i i - i y / i : /Ou .1,9

IN THE EVENT Of QUERIES PLEASE WRITE OVERDRAWN BALANCES ARE MARKED
TO OUR INTERNAL AUDIT DEPARTMENT. Ptaaaonolo Hiateradha N M M I M I
ibm 4d nol appear on Me alaiem.

C..Yri.. l;.TEri;iATIO-.AL »
Tr.UiT COJVA'.iY Ll'-'lTcO
C/'J CoRfDr.ATE SE-.V ICio
 CAYMAN INTERNATIONAL BANK I IRISH INTERCONTINENTAL BANK Lit
TRUST CONPANY LIHITEO 91 Memon Square
C/O CC*PORAT T SERVICES Dublin 2.
ATTN «IH K SEuMONj Telephone: 101)6619744
Telex: 33322
A/C: 02/01037/61 Facsimile: (01)6783034
(IPP
STATEMENT OATE:
OEP CL DEH NON RES » » ARCHIVE COPY »•
04 * »«
PAoE N o : OoG
• '
VALUE DEBIT CREDIT
{ DATE o n AILS OATE BALANCE

: 0 4 J A N 9 3 DROUGHT FCRWARO 5 / 5 * 3 / 2 5 5. 7 .
RfcuE.AL DEPOSIT C/N 9 9 0 0 0 2 3*JAK73 25 . 7 4 5/5*f/27V.
0 o J AN 9 3 j v 1 2 * 6 1 0 w I T h O ^ a w a u
JV 1 2 4 6 1 7 .IThORAWA*.
JV 1 2 4 6 1 6 «ITrtCRAoAt
06J«N93
0OJAN93'
0oJAN93 .
aOrOvO.OO
SO'OuC.OO
28.35
.
FA C/N 05776* 06JANV3. 10/704.»3 5,437/545.
i 0 7 J A N 9 3 CT 1 2 4 5 9 7 MITnOnA-AL 07JAN93: l/oie.oo
91
DT 1 2 4 5 9 6 WITHOKAWAL 07JAN93 20/050.00 5/410,457.
! I i J A N 9 3 CN 1 2 5 2 0 8 LOOiiEnENT JluiCVt : 1/123/339 .60
91
Ch 1 2 5 2 0 7 w 1 T h j n A » A L 31DEC92 1 125.3 0
1 CN 1 2 5 2 u 2 « ITriOnAwAv. I t JA'N-»3 10/»w0.Co 0/529,172. 5 i
! 1 3 J A M 9 3 ; 0 T 1 2 5 2 0 6 W 1 Trtt"R A « A L lSJANvJ f 2/3*4.2a
: . FA C/N 6 5 6 0 4 a 13JAN»! . 220/000.0J 0 , 3 0 6 , 8 2 5 . 27
1 5 J A N 9 3 ' T / F RE uT 6 5 S 0 5 u ANaifACnSrt 1jJAN9: 1J3.'a 6,304,724. 2v
l v J AN9 3• FA C/N O 5 7 7 J 2 l v JANV 3 1/527.a0 o , 3 u 5 , 1 9 o . 33
21JAN93. CT 1 2 5 3 9 2 wlTHOrtA,AL 21JAV»3 1/795.-3
CT 1 2 5 0 0 0 LOOuEiEnT 31UIC92: * / a 3 V .49
RENE-AL DEPOSIT C / F 9 9 9 o 6 5 21JA .93 76 . 5 4
1 FA C / . \ 6 5773o 2/135.00 6 / 3 0 6 , 1 4 1 . 53
21j*NVI '
2IJAN93!Ci» 1 2 5 3 9 = JITRUKAUAL 22JA»>93 2/OaO.ta 6 , 3 0 4 , 1 2 0 . 87
2 5 J A N S 3 . RE wT 1 4 5 5 3 a *ITrtuRAwAL 23JAN93 155.30
FX C/N 657740 2 5J*N9 5 il/"uC.n0
FA C/N 657743 21JAVV3 £ 19 . 3 0 6 , 2 6 2 , 2 8 5 . 17
2 0 J A N 9 3 I CN 1 2 5 4 2 2 LODoE.-.ENT | 20JA>.*i 2/197 .29
CN 125549 LOOJEHENT 2 6JA N4 3 o99 .11
MAT.DCP. 9V9I21 26JAN*: 101/190 .75 6 , 3 6 6 / 5 7 2 . 32
2 7 J A N 9 3 : FA C / N o 5 7 7 * 5 2 7JANV3 1/6j7.2 7
Rc OT 1 2 5 d 4 a L G j G c ^ l N T 27JAN9I a / 5 0 0 • uO 6 / 3 6 8 / 4 3 5 . 05
2 9 J Al«v3' RE OT 1 4 5 54U A \ a a A C n E R uTu 2 V JA W 3 125.3o
FA C/N O5 77*5 29JANVI -.93 • o5 6 / 3 6 8 , 8 0 3 . 70
0 1 F E 5 9 3 ; HE'' C»AL C E ' u S l T C/.» ' 9 Q 0 3 2 OlFiiv? 20 . / I 6 / 3 o 8 , 8 2 4 . 41
OaF E 5 9 3 ' RE 2T 1 2 5 5 4 1 u C - . G i - E ' T 03R IA93 4 / 3 0 0 .uO 6 , 3 9 0 / 8 4 4 . 41
0 5 r t 5 » 3 - HE. Cn RATE 6.0<:00JA0J Jl? II-»3
RE CT 1 t i 2 2 1 .IThufcAnAL 05F iz'ti 1/OuO . O u
.CS^ii*! , i .1. i nti .01) A.400.^34- 4 1
I N T H E E V E N T OP Q U E R I E S P L E A S E WRITE O V E R D R A W N B A L A N C E S A R E MARK ec

TO OUR INTERNAL AUOIT DEPARTMENT.

Plaaao now thai cadlM racoltwd altar
•bova data da nat appaar an Ihla atatam

CaY.-A;. r . r E R . ' . A T I G M A L aA»\s 4

T r . U i T Cu.-r ANY Ll«ITfJ
C/C C U ' I - O R A T E SE-"V ICEA
 !

IRISH lOTERCONTIf JENTAL BANK LTD.

9 Hi "onion Square
EK'vfe2 ' ' ••
TstepSons: (01) 619744,.
7e!esr 33322.?;,
Facsimile: (01) 785034 * :
• •• « VV
STATEMENT OATE: 0 6H A V9 3

ita; /000#00U.00
•V. 55.U/OGU.U0 I-"
•92; • 3/379/014.01
1/447/767.91 4,535/645.28
.,.,,.,20,0,? 2:; •i/abc.ou
.-•• 5/000.CiG 4*535 / 645.2il
;*vr05ptfT92 109*916.94 4/645>56*„22
CoOCm :2>U0U.UQ
"••lHQ&'0TcfT$2'
550/000.00 5/193*562.22
650/661.20
07OCT92
MO.titfj.Z •1/559.L-
•bjviMz "6.; 00 9.32 6
.'.OlC'iFte
07QCt92 '7/113.U
0,1iOCiT 9 ?. 5/336/093.45
SqSfcFlM 1 4»4t>0.42
3/000,0L! 5,347,573.S?
130CT.92' 95/336.43
T/F Ut $99V2. 1 30*|&2? 95/290.91 5/1)47*619.39
1A0CT9S T 12'1475;&K 1 AO DM.92': 665/597.93
|Vf..(T 1 1 613/635.04
EP 1 Aod m i <j6!>/713.o4|
A T.DEI'. o ! 3/ / till. 1 'j 5,£i47/O<s0.21
i>T -»U | iaTW'ffM'i )5UfcT;9.2
J- T i.545t5 Tl>.AH^:F"'" ,160'.CVX:9 2-: B73..JV
^ '/'I- 65.45ia' .1 50C.1$2 j/i>43.391.54
160 C T.9 2
'1 60 CT'9. i 2/OdO.OO
• •i i : 144; -.1 tfocWz 1/000. vi;
i -.'T 1 !l'U*fUITHDRAJAU ^ ' 1 60Cfr;92'
160C*.9.2 319.99
U0C&92 7/o49.1J 5/244./709. w
2[ d' (TT 9; 1 j , 7 5 J . J.. 5,633/959.4f
!M 71-15
.'ri-ow
s OVEHORAWN BALANCES ARE MARXEO

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TKUSI CO..
c/o co?;>o

•'. •• - H M
 :
.f^ jf 'T/P COi»l»Of?AVS' jrgjKtffrflJP' -v"'*"
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nr • i>nTEP.CONTINENTAl. BANK LTD.
ion
> Square
Ts GO: (01) 619744 .
Teles: 33322
fLw Ie: (01)785034

STATEMENT DATE: / 0 o ( l A y 9 3

CREDIT BALANCE .
;
i? 'CU\1 U T9S
1 40C 7 1 #279*232.97
t ^IpH'Xti .tt.173?\f^tfflEHfiNT.-- :v>'-' •• W V 20GCT92.
-.200CT . -26*441 .32
' • • to&*««8Bt' ' £ -MACK • T3O*UCO.OO 4*711*167.62
1*279*232.97
1 *27V*2i2.97
..'1*165.a4
13 7.02
219.23 7*267*132
'. 16/ EUO.DU
100*789. u4
100*739.114
4*396..jO
2*000.00 7* 24K *536.6 5
2 7.2U
14u*tiU0.0u
1 * ciu J. >'. I.
1*17?.if
5i3 . u
J * V!) 6 . 5 u 7*323*104.3t
V; j J / U j 0 . J 0*423*1U4.30
1 b 5 _. i 0 0*422*949.30
20*000.Oil 6,402*949.30
1 2 5 -1; u
1*744.5U
• 5*505.ua 6*401*U03.0U
1*2o0.2C
QUO.,; ii 6*395/324.0 7
2*261.11 6,396*062.96
21 /940. ju 6*374*122.96
OVERDRAWN B A L A N C E S ARE MARKED D

PImm not* thai eradlu rccafwd altar tht

abov* dnt» do nol apprcr on this ttalmitM
 OVERDRAWN BALANCES ARE MARKED 01
jigffi QW3OTSSMVNz&st c5?Aiirgfair. •' •'•v-vc.y.^i-w;-.
PSeasttncts tiiatcrocsisa «ca!vst3 alter a n
obavn dot* d o not nppsar e n Oila ctMsnsant

TC.3K INTERCONTINENTAL BANK LTD.

91 l-'ixicn Square
Dublin 2
Telephone: (01) 619744
Tele*: 33322
Facsimile: (01) 785034 . .

l3rO/92
20N0V92
'24N0V92;
23NO.V92 , 6,374,.1o3.22
Z5NOVVZ
25.M0:V92 6,344,613.22
•26H0V92 266.4o
41,757.72
2<5tiOV*2 6,479.iV
26N0V.92 '1,527.35
25l.'OVV2 • 15 5.1,0 6,394,4*4.52
27M0.VV2
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j %% 19<S.34
J0N0V9J*. da .iU
LVF B T • ' { M M b ^ S f l t & l t R l i l T «' 30II0V92 545.30 6,390,067.32
SC92 30N0.V92
T
I 6,500.00
QN0V92 30,640.41
3QN0.V92 .•• 1,000.uu
R^'vo-TlFi 23i5S4? LOB 6'i'efof 3tj NOV 9 2 (J33.33
fx, 65*9.5 3 30N0V.92
I ,000.1-0 . f > , 4 b o , ij61 . 0 6
£C9i: Ci;; 1 23333 UOFEGF.SHT U-MM l106592
02DE;C92 1 , C2b ,246.97
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1,000.NO 7,51 5,i10.Ll3
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02DGC92
»03DEC92 1 ,1100.'.) •*
•.030EC92 3,273.:.'.
ijEtoiSO* 7,504,oU2.U2
h6.i' DEC ,9 2 7,504,602.U2
•0.7. DEC 9 2 7,494,002.02
DEC .9 2 6US.60
0.3DE:C92 1 36.52
0:8DE.C92- .140.00
0U.0 6 C9 2 2,032.21 7,495,00^.45
-11b (=.c 9 2 2,150.00
OVERDRAWN BALANCES ARE MARKED I
PiooM not® that credit* received attor It
abova data do nol appear on thla otaiaraa

• •>: f-• .sr., jjf.-. «}.->:: • •«••.:!•••.• '

••:.:-• <

c-.v A a "ILLre RHKJ IONAL'BANK &

r.'iJST CO-ICANY :/LIMITED
C/0 CoIVPOf?E-;': :.SfcRVICES
ATT «•{••nfc'ne&'tfo
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IRISH INTERCONTINENTAL BANK LTD.
^Ic&hxr "..v^v - mmi V 91 Memon Squared :
f Dublin 2 • . 'V-l •
iTWephone: (01) 619744;.^'
W v - - A - . - - - •..- ..-• Facsimile: "(01) 785034

STATEMENT DATE: • :06PIAY93

•.T

CREDIT BALANCE :

;7;491/6b5.12
V^jWOSQUO
'. 6 / 4 5 3 / 3 i i b . Ib
'•1 /ooc/ooa.oo
Z30.1-0
'112.8?
112. a?
112.3/
4, •;j yr4. .s
I 2 / 6o j . J i
- • : 4/315.LC 5/42U /Ao?."t3
1/0b0.<j0 .5/427/406.63
• 3/237.U0 ! 5/424/1oV.63
1U1 ,4<i
2 1 5 . oc 5/424/V66.73
275.3 0 5/424>211
• ' 155.GC
3/7UO.iO
i 2 //976.V3 5/543/253.36

OVERORAWN BALANCES ARE MARKED 0

P I D S M nolo thai crodllareceivedalter th

•bova dot* do nol appear en Ihla atstwnaf

7
; <"v - s, - <-" - /<
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vi'»- i .it .. 110 ;At u- .". •'•
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.01 J0L92 • 1 1,25'G.OO
ti l JOL92 i . <•-';.: 1 >6to,82i II 1,5 7,4 >03 7. 56
5 b2J'«C92
J . vV^ff^jbjsSiiEiiT.;!^- :^ ^ : U2.TUC.92 692.4 5
02JUL92 102 .cuj ..* 1 i,563,699;9<
F '-Jjll'li 30 JljN92
li 'JJJ Ji.?iZ 06 J,UL92 '•.;': tOA»7A
06 JU.L92 5yaa2.35
i;7 J'uL9i 07 jili.92
Uw:0L92 150. • ,';-." . •••-si'..* V;-
vtfj-j'u'Ji 0?J;UL9 2 i
0J.J.UL92 » (. . i> *• j % ri
U* JiJi.92 .1 8.9A -' -V 'ii•
\ /.'' i»'.) 0' Ottj;UL92 • i ^' * j
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0!>J0L92 -• 37,061 .7.6 fill.',650,'/

7 J .j L , 07 J 'JL92 3 / 000. j- • •. ' v •
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c/j^Aill^.?^?;.: :*vHv . 10JU-92 -' 6«>725.51
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1C 4*01.92
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PbyV i ririnehitNT -. » • !,il,70Ci>69a*i
,< IJ U L c: «: C/H^65,i 1.03". 13JUU92 23/ 112. 11>677,585.9
' •« j J L i> • 1 I 86-7?'"VX riiOBA'w'At . UjUl.92 3/781 .2'.
1« J U L V c 7/OCO.OC
11 1 VG630A LOOGMENT 1WJ.Ui.92
F * c / Hf.; s r-T i ^ .-• .1AJ.ULV2 : -9,367.00 * 1 it 5 7 ,tiiii i
'i 1SJUL92 61.69
.01. i -fif 6 W i 7.111> I j A u A U •15J0U92 • 938.60 -'ft:
•. ) T?- r 5OJI;JI92
;'F. EOT- <1 f ;> 4 3: 5 .1.01> 0 6 K E l-t I 16JUL92 15,105.91'
'I oJUi.92;• KX C/:v :.i51H t' :'.-: '•'., • '• 20il UL92 11 ,6A3,766.li
f • './' -'<11 u • 20 JOX-92 2 / 81» . t J!
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• • ' " ' ' . '• CN ' 1 1 3 5 4 4 WITHDRAWAL 23JAN92?
2 4 J AI192;- Fit. C / U 6 4 5 8 5 6 . . . 24ijAH92f
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3 l J A N 9 2 j R E JV 1 5 6 4 6 0 BANK CHRf.S FROM
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3-1
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AN.SHACIIER I I M I T E Ii
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:: 1 4 F EB92
17FEU92 FX C/H. "••959244 • 1 7FI-B9?
1 43,B67.llfl
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DEPOSIT C/H; 999B74 ! 1 4 F K H9 2 45,112.54
; IN THE EVENT OF QUERIES flEASE WRTTE" ib,2?in»693.fla
- T O 0011 INTERNAL AUDIT DEPARTMENT. • OVIRDflAWN b a l a n c e s mmweo or
PSMMMI* t!wlci«<Ra nscto^^ aM
L Ala 6ft flftl aaL<fcdi»u rm> «s.1m

ANRIUCMER LIMITED
C/0 COUPORATE SERVICES
Arm R RtDMOND
lii
 ATTN, H HfcPnUHO

imr>. No. 40137 r.i. '•V-i^'-V.'.;:.;-.,'; 'ISft- •'• •i^&jHiftfri r J i ' . , - • . : . - " • ' '.v.- •..'.-.

; STATEMENT:* :;;ANS0ACHER LIMITEO

IV.C/O CORPORATE SERVICES
ir-VATTN R REDMOND
' fa '.!•>> -.••••••

A/Ct 07/01037/81
:
OEP CL OEM NON BES; STATEMCirf DATE;. / \i: ''
• ••stC V-.v MXVLRXSF'.*.- • • '
PAGE N0R;B()4\' • 'i^i-••)'• ^-ij i'SffiVTV; > •

, - VALUE
OATE DETAILS' : DATE' 'Momi'M^^i cntoiT BALANCE ;
II.**'o-iTV'-^'-f^' '^••w
o E P o s i x^f. ZiftJii- •• 99082A • 14FEB92
!»oFEU92 RE • 18FEB92"
REvOT ',:114250 VIT.HORAUAL:- /.).«;" 1«FEB92I
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DT 114307 LOOGEMiNTK'g^^''?;.;';. •1^E892i
19FEB92 FX C/N 446571 • • 19FEB97' v„4>S53.14
FX C/N 44457? ^•.•iVi-^CtV'i,) i?'!. • 1.9FEFL(«?: ' •••• --.9S3.10
20FEU92 CN 114309 UITHDRiWALi r -V • 1 20FEB92 10,0(10.00
CN 114354.,; HIT.HD.BAWAl. , - I' 20/,EB92 A,529.HI
RSN6WALvOBPOSI-TCC/N 911865 ^ 20FE897 11,350.49.
1 36.'iD .. ., ; v, ,... '10,433,726*1 5,
21FEU92 OT . 1 ^ 4 0 8 2 I ; ; C 0 D Q E M 6 N T . ' ; - J !?1FEM9? '.*...19. 47
RENEH"*;tfaBPfliS.ltfii;C/Mfl11039| . •71 FFB9;' "."152.43
!
'21FEB92 , ,*- *»7.sio.;
j20 F F M9 ^ 445.399.97 9,9BFT,585;I8
24FEB92 ? j 2 «• F P H 9 2 73*52
RENI!WALS;'0^'p'o.S 11fC/U) 319866 !?afeh<J2 29.55
FX C f N \ • j;iFE097 106.49 9,9BB,794.74.
25FEH92 CN 114372/ LODGEMgNT,;. !. 2,916.66
CN .1.1437,1 !WITH0RA'WL' •: I2SF E:l9^ 155.no !
JV 156557 -R6 911865 TRF T/A T
WENTj.TO'-"NOSTRO 'S/ O A/C : !i 4.34, 049.2a
FX C/N.i\644771 ?nrinv? i
FX C/M ^946767 i -'A "' I ? 5 F ERT9
ffh'V^ ;
•
* 141.81
OEPOSIT'C/N ; 114373 z.n.vi.vi 10,n?n,l8i;97
I CN 114538 UITHORAWAL nrruvy
EB92 CN 11454(1 tODfiEMENT ^^FEH92 i
26FKfl9? i 1 , 522.77 424.28
CN 114541 LODGEMENT 76FEB92
717.93
CN 1 14539' WITHDRAWAL * 26FEB92
INTEHEST TO. 26FEB92 11 ,494.07
•£X...C/N_JL4*lZP :;•„ 26FEB92 sou. nr.
ZAIIS.9.1 L llItM&Al!LS.«M.
IN THE EVENT Of OUEWCS PUASE WTOTE OVEmitAVVN BALANCES ARE MARKED
TO Oun INTERNAL AUDIT DEPARTMENT.
PtMMMla TTWI arMllta M C L M D CHm I
<M« t o not appew MI M« msImm

i
ANSIHCHEU LI Ml I lit)
C/0 COKPOHATt SUkVICES.
ATT" R Rt&MOUO

lain. No. 40337 R.I.

. AUSBACHER LIMITED BUSi'15?rraaCCNTIMmAL SA^fk LTD.

C / 0 CORPORATE SERVICES
ATTN R REOMOND
 D U N K Kbumjivv.

1
'.v. •"'•'f t'-' 'f itr^lif.t'T^K'.^f^ • ''

•:RH1. No. 40837 R.I.

1 v>
^MaBKnoqtffiJO-..' \'

2AFEB02 io •'nos ^ Sj'^irVw"'

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ZtrMizl . 51#150.00
28FE892;1
28FE892 :
2«F60$2 .. 1A5.33
'ii'ii'iij^]
2AFE092
CNT^I'1 4683: WITHDRAWAL; -< 28FE092: idi^isSLsJj r• : ' , • * . . - . • . ' < " • '
rxic/M-^-'tfA^oV•.:?,<.,;'!'•• k ' " ' • . 28 FEB92
0JHAR92 02MAR92
C N $1,14 669V;U IT KB R AW AI >.,•'•}• y, ••!•••!;.• I,.. ••
C 4 AS'AlW'j'T HO R AUAL;»'4'/'..• 0 3 H A R 9 7 10,1100.00
CN! 1.14 AA8'Wl.THBR AWAL; f ' 5,oofi. fin
t x;«c m .'•• ' '03HAR9? 4A0.75 9*910,211.16
04MAR92 25,839.62 • 9,93A,046.'7B -
06MAR92 BT^T'11.47ij'3:'L"0'C)tfiSMfiNT ; VB-27/2/92 |n/.HAR92
I29FK«I92 732.22 .. 9i9»A>779.00
09MAR92 RSNEWAU^'BiiPOSi^C/W,
CN.' 1 1 4 7 5 7 LOBGEMENT
999728 "' 10,000.00
FX C/f» 6471*9 illOHAHS*? 723.40 !
FX C / N 6 4 7 7 0 2 ilOHARV? 2.1,<.30.00 j % \ 9,94^,055^60 .
10MAR92 RENEWAL DEPOSIT C/N 1 1 9 9 3 9 j 11! M A H 9 7 I 154.83
RFNEWAl D E P O S I T C / N 9 9 9 9 2 5 :1HMAR92 i 144.55
CN 1 1 5 ( 1 0 / . WITHDRAWAL I1?«AJI9/' ! >,134.19 ! "9#97?,924.98 '
12MAR92 DT 1 1 5 0 1 0 WITHDRAWAL i1?HA»92 i 100,000.00 |
FX C / M A47209 :1?KA»9? ' 73,405.'10 j
I. FX/C/N 647212 j 1 ? M A a 91 ; 9 / .00 i
FX C / N - ' . A 6 7 2 1 3 ! 1 | 936.20 i ' 9«7fl7#0B5.i9
M R 9 2 FX C/M' 6 4 7 7 0 8 : 13PA 992 ! 327.63
FX C / N 6 4 7 2 1 1 13HAB92 ; 4 68.10 |
CN 1 1 5 0 1 R WITHDRAWAL . 1 .(HAR97 ' 500.00 j 9,78A,445.12
16MAR92 DT 1 1 5 1 3 6 LOOGEI'EUT 300.»2 9,7ftA,745.94
1AMAR92 RENEWAL D E P O S I T C / U 9 9 0 A Z 1 1ftl'k'i'i? j 5,293.1 5
Rf OT 6 4 7 4 71 ANi-OACMfcB LTD 1 91' Aft 92 | 584.44 9,791,434.65
IN THE EVENT Of OU'RIES PLfASf. WHITI- OVItnORAWN SALANCtS ARE MARKED I
TO OUR INTERNAL AUDIT OENUHMENT.
CVWO* M M I H M E M O M REEEHWD EHW 9
obovo Ua Ml aff*ar an Mil* aUtama

AWSIUCHER L I N 1 1 1 D
C / 0 CORPORATE S E R V I C E S
A T T " R REDMOND

t\

hto. No.400J7n.l.

AOSBACHER L I M I T E D KU3JI JfrniKCOMnNUTfTAL DANK LTD.

C / 0 CORPORATE S E R V I C E S i•j • 91 McmcaSipsso
ATTN R REDMOND . DK&Sa 2 •
TO OUK IHrSKW/U. AUOIT CEPAmteENT, .
Pteaeonou tfnlaredfci •esato.dsfer
i b m a tfow Ho nsi mppm OR s u o a t o t o w s t

* iv SPA CHER LIMX T go

C/0 CORPORATE . SERVICES
ATTN ;R RGOHOHO; : .';.• ' . ••. .-.i i-.y... s-r. ••• ... .•••..••.. , «v •...•'4v 'v'InP^W' t ', ••

vr v •"• ..••..* 'A • •••••• .•• . • '•"--iiK'fj;^

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R E V E R S A L . . . > W *: $ 19HAB92
RE OT I!6474?.1;YAM80ACHER. L'T 6 19MAR92 2/425.01
HE-0T 6 HI 42 I?AN SB A CWELL LTD 19MAR92 5H4.44 j • tihiZoiiUi;-'
20HAR92 RENEUALL?OEP091. T C/MF 1V08 J6. • U- 70MAR97 • n:;i7,
0T^,1.1 SOtt^xt'OOttNEMT.^.. '.'ri y \'•'..li: 1 ?OMARV/> 15.27 9>7«9,056;1».;
23MAR92 RENEW A DE POSIT/' 5/ H», 11103.9 73MAK97
R t N C U A U F! OT' FP 08 IT; •TF/ N > 1110! 47 30M A M 9
.'.. i i 71.96
njt •I • j 11i.,41:
1*7.20
0T;?11 $ 2 2 ^ W . I . T H D R A ^ A L . f v i??i)'AR'»/ |
V • »t,;.1 ^ S22Mt006'CN«lf • . - !?|l|*AR->2 } i 692.76 J 9,789,378.29
2 4 M A R 9 2 0T>;1 1 5339vWI,THDR AWAL 10/050.00 : i;.-.:-'.'-. "•( ! f
RENEWAL'OEPOSI1 C / N 3 1 9 8 6 3 ijfcfASlW I 108.69
RENEWAL D F P O S I T C/U 319866 •' ( f ^ ^ f ^ a r
FX C / N 6 4 7 5 5 0 'JKT'.AOIL 1'J, 752.00
MAT . t>FP. 1 1 4 37 3 7 3 H A R 9 ?. 4ft6, 5 41 .'47
INTERFST'TO 74MAR92 74HAR92 409.39 ' •' ' c i
OT 1 1 5 3 4 5 WITHORAWAL 24MAR92 7,604.11
OFPOilT C/H V I 4 3 7 3 24NAR92 406,561.47 ., 9»?53iS33.94
AH92 DT 1 I 5 3 4 3 WITHDRAWAL 75HAR92 960.00 .- . . -, . •>. -
i

OT I 1 5 3 4 7 WITHDRAWAL 2SMAR92 5,000.00

OT 1 1 V U 4 WITHDRAWAL 25MAR92 60.00
CD I 1 53511 LODGEMENT 25MAR92 2,916.66
CN 1 1 5 3 4 9 WITHDRAWAL 25MAR97 155.00
fX C / N 4 4 7 5 4 9 . 25MAR92 3,000.00
CN 6 4 7 4 2 1 T / F : 74MAR92
FX C / N V A 4 7 5 9 9 ' ; 75MAR97 2,0«3;33 9,747/597.28
2 6 H A R 9 2 FX C / N 6 4 7 5 9 6 : 76MAR97 7,500.00 9,740,097.28
2 7 M A R 9 2 UT 1 1 5 7 1 3 IODOEMENT 77MAR07 * •

OT 111510:WITHDRAWAL 30MAR92 1,038.8? • 9,719,148.46

31MAR92 RTNHV*L :OI!P08IT C/N 990002 31MAR92 21.91
OT 115514 WITHDRAWAL 31MAR92 177,000.00
OT 115 513-WITHORAWAL • 31NAR9Z 49,000.00 - • ' . '•"/••• ' 7'.:
o T. .1 J.5 uj_.«maRA.wjn.._ 3JM.R9.2J. ZlAeflOA.QO- ..;... If 3.03 f i/'o «.3.L
IN TH£ EVENT Of OUEPitiS «-EA«t WHITE
TO OUR INTERNAL AUOIT DEPARTMENT, .
OVEMMAWN BALANCES ARE MARK 10
P t e s u M I * flwl erullla tsMhctl ctiof I
ELUM IA{P 4O MI appear on. (Ms atatsm

A II S » A CIIE R L I M I T E D
C / 0 CORPORATE S E R V I C E S
ATTN R REDMOND
 ifcl_U.i5.LL _W.UU AftAMJ... -JLIJFTSJIFC. JLLO_DLM,JLQ_L
; IN T H l EVENT 09 QUERIES HEABE WRITE
• ^ J f c & U * INTERNAL AUDIT DEPARTMENT. OVSRORAWN BA1ANC38 A M MARKED 01

" '

ANSBACHER C I M I f B O -
C/0. CORPORATE ' SISR VICES .
ATTN R REOMON0 ""

REG. No. '0537R.I.V

STATEMENT AMJUAC.IER L I * 1 TED '' t!VWl FNTE31C0NTINENTAI. BANK LTD. '.

C/0 CORPORATE SERVICES- 91 MarionSqjMW" '. r-'. i'.i-^-V .
A T 7 M R HE OMC.HO
TcSapSsoftt: (01) 619744 *
Tt&au , ; ; 33322
A/CI R.2/oio8>/8l •yk-. <3; * •• 'flwfcajiif-.'(?«)A- •?.?>•!
BEP CL OEM NUN RES]

PARE 110 J 007

VALUE/ - :
DATE
:
I v.
' -• 'ii"i:'i r"
DETAILS
: .OATT :" • . ; ; ' DEBIT ; ,'I BALANC8 ». •
• 'j • •;* 'ptttV&V* "'
; ' 1 • , ' •/ 'i • '
Of,,! 1.1551 2~iWi'THDRA WAL 11HAR92 rA;'oob.oo ' ...

0T!v1 '1.55.1 9: i WIT H D R A W A L

J V 11 5 6 5 3 ' L006CMEIIT ; .
J1MAR97 ;5>o5o.r,o >

'•31MAR92 1*1100.00
J V.' 1 5 8 1 2 3 * L ; 0 0 86M E N T • 3 1VAH97 «2*?07.71
:
J f e l 3 8 1 2 5 •LObGEWT. /. - 31;«A i: 9 1 758,972.40 > I' . • -i* * ' * • ' ; . . :
I NT E R E S If O^y^.JI M A R 92
232*726.53 9',»Ar,o27;2i
01APR92 R ftp T;: ;1,1' 5 A 5j8'5 VAL 2 8 0 2 9 2
LOOC6MBI4T J 11«AR9^ , - ' JOII.22
•'. ... .. • '••: -

RE:;I'T, '1.1 V I 0 7 . WITHDRAWAL (11 A 1' d 91 / 0*600.57•

RE ;,DT .. 11 5 3 4 7 . L008EMENT IM AI'HV/
REI..0T, 115546" WITHDRAWAL 01APR97
•.. > 7 * 5 0 0 . 0 0 •• • • " TI;,
' .••.': •' 1 '
NEW : . C , R l , ' R A T E < : 10.33000000 0 1 APR92 • „ •',...•• •' • . / '
DEPOSIT iC / Ni 9 ^ V 8 A 5 31 M A 8 9 2
0EP0GIT>! F/A C / N 9 9 1 8 6 5 ,'t 31MAR9? 4*5;399.97 9»Ann,47o.u
02APR92 FXvC/N ' 9 4 7 8 4 2 : .'i' 02APR92 1 *b/4.i)0
FXAC/N.' 9 4 7 8 4 3 02APR92 10*307.00 • • ' .

PR92
JV ' 1 5 6 7 0 5 ! RB I N T ADJ TO 3 1 / 3
FX C/N AA7847
31MAR9? /'•'»;;'>•"'•"? .77 9,788*291^93
03APR92 11*750.0(1
DEPOSIT C/M 9 9 4 3 7 3 31HAR92 406*541.47 ''. ' ' •
| DEPOSIT f / A C / N 9 1 4 3 7 3 31MAR9? 406*541,47 9,77A,541.93
I06APR92 FX C/N « 4 7 9 U ? 06APR92 484.04
FX C/N 647938 06APR92 5*643.00
FX C/N 6W989 06APR92 4*420,35 9,765,994.54
07APR92 RENEWAL D l i ^ o S I T C / N 9 9 9 7 2 8 I07APR92 270.17
CN 115 51A LODGEMENT
JV 1511067 RE CHARGES RF. JAN
|07APR92 25*165.00 .
Ftn IUR !07APR92 474.70 r-' . • 9,790*955.01
08APR92 RE (IT 1 1 57A 5 WITHDRAWAL ;PHAPR92 5*000.00
FX C / l i . 6 4 7 9 9 0 '08APR92 250.00 9,785*705.01
09APR92 FX C/N 6 4 7 9 9 3 . •09APR92 1*883.00
FX C/li 6 4 7 9 9 4 j 09APR92 441.37 9,78 3,31)0.64
10APRV2 RENEWAL DEPOSIT C / N 1 1 9 9 3 9 | 10APR92 133.47
RENEWAL.-DEPOSIT C / N 9 9 9 9 2 5 110APR92 124.60 •
CN 1J 1 4 j J 7 _ T / F UBS LODGEMENT j10APR92 12.75 B <783,651.4b
IN THE IVENT 0> O'JENIES PLEASE WRITE
TO OUR INTERNAL AUDIT DEPARTMENT. OVuMAAWN BALANCES ARE MARKEO
FtMwrnl* Vwleradlt* roc«»»«dettat 1
Above OMs <» ikH o^aer on Ihla ttatom

AIISHACHER L I M I T E D
C / 0 CORPORATE SERVICES
ATTN R REDMOND
 ''! wM.MMtatMt
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ANSHACHER L I M I T E D •
C / 0 CORPORATE S E R V I C E S
ATTN R REDMQNIK ;. •.,:

'. ' - ': • ; t<" ••'. -• Ij. . ^

; ' I •'•:.••• V- • -•-r.i . •. •

v..-.• -• •. :••• ••• ^v* V-.':..

Rin. No. 40B37R.L

;:
iSTArE^E^Ti' > M 5 B A C M E « - LIMITED - • IRSSMINTEHCOWTINENTAL B A N K LTD. i
C/O CORPORATE SERVICES 91 MtaHm Sqaam:-;.," .•.-•"::•••-' ••
*•¥••'''' ATTH. R-R60K0ND;;; .; (lODJj/ BsMSaa '••• ••:;
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Y-:' i H i r ' - ' S i i V PAftE NOt 008 '
-S'-.TW);• ' • ' VAlUC • i
DETAILS DATE |
OCIUT ' CREDIT : S A U N C I .

i ;
C N. • '11 $ 9 2 A •:: il 0 0 G E H E N T inAP»97 ' ' .672 i 2 5 ';. i 9 »7(t 4 > 323.71 •
•j 3 A P R 9 2 C N 1 1 5 9 3 3 LODGEMENT : 1 SAPR92 . 50,129.29 t" , ?
CN 1 1 5 V 4 0 LOOOEMtuT ' 1 3APR92 i,aoo,ono.uo 11,634,453.00
4 1 4 A P R 9 2 FX C / N 6 4 8 7 7 8 14APR92 18,470.00
D1 1 1 5 9 3 0 WITHDRAWAL 10APR92 30.000.00
RE DT, 1 1 5 9 5 0 WITHDRAWAL ,v 14APR92 .6,31S.A9
HE CT 1161151 LODGEMENT: ';r 14APR92 470.09 11,580,137.40
1 5 A P R 9 2 OT 6 4 8 7 8 6 ,R6v,;AJM»BACHER. ' 1AAPR92 319.89
T0,tREVIRS6NfB Vviif.•• - : 1AAPR92 319.E9
TO^revsrse^NVRY^V'/V.^ •••••• •»!' 1 6 A P R 9 2 678.34
-.r 1 6 A P R 9 2 319.89
T0.V1REVBRS6!- ENTRY '. 1AAPR92 678.34 11,579,817.51
16APR92 DT f l . 1 6 0 5 5 LODOEMENT. 15APR 9? 11,584,969.88
21APR9J RENEWAL,';DEPOSIT C / N 9 9 0 8 7 1 71APR97>
RBIIHWAL*DBPO<IT C / N 9 9 ) 1 0 3 21 APr9i -
RENEWAL D 8 P 0 8 r , V ' i t C / N . 1 9 0 8 3 A .. 71APR9? :.v. . ;. 1..02 11,609,413.07
22APR92 REHJV. 1 5 6 9 7 8 ' A 4 8 2 9 3 W/DRAW 22APR92 110.29 11,609,302.78
2J4fR92 RENEWAL b'D E P.O S I , T C / N 1 1 1 0 3 9 • 23APR92 116i3U
RENEWAL-DEPOSIT C / N 1 1 1 0 4 0 73APR97 30/066.46
:i 73APR92 A-9.16 •;
n
R E D T 1 1 6 0 7 5 WITHDRAWAL
RE;=DT 1 1 6 0 7 3 LODGEMENT 73APR97 ii . A18.H2
INTEREST.TO 23APR92 73APR97 i 7,179.49
FX C / N • 6 4 8 2 9 8 . "23APR92 107:74
FX C / N 648299 73APR92 143.66 11,A4A,886.09
24APR92 FX C / N 6 4 8 7 9 6 24APR92 9,163.00 |
DT 1 1 6 3 0 7 WITHDRAWAL 74APR92 1,191.01
DT 1 1 6 0 7 4 WITHDRAWAL 74APR92' 21,184.76
DT 1 1 6 3 0 1 WITHDRAWAL 24APR92 678.72
DT 1 1 6 3 1 3 C/N 3 1 9 8 6 3 / 3 1 9 8 6 6
T/FER i24APR92 : 16 4 . 1 V 11,414,832.77
27APR92 OT 1 1 6 3 1 5 LODGEMENT J27APB92 2,916.66
OT 1163(19 WITHDRAWAL 12 7APR92 78,795.00
OT .11 6 3 0 8 WITHDRAWAL i27AP«9Z 28? 7 9 5 . 0 0
i?JJli>ll4_.HJLDiȣjyiftJ,_- 155.00 11,SAO,004.43
I N T H E E V E N T OF 0 U E H 1 E 3 PLEASE W R I T S • ' * OVERDRAWN BALANCES A M MARK ID
TO OUR INTERNAL AUDIT DEPARTMENT.
P t M M nolo Owl oMdllo leeelved M a i H
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ANSIIACHER L I M I T I T L
C / 0 CORPORATE S 6 R V I C E S
ATTN R REDMOND
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C / 0 COSPOHATT:SERVICES
A T T M . R HEDMONO

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RER.NO.40S37R.I,

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C / O CORPORATE S E R V I C E S 91M3Wk»&{MB» • "
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fX C/N 648901 .. - 27AlpR92

UT 1 1 6 3 M R 8 ? . A N S B A C H E R ; . ; .
27Al»R92 'Jf'. .';'.44'l-.S7.
28APB92 18 » 3 4 8 I F L 0
SHAPR92 fx C/N .<448902,.$. - V V ]„•: <:. V-.
28APR92 11 # 0 0 8 . A O
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30APR92
30APR92 JV.^11*321-iJXTHORAWAL ^ ^ :-: >i#ooo.oo
30APR92 . 11 #5Si#i64,Ai
01MAY92
REIJEUACI^EPBSIT
JV>;iJ6532>lf008.tMfiNTC.V
'9.90002 • 30APR92 1,000.00 11,524,664.61
05HAY92 2(1,050.00 ;
05MAY92 JVi/1i653$;;«IT«DRAWAt • 05MAY9? 1 #5<.4.K2 !
JV^11 6534.UI.THOMWAL
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NEW CR-' RAT 'I• n OIMay'92
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0SHAY.92 294.19
J V M 5 7 1 6 * CHARGES' »E APRIL ,i 04MAY.92 155.5'. i ; 11 #ioj^daiis;
06HAY92 C N C 1 1 6 5 4 0 : T / F 'BBS; , ; ; ,
06MAY92 450,000.00 ;
0AMAY92 1,000.00 i
CN::11.A54.1 WITX'OR.AWAL. 05MAY92 3,926.70 11,056,135.13
I07M A Y9 2
C N < I 1 A 5 4 2 , LODGEMENT 0 7MA Y9 ' 1 »943.77
R6N6UAL .DEPOSIT< « / « 999728 07MAY97 1,378.50 > 11,05A> 700.40
tr. C/N A48J.13 ? 1
1 ' „ „ 11MAY92 134.61
RENEWAL' D E P O S I T C / N ' 1 1 9 9 3 9 11MAY9? 125.6B •I ' .:• . , ' j- . .• ,
'•'• 11 "# 05 60,67.
;
RENEWAL- DEPOSIT C / N 9 9 9 9 2 S 13MAY97 1,232I8«
RENEWAL'. DEPOSIT C/N. 9 9 9 6 0 0 UHAY92 18,240.00 " 11#05fl#193.S5
FX C / N 6 4 8 5 2 2 V
fX C / N - 6 4 H 5 2 3 •
14MAY92 . 5,600.011 11#034,353.55
I 5 M A Y 9 2 JV 6 4 9 1 9 6 RE AMS8ACMTR KTD 18MAY92 16.03

REVERSAL RE JV 6 4 9 1 9 6
18MAY92 16. nj
18MAY92 .16.03
REVERSAL' RE ' JV 6 4 9 1 9 6 18HAY92 6.03
REVERSAL' 18MAY92 io .01 ; 11,034,337.52
JV 6 4 9 1 9 6 RE ANSBACHER LTD 18MAY92 2 2 , 5 . 1 7 . sr. i
18HAY92
f X C/N 6 4 9 1 9 7 1HMAY92 2,000.00 ; 11,r/n9,a00.02
FX C/N 649198 20MA Y9 2 5,000.00 t
20MAY92
J V ' . 1 1 6 8 8 0 WITHDRAWAL 20MAY92 3,824.45 , V' ;
JV 1 1 6 8 8 1 LODGEMENT 20MAY92 623.30
RfHfVAI. DEPOSIT C / N 9 9 9 8 6 5 20MAY92 9,169.00 11,000,078.77
J F * c /l. A U <) LI ?A.
IN THE EVENT Of QUEMI.r. PLEAf* WRITE
; ' O V E R D R A W N B A L A N C E S ARE MAFLKEC
TO OUR INTERNAL AUDIT DEPARTMENT.
; K M H M Uftslomlnaiec«h>«l*tft
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ANSHACIIER LIMITED
C / 0 CORPORATE S E R V I C E S
ATTN R REDMOND

NEC,. No. 40537 H.I.

 ANSHACHER 11.11760
C/0 CORPORATE SERVICES
ATTN R REDMOMD

• • • \ ^ftit li-K':.,

FL£FL. No. 40537 R.I,

•Y.t

: umit'E •'"A TAL BANK LTD.

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f X^C/.N i':,649429;?':^;!:; •7C.MAY92 5* ARU.'I A
21HAV92; R ENEWAfc'o'EPO SIf. • C7M 90836;. >; .
I71MAY9? '•y-.-ritt 73
FX .C/N I4FC9199J ' J '71MA Y9? - 103.09
22MAY92 JV.157377 STOPPING CHEOOE . ?1«AY92 1i.191.01
JV'IK.«VA -LODGEMENT . 7 114 A Y 9 7 • 87'.!.UO
DEPOSIT C/N 194373 :3<UPR92 4111,145.35
: l i U P it?? 736,698.59
DEPOSIT C/N 911039 i30APR«2
DEPOSIT F/A C/N 994373 i 76I* A Y92
. 410,145.35; 10,759,818.23
26HAY92 RENEWAL DEPOSIT CIU 19437S 100.86
RENEWAL DEPOSIT C/'L 9 1103 9 26MAY92 451 : 6 0
RENEWAL DEPOSIT C/I) 911040 26IHAY92
RENEWAL DEPOSIT C/U 91986$. ;: 26MAY92 553w3«':
JV 11710* WITHDRAWAL ^ .' • -S 26I»!AY92 1,587.70
JV 1 171 13: : LODGEMENT :, ':;•'.. 26MAY97 7,914.66
JV 1171,1 2 '.U L.T!MDRAWAL 2AMAY97 .! -1 55 iOO :f • . .
FX <:C/NI4494'33.., 'I^IV:^J • :. 26MAYV2 -2,083.31 {
74MAY92 3,169.25 I 10,254>«{|2i79
27MAY92 1NTERESTVT,07;.;27.MA Y92 27MAY97 ,760.17
JV TS7339..CHARGES ,R6 STOPPING
27MAY92: 6.GO ! • . " ' i' 10,257,6365 . W'!*'
F AY92 RENEWAL' DEPOSIT C/N 999546 28MAY92 I'"' 1 6 5 . 8 7 iV V. v ' • ' • •
JV.'117121'LODGEMENT ' Z9MAY92
!
1,000.00 « . • i ; * *..''. • '
jl" JV 117120'-. LODGEMENT I12JUN92 18,139.50 10,974,942'.
.^AY92 DT 116900:LODGEMENT' 29MAY92 5,000.00
RENEWAL DEPOSIT. C/N 990002 29MAY92 25.24
DT 117308' LODGEMENT 28MAY92 44,460.61
JV 160071' VAL 230492 ILK 911039
i A N S H A C H E R T R F "VD 300492 29MAY92 736,69H .59 11,043,126.7.7
02JUN92 NEW CR. BATE I - . 9.77000000 02JUII92 11,063,126.77
03J0U92 DT .1 17321- LODGEMENT D3J0N92 221.69
DT 11 731.9'WITHDRAWAL 03JUH92 10,000.00
DT 117370 WITHDRAWAL 03JUN92 17,000.00
JV 15M79I PAYMENT TO BOI I12JUM92 1 ,500,000.00
J f 5Qq f 11,036,828.69
IN THE EVENT Of QUERIES PLEASE WRITE. :: OVMIORAWN BALANCES ARE MARKED
T O OUR INTERNAL AUDIT.' DEPARTMENT. il
PIMM M M tittimtfiu WM1WI< a m •
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.'HSHACMER L IMITEO
C/0 CORPORATE SERVICES
ATTN R REDMOND

RF.fi. No. 40S37S.I.

 Mo. 40837 R.I.

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DATE " DATE f;'\ BALANCE;

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( ,UM92. DEPOSIT F/A?:C/H;;91 r 1 d 3 9 , . K 31MAY97 -. -,. JF'U^I. ^.'. . 743,1ST.32:
w J U N 9 2 INTERES 05'JIJfo.9 2 /,;!; & 05J0N92 : 7,2o3'i65,
REHEUAli . DEPOSIT vC/.N ; ; 9 9 3 5 9 0 * V; 05JUM92 129.86 >.• , iV;;;;/
JV 1 5 8 8 6 3 CHARGES RE.WAY :0 5rJ U N 9 2 1/7.10 r
CN 1 1 7 3 2 $ LODGEMENT • ; ^V « f) » JUU97 3,008.46 i'- iif7Vo,2ioi88i;.
Iju J U N 9 2 D T . 1 1 7 5 2 8 WITHDRAWAL 'V •OliJOH92 8.050.00
RENEWAL DEPOSIT C / N 9 9 9 7 2 8 . ; v ;f!iUOH97 ^•'11/782*175
0 V J U N 9 2 DT .1911039 TRANSFER VD 2 6 / 5 -05JUN97 742,157.32 J:* -'' >•' .'*•?"•<'
D T ' 1 1 7 5 4 2 WITHDRAWAL ;fl9JUM92 221.69
DT 1 1 7 5 4 3 LODGEMENT ;09JIIN92 . 4',5H'.91
DT 1 1 7 5 4 0 LODGEMENT 308.52
1 1 7 5 4 0 LODGEMENT . 0 9 IUU9? 'i-. 158.62 ; . 1 1 . ^ 0 4 3 , 8 5 1 . ' 9 4 /•
• 1 U J U N 9 2 OT 1 1 7 3 5 WITHDRAWAL 10JIJN92 42.36
FX C / N 6 4 9 7 4 7 . 10JUN92 4,604.00
DT 1 1 75411 WITHDRAWAL 10JUN92 4,236.00 '!••' 1 1 , 0 3 4 j>9i6'9.5'8
11JUN92 1 1 7 5 4 6 WITHDRAWAL. : •
:
114UN92
11.IUN9?
36,497.78
RENEWAL Of POSIT, C / N r - 1 1 9 9 3 9 42,826.10
RENEWAL DEP0SIlP;C7N:j999925 11 JIJN92 •",'7,626.72
RE JV-1A6606t/R E V- J 0 F D T • 117 3 310JUM92
3 4?.36
fx^c/n^^a^?^^^'-;-''^::' ' ;•„;'• s" 1 1 J U N 9 2 '•.,. 137.45 11 ,049,104.43'
15JUN92 15J0N92 9,17UOO 11 in39V933.4'3'-.
UJUH92 DT'117675rWITHDRAWAL • 16J0U92 ,2,984.71
FX':'C/NV6501 55 • • • ' '' 16J0N9? ••,609.00
17JUN92 RE i D T , 1 1 7 8 1 3 ! WITHDRAWAL .>• - 17JIJM92 34.00
RE.; DT. A 5 0 1 5 7 WITHDRAWAL' . 17JUN92 115.22
REVERSAL;':-;'.. '•;• 17JUN92 115-22
RE:.DT 6 5 0 1 5 7 ANSBACHER LTD 17J0H97 115.77 i 11, hi?,191,oo
4UN92 FX,-C/N . ' 6 5 0 1 5 9
18JUN92. 18,794.00 !
; FX, C / l i ; ; 6 5 ( 1 1 6 0 r • :
18JIJN92
19JIIN92
II,oii;I52.90
i . / j UN92 R E : : D T - i " l 7 8 2 i . LODGEMNET ' 776.00 11,011#92«.V0,
22JUN92 RENEWAL DEPOSIT C / N 9 9 I J 8 2 1
72J0N92
'53,545.89
FX C / N - i 6 5 0 1 6 7
22J0N92
77JUN92
" 133.12
F FX-C/N. 650168 23J0H92 99.85 11,0A5#707.7A'
2.5JUN.V1 FX C / N 6 5 0 1 7 0 . . 9,099.00 _ 11,056,608.74
IN THE EVENT OF OUCRIES PLEASE WRITE ; OVERDRAWN BALANCESAREMARKEO
TO OUR INTERNAL AUOIT DEPARTMENT.
Rtoaso Mto that aratflis ' wolwwl lIKf I
*BOW Art* OO rvo< «n «hl«

4-
ANSBACHER L I M I T E D 1" •.

C / 0 CORPORATE S E R V I C E S
ATTN It REDMOND

REO. No. 40837 R.I.

STATS^EMT AHSUACHER LIMITED IRISfl .TTTE)''iC0N'<7NENT/\L BANK-LTD.

C/0 C O R P O R A T E SERVICHT. 93 Misriiisn Squ'sss. ,. . •
A T " ) « REDMOND Bb£&R2 • ' • "'
 ATTN R RSOHONU'

: i *•••vis.'

8. • • ; • ••
RtO. No. 40537 R.I. :
I • ... v • .:• :
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INTER CONTINENTALBANKLTD.
' STATEMENT ••• .ANSBACHER L IMI TEO • • ••- n " •:'->J9t Meata? Sactre-
'j * C / 0 . CORPORATE SERVICES.; ,a DuWin 2 . . .
;- ..• V.; ;»TTH R, REDMOND;^'•
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''^r;.'••••• */ci :02/010«7/B1 •'•>'. ;; ' K-'•
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. ;VALUE'
OATE OETAILS • OATt.; • \ oeHT'^vtSf '' ' crsorr BALANCE;

• ' 1 0;.. V- u1" "•''

FX C / N 6 5 0 1 23JUN92 4/094.55
JV 1 1 7 9 6 7 WITHDRAWAL 3 23JUN92 7 , 5 0 0 . 0 0 ,j
FX C / N ASOAOOy''-1:-:-' ••'** "''"'. V:, 23JON92 790.00 ] i i^oiiiiii.iv
/)H9 2 JV 1 1 7 9 6 1 WITHDRAWAL '•.<•! i 24 J0'i9? 658.bn !
JV 1 1 7 8 1 1 LODGEMENT :24JUH9?
17 4 J UN 9 7
l •34'ilQO.
JV 1 1 7 9 6 8 LODGEMENT 419,960.00
FX C / N 6 5 0 1 7 5 ' •' •74JUN92 81, 135.90 -'• ' • 1

JV 1 1 7 9 6 9 WITHDRAWAL i?4JUH9 7
:
8,:vi2.ri6
JV 1 1 / 9 7 0 LODGEMENT ;'4 JIIN97
JV 1 1 7 9 7 7 LOOGEHENT .74JUN97
DEPOSIT C / N 1 1 7 9 6 6 ;12JUN9? 42,700.45 ; .11,3.17» 0 0 9 . 1 9
!?5JUN92 JV 1 1 7 9 6 5 . W I T H D R A W A L '? '»JUN92 155.00
JV 1 1 7 9 7 1 WITHDRAWAL '75.UIN97 894.91
JV 1 1 7 9 7 4 WITHDRAWAL •0« JWII92 317.74
FX C / N 6 5 0 4 S 1 •'75.HIN97 2,000.00 11,378,642.04
2AJUN92 RE DT 1 1 7 8 1 4 LODGEMENT 2AJ0N97 5,000.00 1
RENEWAL D E P 0 3 I T C / N 9 1 9 8 6 3 26J0N97 3.23 11'313*645.27
1
SOJOU92 JV 1 1 8 0 8 4 LODGEMENT 3DJON92 '••' 833.33
JV 11H0.13 LODGEMENT 30JIIN92 1,000.00 '•' ' • A.'' . •; •• i
RENEWAL D F P O S I T C / N 9 9 0 0 0 2 30JUN92 22.46'
INTEREST TO. .. 5 0 J U N 9 2 V. 30JUN9? 261,476.86 ;;11,596,977.92
> . • A- ' • . I

IN THE EVENT OP QUIRIES PLEAIIII WHITI. OVKROIUWN BALANCES ARE MARKED

TO OUR INTERNAL AUDIT DEPARTMENT.
. P i m m nolo lhatenrfllo r M o b a d o K M H
• b o v * dot* do not o p p w r on Oils i l a k m i

ANSBACHER L I M I T E D
C / 0 CORPORATE S E R V I C E S
ATTN R REDMOND

•ICO. No. 40B37R.I.

S T A T ^ E N T ARAX L T D . BUSH JKJ-ERCON-WrtlMTAL BANK LTD,

. C/0 C O R P O R A T E SERVICES OEPT 91 Mortenftjisaia . ' .•••.• :
 STATEMENT
RECONSTRUCTED IRISH INTERCONTINENTAL BANK LTD.
ANSBACHER LIMITED 91 MERRION SQUARE
C/O CORPORATE SERVICES DUBLIN 2
Telephone: (01) 619744
Telex: 33322
Facsimile: (01)785034
A/C: 02/01087/81
GBP
DEP CL DEM NON RES STATEMENT DATE: 10-Apr-97 30-Dec-91

PAGE:

VALUE DETAILS DATE DEBIT CREDIT BALANCE

DATE
23Dec91 Brought Forward 9,945,177.93
24D«c91 Deal Disposed 24Dec91 2,093.33
24D«c91 CN 112695 Withdrawal 24Dec91 155.00
24Dec91 CN 112685 Lodgement 24Dec91 2,916.69
24Dec91 CN 945059 Lodgement O/O Bank of Ireland 24Dec91 554.74 9,946,410.90
30Dec91 CN 112513 Lodgement OfO NCB Stockbrokers 27Dec91 15,000.00
30D«c91 CN 945197 Lodgement O/O Cambridge Group 27Dec»1 427.01
30Dec91 CN 112994 Lodgement 30Dec91 27,750.00 9,999,597.91
31D«c91 Interest Application 31 Dec 91 241,197.39 10,130,795.30

i
J
R
 RECONSTRUCTED IRISH INTERCONTINENTAL BANK LTD.
ANSBACHER LIMITED 91 MERRION SQUARE
C/O CORPORATE SERVICES DUBUN 2
Telephone: (01) 619744
Telex: 33322
Facsimile: (01)785034
A/C: 02/01087/81
GBP
DEP CL DEM NON RES STATEMENT DATE: 10-Apr-97 30-Dec-91

PAGE:

VALUE DETAILS DATE DEBIT CREDIT BALANCE

DATE
10Dac91 Brought Forward 10Dec91 9,824,053.46
16D«c91 CN 645012 Withdrawal IFO American Express 16Dec91 410.92
16Dec91 CN 645011 Withdrawal IFO Kentford Securities Ltd 16Dec91 2,911.30
16Dec91 CN 112512 Withdrawal IFO Jennifer Guinness 16Dec91 15,000.00 9,805,831.34
17Dec91 CN 112522 Lodgement O/O M 17Dec91 70,000.00
17D«c91 Renewal Deposit C/N 990821 17Dec91 4,986.30 9,880,817.64
19D«c91 CN 112657 Tfrto acc no 02/01062/81 17Dec91 6,326.76
19Dec91 CN 112659 Tfr from acc no 02/01062/91 17Dec91 4,251.49
19Dac91 CN 112654 Tfrto A/C No: 02/01062/81 17 Dec 91 7,697.67
18Dec91 CN 112656 Withdrawal 17Dec91 506.21
19Dec91 CN 112656 Reversal 17Dec91 506.21
18Dec91 CN 112656 Tfr from A/C No: 02/01062/81 17Dec91 506.21
18D«c91 CN 645057 Withdrawal IFO Bank Of Ireland 19Dec91 9,330.00
1BD«c91 CN 645056 Withdrawal IFO B. & C. 18Dec91 17,750.00 9,844,480.91
19Dec91 Deletion C/N 999929 23Sep91 302,593.13
19Dec91 Fixed Deposit C/N 999929 23Sep91 302,583.13
19Dec91 CN 645099 Lodgement O/O AIB PLC (3 Dlv. Chqs) 19Dec91 1,708.46
19Dec91 CN 112683 Withdrawal IFO American Express 19Dec91 1,482.41 9,844,706.96
20Dec91 Renewal Deposit C/N 190836 20Dec91 5.50
20Dec91 Deal Disposed 20Dec91 244.39 9,844,956.85
23D«c91 CN 112655 Tfr from A/C No: 02/01062/81 31Dec91 220.98 9,845,177.83
 RECONSTRUCTED IRISH INTERCONTINENTAL BANK LTD.
ANSBACHER LIMITED 91 MERRION SQUARE
CIO CORPORATE SERVICES DUBUN 2
Telephone: (01)619744
Telex: 33322
Facsimile: (01)795034
A/C: 02/010B7/81
GBP
DEP CL DEM NON RES STATEMENT DATE: 10-Apr-97 30-Dec-91

PAGE:

! VALUE DETAILS DATE DEBIT CREDIT BALANCE

DATE
01Dec91 Balance Brought Forward 30Nov91 8,659,296.34
03Dec91 Interest Application 30Nov91 8,246.02
03Dec91 CN 112221 Tfr from Ansbacher Grand Cayman 03Dec91 1,000,000.00 9,667,542.36
04Dec91 CN 112253 Tfr to A/C No: 02/01947/77 03Dec91 19.65
04Dec91 CN 644747 Withdrawal IFO B.E.L. Secretarial 04Dec91 23,400.00
04Dec91 CN 644746 Withdrawal IFO Kentford Securities Ltd 04Dec91 93.60
04Dec91 CN 112254 Tfr from A/C No: 02/01062/81 04Dec91 2,700.00
04 Dec 91 CN 112255 Tfr to A/C No: 02/01062/81 04Dec91 12,000.00
04Dec91 CN 112224 Withdrawal IFO 04Dec91 600.00 9,634,129.11
05Dec91 CN 111918 Lodgement O/O 05Dec91 70,000.00
05Dec91 Renewal Deposit C/N 993590 05Dec91 11,840.79 9,715,969.90
06Dec91 CN 644842 Withdrawal IFO Kentford Securities Ltd 06Dec91 19,850.00 9,697,119.90
09Dec91 CN 112282 Withdrawal IFO Edward P. Lynam 09Dec91 11,548.42
09Dec91 CN 112340 Lodgement 09Dec91 466.20
09Dec91 CN 112329 Withdrawal 09Dec91 1,500,000.00
09Dec91 Renewal Deposit C/N 999925 09Dec91 435.23 9,186,472.91
10Dec91 CN 112330 Withdrawal IFO Henry Ansbacher & Co Ltd 10Dec91 5,050.00
10Dec91 CN 644839 Withdrawal IFO Kentford Securities Ltd 10Dec91 2,821.80
10Dec91 CN 112444 Lodgement O/O 10Dec91 70,000.00
10Dec91 CN 112443 Lodgement 10Dec91 75,452.35
10Dec91 CN 154092 Lodgement 10Dec91 1,500,000.00 9,824,053.46
 novcalc

1
20-Nov 20-Nov'Renewal Depo C/N 911865
21-Nov 21-Nov CN 111784 Lodgement O/O Guinness & Mahon ,
20-Nov 20-Nov CN 111872 Withdrawal IFO |
20-Nov 20-Nov CN 111871 Withdrawal IFO
22-Nov 22-Nov CN 111902 Withdrawal IFO American Express
22-Nov 22-Nov CN 111803 Lodgement O/O AIB (C.I) Ltd
22-Nov 22-Nov CN 111786 Lodgement O/O
22-Nov 22-Nov CN 644234 Withdrawal
22-Nov 22-Nov CN 644235 Withdrawal
22-Nov 22-Nov Renewal Depo C/N 319863
22-Nov 22-Nov Renewal Depo C/N 319866
25-Nov 25-Nov CN 111956 Tfrto acc no 11215626
25 -Nov 25-Nov CN 644414 Withdrawal
27-Nov 27-Nov CN 112028 Tfrto acc no 02/51185/77
27-Nov 27-Nov CN 112029 Withdrawal IFO
27-Nov 28-Nov Withdrawal IFO
27-Nov 27-Nov CN 644521 Withdrawal IFO Kentford Securities Ltd
27-Nov 27-Nov CN 112031 Tfrto acc no 11290905
28-Nov 28-Nov CN 111805 Lodgement O/O
28-Nov 28-Nov CN 644606 Withdrawal IFO kentford Securities Ltd
28-Nov 28-Nov CN 644607 Withdrawal IFO Kentford Securities Ltd
25-Nov 25-Nov CN 111954 Withdrawal
25-Nov 25-Nov CN "Hi955 Lodgement
28-Nov " 2 8 - N o v Renewal Depo C/N 999546
29-Nov 29-Nov Renewal Depo C/N 990002
 266.62 ! 9,676,875.13
161,260.20 9,838,135.33
4,000.00 9,834,135.33
50.00 *" 9,834,085.33
1,042.74 9,833,042.59
17,500.00 9,850,542.59
7,500.00 9,858,042.59
109.65 9,858,152.24
146.20 9,858,298.44
196.39 9,858,494.83
51.97 9,858,546.80
20,050.00 9,838^496.80
2,083.33 9,836,413.47
140,000.00 9,696,413.47
20.00 9,696,393.47
1,000.00 9,695,393.47
1,413.00 9,693,980.47
1,000,000.00 8,693^980.47
1.69 8,693,982.16
4,703.50 8,689,278.66
32,924.50 8,656,354.16
155.00 8,656,199.16
2,916.66 8,659,115.82
161.17 8,659|276.99
19.35 8,659,296.34
 ) )
I oovcalc

STATEMENT OF ACCOUNT 02/01087/81 FOR NOVEMBER 1991 |

POSTING VALUE
DATE DATE DETAILS

01-Nov Balaoce Brought Forward

04-Nov 04-Nov Withdrawal IFO M.I.S.
04-Nov 04-Nov CN 111443 Trf from A/C: 02/01062/81
04-Nov 04-Nov Renewal Depo C/N 999728
07-Nov 05-Nov Interest application
OG-Nov 05-Nov CN 149624 Trf from A/C: 02/01062/81
06-Nov 05-Nov CN 149625 Trf fronri A/C: 02/01062/81
06-Nov 05-Nov CN 111447 Withdrawal IFO Credit Suisse Trustees (Guernsey) Ltd
06-Nov 05-Nov CN 150350 Trf to A/C: 02/01062/81
05-Nov 05-Nov CN 111446 Withdrawal IFO Ansbacher Ltd
06-Nov 06-Nov CN 111448 Withdrawal IFO Ansbacher Ltd
05-Nov 05-Nov Chgs March-Sept
07-Nov 07-Nov CN 643728 Withdrawal IFO B.E.L. Secretarial
08-Nov 08-Nov CN 643859 Withdrawal iFO Ansbacher Ltd
08-Nov 08-Nov CN 643862 Withdrawal IFO International Airline Passengers Assoc.
08-Nov 08-Nov CN 643860 Withdrawal IFO Mrs. C. Griffin
08-Nov 08-Nov CN 643768 Withdrawal IFO AIB PLC
08-Nov 08-Nov CN 643861 Withdrawal iFO Bank of Ireiand
12-Nov 12-Nov CN 644030 Withdrawal iFO kentford Securities Ltd.
12-Nov 12-Nov CN 644029 withdrawal iFO Kentford Securities Ltd.
12-Nov 12-Nov CN 644028 Withdrawal IFO Kentford Securities Ltd.
12-Nov 12-Nov CN 111623 Trf from A/C: 02/00272/81
12-Nov 12-Nov CN 111624 Trf to A/C: 02/02215/77
12-Nov 12-Nov CN 111623 Trf from A/C: 02/02737/77
12-Nov 12-Nov CN 111623 trf from A/C: 02/01947/77
13-Nov 13-Nov Renewal Depo C/N 990600
15-Nov 15-Nov CN 644612 Withdrawal IFO B.E.L. Secretarial
19-Nov 19-Nov CN 111802 Withdrawal IFO
18-Nov 19-Nov CN 644034 withdrawal IFO Bank of Ireland
19-Nov 19-Nov CN 644160 Withdrawal IFO Wofdwide Mgt Consultancy Services
20-Nov 20-Nov CN 644216 Lodgment O/O Aviation Holdings pLc
20-Nov 20-Nov CN 644232 Withdrawal IFO Kentford Securities Ltd
 !
DR CR : -BALANCE

9,763,427.58
2,074.77 9,761,352.81
3,000.00 9,764,352.81
2,099.26 9,766,452.07
8,614.23 9,775,066.30
769.70 9,775,836.00
105.03 9,775,941.03
1,312.50 9J74.628.53
2,700.00 9,771,928.53
10,050.00 9,761,878.53
5,050.00 9,756,828.53
763.47 9,756,065.06
18,510.00 9,737i555.06
11,250.00 9,7261305.06
363.65 9,725,941.41
925.50 9,725,015.91
9,255.00 9,715,760.91
4,627.50 9,711,133.41
2,775.00 9,708,358.41
13,875.00 9,694^483.41
4,000.00 9,690,483.41
2.376 60 9,692,860.01
581.12 9^692,278.89
2.346.33 9,694^625.22
19.65 9,694,605.57
1,323.29 9,695,928.86
2,321.00 9,693|607!86
125.00 9,693,482.86
9,291.00 ! 9,684,191.86
7.500.00 i 9,676,691.86
I
255.83 j 9,676,947.69
339.18 I 9,676,608.51
 ) Oclcalc

23-Ocl 23-OctjCN 111057 Trf from A/C: 02/01062/81

23-Oct 23-Oct CN 111056 Trf from A/C: 02/01062/81
23-Ocl 23-Oct CN 111106 Lodgement O/O Ansbacher Ltd
23-Oct 23-Oct CN 643490 Withdrawal IFO Gilbeys of Ireland Ltd
23-Oct 23-Oct CN 643490 Withdrawal IFO Bank of Ireland
23-Ocl 23-Oct CN 111082 Withdrawal IFO American Express
23-Oct 23-Oct CN 111081 Withdrawal IFO
23-Oct 23-Oct CN 111083 Withdrawal IFO Ansbacher Grand Caymen
29-Oct 29-Oct CN 150582 Withdrawal
29-Oct 29-Oct CN 110995 Lodgement
29-Oct 29-Oct CN 111276 Withdrawal IFO Park Street Securities Ltd
29-Oct 25-Oct CN 111136 Withdrawal
29-Oct 25-Oct CN 111135 Lodgement
30-0cl 30-Oct CN 111052 Lodgement O/O Kalon Grp. 8. Assoc. Brit. Eng.
30-0cl 30-0cl CN 111051 Lodgement O/O Assoc. Fisheries & Casket PLC
31-Oct 24-Oct CN 111176 Withdrawal IFO AIB (C.I) A/C No: 11158833
31 -Oct 31-Oct CN 111282 Withdrawal IFO College Trustees
31-Oct 31-Oct CN 150410 Trf to A/C: 02/01947/77
31-Oct 31-Oct CN 111281 Withdrawal IFO Mr: R.H. Chambers
31-Oct 31-Oct Renewal Dep C/N: 990002
 16,561.50 10,104,246.89
588.101 10,104,834.99
522,457.79 10.627,292.78
8,607.43 10,618,685.36
4,627.50 10,614,057.86
1,186.78 10,612,871.08
4,005.06 10,608,866.02
150,000.00 10.458,866.02
2,083.33 10,456,782.69
1,087.661 10,457,870.35
450,000.00 10,007,870.35
155.00 10,007,715.35
2,916.66 10,010.632.01
45.00 10.010,677.01
60.36 10,010,737.37
200,000.00 9,810,737.37
2,312.14 9,808,425.23
25,000.00 9,783,425.23
20,000.00 9,763,425.23
2.35 9,763,427.58
 O Octcatc

STATEMENT OF ACCOUNT 02/01087/81 FOR OCTOBER

POSTING VALUE
DATE DATE DETAILS
O1-Oct O1-Oct CN 110484 Withdrawal IFO Clyde Enterprises
01-Oct 01-Oct Lodgement
03-0ct 03-0ct CN 642895 Withdrawal IFO Guinness & Mahon
03-0ct 03-0ct CN 642B96 Withdrawal IFO Mrs. C. Griffin
02-0ct OZ-Oct CN 642B28 Withdrawal IFO Business Enterprises
03-0ct OJ-Oct CN 110500 Withdrawal IFO Mr. R. H. Chambers
03-0ct 03-0ct CN 110499 Withdrawal IFO Colonial Mutual Group
04-0ct 04-0ct CN 642831 Withdrawal
07-Oct OJ-Oct CN 110438 Lodgement
08-0ct oi-oct CN 110439 Tfr to A/C No: 02/01062/81
OB-Oct OB-Oct CN 110440 Tfr to A/C No: 02/02991/77
OB-Oct OB-Oct CN 110261 Lodgement
09-0ct 09-0ct CN 110751 Withdrawal IFO Ansbacher Ltd
11-Oct 11-Oct Withdrawal
11-Oct 11-Oct CN 642991 Withdrawal
14-Oct 14-Oct CN 110436 Lodgement
14-Oct 14-Oct CN 110437 Lodgement
15-Oct 15-Oct CN 110920 Trf to A/C: 02/01062/81
15-Oct 15-Oct CN 110919 Trf from A/C: 02/01062/81
15-Oct 15-Oct CN 110483 Withdrawal IFO Ansbacher Ltd
16-Oct 17-Oct CN 110963 Withdrawal IFO Rogers Aviation Sales
18-Oct 18-Oct CN 110918 Trf to A/C: 02/01062/81
18-Oct 18-Oct CN 110811 Trf from A/C: 02/01062/81
18-Oct 18-Oct CN 110991 Withdrawal IFO American Express
21-Oct 21-Oct CN 111041 Lodgement
21-Oct 21-Oct CN 150006 Withdrawal IFO Ansbacher Grand Caymen
22-Oct 22-Oct CN 643293 Lodgement O/O CRH
22-Oct 22-Oct CN 109249 Withdrawal
22-Oct 22-bct CN 643444 Withdrawal IFO Bank of Ireland
23-Oct 21-Oct CN 643491 Withdrawal
23-Oct 21 Oct CN 643492 Withdrawal
23-Oct 22-Oct CN 111105 Trf from A/C: 02/01062/81
23-Oct 22-Oct CN 111104 Trf from A/C: 02/01062/81
23-Oct 22-Oct CN 111103 Trf from A/C: 02/01062/81
23-Oct 22-Oct CN 111079 trf to A/C: 02/01062/81
23-Oct 22-Oct CN 111102 Trf to A/C: 02/01062/81
23-Oct 23-Oct CN 111055 Trf from A/C: 02/01062/81
1
10,588,606.71
DR CR BALANCE
25,000.00 I 10,563,606.71
I
j 90.96 j 10,563,697.67
4,842.62 10,558,855.05
918.50 10,557,936.55
46125 10,557,475.30
950.00 10,556,525.30
98.68 10,556,426.62
6,299.90 10,562,726.52
15,000.00 10,577,726.52
15,000.00 10,562,726.52
100,000.00 10,462,726.52
459.00 10,463,185.52
1,000.00 10^462,185.52
10,462,185.52
3,810.32 10,465,995.84
30,000.00 10,495,995.84
21,250.00 10,517,245.84
1,000.00 10,516,245.84
18,285.00 10,534i530!84
8,700.00 10,543,230.84
19,773.11 l6.523i457.73
3,000.00 10,520,457.73
158.62 10,520,616.35
2,409.49 10,518,206.86
135,042.18 10,653,249.04
522,329.00 10,130^920.04
245.37 10,131,165.41
1,655.28 10,129,510.13
9,255.00 10,120,255.13
112.11 10,120,367.24
149.48
275.00 10;120J91.72
1,388.09 10.122ii79.81
6,326.78 10,128,506.59
17,000.00 10,111,506.59
5,189.26 10,106,317.33
I 14,491.06 10,120,808.39
 OVE ROAAWN SALANC1S W E MARKED OR
Piwwww M M l k milium,
•> • — M J m ,J ""

* «v't*Hsa»CHER'-cro «o -z-i/t-

3L Ma. 40(37W,
S
ANSBACHER LIMITED.
STATEMENT. C/0 CORPORATE SERVICE.! IRISH INTERCONTINENTAL BANK LTD.
1 91 Memon Sqiare
<- • ^ • • .' •
Dublin 2
Telephone: (01)619744
A/CL, 02/01087/81 Tele*: 33322
Factimile: (01)783034
DEP'CL OEM NON RES

& PAGE NO: UOT STATEMENT OATE: 19N0V91

OATt DETAILS VALUE

OATE OIBIT CREDIT BALANCE
27JUN91 UR00GHT
JV 1 4 3 2 8 1
FORWARD
NEW CR R A T E 11, 1 8 7 5
TJJUO-
TRANSFER FROM 020108780 {26JUN91 1 1 , 1 2 3 , 9 2 1 . 9 2
JV 1 0 7 6 1 3 WITHDRAWAL i 27 J J N 9 1 750. 00
JV 1 0 7 6 1 2 W I T H D R A W A L |27JJN91 2,5UJ. 00
JV.107610 WITHDRAWAL I27JUN91 15,000. 00
JV . 1 0 7 6 1 1 W I T H D R A W A L I27JUN91 9,253. 63
DT 6 3 9 3 2 0 R E V E R S A L 125J J N 9 1 755. 29
FX : C / N 939320' j 2 5 J UN91 679.76
DEPUSIT C / N ' 9 9 0 0 0 2 . I31KAV91 95,897. 95
DEPOSIT C/K 9 9 0 6 0 0 31 h A Y 91 50,000. 00
DEPOSIT C / N 9 9 0 8 2 1 1 7JUi!91 203,000. 00
DEPOSIT C / N 9 9 0 8 2 2 31MAY91 382,499. 22
DEPOSIT C / N 9 9 U 8 2 3 3 1 !1A Y 9 1 37,723. 99
DEPOSIT C / N 99082<. 31MAY91 4u,497. 62
DEPOSIT C/N 9 9 0 8 2 5 31MAY91 26,996. 42
DEPOSIT. C / N •>90826 31*AY91 26,99b. *2
DEPOSIT". C / N V 9 3 5 8 9 I 3 1 MA Y 9 1 600,000. UO
DEPOSIT C / N 9 9 3 5 9 0 - 0 5 J U M 91 469,009. 40
DEPOSIT.- C / N 9 9 5 1 0 3 ' 31MAY91 256,225. 00
DEPOSIT . C / N 9 9 9 4 0 " 31IIAY91 1,330,113. 71
DEPOSIT' C / N 9 9 9 7 2 8 24JUN91 91,520. 74
DEPOSIT C / N 9 9 9 7 2 9 31MAY91 291,76o. 20
O E P O S H C/N 9 9 9 9 2 5 0 o J U N 91 543,276. 29
2 S J O N 9 1 JV" 1 4 2 1 1 (I TRANSFER FROM
0 2 - 0 1 0 8 7 - 3 8 TO 0 2 - J 1 U 8 7 - 8 1
ANSliACHE.t L I M I T E D 27JUN91 '.,442,536.9t> |
RENE..AL J E P O S I T C / N 9 9 U 0 0 2 2UJUN91 19.U5 !
JV 1 4 1 4 8 7 RE A/C T / F ER 27JUI.91 4 , 4 1 . 2 , 5 6 6 . 96
JV' 1 - 1 4iio RE A/C T 'FER 2oJU'-lV1 <•,442,586.96 I 1,096,361 .dl
WJ UN 9 1 :NTC- :6ST TO 30J0N91 30JUN91 293,V45.U2 II ,390/306.U3

•y THE EVENT OP OUEHIES PLEASE WRITE

3 OUR INTERNAL AUOIT DEPARTMENT. OVERORAWN BALANCES ARE MARKED Or
MMM no:* AMI ondlu i—lirt IROT th.
«.1o*» Ml* do noI *p9«ar on mil tuunwnt

ANSBACHER L I M I T E D
C / 0 CORPORATE SERVICES
 w.

SET.. No. 4 0 S 3 7 R . I .

STATEMENT A.'^SPACHE* L I .*• T T E D IRISH INTERCONTINENTAL BANK LTD.

C/3 C O R P O R A TE S5RVIJ 91 Memon Square
Dublin 2
Telephone: (01)619744
Tele*: 33322
A/C: 02/01UO7/S1 Facsimile: (01)785034
r.ijp
TI E P CL OCT' NOW RL'S STATEMENT OATE.

PAGE NO: P01<.

OATE VALUE
DETAILS DEBIT CREDIT
0*TE BALANCE

./^iSEPVI IbSOUuHT FORWARD 1 1 » 7 ',<>, n:o./S

1
£P91 ;jV 11»133 L O D G E M E N T 26KEP91 • 5.1!,
:JV 11034.4 WITHDRAWAL 2OS R P9 1 : .. 2/9.1)5
• UT 110373 WITHDRAWAL 2OSEP91 5 »ii'.;5 . Ui) 1
1 #779,-R.
J7ST P91 ,5T 110310 WTHDRAUAL 2 7 S (•» » 1 13
DT 11.13 77 WT THDPA WAL ? ?SEP01 • r,',uu.ii.i
:
R E " E W A L DEPOSIT C / II 9 9 9 7 I 3 27SE»91 • 5 .X! 1 1 . I <S * , •> .* S . •
3 0 S E P 9 1 ! J V 110T7S WITHDRAWAL 3USEP9J
;JV 11P47& - I T H D P A U A L r . r\ t'

ijV 11.1473 LOOGEMFNT 3ii'.iV9 ! > 1 • . r. I

:JV 1 10477 LOOFIEKFNT JiiSi >'VI >uU.;,(

• RENEWAL DEPOSIT C/790C(i2 3i'SCP9 1 >>.. 1 !
[INTEREST TO 30SEP91 • iii . f. . 1 ;'•1 >'. , > i- - . t \

IN T H E E'.SMT O f C J E R ' E S PLEASE W R I T E O V E R D R A W N O A L A N C E S ARE M A R K E C '

T O OUR iKTERNAL AUDI" D E P A R T M E N T ,
Plaaao n o i t thai cradlia racaivod a n o r ir
•bova data d o n o t a p p n i o n I h l t t u u n <

» 1.1 it I T E -
C/0 CORPORA ft SERVICES

R E G . No. 40537.R.I.

STATEMENT H K - i r . H E R L T t
!R'SH INT2P.C0NTINENTAL BANK LTD
Appendix III (f)
 & MAHON LT?
A*»ILIATCB TOftUIMMUSWAMOM * CO. LTO.
LQMOON
eiTAeUlSHEOI
omccToiis
JOHN M. OUINNMI CMtlKMAM
WILLIAM o . L. ranwgoo K M M I I K 17. COLLEGE GREEN.
J. DCSMOMO TNAVNOI UANAftlNO
»>»«« I. 0 «LLr MANAUIHO
•OIIN O. ClAFHAU JAMCS «. A. *. 1UINHI1I DUBLIN. 2
NIStL >n>IU» J. CLAYTON LOVt. JHB.
HAIIOL3 w. XVCRITT OANIU. T. O'COMMOn
A. rtTIK m. 9UIMNIK NICHACL J. .(MOM p. o . B O X 5 5 A
SCCRCTAHV
" OCWALO C. J. MeCWACKCM
R E G I S T E R E D OFFICE
T C L C O H A M S : MARS, D U O L I N T X L C X : s2oa
T C U M O N T : O U O L I N 702444
NCA. NO. 1020a

'Mr. D . H . A . C e c i l , PO'D/JB
c / o C . D . Alexander,
21, Wilton P l a c e ,
LONDON S . W . I 25th March, 1975

Dear Sir,

We refer to recent negotiations and now write to confirm that

we are prepared to make available to you bridging finance,
subject to the following t e r m s and conditions

(1) Borrower : Mr. D . H . A . Cecil

(2) Majcimum £179, 6l6. 85 (one hundred and seventy nine

Amount : thousand six hundred and sixteen pounds
eighty five pence)

(3) Term All funds_jadvanced are repayable on

demand but, ir. any c a s e , not later than
the 26th September, 1975.

(4) I n t e r e s t Rate We propose charging i n t e r e s t on the loan at

13% per annum. Interest will be debited
by us to the account on the 31st March,
30th June and at maturity of the loan. We
shall apply to you immediately after the
aforementioned dates for payment of i n t e r e s t
due.
 CONTINUATION SHEET N9

(5) Security : We shall require that you complete a Blank

Transfer over 7 0 0 , 0 0 0 shares in Jamaica
Sugar E s t a t e s Limited, transferring the
shares in question into the name of our
Nominee Company - Mars Nominees Ltd.
Such transfer, with the relative share
certificate, will be retained by us as security
for the loan. In addition, we shall require
a Letter of Guarantee signed by Guinness
Mahon Cayman Trust Ltd. , supported by a sum
equal to the loan hypothecated in our favour.

We e n c l o s e herewith a copy of this facility letter for signature by

you and return, thereby confirming your acceptance of the
facility on the t e r m s mentioned. We a l s o enclose a signature
card for completion and return.

We are p l e a s e d to be of a s s i s t a n c e to you in this matter and

should you be in doubt regarding any particular aspect of the
loan, p l e a s e l e t u s know.

Yours faithfully,
for GUINNESS & MAHON LIMITED

Q Q o w k S - .
Banking Manager

Loans Officer
Appendix III (g)
 GUINNESS A HAHON LIMITED

Minutes of meeting held on 7 March 1979. t; .

Attendance: Mr. J.O. Traynor (Deputy Chairman) j 6uinness 4 tehon Ltd

Mr. M. 0'Kelly (Managing Director)

Mr. B. Daly j Central Bank

Mr. A. Byrne

The meting was held to discuss one particular aspect of the bank's
offshore activities which was of concern to the Bank.

Mr. Daly commenced by saying that the Bank recognised that a significant
proportion of International banking business Is conducted through offshore
centres and that, 1n this regard, the Bank did not have a concern about
this type of banking business being conducted by Guinness and Mahon Limited
1n these centres,through Its subsidiary company in the Cayman Islands and
Its affiliated bank in the Channel Islands. The Bank's concern related
solely to the fact that Guinness Si Mahon United has advanced loans in
excess of £5 million to customers which were secured, partly or wholly, by
deposits placed in these banks through discretionary trusts. Mr. Daly
said that because of the complex manner In which the loans are secured and
the secrecy surrounding the existence of the security the Bank could see no
logical reason for the arrangements other than to assist customers to avoid
taxation. The Bank was of the view that It Is not appropriate for a bank
to be engaged 1n such a significant way In tax avoidance schemes.

Hr. Traynor mentioned that discretionary trusts are used for a large nunber
of legitimate reasons. They are used extensively by the multi-national
companies as a means of transferring assets from one country to another.
They had also been used extensively In this country In the past as a
legitimate method of reducing Estate Duty liability.

With regard to the loans granted by Guinness t Mahon Limited to which Mr.
Daly referred, Mr. Traynor said that he wished to emphasise that all of
these loans represent genuine banking loans, which,with the possible exception
of one loan amounting to £400,000;the bank would have been quite satisfied
to advance the existence of the "Cash Deposit* as part of the security.
He was quite confident that all of the loans would be fully recovered without
recourse to the "Cash Deposit". Mr. Traynor stressed that in all cases,
the cash deposits were placed in the offshore bank before the loan was
advanced to the borrower 1n Dublin. There was no question of the bank
advancing loans to be placed on deposit 1n the offshore banks. .
Appendix IO (h)
 4 LU
/o/a/ 18 .

At 33 Oecember 1977 the bank's free resources ratio, on a group basis, . ,

amounted to 9.9 per cent, which was 0.1 per cent, below the minimum 1
required by the Bank. Representations have been made to the Bank 4
claiming that certain Items (which at 31 Deceiver 1977 amounted to i
approximately 15.3 million) should be excluded from risk assets when f r * * ^
calculating the ratio. The effect of excluding these items from risk
assets at 31 Oecember 1977 would be to increase the free resources ratio
t*
to 12.1 per cent. j^rfo^"
J? rh1*-
The items which the bank claims should be excluded from risk assets are

as follows;- /i
(1) loans by Guinness > Mahon Limited (G & M) "secured" by cash deposits
in Guinness & Hahon Cayman Trust limited (GMCT) and Guinness & Hahon
Channel Islands limited (GHCI)

i
* The method by which these loans are secured Is complicated and 1s
designed as a tax avoidance scheme. The procedure is that funds are
transferred to the Cayman Islands and the Channel Islands (Guernsey) to
a registered discretionary trust of which CHCT/GMCI* are the trustees.

| (P
(6,The trust 1s controlled by GMCT/GMCI. A wholly owned and controlled
' company is formed by the trust. This company places on deposit with the
Cayman/Guernsey bank an amount equal to a sum to be advanced by G & M
(Dublin). Before the advance is Issued by the Dublin office the Cayman/
Guernsey company signs an agreement with GHCT/GMCI which stipulates that
^ in the event of the borrower failing to meet his commitments to the
Dublin Office GHCT/GMCI has the right to forfeit a sun from the deposit
m/fo - equal, to any loss Incurred by the Dublin office on the loan.
,GMCT/GMCI may transfer the forfeited deposit to the credit of the Dublin

& office by way of dividend.

No evidence of the agreements between the Cayman/Guernsey company

and the Cayman/Guernsey bank is maintained at the Dublin office^purely
as a precaution against a physical inspection of the bank's affairs by
the Revenue Comnissloners. However, in order to satisfy the bank's auditors
as to the adequacy of the security on the loans Mr. Traynor, during the
course of the bank's annual audited.personally,brings the agreements from
Cayman/Guernsey. The auditors inspect the agreements but do not take notes
of their contents.

GMCT is a wholly owned subsidiary of Guinness & Mahon (Dublin) and

GKC1 is a wholly owned subsidiary of Guinness Mahon (London).
Appendix IV

(a) GMCT audited accounts - Profit & Loss accounts 1972 -

(b) GMCT audited accounts - Balance Sheets 1971 - 1987

Appendix IV (a)
 ) )
GUINNESS MAHON CAYMAN TRUST LTD
AUDITED ACCOUNTS
PROFIT & LOSS ACCOUNTS
(Amounts in Sterling £000)

31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 30-Apr 30-Apr 30-Apr 30-Apr 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep
1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

NET BANKING REVENUE 16 30 52 119 209 275 94 252 503 607 976 1,766 1,296 1,621 1,499 1,652

OTHER INCOME 45 64 153 125 189 200 233 338 380 519 804 1,338 1,298 1,338 1,232 1,368

61 94 205 244 398 475 327 590 883 1,126 1,779 3,104 2,594 2,959 2,731 3,020

EXPENSES

Auditor's remuneration 1 1 2 2 5 10 8 8 9 10 18 26 26 42 39 30
Depreciation 0 0 2 4 8 8 13 15 13 18 27 39 71 146 159 162
Directors emoluments 0 0 21 58 98 113 52 145 332 315 398 639 477 540 486 564
Other expenses 5 8 37 55 131 164 167 196 214 352 571 1,197 1,262 1,517 1,344 1,392
6 9 62 119 242 295 240 364 568 695 1,014 1,901 1,836 2,245 2,028 2,148

OPERATING PROFIT 55 85 143 125 156 180 87 226 315 431 765 1,203 758 714 703 872

Dividend from subsidiary 118 20

Extraordinary interest 189 51

NET PROFIT 55 85 261 125 176 180 87 226 504 482 765 1,203 758 714 703 872
Appendix IV (fo)
GUINNESS MAHON CAYMAN TRUST
LTD
AUDITED ACCOUNTS
BALANCE SHEETS
(Amounts in Sterling £000)

31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 30-Apr 30-Apr 30-Apr 30-Apr 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep
1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

Fixed assets and investments

Fixed assets 20 38 37 46 48 43 38 105 111 157 603 585 491 344

Investment in subsidiary
companies 1 4 18 101 15 0 0 0 0 0 0 0 0 0 0 0 0
Investments 22 32 32 32 32 32 0 0 0 1,173 1,544 1,544 1,544 1,544
1 4 18 143 85 69 79 81 76 38 105 112 1,329 2,147 2,129 2,035 1,888

Current assets

Cash at banks 8 52 55 1,131 1,343 2,363 3,298 4,557 7,150 10,145 8,599 4,732 1,652 1,273 173 1,449 2,665
G M Dublin 0 3,672 5,616 6,316 5,224 3,435 2,903 3,331 4,924 7,662 9,397 26,980 30,971 25,154 25,853 39,392 55,964
G M London 0 2,008 136 764 303 5,040 8,698 9,060 13,594 24,300 34,867 61,596 92,280 129,888 128,233 126,139 81,209
Loans to customers 0 1,290 845 367 3,316 4,418 5,664 5,081 4,409 3,839 13,127 24,715 40,541 50,055 9,177 12,234 14,802
Interest receivable 0 0 0 15 26 112 152 0 435 854 1,463 3,117 1,606 2,269 1,773 1,209 932
Sundry debtors 1 14 3 5 17 17 16 0 17 36 53 35 976 59 64 23 18
9 7,036 6,655 8,598 10,229 15,385 20,731 22,029 30,530 46,835 67,506 121,175 167,147 208,699 165,273 180,446 155,590
 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 30-Apr 30-Apr 30-Apr 30-Apr 30-Sep 30-Sep 30-Sep 30-Sep 30-Sep
Current liabilities 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

Customer deposits 0 5,680 5,673 8,239 9,627 14,387 19,632 20,924 28,936 44,171 63,833 115,811 163,019 203,937 160,486 175,317 149,408
Loans from banks 0 1,282 842 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Interest payable 0 0 0 35 94 164 178 157 330 656 1,231 2,690 1,260 1,952 1,279 855 642
Sundry creditors 0 14 8 23 57 92 107 48 132 335 353 376 585 586 551 519 767
Bank overdraft 0 0 0 0 0 98 0 0 0 0 0 0 0 0 0 0 0
Subsidiary companies 0 0 0 33 0 0 0 0 0 0 0 0 0 0 0 0 0
0 6,976 6,523 8,330 9,778 14,741 19,917 21,130 29,399 45,162 65,417 118,877 164,864 206,475 162,316 176,691 150,817

Net current assets 9 60 132 268 451 644 814 899 1.131 1,673 2,089 2,298 2,283 2,224 2,957 3,755 4,773

Net assets 10 64 150 411 536 713 893 980 1,207 1,711 2,194 2,410 3,612 4,371 5,086 5,790 6,661

Financed by:

Share capital 10 10 10 100 250 250 250 250 250 500 500 1,000 1,000 1,000 1,000 1,000 1,000
Profit & loss account 0 54 140 311 36 88 143 230 457 461 395 410 1,612 3,371 3,086 3,790 4,661
General reserve 0 0 0 0 125 125 125 125 125 125 750 0 0 0 1,000 0 0
Contingency reserve 0 0 0 0 125 250 375 375 375 625 549 0 0 0 0 0 0
Balance on consolidation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Reserves 0 0 0 0 0 0 0 0 0 0 0 1,000 1,000 0 0 1,000 1,000
10 64 150 411 536 713 893 980 1,207 1,711 2,194 2,410 3,612 4,371 5,086 5,790 6,661

Hypothecated deposits 2,281 2,782 1,449 1,357 2,187 10,631 21,985 34,329 38,759
Appendix IX

(a) Henry Ansbacher Memo dated 12 November 1991: Fraser Jennings - Richard
Fenhalls

(b) Henry Ansbacher Memo dated 14 November 1991, Richard Fenhalls - Fraser
Jennings

(c) Extracts of minutes of Henry Ansbacher audit and compliance committees, 29

January 1992, 28 April 1992, 29 July 1992; extracts of minutes of meetings of
Henry Ansbacher Board of Directors, 29 January 1992, 29 July 1992

(d) Fax 16 September 1992, SF Jennings/KM McAuliffe - RD Fenhalls/JM Button

(e) File note of Tim Ridley 17 September 1992

(f) KPMG Peat Marwick management letter dated 30 October 1992

(g) Memo dated 2 October 1991, Richard Fenhalls - Dublin File

Appendix IX (a)
 \ ;
HEKBX ANSBACHER & CO. LIMITED:

INTERNAL MEMORANDUM

TO: Richard Fenhalls

FROM: Fraser Jennings
DATE: 12 November 1991
SUBJECT: Offshore Operations

Further to your note 12.11.91, you should be aware that my

concerns relate to two separate areas of the business. Firstly
the way in which loans are booked, documented and monitored in
Cayman, (a review and finding completed by J Button is attached)
and in turn uncertainty relating to documentation of back to
backs highlighted by the SM deals. The second issue relates to
matters arising from Peat's Management letter raised at October's
Audit and Compliance meeting specifically in respect of Des
Traynor's operation of the 'Dublin Accounts' from Dublin. I have
discussed this with Des, who made the fallowing observations:
1. The concern that he is the sole signature is fatuous as
they are his clients and practically there is no one else
to perform the task.
2. Documentation and records are maintained to a high standard
and kept on a PC which' is kept current by an ex G S M
employee on a part time basis, (someone DT has known for
some years and has a high regard for).
3. Concerns over instructions relating .to the accounts are
unfounded given the longstanding and personal nature of the
relationships involved.
4. The request that all documentation be reviewed in London
was totally unacceptable given the rules of secrecy
governing the Cayman Accounts.
In summary I would say that there is real reason for concern over
some of the operating procedures I have referred to and that are
evidenced in J Button's report, these have been identified and
it is up to John Button to ensure that they are effectively dealt
,with.
/2
On a broader note, I feel we must accept and respect the secrecy-
attached to the offshore accounts which by definition cannot be
subjected to all the tests and scrutiny that might apply in the
UK, but in doing so recognise the trust and responsibility
empowered to offshore's senior executives to ensure that their
activities are at all times in compliance with both the relevant
regulating bodies and the bank's own rules of conduct.

SFJ/AEH

\
Appendix IX (b)
 H E N R Y A N S B A C H E R
• . -

..INTERNAL M E M O R A N D U M- • • ^

Fraser Jennings
cc: John Button.

0a
Richard Fanhalls " 14 November 1S91

Suaiecc
Internal Audit Razort - "Dublin Accounts"

Thank you for your nota of Novasbar 12, 1991. Put quita bluntly, I accept ths
. explanation given by Des Traynor. I find it inconceivable to make the
assumption that the Chainaan of Ireland's largest company, director of a
number of prestigious Irish companies, adviser to the good and great in Dublin
and approved by the Central Bank of Ireland to be a fit and proper person to
run a Bank would be conducting improper, illegal or clandestine activities
contrary to the lav. What I suggest we do to put an end to the situation is
as follows:-
I propose that you and John Button visit Des, go through what he does, how he
does it and we advise the Audit Committee and the Auditors thereafter that we
are satisfied with the position overall (if we are). If you want me to talk
to Des about it, I will. . .

-jjf Richard Fenhalls.

rdf01948.mera •

HENRY ANSBACHER & C o . LIMITED

Appendix IX (c)
 • HENRY ANSSACHER HOLDINGS PLC
HENRY ANSSACHER & CO. LIMITED

Minutes of a meeting of the combined'Audit & Compliance Committees

held at One Mitre Square, London EC3A 5AN
on Wednesday 29th January 1992 at 09.GO am

Present: O.J. Sebire - in the Chair

O.S.G. Adam
P. Ballard
J-0 Calmes (from Itejn S)
W.L.S. Guinness (from Item 2.3)
M. Tilmant

In attendance: 0. Catt
S.F. Jennings
M. Mayhew-Arnold
O.C. Matthews
P.R. Thom
P.G. Greenhalgh - Secretary

MINUTES OF PREVIOUS MEETINGS

The Minutes of the meeting^held on 30th October 1991 wgre approved for signature
by the Chairman.
13.0 Dublin Accounts
The Chairman drew to the attention of the Committee the paper from Ansbacher
Limited regarding the percentage of accounts which had not been signed off. It is
not clear from the letter 4hd previous correspondence:-*

how many such Dublin" accounts there are,

how many of these accounts have not been reconciled within the last 12
months, 24 months etc.

SFJ advised that he would look into this matter and advise the Committee of the
position.

A19.
i ""•
 HENRY ANSBACHER HOLDINGS PLC
HENRY ANSBACHER & CO. LIMITED

Minutes of a meeting of the combined Audit & Compliance Committees

held at Cra Mitre Square. London EC3A SAN
on Tuesday 28th April 1S92 at 3.00 om

Present: O.J. Sebire - in the Chair

P. Sal lard
W.L.S. Guinness
M. Tiimant

In attendance: M. Mayhew-Arnold
O.C. Matthews
P.J. Remington
P.R. .Thorn
P.G. Greenhalgh - Secretary

APOLOGIES FOR ABSENCE

Apologies for absence were received from O.S.G. Adam. S.F. Jennings and D. Catt.
i
MINUTES OF PREVIOUS MEETINGS

The Minutes of the meeting held on 29th January 1992 were approved for signature
by the Chairman.
3 11 (29.1.92) 2.5 Oublin Accs'-.its
PGG raocftac that 3FJ ra; ad'.-isad that ha ar.c John Button wars having axtansiva
tai k-3 with Des Trayr.c; .vi-.ilstN^e was in Cay mar regarding the structure,
documentation and level c: detailed ihformation on file in Cayman in respect of these
accounts. SrJ aiso = ovisac that they w^re satisfied thai the business was bona fida.

PGG had been advised fna: Kevin McAuliffe had reviewed the accounts in Oublin and
is satisfied with the standards of control and documentation. The Committee asked
to be provided with a written report by KMcA which should also address security
(physical) aspects, access to documentation and the position regarding mandates.

PGGVGGAiC07.minVnyr -3-
 HENRY ANSBACHER HOLDINGS PLC
HENRY ANSBACHER & CO. LIMITED

Minutes of a meeting of the combined Audit & Compliance Committee

held at One Mitre Square, London EC3A 5AN
on Wednesday 29 July 1992 at 09.30

Present: D.J. Sebire - in the Chair

D.S.G. Adam
W.L.S. Guinness
P. Ballard

In attendance: S.F. Jennings

P.R. Thorn
P.J. Remington
P.G. Greenhalgh - Secretary

APOLOGIES FOR ABSENCE

Apologies for absence were noted from M. Tllmant and J-O. Calmes. M. Mayhew-
Arnold's absence on medical grounds was noted and the Chairman asked that the
Committee's best wishes for a speedy recovery be conveyed to MMA.

MINUTES OF PREVIOUS MEETING

The minutes of the meeting held on 28 April 1992 were approved for signature by
the Chairman.
 6.3.2. Dublin Accounts
SFJ advised the Committee that he and Mr. Button had now discussed these
accounts with Mr. Traynor and basically there were two issues which need to
be'considered:-

the accounts are controlled exclusively by Mr. Traynor with the

Cayman books being only a reflection of the Dublin position which
operate under the^sole signing authority of Mr. Traynor. SFJ advised
that this was the exception; all other Cayman authorities required
authorising by two staff.

a number of the trusts are "blind trusts" where discretion largely rests
with Mr. Traynor; this structure creates risk which SFJ advised is
• under review.

In summary SFJ advised the Committee that the position was recognised by
management who were considering the matter. In the meantime SFJ stated
that he did not consider that the Dublin business constituted a "terminal" risk
to the Cayman operation.

PRT885.repPGG. -3-
r
The question of the Oublin accounts'had initially been raised in the.-Peats
1990 Management letter and SFJ. advised. in reply to a query raised by
DSGA. that he was not aware of the current views of Peats. As Peats had not
re-visited this matter it was assumed that their earlier concerns had been
allayed.

6.3.3 Management Latter

i Srj advised the Cc.-nmittee that with -:he exception of the back-up facility for
the computer a!! c:her matters raise:: in the 1331 Management Letter had
been addressed, developments in respect of the computer were suspended
pending the outcome of current discussions w!:r, potential purchasers or the
Group.

5.3.4 Organ; sat: era.' Structure

SFJ advised ens: :.-.= interna! s:ruc:».*e has r.ow oeen re-organised: the
t Comrnittee will be provided with ds:alis.

Staff resources have been increasec and SFJ reported that in particular the
new Financial Controller is proving effective. Segregation of banking and
trust business is now largely completed with only 23 out of 417 banking
facilities now remaining outside Banking.

6.3.5 Banking Facilities

SFJ confirmed that the half yearly review was currently in hand but reminded
the Committee that the majority of loans are related to trusts.

ThefBHP facility has been reviewed; SFJ confirmed that security values are
considered to be realistic and provide adequate coVer for the exposure,
i
SFJ confirmed that the large exposure was in respect of the SAF facility which
is reducing. In reply to a question regarding the integrity of the structure of
the loan and the relative security SFJ advised that opinions have been sought
from accountants and lawyers and that whilst not entirely risk free the
documentation and security appear water-tight; the commercial risk is
considered to be minimal. On the question of back-to-back documentation
SFJ advised that in the absence of case law the position was inconclusive
however Cayman were attempting to move from Memorandum of Deposit to
a Flawed Asset position which improves the value of the Security.

SFJ undertook to provide the Committee with the' Cayman procedural

. documentation in respect of the Philippine fiduciary business.

6.3.6 Limit; Barclays Bank Pic

SFJ explained that whilst the bank in general was cutting back on lending
lines to banks the Barclays limit of £l00m, although three times greater than
the next largest limit was realistic in view of the quality of Barclays. In this
connection SFJ mentioned that the 8ank of England were satisfied with the
allocation of limits. *-

The Committee commented that Barclays rating had dropped significantly and
that it would be pru.dent to relate the limit marked to those marked for other
banks. The Chairman advised that he would raise the matter at the HA Board.

PRT885.repPGG. -4-

. • - -<" ' 505 ~ ^

 M i n u t e s o f a meeting o f the Directors
held at O n e M i t r e S q u a r e , London E C 3 A SAN
on W e d n e s d a y 29th January 1992 at 11.30 am
4

Present: R . D . Fenhalls - C h a i r m a n
G.B.O. Cooper
5 . : . Jennings
J . A . HolliweLl
D.S.G. Adam
? . Ballard
J . M . Button
J - D Calmes
?.A. Cragg
D . A . P . Crawlev
J . J . Helbronner
3 . N . Jolles '
D . C . Matthews
F . T . Riess
D . J . Sebire
P . R . Thorn .
M . Tilmant

In attendance: P.J. Wastall

Apologies f o r a b s e n c e w e r e received from Messrs

Al-Salem a n d p . B e L l e n s .
r
 4.3 L o a n S I n v e s t m e n t Review C o m m i t t e e

."VV.iWA

n
4.4.2 Meeting h e l d o n 29th" J a n u a r y 1992

M r . Sebire reported to the Board as foLlows, i

respect oS m a t t e r s c o n s i d e r e d and reviewed at th
cuartarly m e e t i n g of the Committee held eariia
today:

The Committee had discussed a ravia'

(•articularly in regard to the loan beak) a.
operations and procedures in the Cayma;
Islands.
The Board noted that this matter would b«
. further investigated and addressed by Mr
Jennings, in consultation with Mr. Fenhalls
and Mr. Button.

Ana
 HZNRY MS3AC22R HOLDERS PLC

Hinutes'of a aeeting of the Directors

held at One Mitre Square, London EC3A SAN /• • ^
on Wednesday 29th July 1992 ' :•-'•'" ''

Present 5.0. Fenhalls - Chairnan

E.H. Al-Humaidhi
0. Sellens '
J.M. Sutton'
R.H.E. Charlton (as Alternate for J.D. Calaes)
G.5.0. Cooper
W.L.S. Guinness
S.F. Jennings
D.J. Sebire

Invited: J.A. Holiiwell

In attendance: ?.?.. Then - Secretary

S.A. Cole - KPXG Peat Merwick (items 1 to 10)
G. Russell - :<?HG Peat Warwick (iteas 3 to S)
?.J. Wastall

Apologies for abser.ca were received from Messrs. A. Al-Salem, J.D.

Calroes, M. Delloye, J. Krier, A. Langlois-Meurinne and M. Tilmant:

1- MINUTSS
1.1 Minutes of the meeting of the Directors hel'd on 29th April
1992 were approved for signature by the Chairman.

1.2 Minutes of meetings of the Executive Committee of the Board

held on 27th Hay, 5th June and 24th June 1992 were noted and
endorsed.
b) Dublin Accounts
The Committee had expressed concern that -.these accounts
continued to^ be controlled • exclusively (with the Cayman
books being on^.y a reflection of the Dublin position) by Mr.
Des Traynor and operated under his sole signing authority.

It was noted that the position relating to the Dublin

accounts would be reviewed by the Boaxd in due.course.
Appendix IX (d)
 ANSBACHER INTERNATIONAL TRUST GROUP LTD
INTERNAL MEMORANDUM

To: R.D. Fenhalls/ J.M. Button

*

From: S.F. Jennings / K.M. McAuliffe

s

Date: 16th September 1S92-

Subject: Dublin Accounts

BACKGROUND
Whilst reviewing the circumstances surrounding" the continual excesses at Irish
Intercontinental Bank (DOB) and Kredtetbank (KB) a discussion was held between SFJ,
KMA, John Furze (JAF), and Bryan Bothwell (JBB). JAF was asked by KMA why it was
not possible to ensure that transactions recorded in the records held in Dublin could not be
entered in the books of AL on a more timely basis. JAF responded that there were approx
250 transactions per month and that the majority were passed through a Cayman company
called Hamilton Ross Limited (HRL). JAF described HRL's activity as being to receive
. "deposits" in Eire from a number of clients and for these to be banked in HB on behalf of
AL. JAF advised that he was unsure what if any documentation existed in Eire to
substantiate the relationships between HRL and the depositors.

HRL
This is a Cayman company formed in 1981, whose directors are JAF, one current employee
and one ex-employee of AL. JAF is Ihe registered holder of 98 shares the other 2 being held
by employees. No nominee agreements or Declarations of trust are on file.
No financial statements exist for HRL but the books of HRL show that it has 29 separate
sub designated deposits with AL arid that these were funded from a similar number of
"Suspense" accounts, the majority of which carry no" sub-designation. The company docs
. not have any reserves, and would appear, with the exception of one deposit of £2m which
JAF advised to be for the company's account as principal (being funded by a loan), to be
used exclusively for the purpose of the collcction and onward transmission of deposits to
AL.

AL's ROLE
AL's books show 29 deposit accounts from HRL all of which cany a numeric sub-
_ designation. Once a quarter, statements of these accounts are printed in Eire and JAF
advised that these are given to the underlying clients. HRL does not have a bank mandate
for the operation of its accounts with AL.

fl/i QfrJh U»JL jfc^akui*

t> QLb tffl* hjj VKAJ £KfJrtUKJhuj. Imih
II /jM'c fji^jJlAJU* O J u a A
K h/rfWdUukj + faj o&jjJUh VJaJMO
 IMPLICATIONS

It could be argued that HRL is in direct breach of the Cayman banking laws for carrying out
banking activities without a licence.

I, In the context of the audit, this has been discussed with the senior partner of KPMG. who
^has intimated that although this would not cause the audited accounts to be qualified,
<KPMG would be obliged to raise the issue as a primary point of their Management letter

Advice was sought from Tim Ridley (TR) of Maples & Cajder, who would not give a firm
opinion without reading all thefiles but who believed that there was a risk that the Cayman
Banking Laws or Trust Company Laws were being breached. TR was surprised that, post
BCCI, AL should be involved in such transactions which in his view fell considerably short
of the standards required by the Cayman Banking Supervisor. TR felt that apart from the
consequences of a possible breach of Cayman Banking Law the main contingent liability
would arise if AL did not have sufficient information to be able to refund-the monies to the
correct depositors.

OTHER BUSINESS
With the exception of one other Managed company whose bookkeeping would appear to
be similar in nature to that of HRL but where there are a lesser number of active sub-
designated accounts, it would ^eem that the remaining Dublin business consists of
individual deposits sourced in Eire and placed by Managed companies and trusts with AL.

Total AL deposits controlled from the Eire source amount to $80m and the earnings
generated from these and associated business is approx S3 50k p.a.

COMMENT
Apartfrom the above problems in relation to Cayman Banking Law with HRL and the other
similar entity, there remains the ongoing risks of continuing to do this type of business in the
same manner as it has always been' done. Areas which cause concern can best be
summarised as:

• Carrying out a deposit taking activity in Eire without a licence.

• Trading within Eire without declaring this to the Revenue.

- Possible Breach of Eire Exchange Control. •

- Assisting Eire residents to evade Eire Tax.

Failure to comply with the Money laundering regulations.

• Possible risk of error on money transfer between the clients and AL.
• Risks associated with absence of dual controls.
f
If we are to avoid reference being made in the KPMG management letter, it is our
belief that URGENT action needs to be taken in respect of HRL & the similar entity
to ensure that this business is terminated before the end of September.

In addition we will need to consider all other Eire business and the desirability of
continuing :*. in th; future.

We will call you at 12.30 p.m. your time tomorrow to discuss this.
Appendix IX (e)
T SEP-21-0i FRI 0 P. 03/05

J7th September, 1992

TOSNQTK

Rc: Ansbacher Limited/Hamilton Ross

Iriictwith Fraser Jennings and Kevin McAuliffe(?) of Ansbacher limited at short notice on 16th
September, 1992. I think Fraser Jennings is the Managing Director or something of Ansbacher
in Txmclon. I think he is also on the Board of Ansbacher Limited here. Kevin McAuliffe is a
Director of ihe Holding Company in Gumsey and I think is also a Director of Ansbacher
Limited here. Fraser informed me that the First National Bank of South Africa is now
A considering buying Ansbacher. Singer & Fricdlander is no longer in the picture. Appropriate
™ due diligcncc is now being done all over the placc. KPMG Peat Marwick are doing the due
diligence from an auditors standpoint. Internal people such as Jennings and McAuliffe are doing
due diligence from a business/banking standpoint. They have now come across something most
peculiar involving the Dublin end of this and Des Traynor and John Furze about which they arc
very uncomfortable. I immediately asked if the matter in question related to the initial buy-out
of Guinness Mahon Cayman Trust Limited, the subsequent take over by Ansbacher Limited.
They said absolutely not.

Bryan Bothwell has been briefed on the matter. However, John Collins, John Furze and Des
Traynor do not know the concerns at present. They do not know about the visit to Maples and
Calder. \

^ The matter is extremely convoluted in the best tradition of the Irish Gnomes.

• Facts are as follows, to the extent they can be asceiiained;-

1. There is a Cayman Islands company called Hamilton-Ross. Needless to say it has

nominee shareholders at Ansbacher but it is thought that Des Tiaynor owns the company
beneficially. Directors also are local people at Ansbacher. John Furze is both a nominee
shareholder and a Director;

2. Some 29, plus or minus, individual investors, thought to be from the Republic of Ireland
hand over money, possibly cash and cheques (payable to whom we know not) to Des
Traynor who deposits those monies with the Independent Irish Bank ("IIB!,)(a thoroughly
reputable third party bank apparently) in Dublin;

3. JJB credits these monies, it is thought, to the account of Ansbacher Limited, Cayman
Islands. It is not clear what sort of sub-accounting goes on and for whom;

)7 Seplrtnk-rtM2
r
SEP-21-01 FRI 05:45 Pfl FAX NO. P.

II is thought that investors may get bank statements apparently issued by Ansbacher
Limited;

The conncction with Hamilton-Ross is not at all clear. It is not clear whether Ansbacher
Limited holds the moniesreceivedin fact for the investors or for Hamilton-Ross.
Hamilton-Ross bank statement is no more revealing;

Nobody knows exactly what the investors have been told;

Nobody knows quite what role Hamilton-Ross is supposed to play;

They are concerned that Hamilton-Ross may be conducting banking business on an

unauthorised basis if it is accepting deposits for these individual investors. Alternatively
Furze has apparently said that Hamilton-Ross is acting a trustee in which case of course
it requires a trust licence and possibly a banking licence as well, or either (it also occurs
to mc thai the Companies Management Law might also be relevant).

Kevin waved in front of me lots of bank statements issued by Ansbacher limited carrying
Identification numbers and letters but no specific indication of the account holder. The account
holder could be Hamilton-Ross or it could be the individual investors. There are absolutely no
account opening documents or other mandatesfiled by anybody with Ansbacher Limited. The
only way in which Ansbacher Limited has been balancing its books is by lots of entries marked
"subsequence", the ultimate blackhole. The amounts involved are not insignificant, i.e., several
millions of dollars in various currencies.

John Furze has no particular explanation for what is going on. Asloundingly enough there are
sonicihing like 200 transactions going through the structure each month.

I said based on what they had told me,VI could not say specifically whether Hamilton-Ross was
carrying on banking business while unlicensed. Likewise carrying on business as a trust
company. I said that there were arguments that it might well be but I thought that arguments
could be put up to the contrary and doubtless would be by Des Traynor, John Furze, etc. I said
that I would need to have a lot more information and access to all of the files before I could
reach a definitive conclusion. However, the whole structure was extremely bad banking practice
and I thought that any banking regulator would throw a fit if he knew about it. Jennings says
that tho auditors are very concerned about it, having had their attention drawn to it by Jennings
I think. They will certainly qualify the accounts in-some way and put something in the
management letter if the business is not sorted out by the time they sign off.

j Surprisingly, it appears that Fraser Jennings is, in any event, going to discuss this with Jennifer

i
Dilbcrt and also the Bank of England. I said that was of course his business. I said however,
I could not see any legal obligation on the part of Ansbacher Limited to talk to the Inspector of
Banks & Trust Companies here. I did say that, of course, should the accounts be qualified, etc.,
j and be filed in that form with the Inspector doubtless a phone call could be expected pretty
[ quickly.

e
' TCIWR>V\MM«»U*W.
j, 17 Stptmvbct 1091

L " ' - 529 ^

 SEP—21—01 FRI 05r45 PH FAX NO. P. 05/05

1 said that my recommendation was that whatever therightsand wrongs, this did not seem
appropriate business for Ansbacher Limited and they should unwind it and getridof it. This
docs of course raise the question as to whom they should return the deposits. T said that was
a mechanical issue on which I could not give them much comfort. 1 suggested they get hold of
Traynor and Furze and sort it out. The risk of course is that the monies get given back to the
wrong people, or that Traynor in someway interferes. I said that was of course a risk. Ideally,
Ihcy would get a definitive list of people entitled to the deposits etc, get the money back to them
and get discharges, releases, etc. The likelihood of that in fact occurring is remote, as a
practical matter.

There was a good deal of chat about the exposure of Ansbacher Limited on this. I said that
there was of course the question of the regulatory situation, there was the question of whether
they were carrying on unlicensed banking/business (unclear at present I thought) and the liability
to people who had handed over funds to Traynor on whatever basis, presently unknown. I said
"H that I thought ihat the main contingent liability was to the people who handed over the money
in the event that they did not get back what they thought they were entitled to. Hopefully that
risk could be minimised by doing the necessary very promptly.

I asked why First National Bank of South Africa was interested in Ansbacher limited. Fraser
says that the South African Bank (which is the old Barclays Bank operation in South Africa)
decided that it needed a licence in London. The easiest way of getting this was to buy into an
existing operation with staff, business, etc. Originally they had not been much interested in the
offshore operation. However, they now appear to see some value in it - possibly lots of new
business flowing from South Africa7

Fraser said that they did not want anything in writing from me at the moment. If they do, they
will come back to me. I said that I would of course want copies of all thefiles and would
probably have a lot more questions. They said that they noted this.

A-.,

TCRURWW9099\2<W«.
17 Sipicmbff ]992
Appendix IX (f)
 Peat IN/larv/vic'-

Cho/icccJ Accauntjnii

(-•cnciii
p q 5GX ''9] CaOtsS V-Mi.'i.'J.M
G'joc Cjy^-o.-. ^j-i'-I.VI ;3C5i 7-^5 • -3C0
WCS: mc.o "oi.^jC"." *C*r: 3-1 3- ?:=-

cr.-.'Pin^.MTi.ii

; he 3card c-f Directors

Cctcber 2-0. 1SS2

Gear Sirs:

We have recently completed our examination of the consolidated financial statements of

Anscacner Limited (the "Company") for ;ha period ended September 30, 1992. Tha purposa of
this letter Ls to faring to your attention csrain matters which were encountered in the course ai our
work and to offer our comments and recommendations. These comments, by their nature, are
critical as they relate solely, to weaknesses and do not address the many strong features and
controls within the Company's systems.

The primary purpose of our examination was to enable us to form an opinion on the consolidated
financial statements of Ansbacher Limited for the period ended September 30, 1992. We
reviewed and tested the Company's financial systems and related internal controls to the extent we
considered necessary to evaluate the systems as required by International Standards on Auditing.
Our study and evaluation wrth respect to these financial systems was not designed for the purposa
of expressing an opinion on internal controls and may not necessarily disclose all weaknesses in
the systems.

To facilitate your review and follow up, a summary of tha major findings is presented in the following
appendices:
»
Appendix A-observatiors in the current period.
Appendix B-follow up to 1991 management letter.

The contents of this letter and the attached appendices have been discussed with the responsible
management personnel and apply to the controls and procedures in existence during our
examination. We have not reviewed these items since October 9, 1992, the data of our audioes'
report. We woukd be pleased to discuss our comments and recommendations with you and to
assist you wrth implementation.

We would like to acknowledge the continued cooperation and assistance extended to us by the
personnel of the Company during the course of our examination.

Yours faithfully

Km&tuvwA •
K P M G Peat Warwick

Resident Partners:

GXkh3$™
j \ Mtmbtt rl'm ol A.M. 8iaots
 Marwick

A;pand!x A - Obssrvatlcns in :."s Currant Psricc

u?n a raj

•r.s'n Accounts

- 53 XT-ass: T h ^ s s = r-iock ci c t ^ c m e r accc-unLs ("Ouc-iin accounts') whicn are

cp-era\srz and controlled in Dublin, Ireland by the Chairman or
Ar.scac.--er Limrted. Tna Dublin acccur,;s are ac-eratsd outside tha
., regular ; r:a —.ai control anvircnm-ar,; of Ansbacher Limited. The
/ documentation supporting the o a l a r c s s and transactions through
y these acccunts'is weak and in g-eneral transactions ara initiated
J
verbally ;y tha beneficiaries of the trusts which own the account
holding companies. The only control over these accounts has been
that a rraraging director has prepared statements for the operating
companies and these have been approved annually by the trust
beneiiciari
ss. Accordingly any irregularities in the operation of
these accounts couid remain undetected for up to twelve months.
We have seen no formal consideration of the regulatory and taxation
consequences of the Company operating these accounts from
Dublin.
flecommendatian: i
The Oirsctors should consider the desirability of operating these
'accounts outside the regular internal controls of the company and
obtain advice on the possible consequences of being considered
to be carrying on business in Oublin.

Management Comment: Currently under consideration.

Cash with other bapt«;?

stalft d a t e d nhBOUBs/rirafts

Weakness: It was noted that there were significant numbers of stale dated
cheques and drafts on the Cayman National 8ank and 8ank of New
York reconciliation's. Tha presence of stale dated cheques on
reconciliation's provides an opportunity for unauthorized
withdrawals of funds, equaling the amount of the stale dated
cheques.

Recommendation: We recommend that a system be put in place to identify.stale dated

cheques on reconciliation's and transfer them to a separate general
ledger account. • Such'a general ledger account should be reviewed
by the Senior 8anking Manager on a periodic basis, with the review
evidenced in writing.

Management Comment: Agreed and in course of implementation.

Appendix IX (g)
 H E N R Y A N S B A C H E R

r = H V A l. ,M 5 M O R A N O U M

The Dublin r i l s
John Button, "riser Jar-nines.

Richerd r=a>=:is /GS<f 0c:>

2 Gc:cber L392

yjcje::

• • Brian Lavaile of FN 3 and I a at with Des Traynor ana lacsr with Padraig to
^i-v .-*' ^ ^ discuss the who la question of the Dublin accounts. In essence, Brian Lavalla
started the meeting by pcsir.g tha following quastions:-
1. He wanted to know that the money was protected.
2. Ha did not want there to be any claim £or the wrongful handling of the
money.

3. Was an audit process achievable?

4. Was there any breach of Exchange Control? Was any Banking law being
breached, and to what extent was a Banking business being conducted in
Dublin, and to what extent were there cross-border transactions?

Des Traynor took 8L and RDF through the Exchange Control "position and the
manner .in which the funds had all been sat up'. He equally well described in
detail the fact that there was no Irish equivalent of Section 468 of the
Income & Corporation Taxes Act. Padraig took BL through the records in detail
and JDT and he described how the interface with Cayman occurrcd. At the
% conclusion of the meeting, Lavell'e was happy with the position overall,
subject to:-
i
1. There was a weakness in the control system in the sense that those who
did the entries also controlled the accounts.
2. The fidelity insurance probably did not apply to the handling of these
accounts.

3- To what extent was there a permanent establishment-created in Dublin

and to what extent was a Banking licence needed, to conduct the business
in the manner in which it was conducted, particularly as tha mind and
management of the accounts was in Dublin?
I indicated that I did not think that this was the Banking business. It
probably was some fora of fiduciary business. It was agreed that all parties
would consider huw to deal with what Lavelle regarded as an exception to be
solved rather than anything else.

HENRY ANSBACHER & Co. LIMITED

Appendix V

(a) Central Bank letter dated 19 February 2002

Appendix V (a)
CENTRAL BANK BANC C6ANNAIS
OF IRELAND NA H0R6ANN
PO Box No 559 Telephone (01) 6716666 Maurice O'Connell
Dame St. Dublin 2 Telex 31041. Fax 6716561 Governor

19 February 2002

Office of the Inspectors

3 r d Floor
Trident House
Blackrock
Co. Dublin

Dear Inspectors

Re: Ansbacher (Cayman) Ltd.

I refer to your letter of 18 th February 2002. I can confirm that Ansbacher

(Cayman) Ltd. never applied to the Central Bank for or never held a
licence to carry out banking business in this State.
Appendix VI

(a) List of the directors and company secretaries of Ansbacher from its incorporation
in 1971

(b) Transcript of evidence of John Collins

Appendix VI (a)
 Guinness Mahon Cayman Trust LTD/A nsbacher (Cayman) Limited
Directors (Executive and Non-Execultive) 29/1/71 to 30/4/2002.
Name Position Held Appointed Resigned
John Henry Guinness 29/1/71 1/4/74
James Desmond Traynor 29/1/71 1/4/74
Non Exec Dir 18/3/81 Dec'd 11/5/94
Hugh M Sassoon 29/1/71 July 1973
Harold W Everitt 29/1/71 July 1973
John Anthony Collins Director 29/1/71 28/4/95
Non Exec Dir 29/4/95 31/10/00
John Andrew Furze Director 29/1/71 28/4/95
John E Maples 29/1/71 July 1973
Robert J H Vaucher Feb73-Jan74 26/11/80
Graham S Hill Director 18/3/81 31/12/83
Richard Fenhalls Director 2/5/83 11/12/84
Non Exec Dir 19/8/88 12/7/89
Bruce A Ursell Director 3/4/85 5/5/87
Patrick Moorsam Non Exec Dir 11/1/88 15/6/88
Hugh Cecil Hart Non Exec Dir 4/12/80 20/2/02
John M Button Non Exec Dir 19/8/88 27/4/93
John Bryan Bothwell Non Exec Dir 6/4/89 2/11/90
Director 2/11/90 1/11/01
Denis A Catt Non Exec Dir 1/1/90 29/11/91
Stephen Fraser Jennings Director 30/1/92 1/3/96
Kevin Michael McAuliffe Non Exec Dir 30/1/92 25/5/93
Colin John Minty Non Exec Dir 31/5/93 14/7/95
Peter Neville Scaife Non Exec Dir 23/11/94 17/8/99
Royan Dunn Ellis Non Exec Dir 29/8/95 1/1/98
Iacovos Koumi Non Exec Dir 11/6/96 1/3/99
Gary Linford Director 29/4/96 2/10/98
Garry Crossan Director 30/10/98
Beverley Ann Hodkin Director 30/10/98
John Andrew Furze Secretary 29/1/71 2/11/90
John Bryan Bothwell Secretary 2/11/90 22/4/96
Beverley Ann Hodkin Secretary 22/4/96
Appendix VI (b)
PRIVATE EXAMINATION OF MR. JOHN COLLINS

UNDER OATH

ON MONDAY, 8TH OCTOBER 2001

held at

DLA OFFICES

3 NOBLE STREET

LONDON EC2V 7EE

I hereby certify the

following to be a true and

accurate transcript of my

shorthand notes in the

above named interview.

Stenographer
 PRESENT

The Inspectors: JUDGE SEAN 0'LEARY

MR. MICHAEL CUSH SC

MS. NOREEN MACKEY BL

MR. ROWAN FCA

Solicitor to the Inspectors: MS. MARY CUMMINS

Interviewee: MR. JOHN COLLINS

Represented by: MR. JOHN GORDON SC

MR. R. SPILG,

CHIEF EXECUTIVE, ANSBACHER

MR. M. MAYHEW-ARNOLD,

GROUP LEGAL DIRECTOR,

ANSBACHER

MR. N. MICKLEWAITE,

SOLICITOR, DLA

MR. J. SHARKEY,

SOLICITOR, DLA
 2 THE INTERVIEW COMMENCED, AS FOLLOWS, ON MONDAY

3 8TH OCTOBER 2001

5 JUDGE O'LEARY: Thank you very much for

6 coming, I greatly

7 appreciate it. I understand that it is your wish to

8 give evidence on a voluntary basis, is that correct?

9 A. That is correct.

10 JUDGE O'LEARY: That is noted for the

11 transcript. It is a very

12 informal procedure. The only thing that we would

13 like is for you to give your evidence under oath in

14 order to give your evidence the appropriate weight,

15 as applied for in our terms of reference. So if you

16 are agreeable to that, we will have Ms. Cummins

17 administer the oath to you.

18

19 MR. JOHN COLLINS HAVING BEEN SWORN WAS EXAMINED, AS

20 FOLLOWS, BY MR. ROWAN

21

22 JUDGE O'LEARY: Mr. Collins, as you are

23 aware, there are a number

24 of us here. From the bottom, Ms. Cummins is our

25 solicitor. Ms. Noreen Mackey is one of the

26 Inspectors. Mr. Paul Rowan, who is a chartered

27 accountant, is another of the Inspectors.

28 Mr. Michael Cush, who is a Senior Counsel, the

29 equivalent of a Queen's Counsel, is another

3
 1 Inspector. My name is Sean O'Leary and I am the

2 presiding Inspector. The procedure, as I say, is

3 very informal. Because, obviously, it would be

4 impossible for all of us to independently examine

5 you in chief, if you like, the job of doing that has

6 fallen on one of the four Inspectors today and that

7 is Mr. Rowan. So Mr. Rowan is going to ask you the

8 bulk of the questions. The other Inspectors,

9 starting with Mr. Cush, may have some questions for

10 you later on, but by and large, it will be

11 Mr. Rowan.

12 MR. MICKLETHWAITE: Before we start, could we

13 read the other members

14 present into the record?

15 JUDGE O'LEARY: For the record, certainly.

16 MR. MICKLETHWAITE: I am Neil Micklethwaite of

17 DLA. This is Jim Sharkey,

18 another partner of DLA. Next is Michael

19 Mayhew-Arnold of Henry Ansbacher. Next to him is

20 John Gordon, Senior Counsel. Next to him is

21 Richard Spilg, Chief Executive of Ansbacher.

22 JUDGE O'LEARY: That is very helpful.

23 Now, Mr. Rowan.

24 1 Q. MR. ROWAN: Once again, Mr. Collins,

25 good morning. May I

26 establish at the outset if you have had an

27 opportunity to read what has been termed the

28 "information document"? (Exhibit 1)

29 A. Yes.

4
 1 2 Q. You have. Did you contribute towards the

2 compilation of it?

3 A. Marginally, but only marginally.

4 3 Q. Just for the record, could you give us a bit of an

5 overview of your career prior to becoming involved

6 with GMCT?

7 A. Yes, certainly, sir. I left school at 17. After

8 matriculation, I went straight into Barclays trustee

9 department in Luton in this country. I stress it

10 was the trustee department I went straight into, not

11 into any banking department. Subject to two years

12 national service in the Air Force, I was with them

13 for about five years and rose to an administrative

14 level at the age of 22 or 23. Then the forces had

15 not sent me overseas, despite wanting to go, so I

16 was looking for a job and I went overseas with what

17 was then the National Bank of India in Nairobi,

18 Kenya, again to their trustee department in Nairobi.

19 I went there in 1957 as a number two on their

20 trustee department, which again, like Barclays, was

21 a classic trustee department, mainly executors,

22 trustees, wills, some trust work, but also did the

23 securities work for East Africa and we covered

24 British East Africa at that time. I stayed with

25 them and, after about two or three years, took on

26 the principal of the trustee department position, my

27 senior departed and I took it over. So I stayed

28 with them until 1964. By that time, business in

29 East Africa was tailing down, shall we say, for

5
 1 trustee executors. The settlors had all left

2 between one thing and another.

4 I came back to London and had a short spell,

5 probably 10 months or so, with a firm of

6 stockbrokers. One morning on the train, I thought

7 what am I doing here with this fog and left. There

8 was an ad for a job in Jamaica in the Bank of Nova

9 Scotia Trust Company and I joined them in 1965, I

10 went straight out there. I went to Nassau with them

11 for two months only, pending a work permit in

12 Jamaica. I went to Jamaica as Trust Manager for the

13 Montego office of the Bank of Nova Scotia Trust

14 Company, Jamaica. At the Montego Bay office there,

15 again it was a trust department, although it was a

16 subsidiary company, not wholly owned by Nova Scotia

17 at that time although controlled by Nova Scotia.

18 From there, we had an interest from Jamaica in

19 establishing an office in Cayman. Cayman at that

20 time -- there was really nothing happening there but

21 suffice to say that I used to go over there

22 occasionally from Montego Bay. In 1966, in July,

23 I went over to Cayman to establish the office of the

24 Bank of Nova Scotia Trust Company. This was the

25 first resident trust company in Cayman in those

26 days, '66. I said it will only be two years'

27 hardship post. I stayed with the Novia Scotia Trust

28 Company and we built up that company into a credible

29 size until 1973.

6
 1 4 Q. MR. ROWAN: If I could just stop you

2 there, if I may. When did

3 you first meet Mr. Furze?

4 A. In 1968, I think it would have been. I needed

5 assistance then. I remember the office was

6 virtually one man and a girl and an accountant as

7 well. So I only had four on the staff at the

8 beginning. We got business and I needed help, I

9 appealed to Nassau, which was the head office, and

10 they sent down John. John was with me then for I

11 think about six months to help out. He was then

12 posted to Barbados as Manager of Bank of Nova Scotia

13 Trust Company in Barbados. Our business then went

14 on in leaps, as it were, and I can't remember the

15 exact date of this, but basically Barbados wasn't a

16 great trust company operation. There wasn't the

17 opportunity there that there was in Cayman and I

18 asked specifically if I could get John back and he

19 came back as assistant manager. That would have

20 been, I would suspect, the late 1960's, early 70's.

21 Nova Scotia, as I said, in Cayman, we were the first

22 there and sort of supervised the bank in the initial

23 days.

24 5 Q. You as an individual were relatively young in those

25 days. May I just enquire in 1970 what age you were?

26 A. In 1970, I was 36.

27 6 Q. What age approximately would Mr. Furze have been at

28 that time?

29 A. About 30. He was six or eight years my junior, I

7
 1 think. I am not sure, something like that. He was

2 quite a bit younger.

3 7 Q. Right. So how then did you come into contact with

4 the Guinness & Mahon Ireland people? Approximately

5 when?

6 A. I went to Cayman, as I say, in 1966. In Montego

7 Bay, we were very friendly with the Bank of Nova

8 Scotia manager in Montego Bay who was posted to

9 Dublin to open the Dublin office. So that when I

10 took over the trust company in Cayman, one of my

11 earlier visits around the world was to see him in

12 Dublin. He was a very go-ahead manager. He had

13 done very well for the Bank of Nova Scotia. He had

14 been there, by the time I went to see him there, I

15 think we had been about two years. He was building

16 up Irish business. Nova Scotia were expanding

17 internationally at the time very much. He had made

18 some contacts. I went to visit him and he

19 introduced me to some of his contacts. One of those

20 was Mr. Traynor at Haughey Boland in those days --

21 if I remember rightly, he was still there. He also

22 introduced me, I think, to John Guinness. I had an

23 earlier relationship, I think, with Kennedy Crowley.

24 But that was my first introduction to the Guinness &

25 Mahon people.

26 8 Q. Do you recall the name of the Bank of Nova Scotia

27 manager who was sent to Dublin?

28 A. Lyndsey Wellner.

29 9 Q. So you met Mr. Traynor. What sort of a role was he

8
 1 playing in Guinness & Mahon at that time?

2 A. As I say when I first met him, I think it was just

3 an introduction. Later on, I met him in Guinness &

4 Mahon.

5 10 Q. I think he joined Guinness & Mahon around 1968 or

6 1969?

7 A. Alright. It was sometime then when I would have met

8 him, I think, because I made a few trips at that

9 time. Everybody was in Ireland at that time, the

10 Royal Trust and everyone else, looking for business.

11 We were almost the last man on the block coming in.

12 But I met Des in Guinness & Mahon. The role he was

13 playing -- to my mind, there were four partners, as

14 it were. They ran it very much like an

15 old-fashioned merchant bank with the four partners

16 sitting around each having a desk in the same

17 office. There was Des, John Guinness, William

18 Forwood and Maurice 0'Kelly. I wouldn't say he was

19 the dominant one at that time of the four partners.

20 John Guinness was very much the Chairman at that

21 time.

22 11 Q. There is a suggestion from something I have read

23 that at some point you tried to interest Guinness &

24 Mahon in a residential property development in

25 Cayman?

26 A. Yes. This goes back to the -- I must stress first

27 of all that I am a trust company man as a priority

28 and became a banker almost as a subsidiary, because

29 all our trust companies in the offshore world would

9
 1 combine banking with trust company work. While with

2 Nova Scotia, I had a client -- and this was a local

3 client, he was a colourful character and had an

4 option on land, large pieces of land, mostly on the

5 eastern end of the island and a lot of beach land

6 amongst it. This was from a friend of his who was

7 from Chicago, I think it was. He was almost a

8 charitable organisation himself but he had bought

9 the land in Cayman over the years and was sitting on

10 it and was a fairly old man, he didn't know quite

11 what to do with it or wasn't really too worried

12 about it and he gave this client of mine an option

13 to purchase it all for a certain figure. That

14 figure, I thought, was an absolute bargain and so I

15 backed the client, in effect, or wanted to back the

16 client to do the deal, to take it off him, sell some

17 of the property and pay the loan back. As was the

18 wont with trying to get loans trust companies, Nova

19 Scotia weren't interested. So as I had done several

20 times during my career, you then think the deal is

21 good enough and you can sell it to a client and

22 basically I then approached, I think it was

23 John Guinness, and put the deal that if you will

24 lend the money to do this deal, if he falls down, we

25 take the land off him. And he did, in short. The

26 amounts were quite large for those days but they

27 wouldn't rank so large today but I cannot even

28 remember -- I can remember the profit figure but I

29 cannot really remember the amount.

10
 1 12 Q. Of course, this introduction to the land development

2 opportunity was before the creation of Guinness

3 Mahon Cayman Trust?

4 A. Yes. So we did it and they set up a company to do

5 it, Northern Finance or something like that was set

6 up, a Cayman company which was funded to do this

7 deal. The client fell down on the deal.

8 We enforced a loan position, took over the land,

9 sold it in parcels over the years, made

10 approximately £300,000 profit. That gave capital

11 for the bank. This was a Guinness & Mahon

12 subsidiary and that produced the capital for the

13 bank.

14 13 Q. So the profit was developed inside this wholly owned

15 subsidiary of Guinness & Mahon Ireland?

16 A. That is right, yes.

17 14 Q. That meant, of course, that you had an increasing

18 amount of contact with Dublin?

19 A. I did. I mean, once they set up their own trust

20 company or bank, it was mainly a trust company

21 rather than a bank.

22 15 Q. Just before that, whose idea was it to set up a

23 trust company in Cayman? Where did the initiative

24 come from?

25 A. I think probably from Des Traynor.

26 16 Q. You say probably?

27 A. Yes, I couldn't be one hundred percent certain. It

28 would have been one of the four of them.

29 17 Q. But he was still relatively a new boy?

 1 A. Yes .

2 18 Q. He had been there two or three years at that stage?

3 A. Yes, because it was '71 that they set it up. I

4 think again Guinness Mahon London had a Bahamian

5 subsidiary and I think this wasn't succeeding very

6 well and with the money they owned, it wasn't going

7 to cost them anything to set up a Cayman subsidiary,

8 Dublin were attracted to the idea. There was no

9 particular momentum, you know, anything behind it

10 other than to have it and to see -- they presumably

11 had ideas of a few clients but it was a pretty small

12 operation.

13 19 Q. But your feeling was that Des Traynor was a

14 significant driving force in doing this?

15 A. He would have been from his tax practice in Haughey

16 Boland and everything else and he was more familiar

17 with the offshore scene than the other partners.

18 20 Q. So who, then, as the idea matured, did you have

19 reasonably constant contact in terms of setting up

20 the company? Was it Traynor?

21 A. I would think so, yes. I cannot recall, this is a

22 long while back now to say specifically, but yes, I

23 think it would.

24 21 Q. Did you have any contact with Mr. Forwood?

25 A. Yes, I had contact with him, yes.

26 22 Q. What was his role?

27 A. His role was more, you know, looking over things.

28 He didn't get very much involved. He had some UK

29 clients, I think, that we did some business with.

 1 23 Q. Of course, he had been a solicitor in London?

2 A. That is right.

3 24 Q. Did he bring that expertise to bear?

4 A. Yes, they all had their input to an extent, but the

5 major input was coming from Des Traynor.

6 25 Q. So that when GMCT was incorporated, who were its

7 first directors, can you remember that?

8 A. No, I cannot, but I am guessing. I know it would

9 have been myself and John Furze as the local

10 directors. I would suspect in those early days it

11 was Des, perhaps Maurice, John Guinness, James

12 Guinness from London, someone else from London,

13 I think. Those records, you know, must be very much

14 available but there was London representation,

15 I remember James Guinness very definitely, and

16 Hugh Sassoon. I remember them all coming out to

17 look over this land and it was a weekend and they

18 wondered what they had let themselves in for.

19 26 Q. Does the name Maples mean anything to you?

20 A. Yes. John Maples?

21 27 Q. Yes. What was his role in all of this?

22 A. He was the founder of the firm of Maples & Calder,

23 which you probably now heard of was the leading

24 firm. John set that firm up. He was originally

25 with McDonald, it was McDonald & Maples, in those

26 days, I think. He was probably the incorporator of

27 the companies, he was the lawyer involved.

28 28 Q. But was he initially a director?

29 A. He could have been. He could have been just, he

13
 1 agreed to be ...

2 29 Q. JUDGE 0'LEARY: Or was a director passing

3 through or was he an

4 effective corporate director?

5 A. He was only a director for a short time.

6 30 Q. MR. ROWAN: So that having set the

7 company up, at that time,

8 of course, it didn't have physical premises because

9 you were providing services on what might now be

10 described as an outsource basis from the Bank of

11 Nova Scotia?

12 A. Yes. The common business of trust companies in

13 Cayman in those days, and still is to an extent, is

14 to provide what we would call cubicle bank services.

15 In other words, people who set up banks or trust

16 companies but don't want to physically put staff in

17 because the business is negligible. We will engage

18 the services of a trust company such as Nova Scotia

19 to provide those administrative services. They

20 won't be the people who will get business for them

21 because that would be competing with their own

22 business but they will provide the domiciliary

23 services and bookkeeping, etc.

24 31 Q. So that John Furze and yourself were providing these

25 trust services in Cayman on behalf of Guinness

26 Mahon Cayman Trust and you were also directors of

27 the company?

28 A. Yes.

29 32 Q. Can you describe, as best you can remember, the

14
 1 influence that Mr. Traynor was having on GMCT at

2 this stage? What was his role?

3 A. His role was always that of a nonexecutive director.

4 But in those days, before it moved out of Nova

5 Scotia Trust Company, there was really a limited

6 amount of business being done and going on.

7 He would have been, perhaps, the one that introduced

8 the business to Guinness Mahon Cayman Trust,

9 although not exclusively as I know other business

10 came in, a few other trusts. But it wasn't exactly

11 a great success as far as the amount of trust

12 company work it was doing. It had some business

13 that was introduced.

14 33 Q. But he, I suppose, was the person who was acting on

15 behalf of the parent company?

16 A. Absolutely, yes.

17 34 Q. And, therefore, would have perhaps been deciding how

18 the thing was going to move forward?

19 A. Yes .

20 35 Q. Then, of course, offices were obtained. When was

21 that?

22 A. Not until '73.

23 36 Q. Not until '73. At that point, you and Mr. Furze and

24 some others left Bank of Nova Scotia?

25 A. Yes .

26 37 Q. That must have been a considerable wrench for you?

27 A. Yes .

28 38 Q. Having created the Bank of Nova Scotia Trust

29 arrangements in Cayman?
 1 A. It was.

2 39 Q. What prompted you to make that step?

3 A. I thought, you know, this was probably my last

4 chance at an entrepreneurial venture, at that age

5 and one thing and another. With any institution

6 like Nova Scotia or Barclays or what have you, your

7 prospects are limited, to a degree, in what you can

8 do and how you can... You won't get any profit

9 orientated deal from these institutions. When I

10 elected to do this, Nova Scotia actually said to me;

11 'We have got you in line to take over in the Bahamas

12 for the whole group.' and they summoned me to

13 Toronto to try and talk me out of it. So, yes, it

14 involved a personal risk, one fairly safe career and

15 the other one not so safe but I thought with more

16 opportunity.

17 40 Q. So someone was persuasive with you about the

18 potential opportunities or was it the idea?

19 A. No, it wasn't someone potentially. We had been in

20 the offshore business in Cayman, John and I, after

21 its initial five years. I was very involved in the

22 Government committees and one thing and another, so

23 that we had developed contacts and the trust company

24 business is a very personal one - the clients tend

25 to stay with individuals who they know. So that we

26 thought we could make a go of it. This time, the

27 Irish business wasn't taking off and virtually, I

28 think it was about that time, exchange control or

29 something came in and we were thrown out of the

16
 1 scheduled territories Cayman was over night. So

2 that there wasn't much potential for Guinness Mahon

3 Cayman Trust as it was. We thought we could bring

4 in that other angle of the business, which was North

5 American, Caribbean, etc., we had the contacts.

6 We thought we could develop those. So if anyone was

7 a prime mover in setting it up, it was probably John

8 Furze and I.

9 41 Q. So that when GMCT was incorporated or sometime

10 thereafter, shortly thereafter, you and Mr. Furze

11 got an opportunity to hold some shares, is that

12 correct?

13 A. No. We were always on a profit orientated basis.

14 But we didn't have any shares in Guinness Mahon

15 Cayman Trust until, you know, when it got to the

16 25%, way down the line.

17 42 Q. Yes. So that effectively Mr. Forwood suggested that

18 he had played a part in drafting what he had loosely

19 called a participation agreement?

20 A. Which was our service contract, he did that.

21 43 Q. Service contract, yes. Just give me a flavour of

22 how that operated?

23 A. We had a fixed salary, I cannot even remember what

24 it was, and the figures wouldn't really be material

25 today, they wouldn't be very high, because we are

26 going back to '71. I think it was something like

27 10% of profits or something, little profits, so it

28 was 10% each. Initially, I was on slightly better

29 terms than John and we equated after two or three

17
 1 years. I cannot remember now but it was related to

2 a percentage of profits.

3 44 Q. Did that service contract remain in existence during

4 your time where GMCT was part of the Guinness Mahon

5 group?

6 A. Yes. There may have been some variations to it over

7 the years because I think it started off as a

8 three-year contract or what have you and it went on

9 and subsequently we did a new contract, it was

10 substituted for it, but they were all on similar

11 terms.

12 45 Q. So when the service contract was put in place, that

13 obviously gave you some more influence than you had

14 before because you had very direct interests with

15 the company?

16 A. Yes.

17 4 6 Q. Did that change the management direction of the

18 company?

19 A. Oh, I am confusing my career with Nova Scotia and

20 this. Coming on board on GMCT, yes, it did change

21 the direction of the company radically. We were

22 running the company and we were looking for the

23 business, we brought in a lot of business. In fact,

24 we brought in probably eighty percent of the initial

25 business.

26 47 Q. JUDGE O'LEARY: If I walked into the

27 office a month after

28 yourself and Mr. Furze started in GMCT and I said;

29 'What is the management structure here?', what would

18
 1 I have been told? Who was what?

2 A. We were joint managing directors. I think John

3 initially was deputy for a couple of years but we

4 finished up as joint managing directors and we had a

5 staff of about 10 people.

6 48 Q. JUDGE O'LEARY: But when you say you were

7 joint managing directors,

8 is that literally true or were you primus inter

9 pares ?

10 A. No, I was, as you put it, primus inter pares for

11 those first couple of years. And, thereafter, it

12 was very much a joint -- we were very much a type of

13 partnership.

14 49 Q. So it was a matter of equality after a few years?

15 A. Yes .

16 50 Q. Therefore, when we are looking at the management of

17 the company in the late 70's, we should look at it

18 from the point of view that it was equal?

19 A. Absolutely .

20 JUDGE O'LEARY: Sorry for interrupting,

21 Mr. Rowan, thank you.

22 51 Q. MR. ROWAN: I was just going on to say

23 I read at paragraph 42 on

24 the information document (Exhibit 1) that GMCT was

25 run in essence as a quasi partnership. Of the

26 partnership, Mr. Traynor remained based in Dublin?

27 A. Yes, I think that is putting it a bit too strong.

28 He was very much a figure which John and I that we

29 went to for advice, we talked to.

 1 52 Q. But he was the boss, wasn't he?

2 A. He was the chairman at that time, I think. He was

3 nonexecutive. We were out there running, we were

4 taking on the business.

5 53 Q. And the representative of the parent company?

6 A. Yes .

7 54 Q. Carry on?

8 A. But we were the ones taking on the business. And

9 most of that business, he didn't know at that stage.

10 We had, I forgot how often, but the regular

11 reporting went to him.

12 55 Q. Okay. What I wanted you to do was I wanted you to

13 try and be as clear as you can at this distance as

14 to the roles in the middle 70's of the partners? Can

15 you describe to me who did what?

16 A. John was in charge of the administration, largely,

17 of the office and the accounting. It was a split

18 role, almost. He had a certain amount of clients

19 always and I had a certain amount of clients that

20 were our particular responsibility. In those early

21 days, it was hard to put it down as a classification

22 -- a geographic classification of the business.

23 56 Q. The information memorandum (Exhibit 1) provides some

24 help on the subject. At paragraph 45, it says:

25 "From the records we viewed, it appears that GMCT

26 had four distinct areas of business; business

27 generated from the Americas and Caribbean." It

28 says: "Mr. Hart appears to have been particularly

29 active in generating work from the Caribbean, whilst

20
 1 Mr. Collins was concentrating on sources from where

2 he worked in the Americas"?

3 A. Now we are talking early days. Mr. Hart was a

4 client, he was a lawyer, he gave us business but he

5 wasn't generating business for GMCT at this stage.

6 He was a friend, we did business with him and he

7 generated some business for us but as a lawyer.

8 Only latterly -- you know, you develop a good

9 relationship with lawyers, etc., and that was what

10 we had with him in those days. It went further

11 because socially, etc., we were friends.

12 57 Q. The second category was business originating from

13 Ireland, which is then qualified by whether

14 introduced by Mr. Traynor or not?

15 A. No, I don't think so. I wouldn't have divided the

16 business so geographically at all. I mean, we

17 wouldn't have in those days. The business was

18 divided more on the types of business. For

19 instance, the corporate business, the mutual fund

20 administration, cubicle banks, that type of thing.

21 It is much more a classification of business than

22 the private client business. And so we overlapped

23 in most areas geographically. As time developed,

24 undoubtedly, I was doing more of the Caribbean

25 business and much more of the North American

26 business and a relationship developed between John

27 and Des very closely and they were doing pretty well

28 what you would call the Irish business.

29 58 Q. With Mr. Furze, of course, being predominantly in

21
 1 Cayman and Mr. Traynor being predominantly in

2 Dublin?

3 A. Yes, but the business that I am talking about, the

4 trust and companies and at that kind of thing, the

5 business was being done primarily in Cayman. It was

6 a contact source with Mr. Traynor.

7 59 Q. Did you have any involvement with the Irish

8 business?

9 A. I had.... You see, I hate this description of "Irish

10 business" because it is being singled down almost to

11 a particular aspect of that business, but I did have

12 contact with what I would call "Irish business"

13 which was with the Peat Marwicks or the Kennedy

14 Crowleys of those days and we did obtain business.

15 60 Q. So that that meant from time to time you went to

16 Ireland?

17 A. Yes. My wife had a mother and father there, etc.

18 61 Q. And Mr. Furze, from time to time, went to Ireland?

19 A. Yes. My visits became less, his became more and he

20 gradually went once or twice a year.

21 62 Q. Okay. Can you describe the sort of, if I may use

22 the term, 'marketing trips' to Ireland? Describe

23 how they were set up and who you might have met.

24 You have mentioned SKC, I think?

25 A. Yes. They were limited because we were a subsidiary

26 of an Irish bank. We had an Irish name and

27 therefore we had a strong connection. Irish

28 clients, therefore, would be unlikely to use us in

29 the offshore world. This would be the same today as

22
 1 South Africans would be unlikely to use Ansbacher's

2 offshore services in any degree. So that it wasn't

3 principally Irish directed at all. The point why we

4 set it up was because they weren't going to get any

5 more business out of Ireland pretty well because of

6 exchange control, etc., and Irish people don't use

7 Irish banks. If you were going to put money

8 offshore, would you put it with an Irish bank as an

9 Irish person? Now the only reason I think some

10 people did was because they had utmost faith and

11 trust in Des Traynor.

12 63 Q. So when you came to Ireland, he would have arranged

13 a number of meetings?

14 A. Yes, some he would arrange, but I did very little of

15 that in the end. In the early days, I was the

16 pioneer and was trying to sow the seeds, but

17 laterally it was really a question of perhaps

18 meeting established clients or established

19 professional firms.

20 64 Q. Can you remember those professional firms, whether

21 they be accountants or solicitors or whoever?

22 A. They would be both.

23 65 Q. ...who would have particular interests in offshore

24 arrangements? Can you remember the names?

25 A. Yes, one was Kennedy Crowley. I think there was

26 who we had a relationship with and

27 , is it?

28 66 Q. Yes.

29 A. My memory isn't as good as Des Traynor's, I can't

23
 1 obviously remember the other people, there wouldn't

2 have been an awful lot.

3 67 Q. Would there have been some connection with Desmond

4 Traynor's ...(INTERJECTION)

5 A. Sometimes, yes.

6 68 Q. Former firm?

7 A. No, not necessarily with his former firm, so far as

8 I knew, because that went into the background and we

9 really didn't hear of Haughey Boland again.

10 69 Q. There is a suggestion also that Mr. Furze was

11 responsible, at least some of the time, for

12 administration?

13 A. Administration -- I put it more on supervision -- in

14 that he was, as you have put it, the head office

15 representative. So he was very much an individual

16 who we spoke to and reported to.

17 70 Q. Sorry?

18 A. And we had a number of instances of things that...

19 Things are always cropping up in trust companies, as

20 we all know, from legal issues in the States to all

21 sorts of things that we would consult with him on,

22 and on general policy.

23 71 Q. So going back to the categories of business, a third

24 category of business was the Poinciana Fund business

25 originating from Ireland. That seems to have been

26 segregated out a little.

27 A. It wasn't, as far as I am concerned, a segregated

28 area of business at that point. Poinciana Fund, so

29 far as I was concerned, was a company and was it

24
 1 company that I thought was under a trust and that

2 had quite considerable assets.

3 72 Q. Did you have personal dealings with any aspect of

4 that at that time?

5 A. No.

6 73 Q. So who in Cayman did?

7 A. John Furze.

8 74 Q. But presumably, as the principal director of Cayman,

9 you presumably had some feel for what was going on

10 in the Poinciana area?

11 A. Not so much in the Poinciana area. Generally, yes,

12 we would talk and it isn't a question that there is

13 a wall there that I cannot know what is going on

14 over there and he can't know what is going on over

15 here, that didn't happen and there was obviously

16 some talk at times. If you ask me to remember

17 today, I know that I didn't actually deal with it

18 but I can't remember the details of what was

19 discussed at that time.

20 75 Q. Yes, I was just trying to establish a slight

21 difference of emphasis between what you have just

22 said and the information document, where it says (in

23 Exhibit 1):

24

25 "The PFL business originating from Ireland (via

Mr. Traynor) which was administered by
26 Mr. Traynor and by Mr. Furze to the
practical exclusion of any other
27 personnel in Cayman at any senior
level."
28

29 A. In practice -- all I am saying to you, really, is I

 1 cannot say that I was not aware of it at the time in

2 some way, shape or form, because I just don't

3 remember. It is going back 30 years, nearly.

4 76 Q. It seems evident that it was a vehicle which

5 Mr. Traynor created and used.

6 A. I think initially he created it from what I said, as

7 an underlying vehicle under a specific trust. He

8 did have one -- I wouldn't say had it but he had a

9 tendency in a few cases to use companies, people

10 wanted one and they only wanted a one-off

11 transaction to put it through a particular company,

12 albeit his company or whatever. That unfortunately

13 caused a lot of trouble. But rather than

14 incorporate a company to do it in isolation, he used

15 existing vehicles - not a good practice.

16 77 Q. Your feeling was that this was his initiative. He

17 said; 'I need to do this so I am just going to use

18 Poinciana.'?

19 A. Yes.

20 78 Q. And he did it and the records were posted up

21 accordingly, but it was his driving influence that

22 did this?

23 A. Yes, I would think it was on those, that he was the

24 one that the money came to. The money may have come

25 to us but he would have known about it. It was a

26 contact of his that was doing it.

27 79 Q. Alright. Moving then to the question of meetings,

28 board meetings of GMCT, most companies have periodic

29 board meetings, whether they be monthly or

26
 1 quarterly. What was the situation with GMCT?

2 A. I think it was quarterly. We may have had meetings

3 in between but these would usually be routine

4 administrative meetings.

5 80 Q. Yes. May I come back to those sort of meetings,

6 which I might describe, perhaps, as management

7 meetings ?

8 A. Yes, because we needed a meeting, a board approval

9 to do this and to do that.

10 81 Q. Absolutely. So describe the sorts of agendas to me?

11 Were they surreptitiously a fixed agenda and you

12 worked your way through the minutes of the last

13 meeting and looked at financial reports and mandates

14 that had to be signed and so on?

15 A. Yes. John and I, remember, came from this

16 background of Nova Scotia and Barclays and one thing

17 and another. The accounting system was largely a

18 mix of Barclays and Nova Scotia. The procedures as

19 regards minutes and everything else were what we had

20 learned in Nova Scotia and I went up to the Bahamas

21 and we did meetings and book agendas up and all

22 carried on and we did do agendas for meetings and we

23 did sit and have formal meetings.

24 82 Q. Who recorded the minutes?

25 A. John Furze, I think, was the one who wrote them.

26 83 Q. Who was the Chairman of the meeting?

27 A. For most times, it was Des Traynor.

28 84 Q. Did he get to all the meetings?

29 A. Mostly, yes.
 1 85 Q. So he made a trip to Cayman for the board meetings?

2 A. That is right.

3 86 Q. How many a year might there have been?

4 A. A maximum of four.

5 87 Q. Were they held to coincide with important things

6 which needed to be done? I mean, for instance,

7 approving the annual financial statements?

8 A. Absolutely.

9 88 Q. What other sort of things?

10 A. Quarterly results, half yearly results. They were

11 timed within a month of those types of things so

12 that figures could be reviewed at those meetings.

13 89 Q. Were there other nonexecutive directors who came

14 regularly to board meetings?

15 A. I would have to look back at the minute back to see

16 what happened. I think in the early days, yes, they

17 came out, one or two people. James Guinness has

18 been out a few times and Hugh Sassoon had been out

19 in those very early days. I cannot remember, but

20 suddenly all the London directors departed from us

21 when there was the Lohnro scandal, I think it was,

22 they came off the board. But John Guinness was out

23 at times.

24 90 Q. In terms of the strategic development of GMCT, did

25 that issue go onto the board agenda?

26 A. Oh yes. Yes, we were looking at areas of business

27 and what we were doing and we had areas of business

28 to develop.

29 91 Q. So can you tell us a little about the whole area of

 1 how the company got pushed ahead and how it got

2 developed and who were the influences on that aspect

3 of things?

4 A. I think I was very much involved on business

5 development. But there, we were looking at things

6 that we had to look forward. We were a private

7 client based institution largely and perhaps it was

8 my forte more than any other, but we developed the

9 cubicle banking, we tried to get representative

10 offices. We wanted to go into the captive insurance

11 business. I travelled to London to meet with the

12 Guinness people, who were Fenchurch, to try and get

13 them to establish a captive insurance company. We

14 looked at the American business, we looked at the

15 Tax Acts that came out, the Tax Reform Acts of '76

16 and '86 and what they are going to do to us and what

17 the avenues were, what aspects of business were

18 still available in the States to us. We looked at

19 the Caribbean scene. The Caribbean went through a

20 trauma in Jamaica in the 70's, with Michael Manley's

21 Government. Then there were; what other areas of

22 world can we go to? And that was our normal way of

23 doing it. We didn't go marketing as such, we

24 weren't great marketers. We went to call on people

25 we knew and what have you, all the heads, and

26 lawyers and one thing and another. Neither John or

27 I were particularly good at thumping the trail,

28 going around on a dog and pony show, as it were, and

29 selling. And we didn't think it was a good idea.

29
 1 We didn't think, you know, the economics of it

2 because we were looking to establish one case, you

3 were due for X, that is a trust or company, you are

4 looking at a fee of £2,000. If you spent £5,000

5 getting it, how long was it going to be with you,

6 etc.

7 92 Q. Was there a fair amount of agreement among the

8 members of the board?

9 A. Yes. Oh, yes.

10 93 Q. Were there occasions when there was some

11 disagreement?

12 A. Among our board, there may have been at times, but

13 it was usually with the London representative more

14 than any other issue, but not major.

15 94 Q. Of course, Mr. Traynor continued to develop business

16 from Ireland?

17 A. Yes, but as I say, the amount of business wasn't

18 great.

19 95 Q. We will come to that.

20 A. In relation to our overall business.

21 96 Q. In due course, I will give you some information

22 about, as far as we can judge, the development of

23 aspects of GMCT's business. So maybe we will come

24 back to the development of the performance of the

25 business, shall we say. Let's turn to the

26 management meetings. Obviously, three months is a

27 long time between meetings so you would perhaps have

28 had to have some other discussions about things.

29 How were those matters dealt with?

30
 1 A. In those days, you are really talking of John Furze

2 and myself. We were in daily contact and our office

3 doors were wide open. We had copied, a little, the

4 Dublin style, shall we say.

5 97 Q. But did you occasionally have telephone

6 conversations with people in Dublin?

7 A. Yes, but this wouldn't usually be on specific

8 issues.

9 98 Q. And those people would have been Traynor or anyone

10 else?

11 A. Principally, Des. I could have talked to John and

12 others but principally with Des Traynor.

13 99 Q. By the middle 70's, of course, there was a fairly

14 significant restructuring of the board of Guinness &

15 Mahon Ireland?

16 A. In the?

17 100 Q. In the board membership and the responsibilities of

18 Guinness & Mahon Ireland?

19 A. Yes.

20 101 Q. For instance, in '76, Mr. Forwood stepped down as

21 Managing Director?

22 A. Yes.

23 102 Q. And Mr. Guinness, John Guinness, stopped being

24 Executive Chairman and became a nonexecutive

25 Chairman and Mr. Traynor was appointed Deputy

26 Chairman and Chief Executive. So that changed the

27 power and influence in Ireland. Did that have any

28 impact then on what was happening in Cayman?

29 A. If I say no in one way and yet I think that that

31
 1 would be about the time that probably London started

2 to take more of an interest in Ireland and us and so

3 they were -- someone from London could well have

4 been involved like Bruce Ursell and others, who was

5 the Chief Executive of Guinness Mahon, London.

6 103 Q. Yes. What I was really getting at was Mr. Traynor

7 had joined Guinness Mahon around 1968/1969 and by

8 1978 he was effectively the Chief Executive. So

9 that was a considerable change from having some

10 joint managing directors to a single chief executive

11 and it created a much more significant influence for

12 him on the face of it. He also, of course, had this

13 involvement with the wholly owned subsidiary,

14 Guinness & Mahon Cayman Trust?

15 A. No, I don't think it was that material, the

16 difference, no.

17 104 Q. You didn't perceive any change in the way things

18 were done, that you can recall?

19 A. No, other than, as I say, that maybe London took

20 more of an interest in things.

21 105 Q. I turned up a document which is entitled "Guinness

22 Peat Group information sheet". Mary, do you have

23 that, please? It is page 51. The particular page I

24 want is page 56. (SAME HANDED TO THE WITNESS -

25 EXHIBIT 2). Page 56, I think, is the last page of

26 the document and it is a section entitled: "Selling

27 Trust Services."

28 A. Yes.

29 106 Q. The second paragraph says:

32
 2 "Some types of individuals or corporations who
spring to mind who could possibly
3 benefit from such tax planning and
thereby finish up as our clients are as
4 follows:

5 1. The person who wishes to give away

to family members or others by way of a
6 trust if he is not inhibited by
exchange control regulations."
7

8 Of course, this document is dated September 1974.

9 At that point, of course, Ireland was inhibited by

10 exchange control regulations, isn't that correct?

11 A. I cannot honestly remember, but if you say so, yes.

12 107 Q. So effectively this would have been saying that

13 exchange control regulations were an issue that was

14 probably going to prevent someone using the services

15 of Cayman?

16 A. This was not just for Ireland, was it?

17 108 Q. No, on the face of it, it would have been a document

18 circulating within the Guinness Peat Group?

19 A. To give them an idea of what services we could give

20 out of Cayman, yes.

21 109 Q. Yes, that is right.

22 A. So Guinness Peat was mainly London but it had some

23 other outlets outside.

24 110 Q. But it would effectively have created a situation

25 that would have made life more difficult in terms of

26 sourcing business from Ireland?

27 A. Well, you may have an Irish individual with money or

28 assets outside.

29 111 Q. That would be one way where it might not apply, of

33
 1 course?

2 A. Yes.

3 112 Q. As we went through the 70' s, I just wanted to get

4 you to outline to me the sort of administration and

5 accounting system that had developed in Cayman.

6 A. I think I said in earlier remarks that we instituted

7 the bookkeeping system and the accounting, John

8 Furze and myself of GMCT. That system was a system

9 that we had largely brought with us from Nova Scotia

10 Trust Company and from our old days in Barclays.

11 John was also with Barclays Trustee. So that we put

12 in the bookkeeping system. We are going back to the

13 days when it was virtually a hand posting machine --

14 well, it was an NCR.

15 113 Q. Ledger card system?

16 A. Ledger card system, and we had a ledger card system

17 for a number of years, for a long long time.

18 The client accounts were broken down into companies

19 and trusts and formats for those, so that, in

20 theory, accounts could be done straight off those

21 ledger sheets. You had the general ledgers, etc..

22 So we had an accounting system that went on then for

23 many years. It got adapted with computers, new

24 software, but probably stayed basically the same

25 system until, I don't know, subject to what

26 computers do to you, we went from different sheets,

27 but I don't think the system altered very much until

28 the mid 80's.

29 114 Q. Well, in 1978, of course, Mr. Furze wrote to GMI

34
 1 (Exhibit 3) and said:

3 "In view of the recent installation of your

computer system, on behalf of a number
4 of our accounts, we would like you to
provide computer accounting services
5 for these accounts which will be
maintained in our name."
6

7 So John Furze wrote to Dublin and said; 'Look, could

8 you maintain some records for us on the Dublin

9 computer?' Do you recall why he might have done

10 that?

11 A. No, but -- no, I don't, really.

12 115 Q. But you presumably were aware at the time that this

13 request was being made?

14 A. I would have been at the time, I think.

15 116 Q. Yes. It seems strange to me that Cayman would ask

16 Dublin to maintain Cayman's records?

17 A. Yes.

18 117 Q. Obviously, the calculations are more

19 than...(INTERJECTION)

20 A. And I don't know I don't know what they are. It is

21 hard for me to say what you are surmising, even,

22 without knowing what those accounts were, what he

23 would do that for. I don't deny I might have known

24 at the time but I cannot recall it today.

25 JUDGE O'LEARY: I think what Mr. Rowan is

26 saying is that

27 irrespective of what the details of the accounts

28 were, it was the strangest thing to happen. Is that

29 the point you are making, Mr. Rowan?

35
 1 MR. ROWAN: Yes, I thought I had.

2 A. On the face of it, I agree.

3 JUDGE O'LEARY: Yes, yes.

4 118 Q. MR. ROWAN: You can't at this remove

5 provide any clue as to

6 what might have been the reason?

7 A. I cannot, no.

8 119 Q. I mean, the letter went on to say (Exhibit 3):

10 "We would only request that you would provide such

a service on the basis that all the
11 information provided by us remains our
sole property, as also will all
12 information stored within the computer
programme. Needless to say, we will
13 also require your written assurance
that neither the programme information
14 stored nor the accounting records
themselves are made available to any
15 third parties such as auditors, bank
inspectors..." Etc..
16

17

18 MR. MICKLETHWAITE: Is it possible to assist

19 the witness? Is the

20 document available that you are quoting from?

21 MR. ROWAN: I have a document

22 somewhere and I have just

23 been trying to find it, if you could bear with me.

24 MS. CUMMINS: The letter Mr. Rowan is

25 quoting from is actually

26 referred to as part of an appendix to a report that

27 we have we received as part of Guinness & Mahon

28 Ireland's records but I can't seem to find a copy of

29 it here.

36
 1 MR. MAYHEW-ARNOLD: I had thought that I had

2 put a copy of it in.

3 MR. ROWAN: It is page 67.

4 MR. GORDON: Of?

5 MS. CUMMINS: It is just a folder.

6 JUDGE O'LEARY: It is our own

7 documentation, it has

8 nothing to do with you.

9 MR. ROWAN: It was a file that I put

10 together for the

11 interview. (SAME HANDED TO THE WITNESS - EXHIBIT 3)

12 A. We obviously didn't have computers at this stage

13 that could do these calculations automatically. It

14 could have been anything from doing mortgage tables,

15 almost, to doing, for a specific client, some runs.

16 I mean, we had one client where we were invoicing an

17 American client who sold furniture in Germany,

18 I think it was, and there was volumes of work on

19 some of these cases that caused us bookkeeping

20 problems.

21 120 Q. But while I can see the sense of getting the

22 calculating power of the equipment, that middle

23 paragraph which starts this issue about keeping

24 things confidential and, you know, 'we mustn't

25 provide information to auditors' and so on, that

26 created, did it not, a potential difficulty for

27 people in Guinness & Mahon because here was this bit

28 of work being done as part of their main computer

29 system, which had to be segregated, presumably?

37
 1 A. Yes.

2 121 Q. So that the confidentiality aspects of it could be

3 maintained?

4 A. Yes, we were very keen on confidentiality,

5 undoubtedly. We go back to the old contract between

6 a banker and his client and we thought this should

7 be preserved. And Cayman was very big on

8 confidentiality as a country.

9 122 Q. I was just going to say that...(INTERJECTION)

10 A. So maybe we over-stressed that when we wrote, but we

11 definitely would take that issue - if we were doing

12 outside sourcing, we would want it to be

13 confidential.

14 123 Q. JUDGE O'LEARY: Isn't it a fair

15 statement, Mr. Collins, to

16 draw a distinction between the word "confidential"

17 and "non-availability" to people like auditors.

18 That is not only confidential, that is a bit more.

19 Confidential means that you won't tell me but not

20 telling your auditors is a bit more than

21 confidential, a slightly different word, I think?

22 A. It is not our auditors he is talking about, this is

23 Guinness & Mahon auditors.

24 JUDGE O'LEARY: Any auditors, even

25 Guinness & Mahon auditors.

26 A. Yes, presumably.

27 124 Q. MR. ROWAN: What I wanted to know was

28 this request was coming

29 under Mr. Furze's signature. He then presumably

38
 1 maintained the relationship between Cayman and

2 Dublin for the records which were subsequently

3 created?

4 A. Yes, I would think so. He would have a client

5 accounting of some sort going on, yes.

6 125 Q. Do you know, Mr. Collins, whether this matter would

7 have been made a formal matter for approval at board

8 meetings?

9 A. I can't recall, I don't know. It could have been, I

10 don't know.

11 126 Q. Do you know whether the board meeting minutes of

12 that era for Cayman are still available?

13 A. I presume so, I don't know.

14 MR. MAYHEW-ARNOLD: What era

15 MR. ROWAN: This is 1978

16 MR. MAYHEW-ARNOLD: They should be.

17 MR. ROWAN: I would be interested to

18 know whether this was a

19 matter which was approved by the board sometime

20 prior to that letter being written (Exhibit 3).

21 JUDGE O'LEARY: It should be a simple

22 enough matter to look it

23 up and let us know.

24 127 Q. MR. ROWAN: So that what was happening

25 then, of course, was that

26 you had some records being maintained in Dublin and

27 you had some records being maintained on the NCR

28 card system in Cayman?

29 A. Yes, these might have been just client records,

39
 1 I don't know.

2 128 Q. How then did someone tie the two lots of information

3 together?

4 A. We would presumably receive that information from

5 Dublin. It is so difficult to know without knowing

6 what it is, but if we received that information and

7 it was kept, it could be just client records, not

8 Guinness Mahon Cayman Trust records as such but

9 those of a client. We could slot those into the

10 books of a client.

11 129 Q. But then someone would have had to make sure that

12 the two records, two lots of records, were brought

13 together, reconciled at some stage?

14 A. Yes.

15 130 Q. Would there have been someone in the Cayman

16 organisation charged with that responsibility?

17 A. Specifically for a particular client, there would

18 be, in '78, there would be a trust officer, someone

19 who was responsible for that client. Our trust

20 officers, in those days, we didn't have as such,

21 corporate accounting departments. Every trust

22 officer was responsible for producing his own

23 accounts for his own clients. These accounts would

24 be vetted and looked over, but it was his

25 responsibility to get out accounts for the client

26 every year.

27 131 Q. Could I give you a list of names who were employed

28 on the staff. Page 44, please, Mary. (SAME HANDED

29 TO THE WITNESS - EXHIBIT 4) As you can see, this is

40
 1 entitled: "Guinness Mahon Cayman Trust Limited -

2 schedule of staff as at 31st March 1976."

3 A. Yes.

4 132 Q. If one looks down that, one sees under the position

5 "accountant" a person whose name is Delrose

6 M. Williams, is that Mrs. Williams?

7 A. Yes.

8 133 Q. What did Mrs. Williams do as the accountant to

9 Cayman?

10 A. She maintained the general, the accounts of Guinness

11 Mahon Cayman Trust, as it were, the company. She

12 would also be responsible for the underlying, the

13 people posting through the various accounts,

14 producing our draft accounts, etc.

15 134 Q. So she presumably would have had reason to have

16 liaised with Dublin when the 1978 arrangements came

17 about?

18 A. She may have. But, again, if it was just a client,

19 then it may have been a particular trust officer or

20 John or I.

21 135 Q. Alright. Then may I ask you to look at some

22 correspondence, pages 110, 111 and 112 (Exhibit 5).

23 MR. GORDON: Sorry to interrupt you,

24 Mr. Rowan. I take it we

25 will get copies of all of the documents you are

26 referring to now?

27 MR. ROWAN: They should be attached to

28 the transcript of this

29 interview.

41
 1 MR. MAYHEW-ARNOLD: We have just agreed that

2 we were going to get them

3 during the course of today.

4 MR. GORDON: I see, thank you.

5 MR. ROWAN: This is a letter from

6 Guinness Mahon, Cayman

7 Trust of 12th October 1987 and it is to Mr. Padraig

8 Collery of Guinness & Mahon from Mr. Furze. The

9 letter says:

10

11 "Dear Padraig,

12 Further to yours of 7th October, I

confirm you may fax letter and
13 schedules as indicated to our auditors.
Whilst not every balance agrees, we are
14 able to reconcile the figures with our
records."
15

16 Attached to the letter are two schedules of accounts

17 and balances dated 30th September 1987. One is

18 merely headed GMCT, the other is GMCT/College. Can

19 you explain this?

20 JUDGE O'LEARY: '87, is it?

21 MR. GORDON: Yes, '87.

22 MR. ROWAN: What did I say?

23 JUDGE O'LEARY: I just wanted to clear my

24 mind as I don't have a

25 document.

26 136 Q. MR. ROWAN: Can you describe what was

27 going on here, please,

28 Mr. Collins?

29 A. These are obviously balances with Dublin.

42
 1 137 Q. This is Mr. Furze writing to Dublin?

2 A. Yes.

3 138 Q. To Mr. Collery, whose role we will come back to in

4 due course, but he is saying: "I confirm you may fax

5 the letter and schedules as indicated." So were

6 these figures that Mr. Collery had sent to

7 Mr. Furze, who had checked them out, because you

8 will see on the second page that it says:

9 "Mr. Collery, we are in agreement with all of your

10 balances as set out above." So Mr. Furze was

11 saying, or someone was saying; 'The balances are

12 okay. You can send the information to Cayman's

13 auditors.'?

14 A. Yes.

15 139 Q. That seems to suggest that there were, therefore,

16 accounting records being maintained in Dublin?

17 A. And in Cayman.

18 140 Q. And in Cayman, yes.

19 A. In fact, these would be perhaps the more composite

20 ones and ours would be the more detailed.

21 141 Q. But would you agree with me, therefore, that there

22 did appear to be another set of accounting records

23 being maintained in Dublin?

24 A. But these are our balances in Dublin and I don't see

25 anything mysterious about us having balances. We

26 did bank with Dublin.

27 142 Q. Yes.

28 A. I mean, I can take it, you know, in here are all the

29 back to backs and everything else that we put

43
 1 through Dublin.

2 143 Q. But why would Dublin... Before I ask that question,

3 there presumably were lots of other clients who

4 didn't bank with Dublin?

5 A. Yes.

6 144 Q. Were their records maintained in Dublin? Are they

7 on the list?

8 A. No. I mean, when I say other accounts, this is

9 partly nostro account money, I suspect. So there

10 could be money in here belonging to other clients.

11 When you say non-Irish, I could look through several

12 of these and say that they are not Irish clients.

13 Nothing to do with Dublin, they are monies that we

14 have put there.

15 145 Q. So this is a list of all Cayman's clients, wherever?

16 A. No, no. Some of that money is a nostro account and

17 may, as a nostro account of ours, include balances

18 due to other clients because this is our account.

19 146 Q. Yes.

20 A. And we put all our money with various banks around

21 the world, as it were, and we put a large sum of it

22 in with Dublin to keep them alive at one time.

23 147 Q. Right. So you think this list of balances related

24 to your nostro account with Dublin (Exhibit 5)?

25 A. Not all of them, not all of them. I can pick out

26 several; Girard, Tabmount, Masek, Malamud, there are

27 all of these and probably a lot more who are

28 basically back-to-back situations we set up in

29 Dublin.

44
 1 148 Q. So the reason some of them are on the list was

2 because Dublin had lent money?

3 A. Yes. Well, these were the deposits backing that

4 lend.

5 149 Q. Yes, absolutely, that is right. So when you go back

6 to the letter which we looked at, which is page 67,

7 (Exhibit 3) it says:

9 "In view of the recent installation of your

computer system on behalf of a number
10 of our accounts..."

11 A number of our accounts.

12
".... we would like you to provide
13 computer accounting services..."

14 So effectively what Dublin were doing is Dublin were

15 keeping a record of some accounts, particularly

16 those who had deposits with you from Dublin or who

17 had deposits which were backing loans from Dublin.

18 A. No.

19 MR. MICKLETHWAITE: I don't think that is what

20 the witness has said at

21 all, I am afraid. If we are not going to get the

22 evidence right, we should read it back, because the

23 witness has clearly said that these are nostro

24 accounts of amounts that GMCT lodged in their nostro

25 account with Guinness & Mahon in Dublin or that they

26 are back to back loans reflecting the deposits that

27 GMCT has put with Guinness & Mahon Dublin.

28 MR. ROWAN: Thank you very much,

29 I would like the witness

45
 1 to give the evidence. I thought actually what I

2 said was to repeat in a succinct way what you had

3 already said to me, Mr. Collins, but maybe you would

4 like to say again for the record what you think

5 these balances are.

6 A. These balances are a record of what Dublin had for

7 us for various items. We didn't just have one

8 nostro account. We had nostro accounts but we also

9 would have had individual accounts for individual

10 transactions, principally the back to back scene.

11 So those accounts, we would have put a specific

12 deposit with Dublin to back a specific loan. This

13 was the business that Ireland was attracting and

14 Ireland liked, Ireland made money on it. It was

15 acknowledged in the Irish tax scene. These were all

16 loans to America and various places and it was a

17 noted way by all practitioners of structuring

18 investments in the States and elsewhere and in

19 Ireland by non-Irish.

20 150 Q. JUDGE O'LEARY: Mr. Collins, could I

21 interrupt you, if you

22 wouldn't mind, and ask you a question because I am

23 trying to keep my mind straight on it. I don't have

24 Mr. Rowan's expertise in this area at all. Do you

25 think that the accounts represented by the list that

26 you have in front of you are the accounts of the

27 type that Mr. Furze earlier made arrangements to be

28 kept in Dublin?

29 A. (Witness shakes head) I don't... You are asking me

46
 1 if I think and I would say...(INTERJECTION)

2 JUDGE O'LEARY: You can only do your best.

3 A. I would say to you that this (list of names) has

4 nothing to do with that.

5 151 Q. JUDGE O'LEARY: That has nothing to do

6 with that. So there must

7 be other accounts?

8 A. Now this, College Trustees, may have. I don't know.

9 152 Q. JUDGE O'LEARY: So there might be other

10 accounts so, quite

11 separate and distinct from that, whose records you

12 were keeping in Dublin? I think Mr. Rowan was

13 giving you the benefit of the doubt that it was the

14 same accounts, or that appeared to be the same

15 accounts, but are you telling me it is different?

16 A. There may be the odd one in there that he may be

17 doing that for. As I said, it could be a particular

18 client or something else. I cannot tell you that,

19 in general, looking at this particular list, I say

20 to you ...(INTERJECTION)

21 153 Q. JUDGE O'LEARY: I wonder would you think

22 about that and drop us a

23 note about it in due course, about the relationship

24 between the two things, it might be helpful?

25 A. You know, it is a hard one because of the

26 designations.

27 JUDGE O'LEARY: I am not interested in

28 the individuals, that

29 doesn't worry me at all.

47
 1 A. I am not really saying that, but without

2 individuals, etc., you know, I cannot make that

3 assumption.

4 154 Q. JUDGE O'LEARY: No, Mr. Collins, I think

5 the problem I see is this.

6 Mr. Rowan says that there is this letter which you

7 were to do certain accounting work for them and

8 there is a list of balances which appears to have

9 been maintained in Dublin and I understand your

10 explanation for that. What I am asking in my own

11 simple way is that are those two items connected?

12 And obviously if they are not connected, would you

13 point out to us now what different accounts he was

14 referring to when he asked that accounts would be

15 maintained in Dublin. Can you see the point?

16 A. Yes, and I am in a difficulty to know how to be able

17 to answer because this would seem to me to be the

18 totality of what we had in Dublin.

19 JUDGE O'LEARY: I see. Right, Mr. Rowan.

20 MR. ROWAN: May I ask you, therefore,

21 155 Q. Going back to the

22 information memorandum, Section 4 of the information

23 memorandum is entitled: "The memorandum accounts"

24 (Exhibit 1)?

25 A. Section?

26 156 Q. Section 4 of the Ansbacher Cayman information

27 memorandum.

28 JUDGE O'LEARY: Do you have a copy of

29 that, Mr. Collins? I think

48
 1 it would be as well if you had a copy of it?

2 A. Yes. (SAME HANDED TO THE WITNESS).

3 157 Q. MR. ROWAN: I am looking at page 31.

4 I am not asking you to

5 read this all the way through, Mr. Collins. It is

6 just that I was trying to relate the documents at

7 page 110 onwards (Exhibit 5) that we have just been

8 looking at, to this section in the information

9 document. What I am trying to establish is; is it

10 likely that the two things are the same, because if

11 I could just turn you over to page 32, paragraph 68

12 says:

13

14 "In or around 1978, there was a change to the

system. In practice, the GMCT accounts
15 held at Guinness & Mahon (Ireland) in
Dublin were, until 1978, in the form of
16 coded sub accounts of the nostro
accounts. From, it would seem, 1978
17 onwards, Guinness & Mahon (Ireland)
Ltd. held uncoded nostro accounts in
18 the name of their Cayman subsidiary
bank, GMCT, which could be operated by
19 Mr. Traynor, using information held by
him. "
20

21 Are we effectively talking about the same thing

22 here? What you were describing earlier and the

23 various documents that we have looked at, a letter

24 (Exhibit 5) requesting the various Dublin computer

25 assistance and so on, Mr. Collery's records, is this

26 all the same thing?

27 A. I am surmising. Yes, there could have been

28 something of a particular section of this.

29 158 Q. Alright. Accepting that, you did say a moment ago,

49
 1 I believe, when you were referring to the second of

2 the schedules, which is page 112, the GMCT and the

3 College, you made an observation that that could

4 have been part of the memorandum accounts. What

5 were you thinking about when you said that?

6 A. I think these were balances that came to Guinness

7 Mahon Cayman Trust in about this time and they were

8 held previously by Guinness & Mahon Dublin direct

9 with Channel Island entities.

10 159 Q. Right. So these were funds which College Trustees,

11 in the Channel Islands, managed?

12 A. Yes .

13 160 Q. And they at some stage were routed through Cayman?

14 A. En bloc, I think they came to us.

15 161 Q. Yes. Just so I get this right, College were

16 depositing money with Cayman and Cayman deposited

17 the money back with Dublin?

18 A. I don't know whether College went out of being at

19 that time or whether... Yes, I think it did stay in

20 being. I think what you are saying is right, yes.

21 JUDGE O'LEARY: Ms. Mackey is nearly your

22 expert on College

23 Trustees.

24 162 Q. MR. ROWAN: The question I am really

25 asking you is why did that

26 movement happen?

27 A. I think a change of relationships in the Channel

28 Islands and whether London was involved -- I can't

29 remember. There is nothing particularly sinister,

50
 1 that is all.

2 163 Q. I think actually, and I know that we are trying to

3 ask you to recall a very long period of years and

4 that it is not always going to be easy to attribute

5 dates precisely to things, but it does seem to us

6 from looking at this that there were very

7 substantial deposit monies which had been on deposit

8 somewhere else under the control of College

9 Trustees, that there were substantial deposits then

10 moved via Cayman around 1981/1982?

11 A. I thought it was much later than that, I must say.

12 164 Q. If I could turn to page 119 (EXHIBIT 6). (SAME

13 HANDED TO THE WITNESS) We have based, on such

14 information as we had available to us some time ago,

15 we have tried to extract information and turn it

16 into graphical form and this is a chart showing

17 customer deposits. It has customer deposits --

18 there are three vertical bars for each year and the

19 left-hand one is GMCT customer deposits, the middle

20 one is Guinness & Mahon Ireland deposits and then

21 the consolidated ones. If you look around

22 1978/1979, you can see that Guinness & Mahon

23 customer deposits were somewhere in the region of

24 25m to 40m, rising in 1980 to just under 50m. Then

25 in 1981, rising to something like 60m and then 120m

26 in 1982, 160m in 1983, up to 200m in 1984. So there

27 was a very substantial increase in customer deposits

28 around that time. There is some suggestion that

29 some of those extra deposits which GMCT had were

51
 1 deposits which were routed from College Trustees. I

2 want to show you that chart.

3 A. Not of the kind of volume you are talking about.

4 We didn't have 200m real money with Dublin at any

5 time, I would say.

6 165 Q. No, I am not suggesting for a moment that this was

7 with Dublin. I am suggesting that these were the

8 values shown in Cayman accounts of customer

9 deposits.

10 A. Oh, these are the Cayman accounts? Fair enough.

11 Yes, yes. Now that would be what we were doing,

12 yes, we would have had -- we went from various times

13 of showing back to backs on balance sheets and not

14 showing back to backs on balance sheets and those

15 would have a dramatic effect. We did some big

16 transactions which we occasionally got big monies

17 through.

18 166 Q. You can see from this chart that there was a

19 substantial growth in Cayman deposits in the early

20 80's and I want to try and understand what was going

21 on?

22 A. We were doing good business, very good business.

23 We were a highly profitable good little company.

24 167 Q. But could some of those have been deposits which

25 were controlled by College Trustees which they

26 previously had on deposit somewhere else but which

27 were then routed through Cayman?

28 A. I cannot recall. Marginally, yes, but the Irish

29 business was small. I mean, we are talking 200m and

52
 1 the rest of it, but the Irish business wasn't that

2 important.

3 168 Q. I didn't actually attribute where the business that

4 College had was coming from. I was merely trying to

5 establish that you might have been aware that

6 College chose to push some...(INTERJECTION)

7 A. Yes, there was a time I can remember when we did

8 take over some deposits, but I cannot tell you

9 exactly when that was.

10 169 Q. Why would that have been the case?

11 A. Because of the closing down, I think, of the

12 Guernsey operation.

13 170 Q. I think College was sold around 1987/1988 so it left

14 the Guinness Mahon Group around 1987/1988, but six

15 or seven years before that...(INTERJECTION)

16 A. I don't think we were involved with College in

17 Cayman.

18 171 Q. JUDGE O'LEARY: But, Mr. Collins, we will

19 explain what our problem

20 is. It is actually a very simple problem. We know

21 that College Trustees went out of Guinness & Mahon

22 in the late 80's and we know that in 1981

23 approximately, 1981 or 1982, they started routing

24 their funds through you. We don't know why and we

25 are trying to find out why. It is as simple as

26 that. There is nothing actually very mysterious

27 about it, we just want to be able to truthfully say

28 why this happened, that is all. We are not saying

29 it was wrong or it was right, we are just saying

53
 1 why?

2 A. I would think it is probably change in personnel in

3 Guernsey, etc., that they were dealing with.

4 JUDGE O'LEARY: The one thing it wasn't

5 was them going out of

6 business because the whole question of them leaving

7 that area didn't happen for years after that. So it

8 wasn't about going out of business.

9 A. It probably stood there as a shell, more or less,

10 just to be there, but I don't think it did much.

11 I cannot comment on Channel Island companies and

12 what they did with them.

13 172 Q. JUDGE O'LEARY: I see. But do you know

14 why the money was routed

15 through Cayman?

16 A. I presume to make it a simpler operation, to put it

17 all together in one pot and to give us the business.

18 JUDGE O'LEARY: I see. But every person

19 who we have spoken to who

20 was a College trustee client around that time, none

21 of them knew that the money was being routed through

22 GMCT. none of them knew that. So they tell us. We

23 don't know whether it is right or wrong or not but

24 that is what they tell us, yet it was done

25 apparently universally.

26 A. But I don't know what the mechanics of where

27 College... College Trustees was just a fiduciary

28 entity that had money, presumably, and banked it

29 back with Guinness & Mahon in Dublin.

54
 1 173 Q. MS. MACKEY: Mr. Collins, just going

2 back to the schedule that

3 was with the letter earlier, with the schedule of

4 balances that said "GMCT/College" (Exhibit 6), there

5 are a certain number of names on that and from that

6 it would appear that GMCT knew who their College

7 clients were in respect of whom the money was

8 deposited. Is that the case?

9 A. With those, they don't mean anything to me, those

10 names there.

11 174 Q. MS. MACKEY: No, I am not asking you

12 about the names, but is it

13 the case that you did in fact know the names at the

14 time? It would appear from that that they were known

15 to you, to GMCT?

16 A. Known to GMCT, yes.

17 MS. MACKEY: That is what I mean.

18 Thanks.

19 JUDGE O'LEARY: I think we have trespassed

20 without a break for long

21 enough, Mr. Collins, I think we will have a ten

22 minute break now.

23 MR. SPILG: I just want clarification.

24 This is your graph?

25 JUDGE O'LEARY: It is, yes, we produced

26 that.

27 MR. SPILG: You are talking about

28 customer deposits with

29 GMCT the entity and you made a distinction between

55
 1 GMCT and GMI and consolidated. Where does GMCT and

2 GMI come into conflict, in the case of these being

3 customer deposits with GMCT?

4 MR. ROWAN: We extracted at this

5 stage as best we could

6 from the financial accounts and records that we had

7 and without having my files immediately to hand, I

8 am not sure that I can accurately answer that

9 question.

10 MR. SPILG: I just want to understand

11 the distinction. You are

12 talking about customer deposits with GMCT and then

13 GMCT from one component and then you have GMI and I

14 don't know what that is.

15 MR. ROWAN: We would have been taking

16 this information probably

17 from the accounts of GMI where we would have been

18 extracting information from the notes to the balance

19 sheets to match the accounts. Much of this

20 information would have come from GMI sources.

21 JUDGE O'LEARY: We have no difficulty

22 anyway. I will tell you

23 what we will do, we will give you a copy of the

24 back-up documentation.

25 MR. SPILG: Yes, it is important to

26 see what inferences can be

27 drawn from that.

28 JUDGE O'LEARY: Absolutely, there is no

29 difficulty with that.

56
 1 MR. ROWAN: What we were trying to do

2 was to see the development

3 of Cayman as best we could.

4 JUDGE O'LEARY: Alright, we will take a

5 break for ten minutes.

7 SHORT ADJOURNMENT

9 JUDGE O'LEARY: Mr. Collins, thank you

10 very much indeed. Now,

11 Mr. Rowan.

12 175 Q. MR. ROWAN: Mr. Collins, I wonder

13 could you tell us how

14 Cayman kept track of who the beneficial owners were

15 of deposits and trusts and companies and so on?

16 Can you describe that process?

17 A. Carefully. Companies and trusts, mostly under

18 trusts, we were the owners, we had beneficiaries and

19 these were either in trust, they were in trust deeds

20 or known to us in some way. I stress this, we were

21 again a trust primarily so that we didn't in Cayman

22 go out seeking deposit business as such by itself.

23 We were not geared to take on small deposits. It

24 wasn't commercial for us to do it. We didn't have a

25 big loan book, we had a small loan look, very small,

26 in relation to the deposits we had. This attracted

27 our trust clients, it was a good liquid trust

28 company. So that we didn't look for deposit

29 business as such. If someone came and offered us a

57
 1 million dollars, we would be very happy and we would

2 do the documentation and there would be banking

3 documentation for that client. But we didn't have a

4 big deposit business in Cayman at all. It was

5 largely generated by the trust company clients, by

6 the trust clients. So it was our own entities

7 depositing with us. So the documents in relation to

8 them as regards the banking side was probably

9 limited because it was all our offices, we were the

10 trustees, we owned the bank account. There wasn't

11 anybody else who had access to that. So that it

12 wasn't a question of having to have banking

13 documentation signed by all sorts of outside people.

14 We were the people, we owned our own deposits.

15 176 Q. If someone from one of your United States customers

16 who reasonably had a message that they wanted to

17 transmit to you and telephoned you, how would you

18 have known that that person was the person who was

19 entitled to ask you to do something?

20 A. Okay. On the question of a straight bank account, a

21 deposit account, you will have signed a mandate and

22 an indemnity which gave us the power to accept his

23 telephone instructions without liability on

24 ourselves. In practice, we could check it out and

25 we could ring him back and there are other

26 mechanical means of checking out who it was. As

27 regards instructions or requests on trusts or

28 instructions on companies and one thing and another,

29 we owned it, we were in control. Here, these are

58
 1 relationships, you do know the people. If you are

2 worried about an instruction, you would go into some

3 method of verifying it. But generally speaking, if

4 a client rings up and says; 'Could you consider the

5 trust investing in IBM for me? Put £50,000 in IBM?',

6 we would say, fine, it is a normal type of

7 transaction, we would know about it. If we were

8 doing more complex property deals or something else,

9 we would be meeting with the client, we would be

10 over there in the States and doing things.

11 177 Q. What about if someone wanted some money paid out,

12 the same thing would apply?

13 A. The same thing, largely, yes. They would tell us

14 how they wanted it.

15 178 Q. Did the same arrangement apply to the Irish clients?

16 A. Generally speaking, yes. I have come to learn of

17 this by reading all this. I would have expected

18 normally that those instructions come to us first.

19 179 Q. But was that what happened?

20 A. I don't know.

21 180 Q. Pardon?

22 A. I am looking at what I have read and it seems in

23 some cases, perhaps in small amounts, it could only

24 be in small amounts because don't forget that if

25 these figures are in our balance sheet -- I am not

26 sure that they were, that is another point, but if

27 they were in our balance sheet and money was moved

28 out of it, we would need to know. We need to know

29 because we have to replace monies. Money management

59
 1 was very much a part of our banking operation and if

2 people were taking money without our knowing about

3 it, we would be in trouble. Of course, we are

4 paying money on that, on those deposits. We were a

5 very tight banking operation. We took a deposit of

6 £100,000 or whatever from you and we replaced that

7 in those early days, £100,000 with Bank of America,

8 Guinness & Mahon or what have you, on the same terms

9 and all we were doing was taking a turn in the

10 middle. We weren't a lending institution, which was

11 absorbing this, or a money market operation.

12 MR. ROWAN: While on this point,

13 I think Judge O'Leary has

14 a few questions for you.

15 181 Q. JUDGE O'LEARY: Yes, I have, thank you

16 very much. If you go back

17 to the schedules that were given to you in 1987

18 (Exhibit 5), I am not interested in the College

19 Trustees but the other ones. Now refer to those if

20 you want to, but they were nostro accounts?

21 A. Not all nostro accounts, not by a long way.

22 182 Q. JUDGE O'LEARY: I see. Would you turn to

23 paragraph 66 at page 31 of

24 the information document (Exhibit 1) and I am

25 dealing here now with the position in 1987, long

26 before First National Bank ever arrived on the

27 scene. I want you to look at what they say what you

28 say happened, you now being the company say happened

29 about the memorandum accounts.

60
 "There is no doubt about the way in
2 which ACL conducted business with Irish
residents was influenced by Mr.
3 Traynor's presence in Ireland."

4 And then they say: "Where Mr. Traynor was physically

5 located." Paragraph 66:

7 "Mr. Traynor was the principal point of contact

for many (but certainly not all) Irish
8 resident clients. He was assisted by
Mr. Collery and it is understood a
9 Mrs. Joan Williams in Ireland." (AS
READ)
10

11 Then there is a comment about the knowledge which

12 you, Mr. Collins, had and it is of no relevance to

13 the point I am making. Then:

14

15 "It would appear that any detail which may have

been known about why particular funds
16 were being received in and were
required to be paid out on behalf of
17 certain Irish customers was known first
and foremost, (and possibly only, to
18 Mr. Traynor). In particular, from the
available documents, it would appear
19 that GMCT in Cayman was often unaware
of transactions until several weeks
20 after they occurred."

21 Do you see that?

22 A. Yes.

23 183 Q. Now we have many examples, of course, I accept that

24 they are not hundreds of millions of pounds, I

25 accept that, but we have many examples of people

26 contacting Mr. Traynor and lodging money and people

27 contacting Mr. Traynor and withdrawing money and in

28 and out of the kind of accounts of the list that you

29 have in front of you. You say yourselves that

61
 1 Cayman didn't know it until later. Of course Cayman

2 were told about it later. Is that true?

3 A. I haven't had the benefit of looking at this

4 documentation (Exhibit 1).

5 184 Q. No, I am not asking you to adopt the statement; I am

6 saying from your knowledge as a director of the

7 company, is it true?

8 A. I can't remember but I think it might be.

9 185 Q. Alright. So here you have a situation where

10 Mr. Traynor, whatever he was doing, whether he was a

11 nonexecutive or an executive director, he is here in

12 Dublin and a person gives him money to lodge to some

13 account, which ultimately is a Guinness Mahon Cayman

14 Trust account, or goes into him and says; 'Please

15 give me money out of an account', of the memorandum

16 kind that you have before you and...(INTERJECTION)

17 A. Well, that... (INTERJECTION) .

18 186 Q. I am not finished yet. And Cayman don't know about

19 that for some weeks after it, where is the business

20 being transacted? You, as a director of the company

21 now, would you tell me where the business is being

22 transacted?

23 A. I am surprised that if it is any large monies you

24 are talking about, with withdrawals or even direct

25 deposits, all these monies that came into us are not

26 Irish punts after all. We never dealt in Irish

27 punts in any degree of all, it was small money.

28 There is always some foreign currency that is coming

29 to us vis-a-vis Ireland. They were either sterling,

62
 1 dollars, yen, Deutsche marks -- you can see all the

2 various currencies. So they didn't just come in out

3 of the Irish scene and someone walk in with some

4 punts and give them, they were perhaps transferred

5 from outside in.

6 187 Q. No, Mr. Collins, we have evidence of people walking

7 in to Mr. Traynor's office handing him a cheque, as

8 you say very often in non-Irish currency, that being

9 entered in the appropriate memorandum account, and

10 on the basis of the investigation of the company,

11 I am sure legitimately and properly carried out, not

12 being notified to Cayman for some time thereafter.

13 And we have further evidence of people coming into

14 Mr. Traynor and saying; 'Mr. Traynor, I would like

15 £10,000.' 'I would like £15,000.' 'I would like

16 £5,000' and being paid out that money and it being,

17 of course, entered into the appropriate memorandum

18 account and Cayman not being notified for some

19 months thereafter. Now I am talking about the

20 position as it applied ever before the present

21 owners, First National Bank of South Africa, where

22 whatever business Mr. Traynor was carrying out with

23 them, where was he carrying out the business if

24 Cayman didn't know about it for three weeks

25 afterwards?

26 A. Well, again, I wasn't party to this. Can I surmise

27 that this again was a kind of a client -- to an

28 extent, he couldn't accept money, the kind of money

29 you are talking about in any sum and paying out. It

63
 1 was obviously coming out of one or two accounts, not

2 all this general things. It couldn't be out of

3 that, I don't think it could be out of a nostro

4 account.

5 188 Q. It wasn't coming out of the Malamud accounts, I know

6 that.

7 A. Nor probably our nostro account or anything else.

8 189 Q. But it was coming out of some account which had GMCT

9 on it.

10 A. Yes, and this could be the problem in that that

11 account, in practice I don't think we were doing

12 that, but we would often act as a fiduciary. Bear

13 in mind that this comes from the fact that if we are

14 a trustee, Guinness Mahon Cayman is a trustee of a

15 trust. It owns the assets. The bank accounts and

16 the rest of it are in the name of Guinness Mahon

17 Cayman Trust. So on occasions, we would open a

18 designated account for that particular trust or

19 client.

20 190 Q. Yes, I understand that.

21 A. That account -- to take the extreme, to illustrate

22 it better, if it was with Barclays or someone

23 else -- would not be reflected in Guinness Mahon's

24 general ledger balances or anything. If

25 transactions went on on that account, they would be

26 picked up by client accounting at the end of the day

27 to make up the accounts from those statements. They

28 wouldn't be picked up in our general ledger balances

29 because we are not using those funds in our general

64
 1 ledger or everything else. Now we could do that for

2 a company in the same way, and we did for a time, we

3 lent money as Ansbacher or Guinness & Mahon when it

4 wasn't us lending the money. But we were doing it

5 as a fiduciary and we are a trustee and we do these

6 things on a fiduciary basis. We have had arguments

7 over the years on what is fiduciary and what isn't.

8 In the same way for a company, we could have opened

9 up an account, put it in our name -- and it is not

10 good practice in this case and I am surprised they

11 were -- but this could be a particular company's

12 account which wasn't owned by us, these monies.

13 191 Q. Mr. Collins, you can take it that at the time that

14 Mr. Traynor was in the offices of CRH at 42

15 Fitswilliam Square, people were coming in there,

16 lodging money through him and getting money out

17 through him. The money was ending up in an

18 Ansbacher or GMCT account.

19 A. A designated account.

20 192 Q. Yes, in GMCT, and being taken out of a GMCT account.

21 Now how would you describe the service as a banker

22 now, you as a banker? I know you are primarily a

23 trust man but you know a lot more about banking than

24 I do, that wouldn't be very hard. How would you

25 describe the service which Mr. Traynor was providing

26 to those clients in Ireland and was he providing it

27 through the auspices of GMCT? That, you see, is one

28 of the problems that we are going to have to face up

29 to and I want your opinion on it because I value it.

65
 1 A. Well, I am giving you an alternative here in that

2 that account -- let's say it was Poinciana Fund and

3 that account, therefore, would not be... It was

4 opened in the name of GMCT, A/1, A/3 or whatever,

5 the money was put into that. As a bank, we cannot

6 have money coming in and coming out without knowing

7 about it. As a client company, that can work.

8 These people have had to have had an enormous amount

9 of trust in Des Traynor because they didn't know us,

10 they didn't have any account opening documentation

11 with us. I can best describe what they were giving

12 was loans to Mr. Traynor's company which he was

13 placing en bloc with Ansbacher or Guinness & Mahon.

14 That would give him the control.

15 193 Q. And back out again?

16 A. Yes, because it wouldn't really matter, and he kept

17 a record of that.

18 194 Q. So what you are saying to me is that Poinciana Fund

19 or Hamilton Ross were carrying on the business of

20 banking in Ireland?

21 A. I put it to you that the money was virtually lent to

22 them. They didn't have any bank deposit from us, as

23 far as we are aware.

24 195 Q. But if somebody sets themselves up to take deposits

25 and then sets themselves up to repay those deposits

26 in Dublin, forget about the name you have on it for

27 the moment; GMCT, Poinciana, Hamilton Ross, isn't

28 that banking?

29 A. No.

66
 1 196 Q. You are the expert, not me.

2 A. It isn't if I lend you money.

3 197 Q. No, it is not banking for you to lend me money; it

4 is banking for me to receive it. It is the

5 acceptance of the lodgement that makes it banking.

6 That is what all the legislation says; it is

7 receiving deposits. Now either GMCT was receiving

8 deposits, Hamilton Ross were receiving deposits or

9 and Poinciana were receiving deposits but somebody

10 was receiving deposits and I am asking you, as the

11 man who was in charge of the company at the time as

12 one of the partners, which of those three entities,

13 or all of them, were receiving deposits? That is the

14 question I have to answer.

15 A. And I have to say I don't know the answer, alright,

16 I can't recall, but my interpretation is that it is

17 the Poinciana Fund.

18 198 Q. And Hamilton Ross?

19 A. It could be, yes.

20 199 Q. And were you a director of Hamilton Ross?

21 A. Well, Hamilton Ross, I don't think so, not at the

22 latter, I may have been at one time.

23 200 Q. And were you a director of Poinciana?

24 A. I probably was.

25 201 Q. So were you carrying on a business as a banker in

26 Dublin through a company?

27 A. No, Poinciana Fund was a company owned by a trust

28 or what have you.

29 202 Q. What?

67
 1 A. Poinciana Fund would be a company owned by some

2 trust or some other entity, not by Guinness Mahon

3 Cayman Trust.

4 203 Q. Poinciana Fund is owned by Poinciana Trust, as far

5 as I know.

6 A. But it wasn't owned by Guinness Mahon Cayman Trust.

7 204 Q. MS. MACKEY: Hamilton Ross was?

8 A. Was? No, I don't think so.

9 205 Q. MS. MACKEY: Owned by GMCT?

10 A. No, I don't think so.

11 206 Q. MS. MACKEY: Managed by GMCT?

12 A. Managed by, yes. That is different. Both Poinciana

13 Fund and Hamilton would be managed by Guinness

14 Mahon Cayman Trust.

15 207 Q. JUDGE O'LEARY: So isn't it a manager who

16 is carrying on the

17 business? You see the point I am getting at? All I

18 am trying to do is solve the problem.

19 A. I do, but I can't agree with you because if you

20 manage a company in Cayman and that company is doing

21 business in the States whereas we are not, you

22 know...

23 208 Q. JUDGE O'LEARY: The position is this,

24 Mr. Collins, that I can't

25 distinguish between when we are talking about trust

26 companies. All I can say is that there is a company

27 which was owned by a trust and all I can say is that

28 the company was carrying on business. I am saying

29 that either GMCT or a company that operated under

 1 the name Poinciana or the company that operated

2 under the name of Hamilton or one or all of them

3 appeared to me to be carrying on business in Ireland

4 as a bank and you are saying to me you probably

5 think it was Hamilton Ross and Poinciana rather than

6 GMCT and I understand your viewpoint on that. But

7 then I am saying that if that is so, isn't the

8 person that was managing that the person to whom I

9 must look to as being the person who decided

10 executively that that would occur?

11 A. But sure, we would have had several hundred

12 companies and the directors would be

13 ...(INTERJECTION)

14 209 Q. JUDGE O'LEARY: I am not talking about

15 directors now, I am

16 talking about managers. I am saying am I not

17 entitled to say that those companies, the managers

18 of those companies, whoever they may be, and I am

19 not saying that it was you personally, I am saying

20 that whoever the managers of those companies were

21 are the people that I have to say were carrying on

22 the business if I come to that conclusion. Who else

23 can I say? I cannot say that it was nobody. So

24 that is my problem. My problem is I see what the

25 present owners say and I don't actually

26 fundamentally disagree with it and that leaves three

27 possibilities; GMCT, Poinciana or Hamilton Ross

28 carrying on this business in Dublin, one or two or

29 three of them. Whatever conclusion I come to, I

69
 1 have to say who was managing those. Now I am asking

2 you were you managing them?

3 A. Me personally?

4 210 Q. You in your capacity as a director of GMCT?

5 A. No, I was not managing them.

6 211 Q. Who was managing them, do you think?

7 A. John Furze, I would say. There may be somebody else

8 in the office doing some work on them, I don't know,

9 and as far as this end, what you are saying to me

10 now is Des Traynor in Dublin.

11 JUDGE O'LEARY: Thank you very much.

12 Now, Mr. Rowan.

13 212 Q. MR. ROWAN: Time is slipping away so I

14 need to push on a little.

15 Around 1984, Maurice O'Kelly left Guinness & Mahon

16 Ireland. Were you aware of that happening?

17 A. Yes, we knew. I knew he left.

18 213 Q. Do you know what prompted his departure?

19 A. Maurice 0'Kelly's departure from Guinness & Mahon

20 Ireland?

21 214 Q. Yes.

22 A. I think it was Irish business he did within Ireland.

23 215 Q. Which was unsuccessful?

24 A. Yes.

25 216 Q. Right.

26 A. London had taken over more, I think, and come in.

27 217 Q. Yes. Did this prompt a disagreement between

28 Des Traynor and Guinness & Mahon Ireland, do you

29 know?

70
 1 A. I don't think so.

2 218 Q. Well, shortly after that, one year or a year and a

3 half after that in 1986, Des Traynor left Guinness &

4 Mahon. Did he ever explain to you why he chose to

5 leave?

6 A. I think he probably did. After all, we were fairly

7 close. I think as far as Guinness & Mahon Ireland

8 was concerned, it wasn't exactly a successful

9 entity, London were in the process of almost closing

10 it down, and I would venture that he decided to

11 pursue fields otherwise and do other things.

12 219 Q. Page 127 (Exhibit 7). I would like to show you a

13 letter which throws some light on this, Mr. Collins.

14 This is a letter from Guinness & Mahon & Co. in

15 London dated 17th October 1985 to Mr. Traynor.

16 Perhaps you would just like to read the whole letter

17 to yourself first, please. (WITNESS READS LETTER)

18 Have you had a chance to read it through?

19 A. Yes.

20 220 Q. On the last paragraph of the first page, it says:

21

22 "As I have regularly pointed out, you, in fact,

chose to resign over the terms of
23 Maurice 0'Kelly's departure."

24 So it seems from that that Des Traynor was somehow

25 annoyed about the way Maurice 0'Kelly had been

26 treated, is that your recall?

27 A. It wasn't my recall, I didn't remember, but this

28 says that, definitely.

29 221 Q. Right. But in any event, Des Traynor decided to

71
 1 resign. But yet, when he resigned, he was permitted

2 to continue as the Chairman of GMCT?

3 A. Yes.

4 222 Q. Was that in any way a strange thing to do? Here was

5 the Chief Executive of Guinness & Mahon Ireland

6 resigning, but yet he was allowed to continue as the

7 Chairman of a subsidiary. Excuse me, at that time,

8 GMCT was owned by London but it is the same issue;

9 he was allowed to continue as the Chairman of GMCT.,

10 did that issue occur to you as being strange?

11 A. Well, I knew we would be very much for it at that

12 stage.

13 223 Q. Why do you think that was done?

14 A. Because of his relationship with us and his

15 knowledge of our business.

16 224 Q. Or because he was so instrumental in what was

17 happening in Dublin?

18 A. No, I don't see the Dublin or the Irish business as

19 that important, it wasn't that big. Look at our

20 figures, the Dublin figures were so small in

21 relation to the total.

22 225 Q. If one followed that argument, then he didn't need

23 to stay on.

24 A. No, he enjoyed up to that point being Chairman of

25 Guinness Mahon Cayman Trust and their relationship

26 with us. He stayed on perhaps to be a buffer

27 between us and London. He was the one who could

28 stop London -- or talk to London for us and talk in

29 their language. We did have arguments with London

72
 1 periodically, far too often, actually.

2 226 Q. In any event, if you look at paragraph 1 of the

3 letter, it says (Exhibit 7):

5 "I confirm that we would be very pleased for you

to continue in the role of Chairman of
6 Guinness Mahon Cayman Trust for a
period of at least three years from the
7 end of your employment at Guinness &
Mahon."
8

9 So he was offered employment.

10

11 Paragraph 3 says:

12

13 "We will pay you a salary of £12,500 p.a. for

this."
14

15 A salary?

16 A. Well, it is director's fees, in effect.

17 227 Q. It says "a salary." It looks like he was an

18 employee, doesn't it, if he gets paid a salary?

19 A. I think that is semantics, whether he was paid as a

20 salary or fees. We paid a certain amount of his

21 recompense for the period.

22 228 Q. Paragraph 4: "It is understood with regard to these,

23 i.e. taking your secretary along, it is understood

24 that that you will have..." Sorry, paragraph 2

25 reads: "We would be agreeable to you moving into the

26 office previously occupied by Don O'Connor." So he

27 was getting an office. He was a nonexecutive

28 chairman being paid a salary.

29 A. That is an office in Ireland.

73
 1 229 Q. Yes, an office in Ireland, and a secretary, and he

2 is being paid a salary?

3 A. They were paying him £12,500 and we were giving him

4 £12,500 as a fee, as a chairman's fee.

5 230 Q. Yes.

6 A. Before, he wouldn't have been paid because we were a

7 subsidiary of Guinness & Mahon Ireland.

8 231 Q. Yes, but why would he have needed an office and a

9 secretary if he was nonexecutive?

10 A. Well, Ansbacher were kind enough to give me an

11 office and a secretary for four years after I

12 retired to do my work, I had a relationship with

13 them.

14 232 Q. Can I just draw you back to this question?

15 A. Yes, I don't think it is that unusual. They would

16 give him... They were giving him an office partly

17 presumably for this liaison with Guinness Mahon

18 Cayman Trust.

19 233 Q. Yes. Doesn't the office and a secretary and the

20 salary make him look like an executive?

21 A. No. Bear in mind, they were paying him some of this

22 as well. He may be doing other work and winding

23 down work for them, according to this.

24 234 Q. The point:

25

26 "We would be agreeable to you moving into the

office previously occupied by
27 Don 0'Conor and having a computer
terminal wired up to tap into the
28 Cayman Bureau."

29 This presumably was the computer system we discussed

74
 1 earlier this morning?

2 A. I don't know but I presume so.

3 235 Q. Yes. So that Mr. Traynor left Guinness & Mahon's

4 employment and continued to represent Guinness &

5 Mahon Cayman Trust in Dublin. He stayed in the

6 office in Trinity Street until he moved to the CRH

7 offices when he became the Chairman of CRH. That

8 was in 1986 or thereabouts. Now what I wanted to do

9 was I wanted to show you a number of documents.

10 First of all, page 134, Mary, please. (SAME HANDED

11 TO THE WITNESS - EXHIBIT 8). Mr. Collins, in this

12 next lot of documents, I may well be showing you the

13 names of some people who maybe are clients or

14 customers of Cayman. I am not showing them to you

15 to draw your attention to the names, it is just

16 incidental that the names are there. It is more

17 other aspects of the letter that I am wishing to

18 deal with. But the letter on page 134 is a letter

19 from Desmond Traynor with an address at 17 College

20 Green, addressed to a company, and it says in the

21 third paragraph:

22

23 "Attached hereto is a copy of a Press Release

issued this afternoon announcing my
24 retirement from Guinness & Mahon
Limited. Although I shall be moving
25 around the corner to 3 Trinity Street,
Dublin 2, my telephone, telex, and
26 telefax numbers will remain as at
present and Joan Williams will continue
27 to be my secretary. I shall, of
course, be continuing my association
28 with Guinness & Mahon and will continue
to be active as the Chairman of
29 Guinness & Mahon Cayman Trust."

75
 1 So here he was announcing his departure. You can

2 see that he was making it pretty clear to his

3 customers that he was going to remain active.

4 What do you think he was implying by that?

5 A. Don't let us forget that he was very active and on a

6 number of boards otherwise with major companies.

7 He needed an office of his own for this interim

8 period. He had a number of directorships;

9 New Ireland, I think, Aer Lingus. There were a

10 number of other appointments and things he did which

11 he needed an office for. Now Guinness & Mahon are

12 giving him that office, partly to look after

13 Guinness & Mahon Cayman Trust.

14 236 Q. Well, at that point, wholly to look after them.

15 A. No, not necessarily. He was doing his own business

16 from that office.

17 237 Q. He may have been but that is not what he is saying

18 here.

19 A. Well, he doesn't need to, does he?

20 238 Q. Do you have page 155? (SAME HANDED TO THE WITNESS -

21 EXHIBIT 9) This is a letter in September 1987 from

22 Des Traynor at 19 Lower Pembroke Street, Dublin, and

23 it is addressed to Guinness & Mahon. So at that

24 point, Desmond Traynor was writing, without

25 indicating who he was representing, from what was

26 the CRH office at 19 Lower Pembroke Street except

27 that it doesn't say that. He was giving

28 instructions to do with a loan facility. Why didn't

29 Des Traynor indicate on whose behalf he was acting

76
 1 in that letter?

2 A. On whose behalf? He is writing to Pat O'Dwyer at

3 Guinness & Mahon. Doyle or someone has presumably

4 advised him that he is not happy with Guinness &

5 Mahon and what they want.

6 239 Q. Yes, but who is he acting for? There is no heading

7 that says: "Traynor Enterprises". There is no

8 heading that says "GMCT". There is nothing under

9 his name which suggests that he is a director of

10 this, that or the other thing. It is all very

11 anonymous.

12 A. Yes, but again I think this was a London loan to

13 Doyle.

14 240 Q. But that is not the point I am asking you to

15 consider.

16 A. He still, as I say, had contact still with Guinness

17 & Mahon and they were telling him that they didn't

18 want to do this business this way and Des was

19 saying; 'I will look after it when I get back in

20 places elsewhere if they won't do the business you

21 want them to do'.

22 241 Q. Do you think he was acting on behalf of CRH in

23 writing that letter? (Exhibit 9)

24 A. No.

25 242 Q. Was he acting on behalf of GMCT in writing that

26 letter?

27 A. No.

28 243 Q. He wasn't?

29 A. I don't think so. This is copied to Michael Pender,

77
 1 who was Chief Executive of Guinness & Mahon.

2 244 Q. Well, who was he acting for?

3 A. I suspect Mr. Doyle.

4 245 Q. Let me show you page 15 6 (Exhibit 10). This was a

5 letter dated 24th September 1987 from Pat O'Dwyer,

6 who was the banking manager of Guinness & Mahon

7 Ireland and it is addressed to Mr. J.D. Traynor,

8 Chairman, Cement Roadstone Holdings, but it seems to

9 be about the same client matter?

10 A. Yes. I don't think he should have addressed it as

11 Chairman of Cement Roadstone. I think this is just

12 Des being — you know he was friendly with...

13 He had the trust of a lot of people and clients and

14 they did use him as a consultant.

15 246 Q. Okay, let's look at page 160, please. (SAME HANDED

16 TO WITNESS) This is a letter from GMCT of 15th April

17 1988 (Exhibit 11) written by yourself on this

18 occasion. You were writing to Mr. J.D. Traynor at

19 19 Lower Pembroke Street. In what capacity were you

20 writing to Mr. Traynor?

21 A. As Chairman of GMCT.

22 247 Q. I see. But you didn't address the letter like that?

23 A. Well, I would have, I mean, that is...

24 248 Q. Why did you chose to address the letter in the way

25 that you did?

26 A. There is no real magic in that, it is just...

27 I don't know. I wouldn't have, "Dear Des", I mean,

28 that is...

29 249 Q. Was it that you didn't want to spell it out?

 1 A. No, I don't think it was thought of at that time, I

2 think my secretary just picked up his address. And

3 it wasn't Cement Roadstone business so she wouldn't

4 have put that on.

5 250 Q. She might have addressed it to GMCT or the Chairman

6 of GMCT?

7 A. She may have done.

8 251 Q. But she didn't?

9 A. No.

10 252 Q. So was that an error or an omission, or a direct

11 deliberate action not to?

12 A. No, nothing deliberate about this, this is all this

13 American business and there is nothing in that.

14 253 Q. Can we go to page 162, please? (Exhibit 12) This is

15 a letter of 22nd September 1988 from Ansbacher in

16 Cayman written by Mr. Furze to J.D. Traynor, 19

17 Lower Pembroke Street. So Mr. Furze also addressed

18 Mr. Traynor in Dublin but didn't say in what

19 capacity he was writing to him?

20 A. In all that correspondence over the years, we would

21 never have addressed him as chairman, you know. It

22 wasn't that formal a relationship.

23 254 Q. I can well believe that when everyone was inside

24 the Guinness & Mahon organisation that probably one

25 didn't need to, but at this point, of course,

26 Mr. Traynor and GMCT and yourself and Mr. Furze had

27 left the Guinness & Mahon Group.

28 A. Sorry?

29 255 Q. By September 1988, I believe that GMCT had been

 1 acquired by Ansbacher, or 75% acquired by Ansbacher,

2 so that you were still writing to Mr. Traynor but

3 not indicating who he was. And, really, the

4 question that I am trying to address is were you

5 trying to hide his involvement with Cayman?

6 A. No, no.

7 256 Q. You weren't?

8 A. No, I cannot see that. This is just "Dear Des" kind

9 of thing.

10 JUDGE O'LEARY: Mr. Rowan, before you

11 move on from that, could I

12 go back to the previous letter, 15th April 1988?

13 (Exhibit 11) I have one small question arising out

14 of that, if you don't mind.

15 MR. ROWAN: Not at all.

16 257 Q. JUDGE O'LEARY: You said that you wrote

17 that letter to Mr. Traynor

18 in his capacity as chairman of the company?

19 A. Yes.

20 258 Q. The purpose of the letter, and, I mean, I am not a

21 bit interested in who it is for, it makes no

22 difference to me, but the purpose of the letter is

23 conveyed in the very last sentence.

24 A. Yes.

25 259 Q. "Kindly also have G&M agree the extension." So you

26 were making a request to him to get G & M to agree

27 the extension?

28 A. Yes.

29 260 Q. Now weren't you therefore requesting him to carry

80
 1 out an executive function, even though he was a

2 nonexecutive chairman?

3 A. Well, he was our intermediary and contact with

4 Dublin and London.

5 261 Q. I understand, but isn't that an executive function?

6 What else is it?

7 A. Well, in the same way, that way, if we ask a

8 director in London for a loan approval or extension.

9 262 Q. It might be slightly different if you wrote to

10 somebody and said he was the chairman of your

11 company, could you use your offices to get a meeting

12 with Mr. X, who is a well-known prominent man and I

13 would like an introduction. That is the kind of

14 thing you would expect the chairman to do. But here

15 you are talking about using the chairman for the

16 specific purpose of getting the extension to a loan,

17 the request conveyed to Guinness & Mahon in Dublin.

18 Isn't that the kind of letter you could have written

19 to any executive in your organisation who was

20 dealing with an account and say; 'Here are the

21 details. In order to implement all that for

22 Mr. X...' who is the client and I won't mention his

23 name, 'we need certain things in place. One of the

24 things we need in place is Guinness & Mahon in

25 Dublin to agree the extension' And the man you are

26 asking to do that is Mr. Traynor?

27 A. Yes, I think he would have been part of a loan

28 committee to approve things. That would be one of

29 his functions.

81
 1 263 Q. A loan committee with who?

2 A. With people probably from London at this point.

3 264 Q. No, no, he wasn't...(INTERJECTION)

4 A. This wouldn't need London, necessarily, because this

5 was a back to back, I think.

6 265 Q. No, could I just say to you that on 15th April 1988,

7 as far as I know, he was neither a director of

8 Guinness & Mahon in London or Guinness & Mahon in

9 Dublin. His only connection was as chairman of

10 Guinness & Mahon Cayman Trust. So you wrote to him

11 in his capacity as chairman of Guinness & Mahon

12 Cayman Trust asking him on behalf of Guinness &

13 Mahon Cayman Trust to contact an external body and

14 agree the extension of a loan. Now I am saying to

15 you that that looks suspiciously like a request to

16 him to carry out an executive function. Now do you

17 agree or disagree with that statement?

18 A. I think most of the executive thing has been done in

19 Cayman and is sent to him just to pass on to get his

20 approval.

21 JUDGE O'LEARY: Thank you. Sorry,

22 Mr. Rowan.

23 266 Q. MR. ROWAN: So far, Mr. Collins,

24 I have been showing you

25 letters essentially which were being sent to

26 Mr. Traynor. I wanted to show you a letter now on

27 page 167 (Exhibit 13) which Mr. Traynor sent to

28 Guinness & Mahon. This is a letter headed

29 "Ansbacher Ltd." of 25th May 1990 addressed to

 1 Mr. Lanigan O'Keeffe at Guinness & Mahon Ireland.

2 The significant point about this is that on the

3 letter is another address, saying: "Please reply to

4 42 Fitswilliam Square, Dublin 2". Now this was a

5 letter on behalf of Ansbacher that Mr. Traynor was

6 writing to Guinness & Mahon, giving what looked like

7 executive instructions. What do you make of that?

8 A. Well, he will have received this obviously from us,

9 that this is what we wanted. He is liaising for us

10 with Guinness & Mahon Ltd..

11 267 Q. Yes. This is what you would expect of a

12 nonexecutive director?

13 A. Well, yes. I mean, he was chairman, he was a little

14 more.

15 268 Q. Yes. Can I turn to page 168 then (Exhibit 14),

16 please? This is another letter of 14th January 1991

17 from Ansbacher to Mr. David Humphries, Guinness &

18 Mahon, signed by J.D. Traynor, again with the

19 address: "Please reply to 42 Fitzwilliam Square".

20 Page 169 is a reply from Mr. Humphries. On this

21 occasion Mr. Humphries has written to Mr. J.D.

22 Traynor, Ansbacher Ltd., 42 Fitswilliam Square. The

23 letter, by the way, is dated 16th January 1991. So

24 Mr. Humphreys knew what Mr. Traynor's role was, did

25 he not, because he wrote to him at Ansbacher just as

26 Mr. Traynor had written to him on Ansbacher's

27 heading?

28 A. Yes, he was using Ansbacher heading then, isn't he,

29 so obviously he tells him how to reply.

83
 1 269 Q. Yes, but you didn't do that when you were writing to

2 Mr. Traynor?

3 A. Shall we say we knew where he was and he knew where

4 we were.

5 270 Q. In any event, I would like to turn to the issue of

6 the change of ownerships.

7 JUDGE O'LEARY: Mr. Rowan, I am anxious,

8 I have two constraints in

9 respect of time. (1) I understand that our next

10 witness won't be available until two o'clock and I

11 know he has an appointment and I am anxious to give

12 him a little bit of flexibility so that he doesn't

13 have to be here exactly at 2:00. And I don't know,

14 was somebody else going?

15 MR. MAYHEW-ARNOLD: Indeed, it is Mr. Spilg.

16 MR. SPILG: It is no problem.

17 JUDGE O'LEARY: But I am anxious to

18 facilitate you as well.

19 So, if you don't mind, I am anxious to stop the

20 questioning of Mr. Collins about half an hour before

21 he is likely to be finished to give us a little bit

22 of fat on the other side, which will give the next

23 witness an opportunity of settling in and that sort

24 of thing, I think that is appropriate. So you might

25 bear that in mind. Also, I am conscious of the fact

26 that I don't want to run too far over one o'clock

27 because the stenographer has human limitations as

28 well as everything else.

29 271 Q. MR. ROWAN: Mr. Collins, if you are in

84
 1 agreement, we will just go

2 on a little longer and then break for lunch.

3 Mr. Traynor had left Guinness & Mahon and then a

4 couple of years later it was decided that he and you

5 and Mr. Furze and Mr. Hart would make an offer to

6 Guinness & Mahon to buy out GMCT. Can you tell me a

7 bit about what led up to the decision to offer to do

8 a buy-out?

9 A. Well, I think Guinness Peat Group were the ones who

10 were thinking of divesting and how we got notice of

11 that or what was another thing, but we were very

12 keen to maintain our independence at that stage and

13 not be sold en bloc with Guinness & Mahon & Co. or

14 anything else. If my memory serves me right, we

15 have tried initially about three months or four

16 months before to enter into these negotiations and

17 we had negotiations in Victoria with Alistair Morton

18 and he came out to see us. But he wanted too much

19 at that point. But the long and short of it is that

20 they all came around and in the three months he got

21 back in, he was back on and we negotiated a deal to

22 buy it.

23 272 Q. Who undertook those negotiations?

24 A. Hugh Hart, mainly.

25 273 Q. Hugh Hart?

26 A. Hugh Hart. I was very much in it, but Hugh was the

27 prime negotiator.

28 274 Q. What part, if any, did Des Traynor play?

29 A. He would have played some part. He would have been

85
 1 referred to as our friend and partner.

2 275 Q. In any event, you reached agreement on a price and

3 you used four companies as vehicles, a company

4 representing the interests of each of them buying

5 out shareholders?

6 A. Yes, I think that is obvious.

7 276 Q. Then very quickly you agreed to sell on 75% to

8 Henry Ansbacher?

9 A. Yes.

10 277 Q. Was that something that you knew was possible before

11 you did the deal with Guinness & Mahon & Co.?

12 A. No, I think we thought of them as a party, because

13 of Richard Fenhalls, who we had known from Guinness

14 & Mahon days because he was Chief Executive of

15 Guinness & Mahon and so he would be a party who we

16 would approach. We bought it and I think in

17 consensus among us, for us, we didn't think that

18 there was too much future for a totally independent

19 trust company with no backing. We were willing to

20 give it a shot, I think, if we couldn't get it, but

21 we weren't happy with that situation in the climate

22 of '88 and the business wasn't exactly booming. So

23 we approached several parties. Credit Suisse was

24 the main one. I had an introduction to Credit

25 Suisse through a colleague and another in Credit

26 Suisse Trust Company and one thing and another.

27 I went to Zurich and I sat among these four gnomes,

28 as it were, and they were very pleasant to me,

29 showed an interest as they had got a lot of detail

86
 1 beforehand, naturally. They were very interested

2 but timing - they were not going to reach a decision

3 within six months or so. And, quite frankly, we

4 had, I think, told the Inspector that we didn't

5 intend to carry on as an independent for too long.

6 So we couldn't wait for the Credit Suisses of this

7 world. We tried others, I think I remember someone

8 else coming into the picture, but quite frankly when

9 we were negotiating with Richard and the rest,

10 I think they were the only game ones in the end and

11 were serious.

12 278 Q. In any event, you succeeded in doing the deal with

13 Ansbacher and they acquired 75%?

14 A. Yes.

15 279 Q. So at that point, GMCT left the Guinness & Mahon

16 Group?

17 A. Yes.

18 280 Q. Okay. Of course, the memorandum accounts, as we

19 might call them, were still being maintained in

20 Dublin by Mr. Traynor and on his behalf by

21 Mr. Padraig Collery, but Mr. Collery at that point

22 continued to be an employee of Guinness & Mahon

23 Group, he was still an employee of Guinness & Mahon

24 Ireland. Did you come into contact much with

25 Mr. Collery?

26 A. No. I met him, I think, socially in London, but no,

27 not very much contact.

28 281 Q. Were you aware of his role?

29 A. I can't recall, you know, whether at that time I was

87
 1 advised of that or not or whether I was aware of it,

2 I just can't remember.

3 282 Q. Well, if I explain to you that our understanding is

4 that he, while continuing to be an employee of

5 Guinness & Mahon Ireland, attended periodically,

6 probably on a weekly basis but perhaps more often,

7 at Mr. Traynor's office in CRH and used the computer

8 which was installed in Mr. Traynor's office to

9 update the memorandum accounts. You weren't aware

10 of that?

11 A. Not particularly, no, not that I can remember.

12 283 Q. As a Managing Director of Cayman, you weren't aware

13 of that?

14 A. Again, you know, these memorandum accounts weren't a

15 big issue with us. They weren't a big issue with us

16 at all, it was a small part of our business. I

17 mean, they didn't come up on this merger or anything

18 else, or the buy-out.

19 284 Q. When the transaction with Henry Ansbacher was being

20 done, was there very much investigation undertaken,

21 do you know, by Henry Ansbacher into what they were

22 buying?

23 A. I thought they did a fair amount, yes.

24 285 Q. What did they do?

25 A. They had a local firm of lawyers. They had Peat

26 Marwicks in, particularly for the loan book. Kevin

27 Mortell came out, Kevin McAuliffe came out.

28 I liaised with Kevin McAuliffe a lot, I think.

29 286 Q. Do you know when, let's call it due diligence, was

88
 1 being done, whether the auditors would have been

2 aware of the very unimportant memorandum accounts in

3 Dublin?

4 A. I think they would have been, yes. I cannot tell

5 you offhand now.

6 287 Q. So just finishing this section, may I turn you to

7 the letter on page 174 and 175 (Exhibit 16), please?

8 This was a letter which you wrote dated 13th June

9 1990 on Ansbacher headed paper to Guinness & Mahon

10 for the attention of Mr. Martin Lanigan O'Keeffe.

11 On the second page, the penultimate paragraph, it

12 says:

13

14 "Your facility letter (to the client) will not

mention the hypothecated deposits that
15 are being provided as security."

16 Why did you say that?

17 A. I think in all these tax matters, you don't want to

18 give information you don't have to. This was a loan

19 that was structured on a back to back basis to Mr. X

20 but he wasn't the one that was giving the deposit,

21 we were - a separate entity.

22 JUDGE O'LEARY: I think we would prefer

23 not to mention names.

24 We undertook not to. We will leave that man's name

25 out.

26 288 Q. MR. ROWAN: So in essence, you were

27 saying to Guinness & Mahon

28 don't provide an important piece of information in

29 their documentation?

89
 1 A. No, we would said we will give them the deposit.

2 We, Guinness & Mahon Cayman Trust, were saying; 'We

3 will guarantee that loan for you in addition to what

4 you have got from him and we will give you a deposit

5 to back that guarantee'.

6 289 Q. But I am sure you can appreciate that maybe someone

7 at a later stage looking at the loan documentation

8 which Guinness & Mahon subsequently produce, they

9 could be misled by not knowing that the loan was

10 backed?

11 A. No, I don't follow you, I am sorry.

12 290 Q. Well, the borrower may have been using the loan

13 offer to achieve other objectives. It might well be

14 that the auditor of that company or whatever would

15 have wanted to have been aware as to whether there

16 was a security given by the borrower when in fact,

17 of course, there wasn't a security because it was a

18 cashback loan and you were saying; 'Don't provide

19 that information.'?

20 A. There was security as well. There was a property, a

21 valuable property.

22 291 Q. Absolutely.

23 A. And that is where we wanted to -- the property well

24 secured the loan on its own.

25 292 Q. Nevertheless, the arrangement was set up with a cash

26 backing arrangement?

27 A. Yes, and one of the reasons for that is so he

28 doesn't pay the full borrowing costs. This way he

29 does it cheap, he does it on a turn in, in effect,

90
 1 because a trust gets a deposit and the loan is..

2 This is how you have got a 1% turn in, that is all

3 he is paying.

4 293 Q. I think your comment at the beginning of this was

5 that you don't want necessarily to provide all the

6 information?

7 A. Yes, I don't want to put it all in a letter to him,

8 no.

9 MR. ROWAN: I think that is a point

10 that we could stop at now.

11 2 94 Q. JUDGE O'LEARY: Alright. Do you think,

12 Mr. Collins -- I know now

13 it may not be your responsibility but just look at

14 it from a slightly different perspective. Look at

15 it in the books of the borrower?

16 A. Yes.

17 295 Q. If his facility letter leaves out part of the

18 security, aren't his books defective?

19 A. No, because it is another entity that is providing

20 that. His books aren't, he has done that

21 transaction.

22 296 Q. Yes, I understand that.

23 A. And so his books aren't. The fact that he has

24 influenced someone else to provide a guarantee or

25 deposit isn't anything to do with his books.

26 297 Q. Thank you. The other thing that I would like to ask

27 you arising out of this is what mechanism would have

28 preceded the giving of that guarantee?

29 A. I would have talked to the client, I would have been

91
 1 in contact with him.

2 298 Q. Yes, but you see, Mr. Collins, he is not your client

3 if it is a trust?

4 A. No.

5 299 Q. He is a potential beneficiary of the trust, but he

6 is not your client unless the trust is only a trust

7 in name, then he is your client?

8 A. No, no. No, no. That is not fair, sir.

9 300 Q. What?

10 A. That is not fair, sir.

11 301 Q. I know, but you will appreciate that from time to

12 time, I have to say things which might not be fair,

13 do you understand?

14 A. No, it is not even correct.

15 302 Q. But I have to say it nevertheless.

16 A. I don't see it as correct

17 303 Q. But it is you who said it. I said 'what preceded

18 it?' and you said 'Of course, I had to contact the

19 client.' And if you mean by that Mr. X, if you mean

20 Mr. X, I am saying to you Mr. X may be a potential

21 beneficiary of the trust, but if the trust is your

22 client, he is not your client. Therefore, what I

23 have in mind is what mechanism would have taken

24 place within the trust structure to authorise this

25 guarantee?

26 A. Within the trust structure? I hear what you are

27 saying, he is a borrowing client.

28 304 Q. Would you like to think about it over lunch? I think

29 it is a complicated enough situation. Think about

92
 1 it.

2 A. I hear what you are saying but I don't think it is

3 really, you know.... Yes, I will think about it.

4 305 Q. Yes. You see the point I am making, really, is that

5 if you as a trust company are taking instructions

6 from Mr. X, do you understand?

7 A. Requests or listening to his requests, yes, whatever

8 way you like to put it.

9 306 Q. If you are taking instructions from him, then it is

10 not really a trust at all. If on the other hand you

11 are making an independent decision, then it may be a

12 trust and I am asking you what were you doing. One

13 of the things I am going to have to consider is

14 whether you were in fact in respect of the Irish

15 clients -- I am not interested in anybody else --

16 whether you were in fact making an independent

17 decision or not or were you just following

18 instructions. That is the question. Can you see

19 the point I am getting at?

20 A. I can, and I think I...

21 JUDGE O'LEARY: Think about it over

22 lunch, thank you very

23 much. We will adjourn until quarter to three.

24 MR. ROWAN: Mr. Jennings is coming at

25 two o'clock.

26 JUDGE O'LEARY: But he doesn't have to be

27 here until... Put him off

28 until quarter to three. Right, half past two and

29 bring Mr. Jennings at three o'clock. Will you do

93
 1 that?

2 MR. GORDON: Yes.

3 JUDGE O'LEARY: Is that fair enough? Does

4 that suit everybody? Or is

5 everybody happy to start at 2:00 and bring him at

6 2:30?

7 MR. GORDON: Yes.

8 JUDGE O'LEARY: Okay, there is no problem

9 with that.

10

11 LUNCHEON ADJOURNMENT

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

94
 1 THE HEARING CONTINUED, AS FOLLOWS, AFTER THE

2 LUNCHEON ADJOURNMENT

4 JUDGE O'LEARY: If at any time,

5 Mr. Collins, you want to

6 take a break, just let me know.

7 A. Very good, thank you.

8 307 Q. MR. ROWAN: I want to move on,

9 Mr. Collins, to around the

10 time of Mr. Traynor's death. Did you know that he

11 was unwell?

12 A. He had had a heart attack about six years ago, I

13 think, before his death, or something like that, but

14 he had changed lifestyle, smoking and everything

15 else, but no, this was a sudden death. It was a

16 shock to us all.

17 308 Q. Right. Mr. Furze attended the funeral?

18 A. Yes.

19 309 Q. Were you there?

20 A. No.

21 310 Q. So that after that, the position was that the

22 records that Mr. Traynor had maintained were in his

23 office and, as we understand it, Mr. Furze made one

24 or possibly two visits to Ireland to go through

25 those records and we understand that some of them

26 may have been destroyed and some of them removed to

27 Cayman. Now can you tell me what you know about the

28 decision for Mr. Furze to return to Ireland?

29 A. To return to Ireland?

95
 1 311 Q. Yes, and deal with the records.

2 A. I cannot recall anything today as to what we said

3 and what we did at the time. He obviously went to

4 look at the records, I presume, but it would have

5 been very much John's decision.

6 312 Q. Was that a decision of his or was it a decision of

7 the board?

8 A. We are looking at '94 now so that when you say

9 "board", I would say all the management would have

10 been aware of his going.

11 313 Q. Yes. So they knew he was going to Ireland to review

12 the records?

13 A. I presume so. At that time, the management was

14 about four or five of us.

15 314 Q. Yes. Did he report on what he found in Ireland?

16 A. Not to me.

17 315 Q. Do you know did he report to anyone else?

18 A. I think he probably did, yes. I would have thought

19 it might be Fraser Jennings at that point.

20 316 Q. Then we understand that sometime after that, he

21 returned again to Ireland a second time?

22 A. You say that this is a third time? The funeral,

23 then the second time and then the third time?

24 317 Q. Yes, we believe.

25 A. I don't know.

26 318 Q. You don't know. But in any event, he dealt with

27 Mr. Collery and Mr. Traynor's former secretary,

28 Ms. Williams?

29 A. Yes.

96
 1 319 Q. Who have indicated that certainly Mr. Collery

2 provided some assistance to Mr. Furze and, arising

3 from that, we understand Mr. Collery was -- I will

4 not use the word "employed" but certainly he was

5 paid money to provide assistance to Ansbacher

6 Cayman. Do you know what the arrangements were with

7 Mr. Collery?

8 A. No, not specifically, that wasn't done by... I

9 think that was Fraser Jennings and Bryan Bothwell,

10 etc..

11 320 Q. I see, but Mr. Collery was paid a fee of some sort

12 to provide assistance?

13 A. Yes, I believe so, yes.

14 321 Q. But what exactly was it he was working on because,

15 as we understand it, Ansbacher had got rid of the

16 Hamilton Ross accounts or accounts in the beginning

17 of 1993. So what was left for him to help with?

18 A. I would have thought generally the Irish clients may

19 have been with -- I don't know, you know, what other

20 matters there would be. There would be certain

21 other Irish clients he would probably would have

22 liaised with.

23 322 Q. I mean, am I right in believing that post 1988,

24 there were Hamilton Ross clients or there was the

25 Hamilton Ross situation?

26 A. I don't think Hamilton Ross came into being as the

27 situation you are describing until much later.

28 323 Q. How much later?

29 A. I don't know, but I am guessing 90's.

97
 1 324 Q. Sorry, I didn't quite catch that?

2 A. I am guessing in the 90's.

3 325 Q. Anyway, there was the Hamilton Ross situation, there

4 was the Poinciana situation and then were there

5 other clients who had trusts with Cayman?

6 A. There would have been, yes.

7 326 Q. So the supposition is that Mr. Collery was helping

8 with those clients, the last group?

9 A. He may have been helping with the liaison.

10 327 Q. And he continued to assist for several years,

11 I understand?

12 A. Yes, after my time.

13 328 Q. After your time, right. Mr. Collery received

14 payment for his services?

15 A. Yes.

16 329 Q. But you don't know anything about that?

17 A. No, you will have to ask...

18 330 Q. When did you yourself stop being involved with the

19 company? You were an executive until 199...?

20 A. May 1995, I retired as a full time executive.

21 I stayed on until October but -- where are we now?

22 Last year.

23 331 Q. JUDGE O'LEARY: October 2000, I think?

24 A. Yes, as a nonexecutive director.

25 MR. ROWAN: Okay, I haven't got

26 anything more that I want

27 to ask. Thank you very much.

28 332 Q. MR. CUSH: Mr. Collins, much earlier

29 this morning, Mr. Rowan

98
 1 asked you a question about Irish business and I

2 thought you balked somewhat at the looseness of the

3 term and I just wonder could you perhaps tell us

4 what you understand by Irish business?

5 A. Yes, because it has been narrowly defined since,

6 and, to me, the Irish business was primarily the

7 loan book. When we referred to it, it was primarily

8 was the loan book - we had an Irish loan book, which

9 was a little difficult to work out, shall we say,

10 but we did work it out. But that was the primary...

11 We wouldn't necessarily be putting together all the

12 Irish trusts into the one little box and saying;

13 'That is Irish business and this is this.' We in

14 fact always balked when head office wanted to know a

15 geographic division of our business, because it

16 wasn't an easily defined matter, where it came

17 from... However, you could have this.... But you

18 couldn't necessarily define all the business

19 geographically and it wasn't a fair comment of it.

20 333 Q. Was the term used at all by those of you working in

21 the company or is that just a term that

22 has...(INTERJECTION)

23 A. No, I think it is a term that has developed,

24 developed over the last probably 10 years.

25 334 Q. Yes, but if it had an application, you would

26 understand it to apply primarily to the loan book?

27 A. The loan book and probably general trusts and other

28 matters.

29 335 Q. Just another small point from this morning, you

99
 1 mentioned that Mr. Traynor would have had experience

2 in offshore matters. Do you know that to be the

3 case?

4 A. Well, he had it from us, I think at that point he

5 had been in the business with us for a long while.

6 336 Q. Yes, but your first meeting with him

7 was...(INTERJECTION)

8 A. As far as Haughey Boland and that kind of era, no, I

9 don't.

10 337 Q. Okay. In those early days, you have mentioned

11 meeting people from Kennedy Crowley. Can you recall

12 who you met?

13 A. Don Reid.

14 338 Q. Anybody else?

15 A. Who is the chap who used to lie down behind his

16 desk? He was quite a character, I can't remember

17 his name.

18 339 Q. Was it Mr. Mooney?

19 A. I know that name, but I don't know -- well, no,

20 there was another man.

21 JUDGE O'LEARY: I think, Mr. Collins, it

22 would be important to

23 identify him as it would be terrible if we

24 identified in the report the wrong man as having to

25 lie down behind his desk.

26 A. I think I will keep quite about anybody else,

27 because I cannot recall.

28 340 Q. MR. CUSH: As time went on, I think

29 you had less contact with

100
 1 Ireland and Mr. Furze had more contact?

2 A. Less contact, yes.

3 341 Q. Was there referral of Irish business other than

4 through Mr. Traynor?

5 A. Yes. There wasn't a lot, but there was.

6 342 Q. And who did that come from?

7 A. As I said, it could have come from the Kennedy

8 Crowleys or the law firm. I can't be specific and

9 remember, but I would say there was.

10 343 Q. Let's just take it this way; do you think that

11 business did come from Mr. Reid that had no

12 connection with Mr. Traynor?

13 A. Yes .

14 344 Q. Yes?

15 A. Yes .

16 345 Q. Do you think the business came from Gore & Grimes

17 that had no connection with Mr. Traynor?

18 A. I know we got business from that source but it was

19 early on and I don't think it was through his

20 connection, particularly. That bit of business was

21 also connected to him, I think, but it didn't come

22 to us that way. It started the other way and it was

23 more getting to know Mr. Traynor again.

24 346 Q. Is it the case that business might have originated

25 other than through Mr. Traynor, but as time went on,

26 be handled largely by Mr. Traynor?

27 A. When you say handled, yes, as the point of contact

28 with some clients, yes.

29 347 Q. Yes. But were there some clients who never had

101
 1 anything to do with Mr. Traynor, who may have

2 originated through, say, Mr. Reid, and never had

3 dealings with Mr. Traynor?

4 A. Yes, they wouldn't want to, necessarily.

5 348 Q. Yes, so there were such clients?

6 A. Yes .

7 349 Q. Were Kennedy McGonagle a source of

8 clients...(INTERJECTION)

9 A. Not a major source, no, but we did have some

10 business from them.

11 350 Q. Some business?

12 A. Yes .

13 351 Q. Any other law firm that you can think of,

14 Mr. Collins?

15 A. No, not offhand.

16 352 Q. Any other accountancy firm that you can think of?

17 A. I cannot remember. I just can't remember, I don't

18 know.

19 353 Q. Were there professionals other than accountants and

20 lawyers who might have referred business?

21 A. Professional field? No, I don't think so.

22 354 Q. You mentioned this morning the management style in

23 Cayman and that you had adopted perhaps something of

24 the Dublin style, which I understood you to mean

25 fairly relaxed, almost convivial, would that be

26 fair?

27 A. Yes. We had a staff, I would say, who was very

28 loyal and we were loyal to them and it was a great

29 staff.

102
 1 355 Q. Yes. It was a small set-up, was it not, in terms of

2 numbers of people?

3 A. Yes, in their heyday, I would think 35, 40.

4 356 Q. Yes. Mr. Furze, I understand, was a fairly

5 convivial or ebullient sort of man, would that be

6 right?

7 A. He was a mixture, yes. He was actually quite

8 sensitive.

9 357 Q. Yes. And you would have known him a long time?

10 A. A long time.

11 358 Q. In management terms, presumably, if there was

12 anything of significance, you are likely to know

13 about it, even if it was on his side of the

14 business?

15 A. Yes.

16 359 Q. When Mr. McAuliffe came in 1988, I think, is that

17 right?

18 A. Yes.

19 360 Q. Isn't that right, Kevin McAuliffe in 1988?

20 A. Yes.

21 361 Q. Do you recall that? I think you said that you had

22 some dealings with them?

23 A. With Mr. McAuliffe?

24 362 Q. Yes.

25 A. Yes, probably.

26 363 Q. Well, do you recall having dealings with him?

27 A. Not specifically, but I mean, he came to do the due

28 diligence so I am sure he would have talked to me

29 about it.

103
 1 364 Q. Have you seen these bundles of documents,

2 Mr. Collins?

3 A. Yes .

4 365 Q. You have seen his report, then, have you?

5 A. Yes .

6 366 Q. You have seen, I take it then, what he had to say

7 about the loan position and the comments he made in

8 respect of the loans?

9 A. Yes .

10 367 Q. Do you think his comments are fair?

11 A. Can I refresh my memory?

12 368 Q. Yes, of course. The documents begins at 293. In

13 relation to the loans, you will find the material on

14 page 302 (Exhibit 17).

15 MR. MAYHEW-ARNOLD: It is in the second

16 bundle.

17 369 Q. MR. CUSH: Just under the heading

18 "Comment" in particular,

19 Mr. Collins, if you just look at those roman numeral

20 subparagraphs.

21 A. Yes, I would take issue with some of these comments

22 here, how they appear, because bear in mind again

23 that we were probably lending, and mostly we lent to

24 trusts or companies under our management. So

25 perhaps it was a bit lax and we didn't get, on the

26 one hand, completing this document to this other

27 hand all the while. But we were in control, we were

28 lending to entities controlled by ourselves and we

29 had the assets under our control. So if we didn't

104
 1 have full authorisation or security of documentation

2 or things like that - we owned it.

3 370 Q. Yes. So is the point you make fairly summarised by

4 saying that whilst the facts there stated may be

5 largely accurate, they don't properly take into

6 account what you have just mentioned?

7 A. That is right.

8 371 Q. When Mr. Jennings came, am I right in thinking that

9 Mr. Jennings came sometime in very early 1992?

10 A. Yes.

11 372 Q. That is what appears from the documents but would

12 that accord with your own recollect?

13 A. Yes.

14 373 Q. He, unlike Mr. McAuliffe, I think, went out for an

15 exercise. He was coming for a longer period of

16 time, isn't that so?

17 A. Yes.

18 374 Q. Did that produce some resentment on the part of

19 those already in Cayman?

20 A. Yes.

21 375 Q. Would you have been one of the people who felt that

22 was evident?

23 A. Yes. It wasn't particularly - I was one that

24 supported partly his coming in, it was a post they

25 wanted him to occupy. We were looking for, yes,

26 support and some help in certain areas but this went

27 a little further than that. We had an open dispute

28 at the board meeting.

29 376 Q. Yes.

105
 1 A. Bear in mind we were at that point still

2 shareholders and the costs and everything else were

3 important to us and we were going to have to absorb

4 those costs, as we saw it.

5 377 Q. Yes. When you say "we", do you mean Mr. Hart,

6 Mr. Furze and yourself?

7 A. Yes.

8 378 Q. What about Mr. Traynor? Where did he stand on the

9 issue?

10 A. In the same way.

11 379 Q. He shared your view?

12 A. Yes.

13 380 Q. The contrary view was being taken up, then, by who

14 in particular? Mr. Fenhalls?

15 A. Yes.

16 381 Q. Anybody else?

17 A. Mr. Button.

18 382 Q. Mr. Button. Anybody else?

19 A. Mr. Jennings.

20 383 Q. Mr. Jennings. In any event, he arrived and?

21 A. The terms were slightly different to the original

22 concept.

23 384 Q. I see. Did the resentment dissipate over time or

24 did it continue?

25 A. I think largely for myself and others, it did

26 dissipate, but for John - no, the relationship

27 wasn't good.

28 385 Q. Wasn't good. I gather that you were about to say

29 that with Mr. Furze in particular, it wasn't good,

106
 1 would that be fair?

2 A. Yes .

3 386 Q. Is there anything in particular that seemed to you

4 to be causing that poor relationship?

5 A. That is a hard one to comment on, going back and

6 remembering the ins and outs of it, but it was...

7 Shall we say, I have seen documents since, only in

8 these last few weeks, which indicate perhaps why

9 that resentment was there, because of an attitude,

10 and we never knew that everyone was looking to get

11 us out at that time.

12 387 Q. Well, there is a suggestion in the documents which

13 you will have seen in this bundle that the people in

14 London didn't think a great deal of the management

15 in Cayman. I think that would be a fair summary,

16 wouldn't that be so?

17 A. It was rather a volte-face over three months.

18 388 Q. Yes. Do you mean that he went out thinking the

19 management was quite good and changed the opinion or

20 the other way around?

21 A. No, they thought we were great up to about three

22 months when the results didn't come in and the rest

23 of it and there was a sudden change.

24 389 Q. Yes .

25 A. As far as we saw it.

26 390 Q. I see, that is how you saw it, yes.

27 A. I mean, one moment Richard Fenhalls is talking to me

28 about 'Would you like to take over the group?' and

29 then six months later, you know, we are into this

107
 1 scene.

2 391 Q. Yes. And you will have seen then in the documents a

3 fairly clear desire on the part of London that

4 Mr. Furze and yourself, and indeed Mr. Traynor

5 later, but Mr. Furze and yourself were going to

6 effectively leave executive functions to the

7 company. Now was that ever said to you?

8 A. No.

9 392 Q. Never?

10 A. Not at that time, no. No, there wasn't any of that.

11 It wasn't to that -- though I say I have seen it in

12 the last two weeks.

13 393 Q. Yes. Nobody said that or hinted at it?

14 A. Not to that degree. The situation was always mostly

15 that Fraser Jennings was coming in as managing

16 director and we would take lessor roles, etc., but

17 that was it at that point.

18 394 Q. Back in London, in this period early in 1992 and on

19 into 1992, there were periodic meetings both of the

20 board and with what is known as the Audit and

21 Compliance Committee, and a regular topic for

22 discussion was what was termed "the Dublin accounts"

23 and concerns were being expressed about the Dublin

24 accounts. Did you know that was happening?

25 A. Not to the extent that I have seen in the documents,

26 no.

27 395 Q. What did you know, Mr. Collins, about concerns?

28 A. It was something that was raised perennially, that

29 Des always said you have to satisfy them.

108
 1 396 Q. Did you know, then, that they were concerned and

2 that they would bring the topic up with Mr. Traynor

3 and then you felt the concerns?

4 A. Yes, and then they would send people out to look at

5 it and that.

6 397 Q. What were they concerned about?

7 A. I think they were concerned on the identity basis,

8 on the banking idea, 'we don't know the clients'.

9 More than anything else, that was the prime concern.

10 398 Q. Who first said that to you?

11 A. Well, I don't know. I am putting to you what I

12 think their concern was, I don't say that anybody

13 actually said that to me, I am presuming.

14 399 Q. That may not have been said in those terms?

15 A. No.

16 400 Q. From whom did you gain that impression? Was it

17 Mr. Jennings primarily?

18 A. No, I think it was before. I mean, I think the

19 auditors had raised this issue with Des at audit

20 meetings and one thing and another.

21 401 Q. And were you aware of that, you were?

22 A. Yes .

23 402 Q. I think in April 1992, Mr. Traynor was in Cayman and

24 Mr. Jennings was obviously in Cayman, having arrived

25 a couple of months before and they had what is

26 described as a lengthy discussion about the

27 accounts?

28 A. Yes .

29 403 Q. Do you recall that?

109
 1 A. No, I wasn't part of that.

2 404 Q. Well, you may not have been part of that discussion

3 but you presumably were aware that Mr. Traynor was

4 over?

5 A. Yes, Mr. Traynor was probably over or they may have

6 told me that they were having these discussions, but

7 I was kind of kept out of it, you know, not

8 deliberately, but kept out of it by 'you have other

9 things to do, we will sort this out'.

10 405 Q. You see, one of the terms used in these documents

11 was that at that time, arising from that discussion

12 in April, Mr. Jennings seemed satisfied that the

13 business was bona fide, was that the word? The bona

14 fides of the business, that was something that was a

15 concern at that time, that was what was being said?

16 A. Yes, but I think it was a small... I wasn't

17 necessarily involved or needed to be, it was a small

18 part of the business, looked on it as a kind of a

19 fiduciary account.

20 406 Q. Why was the identity of the clients something that

21 gave rise to concern about the bona fides of the

22 business?

23 A. Well, it is always the danger of having read

24 documents and finding this out afterwards. Why

25 would it be? I would say today it would be a problem

26 because of succession. If something happened to

27 Des Traynor, who are the clients? Even if it is only

28 a managed company and we have assets for them, who

29 are they? And we didn't have that information in

110
 1 Cayman, as far as I could see.

2 407 Q. That is something that might go to the efficiency of

3 the business rather than the bona fides of the

4 business, you understand. But you have seen

5 Mr. Collins, the memo in September, 16th September

6 memo, have you seen that?

7 A. I think so. Which one is that?

8 408 Q. It is 524 in that second one (Exhibit 18). This is

9 a memorandum of 16th September 1992 and it is from

10 Mr. Jennings and Mr. McAuliffe and it is back to Mr.

11 Fenhalls and Mr. Button. I should just ask you

12 before you go further, have you seen a transcript or

13 a draft or uncorrected or unapproved transcript of

14 Mr. Fenhalls' evidence?

15 A. Of his evidence, yes.

16 409 Q. Yes, you will appreciate. You will appreciate then

17 that in very broad terms, he described this as being

18 a quite dramatic and significant piece of

19 information that was coming to him through this

20 memorandum, you will have picked that up?

21 A. Yes.

22 410 Q. Now what is said on the second page of the

23 memorandum under the heading "Comment": "The areas

24 which cause concern can best be summarised as..."

25 And then there is a list of concerns. They would be

26 concerns which would go to the bona fides of the

27 business, would they not?

28 A. There was concerns, yes. I don't think there was

29 ever any breach of exchange control.

Ill
 1 411 Q. Well, leave aside whether there was or there wasn't,

2 this concern about whether there might have been,

3 whether there was a banking business without a

4 licence, whether there was assistance of tax

5 evasion, those are concerns that go to the bona

6 fides of the business, you will agree with that?

7 A. Yes, but that is very broad, that assisting, you

8 know, evading tax. If people come to you with money

9 outside, you don't necessarily enquire of their tax

10 position.

11 A. I understand that. But what I want to know,

12 Mr. Collins, is that these serious concerns about

13 the bona fides of the business, was anybody coming

14 to you as joint managing director and saying; 'What

15 is going on here?'.

16 A. No, they weren't particularly, no. No. By that

17 time, Fraser Jennings had come in and when this was

18 going on, I think I was one of the excluded parties.

19 412 Q. Well, surely Mr. Furze came to you and said;

20 'My God, this is what they are saying now.'?

21 A. Yes, he may have done, he may have done.

22 413 Q. Either he did or he didn't?

23 A. I don't know, I can't remember.

24 414 Q. I think you must recall whether he did or he didn't?

25 A. Going back ten or eight years, I honestly can't

26 recall.

27 415 Q. It is not something he is likely to have kept secret

28 from you, is it?

29 A. No, but we may have had that kind of comment about a

112
 1 lot of things.

2 416 Q. Comments of this nature?

3 A. No, not of that nature but comments relative to

4 London controls, etc.

5 417 Q. Were you aware that advice was taken from Maples &

6 Calder?

7 A. Not until after, long afterwards.

8 418 Q. Were you aware of the nature of the advice?

9 A. Afterwards. Sometime afterwards, I can't remember

10 when exactly but I did.

11 419 Q. A year, two years, a month, how long?

12 A. I am trying to think when this came up or whether it

13 came up with me reading this or whether I learned

14 about it something like a year or two years later.

15 420 Q. You will have seen handwritten notation at the foot

16 of the page of the 16th September memorandum

17 (Exhibit 18) and that, as you probably will

18 appreciate, is Mr. Fenhalls' handwriting?

19 A. Yes.

20 421 Q. He is advocating drastic action, is he not? He is

21 suggesting the end of the business, off the books

22 and Mr. Traynor's position is untenable. That is a

23 significant development in the business, is it not?

24 A. Yes.

25 422 Q. Did you know that that view was being taken at that

26 time?

27 A. No.

28 423 Q. Nobody told you?

29 A. No. Well, I knew the business was going.

113
 1 424 Q. Yes. Who told you that?

2 A. It would be either Fraser Jennings or John Furze.

3 425 Q. Yes. Well, if you knew the business was going, you

4 must have known why it was going?

5 A. Well, as I say, there is a bit of history of this on

6 the unknown, client relationship and everything

7 else. Again, it wasn't major but they wanted it

8 done. They had not got this far before.

9 426 Q. Had it ever happened to you before that somebody had

10 said; 'We must rid ourselves of that business'?

11 A. All kinds of business... No, I think they probably

12 didn't, but not coming from us, we may have done it

13 ourselves and we may have looked at certain types of

14 business in certain areas.

15 427 Q. So, you will agree it is a significant thing to do?

16 A. Yes .

17 428 Q. And it involves taking a view on the desirability of

18 doing that business and clearly that view had been

19 taken in this case?

20 A. Yes .

21 429 Q. And as far as you understand, that view was taken

22 predominantly because of concern about the identity

23 of the clients, is that right?

24 A. That is right.

25 430 Q. JUDGE O'LEARY: That is the kind of

26 decision, Mr. Collins,

27 that you would take if somebody came along to you

28 and gave you information that money you were holding

29 on deposit was drug dealer's money or something,

114
 1 isn't that right?

2 A. Yes.

3 431 Q. It would want to be something of that significance?

4 A. Well, yes, I think there was a clash of views on

5 what that money, how it was handled.

6 432 Q. But if somebody did come along to you at that time

7 and said; 'Well, X's money is drug money', you would

8 get rid of it as soon as you could, isn't that true?

9 A. Yes, on drug money, yes.

10 433 Q. Yes. So it is that kind of level of problem before

11 you would start deliberately getting rid of money?

12 A. I don't.... The drugs is far worse.

13 JUDGE O'LEARY: I see.

14 434 Q. MR. CUSH: In that period, what did

15 you understood had

16 happened in September 1992?

17 A. They said that those accounts should go?

18 435 Q. Yes. Off the books, I think, was the expression.

19 What did you think had actually happened?

20 A. I think that the fact that John Furze and Des

21 Tryanor got it off very quickly. They transferred

22 it, I think, to this, what is the name again? The

23 other company, not Poinciana.

24 436 Q. JUDGE O'LEARY: Hamilton Ross?

25 A. Hamilton Ross.

26 JUDGE O'LEARY: Sure, it was already with

27 Hamilton Ross.

28 A. No, I don't think so. Was it?

29 MR. CUSH: You see, the memorandum

115
 1 tells you, if you look at

2 the 16th, at page 524 again (Exhibit 18).

3 JUDGE O'LEARY: 52 4?

4 A. Yes, all right, it was.

5 437 Q. MR. CUSH: So what do you think

6 actually happened then?

7 A. Well, Hamilton Ross ceased to be a company managed

8 by Ansbacher. They took over the management of

9 Hamilton Ross, someone did, it was transferred.

10 438 Q. Let's see if we can take it in steps. Hamilton Ross

11 ceased to be managed by Ansbacher, isn't that right?

12 A. Yes .

13 439 Q. The shareholders and directors changed. Were the

14 directors changed?

15 A. Yes .

16 440 Q. The directors were changed?

17 A. Yes .

18 441 Q. What then happened to the money? What went off the

19 books and where did it go?

20 A. Well, it stayed with IIB, I presume. It was in

21 their name in IIB, from what I have read here, so it

22 stayed there.

23 442 Q. So do I understand you correctly to say that the

24 objective was achieved by the simple device of a

25 change of directorship in Hamilton Ross, is that

26 right?

27 A. I would think so, yes.

28 443 Q. Just you are not really -- you are more on the trust

29 side rather than the banking side, are you?

116
 1 A. Yes .

2 444 Q. Does that take it off the books?

3 A. I think it does, if it wasn't, you know.

4 445 Q. Okay. The continued management of Hamilton Ross,

5 what did you know about that?

6 A. I knew that... I didn't really, no, I don't know

7 anything about it, very much. Because it went,

8 Hamilton Ross, I think, it went out of the office at

9 that time. I think John Furze was probably still

10 involved with it.

11 446 Q. I think probably everybody in the room knows that to

12 be the case, but you surely knew that, Mr. Collins?

13 A. Yes, I probably did.

14 447 Q. Did you think that that was appropriate?

15 A. It, shall we say, it would have gone, it went away

16 completely, I think, for a short time, I don't know

17 what happened. Whether I knew when it came back on

18 and everything else, I don't know, no, I couldn't.

19 448 Q. Leave aside the dates and even if there was an

20 interval of separation, did you think it was

21 appropriate that Mr. Furze should have a continued

22 role in the management of Hamilton Ross?

23 A. 1992 or 1993, no, I don't suppose it was.

24 449 Q. I take it you didn't do anything about it?

25 A. No, and it is very hard to go back on this thing.

26 Whether I was told or knew officially is another

27 matter. I don't recall.

28 450 Q. JUDGE O'LEARY: Was Mr. Traynor

29 involved as well?

117
 1 A. Well, he wasn't on the Board of Hamilton Ross, as

2 far as I know .

3 451 Q. JUDGE O'LEARY: No, no, he was the man

4 who operated these

5 accounts in Ireland. Forget for the moment whose

6 name they were under prior to the denouement in

7 September 1992, he was the man who pulled the

8 strings in Ireland, we won't call it any more than

9 that. Who did you think pulled the strings in

10 Ireland during the early months of 1993 with regard

11 to Hamilton Ross? You knew it was still Des

12 Traynor?

13 A. Hmm.

14 452 Q. JUDGE O'LEARY: Is that fair?

15 A. Yes, I think so.

16 453 Q. JUDGE O'LEARY: Okay. If I could ascribe

17 to you the nickname of the

18 three musketeers who established the company, two of

19 the three musketeers were still pulling the strings

20 in Hamilton Ross in 1993, isn't that right?

21 A. Yes, it would have been.

22 454 Q. I don't suppose the third musketeer, they didn't

23 keep you, I am not saying they were going around

24 talking about it every day to you, but they didn't

25 hide the fact from you?

26 A. I don't think it was mentioned much at all, no, it

27 would almost be isolated from them.

28 455 Q. JUDGE O'LEARY: Are you saying that there

29 was a break between the

118
 1 three of you?

2 A. No, there wasn't, no, I can't say that, no. There

3 wasn't a break between us.

4 456 Q. JUDGE O'LEARY: A subdivision, that the

5 two of them were doing

6 something associated with your joint venture but

7 excluding you from it?

8 A. Well, this wasn't part of it, it was no longer a

9 part of Ansbacher.

10 JUDGE O'LEARY: I see.

11 MR. CUSH: Thank you very much,

12 Mr. Collins.

13 457 Q. MS. MACKEY: I think I have just one

14 question, if I can find

15 it. Mr. Collins, you mentioned there earlier that

16 there were Irish clients who were referred by

17 somebody other than Mr. Traynor and with whom

18 Mr. Traynor never dealt. How did those clients deal

19 with Ansbacher, with GMCT, did they deal directly?

20 A. Yes.

21 458 Q. By letter, by telephone or did they deal through an

22 agent? How did that work?

23 A. I don't think it is all encompassing, I can't say

24 that they all dealt with this or dealt with the

25 other and some would be direct, some may continue to

26 go through the lawyer. There was a history

27 generally of our business and a lot of the business

28 was conducted through lawyers, as the clients'

29 representatives.

119
 1 459 Q. Would those clients who didn't deal through

2 Mr. Traynor, would they have been in the main trust

3 clients or would there have been people who just had

4 deposits?

5 A. Mainly trust clients.

6 4 60 Q. And would any who had the use of a company just

7 without having a trust?

8 A. Yes, could be.

9 461 Q. There would be?

10 A. Could be.

11 462 Q. Would they deal through a lawyer or a firm of

12 accountants or directly?

13 A. I cannot say exclusively, some may.

14 463 Q. You can't be more specific?

15 A. I cannot pinpoint that.

16 4 64 Q. In the main, could you put a rough number on how

17 many they were who were non-Traynor clients,

18 roughly? Would it have been as many as 20?

19 A. Yes, it could well have been.

20 465 Q. Would it have been more?

21 A. No, I don't think so.

22 466 Q. About 20?

23 A. I would say so.

24 MS. MACKEY: Okay, thank you very much.

25 I have no further

26 questions.

27 467 Q. JUDGE O'LEARY: There is just one little

28 area that I would like to

29 cover which I would like to go back on, Mr. Collins.

120
 1 It is an area which I want to try to understand.

2 Because of the terms of reference and the Orders we

3 got from the High Court, we have to consider Irish

4 business as defined by the Courts and that includes

5 people who have no business in Ireland at all and

6 where loans were arranged through Ireland. There

7 were a large number of, and I think I will use the

8 word 'characters' without referring to any

9 individual because I don't want to refer to

10 individuals, from the United States who apparently

11 had no connection whatsoever with Ireland, some of

12 them had Irish names, but I would say that that is

13 about the size of it, some of them had distinctly

14 unlrish names. Whose side of the business was that?

15 A. Mine largely.

16 468 Q. Presumably, you had dozens of such clients, some of

17 whom never came near Ireland at all?

18 A. Yes, well, dozens may be exaggerating but, yes, we

19 had quite a few.

20 469 Q. But there was a group with some cohesion between the

21 group or other people outside that central core, if

22 you like, that arrangements were made to borrow

23 money in Ireland on a back to back basis?

24 A. Yes .

25 470 Q. And money was placed on deposit?

26 A. Yes .

27 471 Q. Where such a facility was required by a United

28 States citizen in particular, was it always through

29 Ireland it was done?

121
 1 A. No, just a correction, they weren't usually US

2 citizens. They may be doing US investments, they

3 may be Mexican or what have you, but they weren't

4 necessarily US nationals.

5 472 Q. I am not talking about people who had emigrated from

6 Ireland.

7 A. No, I am not talking about them either, no, I am not

8 talking about that at all. I am saying that those

9 loans were arranged for people. In short, the US

10 tax laws had an allowance that you could -- it was

11 easier after they brought in the foreign real estate

12 property tax situation. In particular, if you are

13 investing in a property in America, there is a

14 formula set out that you could set against it. You

15 had to put a certain amount of equity up to make it

16 a reasonable transaction, but that could be 20% and

17 you could lend the rest.

18 473 Q. Yes.

19 A. And you could lend the rest in and get an interest

20 rate against the profits, the US taxes. That lender

21 was better if it was a bank, a foreign bank. So,

22 Guinness & Mahon Dublin was the lender of choice

23 which had the treaties etc. to do it.

24 474 Q. The only other thing arising out of that that I

25 would like to ask you is were you the executive that

26 handled the series of loans that, unfortunately,

27 ended up in court in Florida? I don't want to go

28 into the details of those.

29 A. No, I wasn't, John was, but it was a disaster.

122
 1 475 Q. A disaster?

2 A. A disaster.

3 476 Q. I know and I don't want to go into how much of a

4 disaster it was, I appreciate that, and Mr. Furze

5 may appear to be ...

6 A. Yes, these are the ones in Fort Lauderdale.

7 477 Q. I don't want to mention any individuals' names.

8 A. An absolute disaster for the clients and it wasn't

9 too good for us.

10 478 Q. I understand that, yes. We have received

11 information, which we may have to reflect in our

12 report, that some of the documentation concerning

13 those loans were false, that loans were said to

14 exist which didn't exist at all and the property was

15 confiscated by the Irish company in circumstances

16 where it was alleged that loans were defaulted on

17 where no such loans existed at all, do you know

18 anything about that?

19 A. No, are you sure you are not getting confused, is

20 this Guinness & Mahon?

21 479 Q. Yes, I am saying precisely what I am saying. It may

22 well be that they were Guinness & Mahon.

23 A. Dublin?

24 480 Q. Yes.

25 A. The Lauderdale situation I immediately thought you

26 were referring to. I am trying to recall, but I

27 don't think it had any big lending situation that

28 was causing us a loss. It was a disaster and a lot

29 of trouble.

123
 1 481 Q. I find myself restrained by the difficulty in not

2 mentioning the name and I won't pursue it any

3 further, but I am in difficulty in that regard. We

4 certainly have evidence before us which would

5 suggest that loans were created, a loan was created

6 on paper only and that property was acquired by

7 Guinness & Mahon in Dublin in circumstances where it

8 was alleged that there was a default in a loan which

9 never existed. Do you know anything about that?

10 A. I don't.

11 MR. MAYHEW-ARNOLD: Around about what time

12 would that be, about what

13 year?

14 MS. MACKEY: Perhaps we could simply

15 write down the name and it

16 need not go on the record. (SAME SHOWN).

17 A. This man I didn't know, this was one of John's.

18 John did bring him and he was a disaster of a

19 client, but he wasn't an Irish client.

20 482 Q. JUDGE O'LEARY: It is an Irish client as

21 far as we are concerned,

22 because the documentation is alleged to exist that

23 that was an Irish loan.

24 A. This was ... (WITNESS SHAKES HEAD)

25 483 Q. The allegation is that there was an Irish client,

26 there was a loan granted by Guinness & Mahon in

27 Dublin in respect of this client and it was backed

28 by various funds held by GMCT and also by a

29 guarantee against the property. The loan was, and I

124
 1 will go so far as to say deliberately defaulted on,

2 and then the property acquired by Guinness & Mahon,

3 all with the approval of Guinness & Mahon Cayman

4 Trust. Do you know anything about that?

5 A. No, but I have seen some -- I didn't set this up,

6 this one I didn't, but I have got a feeling there

7 was a deposit and a loan.

8 484 Q. Oh, there were deposits, absolutely.

9 A. There was a loan up against those deposits.

10 MS. MACKEY: But there were two

11 separate loans, that might

12 be the confusion for two different members of the

13 same family.

14 485 Q. JUDGE O'LEARY: That is correct, and the

15 one that was "defaulted"

16 on, it has been alleged to us was a complete

17 fictitious loan, it never existed at all?

18 A. I don't know anything about that. The man finished

19 up in jail and lost everything anyway, but I don't

20 know.

21 486 Q. I think what we might do is we might actually send

22 you whatever documentation we have on that and ask

23 for your comments on them.

24 MS. CUMMINS: It is part of the public

25 record in the Moriarty

26 Tribunal.

27 JUDGE O'LEARY: It is anyway, but we will

28 send what we have.

29 MR. GORDON: Can you give us the

125
 1 approximate date again?

2 MS. CUMMINS: The date of the loan or

3 the date of the Moriarty

4 transcript?

5 MR. GORDON: The date of the loan?

6 MS. CUMMINS: 1985.

7 MR. MAYHEW-ARNOLD: If you have it there.

8 JUDGE O'LEARY: It is just that somebody

9 in evidence to us has made

10 the statement, somebody in whom we have confidence

11 and we must either decide if we are going to refer

12 to it, we might decide not to refer to it at all,

13 but we must find out is there another different

14 viewpoint than the viewpoint which we have got,

15 because it would be unfair for me to do that. That

16 is it, I have no further questions. Mr. Collins,

17 thank you very much, I greatly appreciate your

18 attendance and could we thank you very much for the

19 courtesy that you showed us in (a) attending, and

20 (b) in answering the questions. We hope that that

21 will be the last time that we will have to ask your

22 assistance, but thank you very very much indeed and

23 we wish you a long and very happy retirement.

24 MR. COLLINS: Thank you very much.

25

26

27 END OF INTERVIEW

28

29

126
Appendix VII

(a) A note to the Securities Department of GMI from Mr Traynor dated 70ctober
1987

(b) Instruction to Mr P O'Dwyer from Mr Traynor dated 3 Aug 1988.

(c) Central Bank inspection report 31 August 1982 (extract)

(d) Central Bank inspection minute of meeting held on 9 August 1979, extract
Appendix VII (a)
 19 Lower Pembroke Street.
Dublir 2.

Teleprcne (01) 763065

/J. 0. T-aynor

7th October, 1987.

Securities* Dept.,
Guinness + Mahisn Limi£6d,
17 College Greenv /
DUBLIN 2.

rs

Dear Sir3r
Many thanks for letting me have the envelope
containing John Barrett's old Will from my dossier.
Receipt enclosed herewith.
I also enclose envelope marked 'John Barrett
Letter cf Wishes' and would be grateful if you could
put this in my dossier with the enveloDe marked
'John 3arrett - Will'.
Many thanks.
Yours faithfully,

r
V;
rN

JDT/AJW
Appendix VII (b)
 T«L7MSS1/7N0M 19 LOWER PEMBROKE STREET,
Facahnttte 812035 DUBLIN 2.

M E M 0 R A N D U M

Patfil 3rd August 1988.

J.D

Confirming Joan's telephone conversation with y o u , I

would be grateful if you could arrange to let me have:
f'-ftfOk A U.S. Dollar Draf- for US$2,400 payable to
The Rental Connection, Maine, U.S.A.
Ii" U.S.$500 in n o t e s .
Stg.£200 in cash.

Each amount should be debited to G.M.C.T. No.2 Sub-Company

Account.

J.D. Traynor.

JDT/AJW

A3/5H-H&'
Appendix VII (c)
 Guinness Mahon Cayman Trust
The balance sheet of the company at 30 September 1982 is contained
in Appendix 22. It shows that the Company had assets of £166 million
at that date comprised mainly of liquid assets (£128 million). Advances
by the company amount to only £36 million. As far as we are aware
the bank conducts normal banking operations. It is a matter for consideration
as to whether we should seek to verify this understanding.

Prior to 1972 (when the Cayman Islands ceased to be part of

the scheduled territories) funds were transferred from this country
and placed in a discretionary trust of which Guinness Mahon
Cayman Trust were the trustees (J.D. Traynor is a director of
the company). The owner of these funds could then borrow from
Guinness"5,Mahon Limited an amount equal to the value of the funds
in the Cayman. The loan was secured by these funds. This security
was formalised by the borrower signing a promissory note pledging
the funds in the Cayman to the bank should the loan fall into
arrears.

The scheme had the obvious benefit for the depositor/borrower

in that the deposit earned interest which was taxable at a low
rate in the Cayman and the interest on the loan was allowable for
tax in Ireland. The benefit to the bank is that a margin of 0.5
per cent, to 1.0 per cent, is earned on each loan with no risk
attached.

No funds have been transferred from this country to the Cayman Islands
since 1972.
As stated in Section 3(») loans secured in this manner amount to
approximately £2 million.
* Summary of balanceTheet at 30 September 1982

£'M
Liquid assets 128.2
Advances 36.8
Other Costs 1.6

166.6

Deposits 162.5
Other Liabilities 1.0
Capital and Reserves 3.1

Ui6.6

The budgeted profit for 1982/83 is £800,000 before tax.

Appendix VII (d)
 ftillHNESS & KAHON LIMITEEi

Meeting held on 9 August in College Green, at 3.00pm.

Attended by:
Mr. D. Traynor
Mr. M. 0'Kelly Guinness & Mahon
Mr. D. McCleane

Mr. B. Daly Central Bank

Mr. N. Kennedy

Mr. Daly explained the purpose of the meeting which was to review the progress
in the bank since the last inspection on the affairs of the bank at 30 April
1978. Mr. Daly said it was now the policy of the Bank to hold review swet-
ings with the banks twice yearly, supplemeriting the detailed examinations
which would take place every 2 to 3 years. He explained that these meetings
were Intended to be a two-way process where the Bank would be informed of
the state of affairs of the bank and also ths bank would have an opportunity
to air artyvlfcwslt might have.

Kr. Daly said that since 1976 Guinness & Mahon Limited had received quit* a
lot of attention in the Central Bank, mainly because of its lending to the
property sector and also its shareholdings in companies to which it granted
loans. As a result of this conditions were Imposed on the bank in Jure 1977
restricting these forms of lending. Mr. Traynor accepted that these steps
were necessary and the conditions are being complied with.

The bank was then discussed under the following headings

1. Capital Adequacy

Mr. Daly said that the bank was adequately capitalised on a group basis
having a free resources ratio at 30 April 1979 of 14.4 per cent. The
capital employed to gross assets ratio of the Group was 5.6 per cent.
2. Profitability

As can be seen from Appendix 1, the operating profit of the bank has
been increasing steadily since 1975. The actual profit before tax
has fluctuated considerably due to provisions for bad debts and the
sale of interests 1n subsidiary companies. Mr. Daljf.asked what the
profit expectations for 1979/80 were. Mr. Traynor said that the bank
had budgeted for a profit before tax of about £750,000, which was app-
roximately half of last year's figure. He explained the reason for
this fall was due to high Interest rates, continuing increases in over-
heads, the loss of Income on the dollar premium and the credit restrictions.
He said that the credit policy restrictions would hit his bank as It
had been the policy of his bank to keep advances at a low level since
1976. He hoped that his bank would be able to get some concession
from the restrictions for this reason.

The profits of the subsidiaries would be similar to 1978/79 and the •

reduced profitability would be mainly due to a reduction in the parent
bank, though it was expected that £100 - 150,000 of bad debts would
be recovered. (Such recoveries are not Included In the budgeted profit
of £750,000).
Concluding the discussion on profitability, Mr, Daly said that 1t was
good prudential policy that bank profitishould grow and, with this In
view, he felt that the Bank would be sympathetic towards any represen-
tations which were made by the bank on the credit policy Issue.

3. Loan Portfolio

Mr. Daly said that the spread of risk in the loan portfolio was satis-
factory (see Appendix 2 ) and asked If there were any large loans 1n
the Cayman Company. Mr. Traynor said that at 30 April 1979 the loans
by the Cayman company totalled £4j million, of which flj million was
backed by deposits. He said the largest loan was £1.1 million. He
added that there was no plan to expand the loan portfolio In Cayman
and that there were no loans to Irish companies or residents from Cayman.

Mr. Daly then asked for some details on the larger loans by the bank
(see Appendix 3).

Mr. Daly asked if the bank envisaged issuing any preference share or
 lypes of loans are messy, very competitive and,in any case, the bank
can attract sufficient of the normal banking loans without adverting .
to these types.
/

In reply to a query from Mr. Daly, Mr. Traynor said 'ihat the bank would
seek to expand its lending in the Agriculture and Service industrial
sectors. He said the most troublesome areas are the small manufacturing
companies and labour intensive industries.

4. Deposit Portfolio

Mr. Daly said he had no comment to make on the deposit portfolio which
was in line with all the Bank's standards(/fyvW.* S).

S-. Liquidity

Mr. Daly said that the liquidity ratio for the bank and group was over
So per cent, which was adequate. Mr. Traynor said that the high ratio
was as a result of the bank's curb on lending in recent years and the
present curtailment on lending due to the Bank's credit policy. He
added that he would be visiting the Bank's Banking Department with the
view to discussing the credit policy In relation to his bank.

6. Guinness Mahon Cayman Trust Limited

Mr. Daly asked Mr. Traynor to comment on the International activities

of the company. Mr. Traynor said the bank had an "A" licence to do
business in the Cayman Islands. It had a staff of 21. The bank's
business is mainly banking and trust management. Another Guinness
Mahon company, Guinness Hahon Guernsey Limited,are the trustees of hun-
*MJL»L«_ dreds of discretionary trusts, owning companies with registered offices in
LtrkiJL I the Cayman Islands. Deposits from Irish residents SsTplaced in the
name of one of these trusts which onlends to ons of these companies
/4s».4jbsr>S. a n d t h e f u n d s a r e tur|> d e p o s 1 t e d ^th the Cayman bank. The Cayman
Bank redeposits these funds with tho Dublin bank which may give an ad-
vance to a customer (original depositor) secured hy these funds.
Mr. Traynor said that there was little increase in activity in the
Cayman company in the last few years and he did not.think it would
grow any further.

The meeting then concluded.

Appendix VIII

(a) Guinness Mahon London internal memo of 1 May 1990from Michael Whitmarsh
to the Credit Committee entitled ' G&M Dublin - John Byrne Group Connection'

(b) Guinness Mahon London internal memo dated 28 September 1989, same to same,
and entitled 'J. Turley connection - G&M Dublin'

(c) Guinness Mahon London internal memo dated 11 June 1984from Mr Traynor to
Mr Pat O'Dwyer of Guinness & Mahon

(d) Guinness Mahon London internal memo dated 18 December 1984from Bruce
Ursell to the directors of GM London
Appendix VIII (a)
 10 2 c
M E M O R A N D U M

GUINNESS MAHON & CO TO: credit Committee

DATE lay 1990 FROM: Michael Whitmarsh
Credit Control Unit

/ G&M DUBLIN 4- JOHN BYRNE GROUP CONNECTION

I The annual renewal for these "fully adequate*' facilities was
V submitted to Credit Committee on the 24 April. Committee decided
that the proposal should be resubmitted with some further
information, justifying renewals at the margins quoted.
Committee will recall that this business has been with G&M for
some years and was introduced and previously managed by Mr Des
Traynor.
Backing deposits are held at G&M Dublin in the name of Ansbacher
Caymen Islands, but there is no supporting guarantee. Despite
this, Dublin feel that the margin is satisfactory on these loans.
They have other business generated from this source (loans,
deposits and investment business) which is, or in the past,
has been introduced by Mr Traynor and the Caymen association.
The net worth of the John Byrne companies is in the region of
£10 million andtthey.JAre very happy with the relationship.
Total deposits with G&M from Ansbacher Caymen total some
£35 million on which Dublin pay market rates. It is their view
that they would have great difficulty in raising an amount of
this size in the local market on the G&M name. Only sources
available for this size of money are the Irish clearers or large
~ .nternational banks, all of whom appear to be making allocations
; | to G&M from their Japanese country limits, which are well used.
Renewal of these facilities is requested, though it should be
noted that Dublin do have a letter from Mr Traynor stating that
if any time the provision of these facilities causes
embarrassment to G&M, he will undertake to place them elsewhere
within 24 hours.
Appendix VIII (b)
 M K M O R A H D O K

GUINNESS MAHON ft CO TO; Credit Committee

DATS: 28 September 1989 FROM: Michael Whitaarsh
Credit control Unit

J TMNRJCR OB—BCTXOW • c o t CTJBUM

Attached are applications to Credit Committee approved b y Dublin

to firstly grant a now facility to Argus Leasing Limited, a now
company f o r m d by Mr Turlay and, secondly, raarranga tha security
on tha whole connaction.
The present limits to tha Group ara sat out on paga l of tha
accompanying memoranda and total an exposure of £450,000 and
thasa ara currently sacurad by "adequate" deposits which ara
affactively under Dublin's control.
Tha Committee will ba aware of tha background of such security
and the fact that, in certain cases, this say be withdrawn in the
foreseeable future.
This is one such case where the. customer has been infocaed that
the Bank would prefer to have such arrangements conducted
elsewhere, unless additional security could be provided.
Mr Turlay wishes to maintain his relationship with six a&d has
offered additional or substitute security to back his personal
guarantee. This is a charge over three modern warehouse units
which he owns personally, situated near Dublin airport. Thasa
are currently tenanted by Avis, Valley Ice-cream (the biggest
ice-creaa distribution in Ireland) .and the third by an equally
reputable covenant. Additionally, Dublin are offered a first
floating charge over the assets of GBM Plastics Limited -to secure
that company's borrowing.
The property has been informally valued by John Pinnegan of
Fiimegan Manton at £550,000. Dublin have not insisted on a
formal valuation at this stage as they feel that it is difficult
to ask the customer (who wants to stay with them) to go to this
expense when he had quite readily produced alternative security
and they are still hold the adequacy which is currently valued at
about £1 million.
What we have therefore at the moment is additional security on
which all the formalities have not been completed, but it does
fulfill Dublin's requirement of relying less on the adequacy
which may well be removad in due course. Whan this does happen
they will require a formal valuation of the property.
Appendix VIII (c)
Appendix VIII (d)
 • MfliJl S". '.. -HONftCO II I) MEMUHANlJtlM I Hr.uv Ur:.I..- I I
.,(.; J 01 Ii H o o e m U i r , P.) 84 I 'i Uiiorlur:;

You have roooivrd a copy of i lu» Had and lkmhflLi.1 I>trt>t.«

Commit too report as part <>L Hie yeiir ind -account imj
p r o c e s s . You w i l l also hnve noted Lhiil tho repori
is s o m e w h a t more detailed than :in previous y e a r s , r
would l i k e , in addition, to draw your attention particularly
to the following items:

I have drawn these situations to your attention

as it. is usually the practice to value c o l l a t e r a l
and compare w i t h outstandings where a loan is made
to a single purpose company without outside g u a r a n t e e s .
In these cases if we did not have significant contingency
r e s e r v e s available we would have to review the
level of specific reserve. This is the view also
taken by our a u d i t o r s , who in addition feel out-
c a r r y i n g value of Bourdon and t.he unreserved portion
of B a r r y Business Systems can only bo justified
by tho comfort of our contingency p o s i t i o n .

/cont * d
 18th December, l'J!J<1

F i n a l l y , I w o u l d draw your attention to the comments

on tho C a y m a n s . No details of individual Locins
were provided from Grand C a y m a n . The Committee
agree that in view of the small size of the loan
book, to accept the assurance of RDF on the working
methods and his own look at tho p o r t f o l i o . I have
n o t , m y s f i r , «<M:II .my il>< I a i I y. ol' I h«' Cayman 1 O ; I I I
portfolio for a considerable number ot y e a r s . 'J'h<*
bulk of them are cash backed, but there are a number
of risk items, which I am assured by Des Traynor
are a l l c l e a n . I bring this to your attention
simply b e c a u s e there has not been an 'independent'
look at the portfolio since RDF's visit eight months
a g o . I w i l l in the course of the next two months
ensure that full details are made available to
m e . If there is any need to revise the recommended
position on C a y m a n , I will inform you when I have
made the e x a m i n a t i o n , but I have no reason to suspect
there w i l l be any need to change this r e c o m m e n d a t i o n .
Appendix X

(a) Internal Henry Ansbacher memorandum dated 5 June 1992

Appendix X (a)
 ANSBACHER INTERNATIONAL TRUST GROUP LIMITED

INTERNAL MEMORANDUM

To: P. J. Greenhalgh

From: KL McAuliffe

Data: 5^1^2,195)2

Subject: DUBLIN

I have amended yct-ir draft nota of 1st June, 1552, and attach a revised versior.
which I think is more renresentacLve or ths situation.

kma/jap
AtL

7l39 35
9S-VO-1.*** xifli i l a i 71398S ANSBACHER CC. I . ) LTD. " GS" Jli41
i
*

NOTE TO PILE 1 JUNE 1992

.ANftBAOfEK LIMITED D U B L I N A C C O U N T S

On 1 June 19921 spoke to Kevin McAnUffa who told me that whilst he was In Dublin
in May, 199^, he had, at the invitation of Des Traynor, taken a brief (approximately 1
hour) look at the "Dublin" accounts, which are"memorandum accounts only, As the
review had been on an ad hoc basis no written report had been prepared.

Points emerging from the discussion with KMcA were:-

the book-keeping System appeared to be satisfactory and is maintained on a

PC with backup computer data kept off-site.

KMcA did not reconcile the records against Cayman's figures, however,
these have been reconciled monthly as a matter of course since January, 1991.

KMcA suggested that the difficulty In reconciling the position originally

reported by Peats was resolved circa January 1991, and ihlt an ddxHticual
check was carried out by John Furze when he visits Dublin each September
to review the underlying trust records.
Appendix XI

(a) Memorandum account A/A30 for 1988 and 1989

(b) Memo of Richard Fenhalls 16 September 1992

(c) Examples of early 1991 instructions to IIB about the Ansbacher accounts

(d) Letter of application to open Hamilton Ross accounts in IIB

(e) Memorandum account A/A30 statements for 1995 and 1996

Appendix XI (a)
DESCRIPTION CALL PL p.; 51 T A/C

DATE PARTICULARS VALUE DATE DEBIT

3IDL C a7 $UALA.\Cc L»«UUuHr FOi<WARi.i

04JAN8Q CR. I.NTLP.LSI K A T E CHAUGlO
U.on Gi»OS c »
13JAN8A Lunor^
2yJAM81 LUOuf..

/
STATEMENT DATE - 2 ' > J A i-J 0 TF

CREDIT BALANCE

\
3,6 7 7 . 4 0
3,677.40

1•000.GO 4 ?677.40
12 ii. 00 4,802 .40
DESCRIPTION C A L L Ol.PjSiT A/C
L t U U t K

OATE PARTICULARS VALUE DATE DEBIT

>9Fi_B88 UAlA.'iCL. L-^LUOHI i ORWA'i'

) 1 MAR 8 8 .UfK/FO
I 'j MAR 8 8 -bOjC J
a
ilMAP.89 N T . rA P P L I F u 10 3i URd8
.•jD..#
 > .JIMAUQb
STATEMENT DATE

CREDIT BALANCE

V
4,802.40
125.00 4,«?27.40
, 0 0 0 . 00 6,927-40
LOO > 711
125,00 7 ,153.18
 y .
DATE PARTICULARS VALUE DATE DEBIT
ill!

3 1 MAR OC viJALAmCL uKUUbHT f ORWARU

0IAPR8Q LIJDIJ A ,
29APR88 LL.D.,Fl>

/ i
CREDIT
BALANCE
V

7,153.Id
i»ooo. on 8, 153. lb
12 5.00 8,278.18

Ui

I
 L L u u c n
DESCRIPTION -ILL l>i_ V jf> i 1 A/C
DATE PARTICULARS VALUE DATE DEBIT

3 IMAYftfl AuA.»CL u R U U G H T f-ORWAI'U

3 L Mm Yti8 LJOGPi,
30 J UN UP. LuDGF«
IiiT • APi'LirU 7 0 I G J u N b ^ 0 iJLY o 1
STATEMENT DATE *30jUN8b

CREDIT BALANCE
mi
81 ?. 7 8 « 1 il
12 5 . 0 0 0,4U3. ,1 a

15-5.22 8 »686 j

uuu

I
 CUHHtNCY < i- • «_ i i •-<
DESCRIPTION CALL D L P W S I T A/C LEDGER
DATE PARTICULARS VALUE DATE DEBIT
illti

3 0 J U N a18 ALA.iCt. L-RUIJoHT FCU'.-.'AR,

LyjLYa ? LUDL»!':..

iniu

}
STATEMENT DATE 2 9J L Y 8Q

CREDIT BALANCE

8*686.40
lati^oo 8,811,40

•
 CURRENCY I TL F L I
>
DESCRIPTION
c
LALL HL PJ . IT A/C
LEDGER ACCOUNT-NUMBER |](J001 i8<j
V
DATE PARTICULARS VALUE DATE DEBIT STATEMENT CREDIT
DATE JT AUG88 BALANCE
.UUUU

29JLY3R « ^ A L A \ C _ iiRUUOHT FO.iWA»D 8 » 8 LI •> 40

20JLY88 LdOJTO If 0 0 0 . 0 0 •» 811 . 4 0
Vw 3 1 Ao Gbsl 12i>» 00 9,936.40

liiiliu
1
 y
DESCRIPTION CALL DLPUSIT A/C LEDGER
DATE PARTICULARS VALUE DATE DEBIT

31AOG08 • i.'ALAwCL liPIJI.'GHl FOrU-'ARu

30SLPfaa LiJOoPD
I N T . APPLIFU TO 30^u PQR n in-.. Tar"
HP
STATEMENT DATE 30SE POfl

CREDIT BALANCE

9,936.40
125.00
249.II 10,310.51
 CURRENCY AVWUI4I llUlWUUf
DESCRIPTION .ALL DuPuSiT A/C LEDGER STATEMENT DATE -11 0 - T 8 8

DATE PARTICULARS VALUE DATE DEBIT CREDIT BALANCE

lililili
<«jAi.A.-iC-. ..RQIJUU l-OKWA'^ 10 » 310 o 51
030LTub LjOGFU L,000.00 11,310.51
2 iOv,TfaO L ^ r S R . 12 b . 00 1L,435.51
DESCRIPTION Z ALL DuPUSir A/C
LfcDlifcli
DATE PARTICULARS VALUE DATE DEBIT

3io:raa «=JALAir.l u R - U C H T H O k W A R J
30MUVUB L U D l T u
 > t

STATEMENT DATE " J ON 1 V 8 8

CREDIT BALANCE

11 , 4 3 5 . 5 1
l?.t>. 00 11,560.51
DESCRIPTION LALL DuP-jSiT A/C

DATE PARTICULARS VALUE DATE DEBIT

.lu'LVo- 1 • MALA-.C.. 1
'vJl!111 i f.xW-.t" ..
1
I AP- L; J in jin 1 J •'« I Ci':
 ; t

STATEMENT DATE J0 0F L 8 D

CREDIT BALANCE

L I , r> 60 . 5 1
1.uO
3 3 7 . f. 2 12,023.33
 DESCRIPTION LALL D_ P .i 1 ' A/'C
V
DATE PARTICULARS VALUE DATE DEBIT

3 U •!") u C 6 "• * -4Ct ijUol'l 1 'T ."•'/•.

H©
v..

v..

-ito
 > :
MB-

STATEMENT OATE J I JA N3 9

CREDIT BALANCE

12,023.33
i » O h . on
 /f
1 -It
DESCRIPTION CALL TC.'"' . S I T A/C
STATEMENT DATE TPFF:

VALUE OATE DEBIT CREDIT BALANCE

3L Ja.'.'IP AlA iCL I nlW;.i'j

I 3,023.J i
2 l.^i.
1 00 13, I V * . 3j
l 5. on 1.3,273.33
urn:

J®0
 f
1 * V* 1 ^ .• V>

DESCRIPTION LALL Ou-PJSi T A/C STATEMENT DATE 3ltfAR89

DATE PARTICULARS VALUE DATE DEBIT CREDIT BALANCE

2bFt8u9 V^ALA.;C:- u P O U O H l f-3;<WAP.^ 13.273*33

0LMAR89 IK i JTG IOU 313.3c 12,959.97
3 1 MAR b 9 L'JDjEU' 125.00
INT. APPLIED TO 3 L^m R o q 0 LAP*89 ,413.06 13,493.03

i
 8 7
f l
r
DESCRIPTION CALL L pJ » L T A/C
STATEMENT DATE 2 8 APR 8 9

DATE PARTICULARS VALUE DATE DEBIT CREDIT \ BALANCE'

3imar89 voALA„Ci-: JPlJUUHT FOiiWARO

lt>MARu9 DRA.V! 13,493.03
LOO.00 13 » 3 9 8 . 0 3
03APR89 LODGED
28APR 89 LODGED I,000.00 14,398.03
125.00 14»523„03

s •
 n
DESCRIPTION- CALL DEPOSIT STATEMENT DATE 3 jj^-y gg

DATE PARTICULARS VALUE DATE DEBIT CREDIT ^ BALANCE'

31 MAY89 BAL-AKCE ERCUGHT FORWARD

30MAX89 LODGED 14/523,03
125.00 14,648.03

NODB
/'
 B / C 0 5/4- 1 / 2 5 0 5 0 0

'•I/ '//''••' BROUGHT FORWARD

'»)/ i./f.i'J .'30/ 6/09 l-orlKMi!
Ml)/ 6//J9 30/ r,/R9 I ill <!» .:.<:! > r. U1/ './»$«.'
 iwiu.on
U5.U0
460.58

152.TJ.6l
 ' 1
!
«J, (:/U*) BROUGHT FORWARD
IV/ 7/89 19/ 7/89 Lodge,i

/' 7/li'i
 \ %)t

15233.61
125.00

i t 1.1

m i

15350.61 J
 •>/iyj 7/ 9/09 ].,»!,<r«l
f-V 9/09 30/ 9/89 Lodged
•0/ «J/H9 30/ 9/89 In I: Brest l o K)/ <i/n<j

[UJ/ <)/H->
CARniED FOflWAHD
 IVHU.61
1350.00 16733.61
125.00 16058.61
529.13

l:f!

17387.74 y
f

7 <r <
- e~ t^
- t^ c*
Iflrl
HO N
- S3 CO

c ~ t*.
i.-! i ".- rs
rj r- -

o
o
in
CN
iN
CO

o
o
10
o
10
CM
\

\ 2
<
10
o
0
\
CD
3 ^
I 7
.5 — o<

c* a» o c*
~ O o s
0« -T rS
*-> n C5

••H -S•» \ —s
 u n u u u i i i r u n t m n u
aa/u/tw 22/11/09 i.ui.'^fn!
•n/\\/m 22/11/39 Liwlgttd

nn/n/ii'j
CARRIED FORWARD
 IV2IJ7 .7 A
123. (JO
7.10.00

20162.7A
 onuuum ruiWVAHU
15/12/09 J5/12/89 ATVA
31/12/09 31/12/89 Lot!gad
:< 1/12/09 31/12/89 Ltutxnd
31/12/H9 31/12/89 [ntrrust In 3l/)2/r>9

V CARRIED FORWARD
 20162.74
24.00 20138.74
750. 00
125.00
701.67

i
I

21715.41 •'"'• •! t
I i l> f
Appendix XI (b)
 WWm
tmfmM

|B«B M B
IS M H

DRAFT

To: Viv Bartlett/Brian Lavelle

Fran: Richard Fenhalls
re: The Cayman Minorities
16 September 1992
CP
1 believe there is general agreement between you and tbe management of Henry
Ansbacher ( Company Ltd that the issue of the minority shareholders in Cayman
ought to be addressed. This is in order to consolidate the shareholding of
Ansbacher Limited and to enable a restructuring of the Cayman islands bank and
trust company managements. *

The issues that will need to be addressed as part of this process are
l Purchase of the shares
2 Management structure in the Cayman Islands
3 Diminution in value of tbe SAB shares since the acquisition of Guinness
Mahon Cayman Trust Limited ("GMCT").

Each of these gives rise to a number of considerations. Dealing with each of

these seriatim:*
\

l Purchase of shares

a) Rate of depreciation applied for the purposes of

determining tbe profits used in the calculation of
tbe value of the option.
b) One off debits or credits to the P a L, eg the CITCO
pension holiday and front ending fees;
c) Lean warranties given by the vendors of tbe former
GMCT.

Management

a) unexpired portion of the service contracts

b) Resultant management structure I*
c) Dublin "rep office"
A/' ,

w
3 BAB Shares
the vendors of GMCT received HAH shares as part consideration; these were
allocated on the basis of a price of 89p per HAH share. AL management have
purchased p/a subsequently a total of 1,143,000 BAB shares. The total number
of consideration shares issued was 2,252,088, giving a total of 3,671,088 BAB
shares held by AL management.

The Desired Result

The desired result would be to end up with Fraser Jennings as Executive

Chairman of the Cayman islands operation, Bryan Botbwell as the ongoing
Managing Director and Messrs Collins and Furze in a consultancy role ensuring
their ongoing loyalty and commitment to the operation and the residual
business flows resultant therefrom.

With regard to Des fraynor, my view is that the sort of business that be can
usefully introduce to the Cayman Islands is more than outweighed by the
regulatory risks involved of his conducting a pseudo banking business in
Dublin.

Hugh Bart, who contributes substantially to the business, ought likewise to

be encouraged to remain.

I believe that the desired management changes can be brought about as part of
an overall transaction involving the purchase of the minorities and the
restructuring of management.
i
A simplified management structure, with Fraser Jennings as Executive Chairman
and Bryan Botbwell as ongoing Chief Executive, would be effective, the role
envisaged for Messrs Furze and Collins would be that of non-executive deputy
chairmen of the organisation (thus enabling them to maintain their face in the
island) on an annual consultancy fee of, say,CX$50,000 p.a. each, they should
be given an office and secretarial assistance and the consultancy agreements
would include appropriate confidentiality and exclusivity clauses with regard
to the existing business and staff and future business. Hugh Bart should be
offered a directorship in London to wed him to the organisation further, as
he will be spending considerably more time in London as bis children get
educated in England. Bis existing office and secretary in the Cayman islands
should be offered to him.

I believe that the service contracts of Messrs Collins and Furze, which are
now subject to one year annual notices, should be paid in full. The total cost
of so doing would be CI$330,000. Botbwell's service contract provides that
notice cannot be given until December 31, 1992, but in any event this would
need to be reaegotieted and an increase in salary given to equate him to the
former level of Messrs Collins and Furze, an additional CI$82,000 p. a.
Insofar as Des Traynor is concerned, he has been conducting certain of the
Dublin "accounts" from his office in the CUE PLC building in Dublin. For some
time now we have been concerned about the regulatory aspects of someone
physically present in Dublin maintaining accounts in the Cayman Islands for
the benefit of Irish residents. He have been consistently assured that all
exchange control approvals have been obtained on these accounts and that they
have been properly maintained. Indeed, on inspection this has been proven to
be the case, but in the increasingly puritanical world of regulation, I
believe that the time is appropriate to bring an end to this situation, it
should be possible to unwind the Dublin accounts and place them vith a bank
of Des Traynor's choice. The total loss in revenue to the Cayman islands
operation1 is as set out in the attached schedule prepared by Fraser Jennings,
marked "A *.

Des Traynor*s chairmanship which costs the company OS$60,000, i.e. CI$50,000
p.a. in total ought to be terminated and Des paid a 6-month termination fee.

Therefore total one off cost of re-structuring the Cayman Islands management
amounts to CI$462,000 vith an on-going, incremental cost of Bryan Bothwell's
suggested increase of CI$60,000 p.a.

Purchase of Shares

I believe it is appropriate, with the C being as strong against the $ as it

is currently, to take advantage of this and to negotiate for the purchase of
the minorities in the Cayman Inlands. In the ordinary course of events the
option on the Cayman Islands could not be exercised until 1 January 1994 and
ve need management's consent to an acceleration of the arrangement. There are
a number of items that would need to be taken into account in the precise
negotiation of the purchase price and at this stage it is not possible to be
totally accurate in predicting what the ultimate price shoud be.

For instance, there has been an ongoing discussion as to what rate of

depreciation needs to be applied to the purchase price - that which prevailed
under GMCT's accounting principles prior to the purchase or Ansbacher*s
accounting prin:iples. I believe equity should prevail and the GMCT rate of
depreciation applied. This view is confirmed by Charles Allen-Jones of
Linklaters 6 Paines (see annexure "B" and opinion on this point).

In addition there is the whole question of Fraser Jennings' costs and tbe
extent to which they ought to be applied to the Cayman Islands. There are
also items such as the CITCO pension fund holiday which should be taken into
account.
I attach, narked "C", a pro forma memorandum prepared by Kevin McAuliffe on
the cost of purchasing the minorities.

It probably does not matter all that much whether any discounting effect is
taken into account because we will simply be using an earlier 3-year rolling
average on the profitability of the organisation. The permutations show a
price range of £6,019,000 to £6,274,000 and the precise consequences will be
as a result of detailed negotiation.

The goodwill write off in each of the relevant cases will range from £2.4m to
£2.6m.

it should be noted that the four original vendors of GMCT have lost, as a
result of the diminution of the share price in the Ansbacher shares originally
granted to them, each an amount of £347,612.10 and a total of £1,390,448.40 -
based on the value at issue of 89p per consideration share, and the proposed
FHB offer price of 34p per share.

I believe that they fully understand and accept that they have no recourse to
anyone as a result of the diminution in value of shares. However, viewing it
as a package deal overall, 1 suggest that for an early purchase of the
minorities we ought to work on a purchase price of approximately £6.5-6.75a,
allowing for a variety of trade offs on what ought to be included in the
calculation or not. Part of the trade offs ought to be the release of the
warranties that the vendors of GMCT have given to Ansbachers on certain of the
loans totalling 0S$5.284m. This is of course after you have had a detailed
lode at all of the loans and are satisfied vith our commercial judgement that
these loans pass scrutiny. If npt, a partial release may be appropriate.
V

In the basic assessment of the net asset value of Ansbachers, we allowed £lm
in the calculation for the cost of restructuring the Cayman Island management.
You will see that there is a surplus on this allocated amount in relation to
the restructuring of $1.5m in relation to the suggested course of action and
thus this should allow for any variation in the purchase price of the
minorities.

Ky recommendation and that of John Button and Fraser Jennings is

1 we should proceed to deal with the managerial consequences as set

out in this memorandum;

2 we should proceed to deal with the purchase of the minorities in

the range of £6.5m, using the surplus of the amount allocated to
management restructuring/redundancy to deal with any negotiating
latitude on the share purchase agreement.
 Z have dealt quite separately with the Cayman Islands management on the
question of the FNB offer for BAH. I have indicated to them that the purchase
of the minorities and restructuring of the management can in no way be linked
to the BAB offer. They have quite separately to take a decision as to what
the; wish to do in relation to the offer and I have said that tbe restrictive
covenants on the HAH shares will be released to enable them to accept the
offer and provide the irrevocables that have been requested.

rdfcay.mem

rr

t
Appendix XI (c)
 Limited
A Member of the Henry Ansbacher Holdings PLC Merchant Banking Group

P.O. Box 887, Grand Cayman. British West Indies

Please reply to: Phone: (809) 949-4653^4
42 Fitzwilliam Square, Telex: CP 4305
Fax: (809) 949-7946
Dublin 2. (809) 949-3267
Tel: 765144/763065
Fax: 612035
24th January, 1 991
Garrett Logan, Esq., .
Irish Intercontinental Bank Limited,
91 Merrion square,
DUBLIN 2.

Dear Garrefct,
Thank you for your letter of the 17th January'.
/
Could you please amend the details on Account/03/05153/81 tfo
read Ansbacher Ltd. Re C/BT. /
Yours sincerely,

i^d-o-*^

p.p. Collery,
Cjp

DPC/AJW
 Tel: 765144/763065 42 FIT2WILLIAM SQUARE
Fax; 612035 DUBLIN 2.

30th -January, 1 9 9 1 .

Garrett Logan, Esq.,

Irish intercontinental B a n k L i m i t e d ,
91 Merrion S q u a r e ,
DUBLIN 2.

Dear Garrett,
I am unable to reconcile the credit of £62.04 per a t t a c h e d
advice.
Could you please advise m e as to how you received t h i s lodgment
and from w h e r e .

Yours sincerely,

D«P. Collery.

DPC/AJW

ZHOZC
c ,

$W
Appendix XI (d)
 Letter of Application for the Opening «f Accounts by !ncorpoV»l«rf M ' «

Full Title of Company (Block Capitals)

_ HaMH/DCN BOSS CO , LDCnED

vJUreaa of Registered Office (Block Capituls)

' ANSBAGHER BOUSE, P.O. BOX 887, GRAND GEOffiN, B.W.I.
TO: Irish Intercontinental Dank Limited Date: 18th SEPTEMBER 1992
\
\
Gentlemen,
M y Directors request you to open and/or continue one or more account(s) in the name or the
Cvmpuny In piiruianr.t: nf (hi* request I hand you herewith:-
a>>m-r-m<!uii<.t,iccl

I. Certified Copy of a Resolution of the Board of Directors regulating the conduct of the
noMuni(x), ifigeihftt with specimens of the signatures of the authorised signatures.

Yours faithfU/ly.

Th*» Copy Resolution overleaf must be completed and.signed hy a Director and the Secretary or by
t*-o Directors. Specimen signatures of all authorised signatories must hr Affiled overleaf.

III$M I M n i i S N I I N I N T M M M ! U W T O • t l M|«MU« H f M t t . UUtLlN t > K U m B H | , « l « H I H • M O M t t *l n N M • Y t l U . M a t t

 We certify (hat the following Resolution of the Beard of Directors of Hamilton Bess Co. Tvim-i*-^
and
waspassed ai a meeting of the, Board held onl8th Septenber19 hat b«an duly
"Resolved that Irish Intercontinental Bank Limited be and is hcrebj jequcited to open »nd/or
continue one or more account(s) in the name of the Company and that the said Bank be and is
licteby authorised to honour all cheques, bills of exchange, promissory notes and other
negotiable instruments expressed to be drawn, signed, accepted or made on bebaif of the
Company and to act on any instructions relating to the secountfs), affairs or transaction* of the
Company notwithstanding that such action may vauae such account(s) to be overdrawn or any
overdraft thereon to be increased (but without prejudice to the < iglit of the said Bank to refuse to
allow any overdraft or increase of overdraft) provided they are signed on bebaif of the company
by any one director or authorised agent
and that the Company do borrow from the said Bank on such term* and subject to such
conditions as may be agreed with the said Bank from time to time and that the said Bank he
lurmched with a copy of the memorandum and Articles of Association of the Company and
with the full names and the specimen signatures of the Directors, Secretary and other Officers of
the Company and that they be frnm time to time Informed In writing, signed by at least one
Director and the Secretary of the Company, of any change that may take place in them and that
lists Resolution be communicated to thecaid Bank and remain in force until notice in writing to
the contrary, signed by at least one Director and the Secretary of the Company, be given to the
said Bank." fr , ~
Director Director/Sccretory
-St
LIST O F A U T H O R I S E D SIGNATORIES
Full N a m e Position Signature

JOHN A . FURZE Director

J . DESMOND TRAYNOR Authorised Agent
D. PADRAIG CQLUSKY Authorised Agent
JOAN WHLIflMS Authorised Agent
f
31/12/94
93/01/95 03/01/95 ANS TEL BILL 123.34
03/01/95 03/01/95 DINNER/LUNCH 320.00 87361.24
24/01/95 06/01/95 mooo 993.50

PL/01/95 86367.74
 |SAM3ILTON ROSS

L _

31/01/95 llSjQHTFORWARD
91/02/95 01/02/95 LODGED
31/02/95 01/02/95 MB.
93/02/95 03/02/95 CORP PTNES
14/02/95 24/02/95 REV ENTRY
128/02/95 24/02/95 LODGED

28/02/95
CARRIED FORWARD
 ACCOUNTNUMBER 80001386 PAGE
sterling

86367174
750.00
300.00 87417.74
55000.00 32417.74
55000.00 87417.74
176101.67

263519.41
 •it
V
S T A T E M E N T OF A C C O U N T

,TOM BOSS

A/A30

ACCOUNT NUMBER 80001386 PAGE 27

BAUNCE88HOWNARE«i: sterling

1/02/95 BROUGHTFORWARD
27/03/95 27/03/95 D12000 2013.00 261506.41
31/03/95 31/03/95 Interest to 31/03/95

31/03/95 263315.22
 fm ILTOM ROSS

L _ _ J

31/03/95 BROUGHT FORWARD

g/04/95

/OA/95
25/04/95 LODGED

25/04/95 SIC •
/04/95 25/04/95 DRAWN

©
 PA6E
ACCOUNT NUMBER 80001386 28
BALANCES 8 H Q W M

263315.22
35000.00
3750.00
12500.00

289565.22
 ILTON ROSS
jHAMl

L _

30/04/95 BROUQHT FORWARD

05/05/95 05/05/95 TEL CHGS ACL
35/05/95 05/05/95 IR 5000 TO N02 A/C
35/05/95 05/05/95 ACCESS 750
31/05/95 23/05/95 COSGROVE TRAVEL
31/05/95 23/05/95 TEL CHGS ACL
31/05/95 23/05/95 TEL CHGS ACL
31/05/95 ' 31/05/95 TEL CHGS ACL
31/05/95 23/05/95 D KELLY
 A/A30
ACCOUNT NUMBER 80001386 PAGE 29
BALANCES SHOWN ARE IN: sterling

289565.22
123.34
5165.00
774.75 283748.81
1488.18
123.34
109.75
124.36
3468.00

279150.08
 | AH"ILTON
S ] ROSS

L . _ J

31/05/95 BROUGHT FORWARD

06/06/95 06/06/95 REV ENTRY
(06/06/95 06/06/95 REV ENTRY
Q6/06/95 06/06/95 ACL'
130/06/95 30/06/95 Interest to 30/06/95
9 30/06/95 30/06/95
 ACCOUNT NUMBER 80001386 PAGE 30
BAIANCE88H0WNAREJNT sterling

279150.08
109.75
123.34
2000.00 280916.99

2020.00

282398.93
 }

JSAHILTOH
I ROSS

U
[31/07/95 BROUGHT FORWARD
29/08/95 18/08/95 IR2000
 ACCOUNT NUMBER 80001386 PAGE 31
BALANCES SHOWN ARE IN: sterling

282398.93
1943.90

280455.03 .
- J
 -

- / v>- " ti -v.-c

JHAHILTOH BOSS

' V.
"..-V-ViA
L . J
•i ' " >
; --11: v
>
[31/08/95 BROUGHTFORWARD.
129/09/95 29/09/95 CASH 1000
29/09/95 29/09/95 254.91 F GLENNON '
130/09/95 30/09/95' Interest to 30/09/95

6
tXBUP

i
A/A30
ACCOUNTNUMBER 60001386 PAGE 33
C

280455.03 m
1025.00 f
261.28 279168.75
I
i

•1

3
% i•
n
M

1
\
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V

282716.12
j
 |EHAMILTON
aM] ROSS
n

30/09/95 BROUGHTFORWARD
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Appendix XII

(a) Transcript of evidence of Mr Jack Stakelum given to the Inspectors on

November 2000

(b) Transcript of evidence of Mr Jack Stakelum given to the Inspectors on

December 2000
Appendix XII (a)
PRIVATE EXAMINATION OF MR. JACK STAKELUM

UNDER OATH

ON WEDNESDAY, 8TH NOVEMBER 2000

I hereby certify the

following to be a true and

accurate transcript of my

shorthand notes in the

above named interview.

Stenographer
 PRESENT

The Inspectors: MR. JUSTICE COSTELLO

MR. ROWAN FCA

MS. MACKEY BL

Solicitor to the Inspectors MS. M. CUMMINS

Interviewee: MR. JACK STAKELUM

Accompanied by: MR. KARL HAYES

GORE & GRIMES SOLICITORS

CAVENDISH HOUSE

SMITHFIELD

DUBLIN 7
 1 THE INTERVIEW WITH MR. STAKELUM COMMENCED AS FOLLOWS

2 ON WEDNESDAY, 8TH NOVEMBER 2000:

4 MR. JUSTICE COSTELLO Mr. Stakelum, we will

5 start our interview now.

6 I will introduce the inspectors.

7 I am Declan Costello. Ms. Mackey is on my right

8 and Mr. Rowan is on my left. As you know we have

9 been appointed inspectors by the High Court. This

10 is an interview and I should explain, Mr. Stakelum,

11 that it will be under oath. I will ask our

12 solicitor in a moment to administer the oath to you.

13 But if during the interview we ask you questions on

14 which you would like legal advice, please tell us --

15 whoever is asking you the questions -- and we will

16 stop and you can consult with your solicitor.

17 Similarly, should your solicitor think it proper

18 that he should give you legal advice on any

19 question, he can indicate to us that we should stop

20 and he can then discuss the matter with you.

21

22

23

24

25

26

27

28

29

3
 1 MR. JACK STAKELUM, HAVING BEEN SWORN, WAS EXAMINED

2 AS FOLLOWS BY MR. COSTELLO:

4 MR. JUSTICE COSTELLO Mr. Stakelum, regretfully

5 we only received yesterday

6 in the middle of the morning your letter of

7 6th November in reply to our letter, our previous

8 correspondence. Unfortunately this means that we

9 can not adequately complete the interview this

10 morning because a number of matters have to be

11 investigated by us before we continue asking you

12 questions, matters which have been raised both in

13 this letter that we got yesterday and in the earlier

14 correspondence. What I would hope to do would be

15 to make some progress this morning and then to

16 adjourn our interview to perhaps not next week but

17 the week after, if we could find a suitable date.

18

19 What I propose to do, Mr. Stakelum, now is just to

20 try to get some general matters clarified about your

21 career and your association with Guinness & Mahon

22 here in Ireland, and Mr. Traynor in particular, and

23 what help you can give us about the services which

24 Ansbacher gave to clients of yours here in Ireland

25 or what you may know about the services. Because

26 as you know, what we are required by the

27 High Court to do is to investigate the affairs of

28 Ansbacher. That having been done, we would then

29 like to ask you some further questions about a

4
 1 couple of the detailed matters that we wrote to you

2 about: Ms. Banotti's affairs and Mr. Keane's

3 affairs. I would like to start with some general

4 background information, Mr. Stakelum, if you

5 wouldn't mind giving it to us. First of all about

6 your career as an accountant, if you could briefly

7 outline it for us.

8 A. I commenced training as an articled clerk with a

9 firm called Boland O'Dowd but they broke up and I

10 transferred to Haughey Boland & Co in or about 1956,

11 I think late 1956. That is where I would have met

12 Mr. Traynor. I left Haughey Boland in 1958.

13 I qualified in the meantime and rejoined them in

14 1962. At that stage Mr. Traynor was a partner in

15 the firm. Then I became a partner in 1967. He

16 left Haughey Boland & Co in 1970 or 1971 and joined

17 Guinness & Mahon. I left in late 1975 to form my

18 own consultancy company, Business Enterprises Ltd,

19 which is where I operated until I semi-retired;

20 I closed the office and let the company run down in

21 1998. I operate a few clients from home now.

22 1 Q. Could you tell me about the nature of the business

23 that you started in 17, Clyde Road, is that right?

24 A. That's right. 17, Clyde Road was my office until I

25 closed that in October 1998. I operated from there

26 all the time after leaving Haughey Boland, so I

27 didn't operate from anywhere else. That was a

28 financial consultancy company whereby I provided

29 financial services to clients, sometimes being on

5
 1 their board of directors, more times not depending

2 on what the wishes of the clients were and what was

3 suitable for the occasion. Most of the work would

4 have been involved in the financial field dealing

5 with banks and arranging short, medium and long-term

6 loans. Monitoring their financial requirements.

7 But some clients would have you do a lot of work for

8 them and more a lot less. Some would include

9 interviewing for replacement staff involving you in

10 the normal day-to-day business decisions of the

11 company. Others wouldn't require you, only when

12 specific needs arose in connection with banking.

13 Mostly banking.

14 2 Q. You had two companies, is that right?

15 A. There is some confusion about that. Business

16 Enterprises Ltd was the main company. We had a

17 company called BEL Secretarial Ltd. The "BEL" is

18 the initials of business enterprises. That was to

19 provide secretarial services to companies. It may

20 have been appointed secretary to some companies but

21 it never functioned in the sense that it

22 never...(INTERJECTION).

23 3 Q. The main one was Business Enterprises Ltd?

24 A. Absolutely, yes.

25 4 Q. You were director of this company. Did you have

26 anybody else in the company with you as a fellow

27 director?

28 A. I had one colleague with me from the time I started

29 up to about 1986 and then I got another.

 1 5 Q. When you say a colleague, did he own part of the

2 equity of the company?

3 A. No, I think we only had two shares issued. I may be

4 wrong about that, there might have been a 100 shares

5 issued, but I would have been the beneficial owner

6 of the whole lot.

7 6 Q. Of the whole 100?

8 A. Yes.

9 7 Q. When you say you had a colleague, is that just

10 somebody who merely acted as a director to come to

11 the board of directors meetings?

12 A. No, he would have worked with me. Originally it was

13 an assistant that was with me in Haughey Boland & Co

14 that came with me at the time.

15 8 Q. What was his name?

16 A. Joseph Seely.

17 9 Q. He would have left about 1986. He would have been

18 replaced. Then I would have recruited another

19 colleague from what was Haughey Boland & Co or

20 Deloitte & Touche?

21 10 Q. What was his name?

22 A. Ian Murray.

23 11 Q. Were they on the payroll of the company?

24 A. That's right.

25 12 Q. So that in fact, it really was virtually a one-man

26 company, it was your company?

27 A. That's right.

28 13 Q. You had one assistant, Mr. Seely and Mr. Murray

29 later?

7
 1 A. That's right.

2 14 Q. What staff did you have as well?

3 A. The only other one was a secretary.

4 15 Q. Can you give me the names of the secretaries that

5 you employed?

6 A. My own secretary is Ms. Ann Verdon. She would be

7 with me 30 years. She was with me in Haughey

8 Boland & Co and came with me. At stages further

9 back there would be an extra younger girl but I

10 would be struggling to remember names. They would

11 have changed periodically.

12 16 Q. The main person was Ms. Verdon?

13 A. That's right, yes.

14 17 Q. I want you to be a little more explicit about your

15 business. Did you act as an accountant. Did you

16 carry out any accountancy work for your clients.

17 Did you audit their books for example?

18 A. No. I wouldn't have been in practice as an auditor

19 at that stage. There would have been different

20 assignments carried out for different clients.

21 I think in the sense of accountancy, very little.

22 There would have been some things whereby we would

23 have operated the payroll for clients, which

24 principally was to preserve confidentiality for the

25 client from staff. We would have operated payroll,

26 so to that extent we would have been doing

27 accounting.

28 18 Q. But you didn't act as auditor?

29 A. No.

8
 1 19 Q. Did you act as tax adviser?

2 A. No, I wouldn't know anything about tax really.

3 I was never a tax adviser and never an auditor.

4 My function was mostly in the finance area with

5 banks and then general business.

6 20 Q. Being in the financial area about banks, was that

7 raising money for your clients?

8 A. That's right.

9 21 Q. Raising loans and organising loans and organising

10 securities for your clients?

11 A. Yes, that's right. Providing whatever was needed

12 to the banks.

13 22 Q. The banks would require security for loans and you

14 were involved in that?

15 A. Yes, that's right. I would be involved in talking

16 to the banks and offering what security would be

17 available to the banks in connection with loans.

18 23 Q. It would be an integral part of your work?

19 A. Absolutely.

20 24 Q. When Mr. Traynor left the bank and left

21 Haughey Boland and went full-time, he had been

22 before that a director of Guinness & Mahon Ireland

23 or am I wrong in that, before he left full-time?

24 A. I don't actually know that. I know that he was

25 doing a lot of work for the bank in connection with

26 certainly their clients before he left

27 Haughey Boland & Co to join them. I don't know

28 whether he was a director or not.

29 25 Q. Do you know that when he joined them he became Chief

 1 Executive. He was Vice Chairman and

2 Chief Executive?

3 A. At the time that he joined there was John Guinness

4 in the bank and William Forwood. He became joint

5 something, like joint managing director and probably

6 John Guinness Chairman. I'm not sure who would

7 have been joint with him, but maybe William Forwood.

8 26 Q. You were described in the McCracken report as a

9 close personal friend of Mr. Traynor's, is that

10 correct?

11 A. Me?

12 27 Q. Yes?

13 A. Yes, very close.

14 28 Q. Would he have told you about the establishment of

15 the offshore companies that Guinness & Mahon were

16 involved in?

17 A. I would have become aware; I wouldn't necessarily

18 know what the structure might be. It wouldn't be

19 almost that he would be telling me that. But I was

20 certainly aware that he was involved with Cayman.

21 29 Q. Tell me what you understood?

22 A. I am not sure what dates or stages he would have

23 been very involved with the Cayman islands.

24 Certainly at stages he used to be going out to

25 Cayman three or four times a year. I would have

26 met at one stage socially John Furze and

27 John Collins. They would have come to Ireland.

28 I would have met them probably at dinner in

29 Mr. Traynor's house. I am not sure what else I

10
 1 might have understood from that?

2 30 Q. It is not a question of what you might have

3 understood, Mr. Stakelum, I just want you to tell us

4 what you knew about the operations of the subsidiary

5 in the Cayman Islands?

6 A. I am not sure how to answer that under oath in the

7 sense of telling what the truth is or what I would

8 be imagining.

9 31 Q. Do your best, Mr. Stakelum. Tell me what you know

10 about the company that was established in the

11 Cayman Islands, the subsidiary, and what it did.

12 What services did it supply?

13 A. A lot is what I am reading in the papers.

14 32 Q. Tell me what you know?

15 A. I guess there was a company established in the

16 Cayman Islands that would have dealt from an Irish

17 point of view with offshore monies. I don't know

18 whether that was a subsidiary of Dublin or whether

19 it was a subsidiary of London. I have a feeling at

20 one stage that it was one way and then it moved the

21 other way for whatever internal reasons Guinness &

22 Mahon would have had.

23 33 Q. Have you difficulty, for example, in knowing that

24 discretionary trusts were established?

25 A. Well, they probably were but I...(INTERJECTION).

26 34 Q. My question is, did you know that they established

27 discretionary trusts?

28 A. No, I wouldn't have known.

29 35 Q. Is this the first time you have learned of it, from

 1 me?

2 A. I would suspect that they have from reading papers.

3 36 Q. Tell me what you suspected?

4 A. I suspected that probably trusts were arranged, but

5 I don't know whether they would have been arranged

6 in Dublin and operated from Cayman or operated from

7 ...(INTERJECTION).

8 37 Q. Who would have been the trustee?

9 A. I didn't operate any trusts.

10 38 Q. I am asking you what your knowledge is of the

11 company. Do you know the name of the company,

12 Mr. Stakelum?

13 A. I know that there was Guinness Mahon Cayman Trust

14 and it later became known as Ansbacher.

15 39 Q. Let us deal with Guinness Mahon Cayman Trust.

16 Do you know what that company did?

17 A. It was a bank primarily. I presumed it was a bank

18 and I presume it would take deposits.

19 40 Q. It took deposits, yes?

20 A. I presume it did the normal banking thing about

21 making loans. But I would have had no direct

22 dealings with that.

23 41 Q. I am coming to that later, Mr. Stakelum. I want you

24 to tell me because we have to report to the court

25 about the affairs of Guinness Mahon Cayman Trust.

26 You think it was a bank and it took deposits. Do

27 you know anything else about it?

28 A. I know that John Furze and John Collins were

29 directors of it. I think they were executive

12
 1 directors.

2 42 Q. I am asking you what it did, Mr. Stakelum?

3 A. I haven't specific knowledge, Mr. Costello.

4 43 Q. You haven't got specific knowledge?

5 A. No.

6 44 Q. General knowledge?

7 A. From general knowledge I assume it did what banks

8 did: Take deposits, make loans, take securities for

9 loans. You are telling me something about trusts?

10 45 Q. I am not, I want to find out what you know. Do you

11 not know that it carried on a business of managing

12 trusts?

13 A. No, I don't know specifically.

14 4 6 Q. Did you know that Guinness Mahon Cayman Trust Ltd

15 acted as trustee and managed trusts?

16 A. No.

17 47 Q. You didn't?

18 A. I don't know that, I suspect that.

19 48 Q. You suspect it. When did you first suspect that

20 was so?

21 A. That is very hard to answer. I suppose from

22 discussions back over the years with Mr. Traynor,

23 I would have assumed.

24 4 9 Q. Why would you have assumed it, would he not have

25 told you?

26 A. He may have but there would be no reason for him to

27 come along and say 'Jack, we are operating trusts in

28 the Caymans.'

29 50 Q. You learned from him that he operated trusts in the

13
 1 Cayman Islands?

2 A. It might be from general conversation I would glean

3 that those things happened.

4 51 Q. From general conversation with Mr. Traynor?

5 A. Yes .

6 52 Q. That would be when it was founded in the early

7 1970's?

8 A. I presume sometime like that. I don't know when

9 they started operating trusts from or anything like

10 that, so I don't know.

11 53 Q. Try to listen to the question and try to be clear in

12 your answer so far as you can. I am asking you

13 when you first knew that Guinness Mahon Cayman Trust

14 carried on a trust management business?

15 A. I don't know the answer to that question; it would

16 be information that you might assimilate.

17 54 Q. When did you first know that it carried on this

18 business?

19 A. I would love to help you with an answer.

20 55 Q. Well try. Was it early 1970's?

21 A. Probably sometime in the 1970's.

22 56 Q. So you knew sometime in the 1970's that there was a

23 company called Guinness Mahon Cayman Trust. Did

24 you know that Mr. Traynor was the Chairman of it?

25 A. I don't think at that stage, but I would have known

26 that he was Chairman much later on.

27 57 Q. When was that?

28 A. I don't know that. But at one stage they sold out

29 in Cayman to somebody and I think Mr. Traynor

 1 finished up with some small percentage.

2 I understood that he was asked to stay on and he

3 became Chairman for a period of time.

4 58 Q. Are you saying that you didn't know he was Chairman

5 until the company sold the shares and he stayed on.

6 Are you saying that before that happened in 1988 --

7 you didn't know that he was Chairman of the company?

8 A. I don't know whether I knew or not, that is the only

9 answer I can give to that.

10 59 Q. I wonder why that is. Did he not tell you that he

11 was Chairman?

12 A. He may have but I have no recollection of that.

13 I have no recollection of that.

14 60 Q. Did you know that he was associated with the company

15 in Cayman?

16 A. Very much so. He used to travel frequently out

17 there.

18 61 Q. Why would he do that if he wasn't associated on the

19 board of directors in some way?

20 A. You asked me was he Chairman.

21 62 Q. He was on the board of directors you think?

22 A. I don't know if I knew that but I may have known

23 that.

24 63 Q. You knew that he was closely associated?

25 A. Very closely associated with it.

26 64 Q. From the very beginning?

27 A. From the very beginning of what?

28 65 Q. We are sparring, Mr. Stakelum. Yourself and myself

29 are sparring. I was just wondering if I could lead

 1 you to tell me what you know about Mr. Traynor's

2 involvement so that we won't spar. If you don't

3 answer me, frankly this is going to be a long

4 interview. Please tell me what you know?

5 A. I want to help.

6 66 Q. Then help me.

7 A. Mr. Traynor left Haughey Boland in 1970 or 1971.

8 He was very involved with Guinness & Mahon.

9 67 Q. Just pause there: He was very involved with

10 Guinness & Mahon?

11 A. Yes, he was very involved just before he left, and

12 then he left. After he left, I don't know when he

13 got involved with Cayman or formed Cayman.

14 I suspect from reading a lot that he took a major

15 initiative maybe in the formation of

16 Guinness Mahon Cayman Trust. I don't know when I

17 became aware of that. Mr. Traynor wasn't likely, no

18 matter how close we were he wouldn't discuss his

19 business things with me where they wouldn't have any

20 interest for me. Obviously over the years I became

21 aware that he was very involved with Cayman. He

22 used to travel there a lot. I don't know when he

23 went on the Board or when he became Chairman.

24 I am aware he was Chairman in the later days.

25 I cannot answer you about when I became aware he was

26 Chairman because I just don't remember. What else

27 can I say about that? I cannot remember when he

28 became involved. I wouldn't know whether

29 Guinness Mahon started in 1971, 1972, 1973, 1974,

 1 1975 or 1976. I don't know that.

2 68 Q. No particular date but early in the 1970's?

3 A. Yes, in the 1970's I presume is when he got involved

4 with Guinness & Mahon. So I presume sometime after

5 that he got involved with Cayman.

6 69 Q. At the time you left did you talk to Mr. Traynor

7 about it. Did you discuss this very major change

8 in your professional life. Did you discuss it with

9 him?

10 A. Yes, as a friend I would have.

11 70 Q. Did he indicate to you that as a friend he would try

12 to help you?

13 A. No, that would have been my decision. My leaving

14 Haughey Boland arose from a difference of opinion.

15 71 Q. I am not asking you about that at all. I don't

16 want to go into your private affairs. I want to

17 know, did Mr. Traynor suggest to you that he would

18 be able to help you, put business your way?

19 A. No, and he didn't ever.

20 72 Q. Did you say to him that you would be in touch with

21 him, that you would like his assistance?

22 A. No.

23 73 Q. You didn't?

24 A. No.

25 74 Q. But in fact you did get his assistance for clients

26 of yours?

27 A. Not specifically because I went out on my own

28 though, I was getting his assistance before I left

29 Haughey Boland & Co and would have continued after.

 1 But that would have been the same kind of assistance

2 I would have got from people in AIB except that he

3 was closer to me and I knew him better.

4 75 Q. Very well. You knew then that he was closely

5 associated. You didn't know what particular office

6 he held in the company. With Guinness Mahon Cayman

7 Trust, you knew that it was a bank and you knew that

8 it was involved in establishing trusts. Did you

9 know that the trusts it established were

10 discretionary trusts?

11 A. That is not my language at all.

12 76 Q. Did you know; did you hear that. It might not be

13 your language -- it is lawyer's language -- but did

14 you know that they were discretionary trusts?

15 A. I don't know whether you are telling me that all the

16 trusts that Guinness Mahon were involved in were

17 discretionary trusts. I presume there were trusts

18 of all kinds.

19 77 Q. Do you know the difference between a discretionary

20 trust and an ordinary trust?

21 A. It gives discretion to the trustees.

22 78 Q. In that they have absolute discretion to do what

23 they like with the trust funds?

24 A. That is a bit out of my league.

25 79 Q. Have you come across it?

26 A. I have heard it before.

27 80 Q. Have any of your clients ever had discretionary

28 trusts ?

29 A. I don't think so. The only things I might know is

 1 if they died or something and there would be letters

2 of wishes with discretionary trusts. I probably

3 came across a few of those.

4 81 Q. Did you yourself ever have one?

5 A. No.

6 82 Q. In relation to the activities of Guinness & Mahon

7 and the establishment of Guinness Mahon Cayman

8 Trust, do you know that Guinness & Mahon and

9 Mr. Traynor in particular then established

10 subsidiaries in the Channel Islands to do the same

11 work as Guinness Mahon Cayman Trust had been doing

12 in the Cayman Islands?

13 A. I don't know that he established them but I would

14 have met somebody from a company called "Sovereign

15 something" at a golf outing of Guinness & Mahon

16 sometime and there was some connection with

17 Guinness & Mahon, but I am not too sure what it

18 ...(INTERJECTION).

19 83 Q. Are you telling me, Mr. Stakelum, that Mr. Traynor

20 did not tell you that they had established

21 subsidiaries in the Channel Islands?

22 A. I am telling you that I am not aware that he

23 certainly told me that specifically.

24 84 Q. You either remember it or you don't remember it.

25 Do you remember Mr. Traynor telling you that they

26 established...(INTERJECTION)?

27 A. As clear as that I don't remember.

28 85 Q. Did you learn it subsequently?

29 A. I don't know about the subsidiaries. Subsidiary has

19
 1 a connotation to me as an accountant that somebody

2 owns something. I don't know whether they owned

3 subsidiaries in the Channel Islands. But I am aware

4 that they had connections in the Channel Islands.

5 86 Q. What were the connections?

6 A. There was the thing that is mentioned of

7 College Trustees. I am not sure that I read it in

8 your documentation that...(INTERJECTION).

9 87 Q. Let us be clear. We sent you particulars of

10 College Trustees. Had you never heard of it before

11 that?

12 A. I had heard the name College Trustees.

13 88 Q. Let us get back to that; that is what we are talking

14 about?

15 A. I am not aware that it was a subsidiary.

16 89 Q. It was an association?

17 A. Yes .

18 90 Q. Guinness & Mahon had an association with

19 Channel Islands?

20 A. Absolutely I would have been aware of that because I

21 would have used the facility.

22 91 Q. What facility would you have used?

23 A. I referred to it in my notes to you in connection

24 with Gerry Keane.

25 92 Q. What facility would you have used?

26 A. Guinness & Mahon provided a company for me from I

27 presume Guernsey for the use of Mr. Keane, so they

28 obviously had a connection.

29 93 Q. Then you knew about it?

 1 A. Yes. I don't know what subsidiary it is. I knew

2 there was a connection.

3 94 Q. Tell me then what you knew about the connections

4 that Guinness & Mahon Ireland and Mr. Traynor had in

5 the Channel Islands?

6 A. In connection with Mr. Keane at a stage where he

7 wished to purchase a residency and where he had no

8 facility or borrowing capacity at the time but had

9 some funds abroad, I advised him if he wished to

10 maintain the confidentiality. And the only way was

11 to use a foreign company.

12 95 Q. Where did he have the funds?

13 A. He had the funds placed with me and in turn I had

14 placed them with Mr. Traynor.

15 96 Q. Where were they then?

16 A. I don't know that but I always suspected until

17 proceedings arose in recent times that they were in

18 Cayman but I am not sure of that now.

19 97 Q. Mr. Keane gave you funds. You gave them to

20 Mr. Traynor. Mr. Traynor put them somewhere and you

21 thought they were in Cayman?

22 A. That is right.

23 98 Q. I am asking you about the Channel Islands?

24 A. They then provided a company. I asked Mr. Traynor

25 and he arranged for a company to be provided.

26 99 Q. What year are we talking about?

27 A. About 1988.

28 100 Q. Are you telling me that before that, you had never

29 heard of College Trustees?

 1 A. I don't recall the name but I think I met a guy from

2 over...(INTERJECTION).

3 101 Q. Let us continue this rather lengthy dialogue by

4 asking you some more detailed questions. Had you

5 never heard of College Trustees. Companies that

6 Guinness & Mahon were associated with in the

7 Channel Islands -- when did you first know that?

8 A. Probably at the same time I would have heard about

9 the Cayman, I don't know.

10 102 Q. In the early 1970's?

11 A. Middle to late 1970's maybe.

12 103 Q. Middle to late 1970's?

13 A. I went out on my own just after...(INTERJECTION).

14 104 Q. Answer my question. This is the middle to late

15 1970's that you first realised or understood that

16 Guinness & Mahon had association companies in the

17 Channel Islands?

18 A. I cannot be as specific as that. I understand that

19 I am under oath here and I cannot be as specific as

20 that. I am not sure when I learned that. That is

21 not wanting to be unhelpful, I am just not sure.

22 105 Q. You want to be helpful?

23 A. I do, absolutely.

24 106 Q. Tell me what you understood these companies that

25 Guinness & Mahon were associated with in the

26 Channel Islands. What were they?

27 A. Evidently one was College Trustees. I don't know

28 how long that is in existence.

29 107 Q. That was one company. Any other companies?

22
 1 A. I think from your documentation there is a

2 Guinness & Mahon something or other, maybe Guinness

3 & Mahon Channel Islands. I may have heard of that

4 years ago. But I don't recall. And I presume if

5 there was a Guinness & Mahon Channel Islands, it

6 probably dealt in banking situations and maybe

7 College Trustees acted in secretarial situations.

8 I am not positive about either of those things.

9 There was a Sovereign something or other. I met I

10 think the managing director of that at a

11 Guinness & Mahon golf outing. I don't know what

12 they did. They may have done trusts, secretarial

13 work. I don't know what they might have done.

14 108 Q. Did Mr. Traynor never talk to you about these

15 companies ?

16 A. No.

17 109 Q. Never?

18 A. No, the only time he talked to me in detail was one

19 time he came around talking at a time when he had

20 acquired or had a small percentage of a company in

21 Cayman. He talked about disengaging himself from

22 the Cayman.

23 110 Q. I am talking about the Channel Island companies?

24 A. I have no recollection of him talking to me about

25 the Channel Islands.

26 111 Q. Did he explain to you why they had to be

27 established?

28 A. No.

29 112 Q. Did you know why?

 1 A. No.

2 113 Q. Did you know that there were exchange control

3 difficulties ?

4 A. No.

5 114 Q. Did you ever hear that?

6 A. That he had exchange ...(INTERJECTION).

7 115 Q. No, that there were exchange control difficulties

8 which meant that Guinness & Mahon decided to

9 establish subsidiaries in the Channel Islands?

10 A. I wouldn't know that.

11 116 Q. I am wondering did he ever tell you that?

12 A. No, never.

13 117 Q. Did you ever ask him why they had established

14 companies in the Channel Islands?

15 A. No, I don't know that he established companies in

16 the Channel Islands. Guinness & Mahon was there

17 long before Des Traynor and maybe they had them.

18 118 Q. Alright, I withdraw that. I apologise to you for

19 confusing you. Try now and get it clear. Did

20 Mr. Traynor explain to you why Guinness & Mahon

21 Ireland established subsidiaries or companies in the

22 Channel Islands?

23 A. No.

24 119 Q. He didn't?

25 A. No.

26 120 Q. Apart from Mr. Traynor, who was a friend of yours,

27 with whom did you have dealings when you went to

28 Guinness & Mahon on behalf of clients?

29 A. Probably Maurice 0'Kelly but that would have been

 1 sometime later when he joined Guinness & Mahon.

2 Definitely Pat O'Dwyer who was a banking manager.

3 Probably Martin Keane. Michael Pender.

4 John Guinness at one stage. I had dealings with

5 William Forwood at a later stage but it hadn't

6 anything to do with his role in Guinness & Mahon.

7 In fact he might have even left Guinness & Mahon at

8 the time. I cannot remember any other names.

9 121 Q. You cannot remember any other names.

10 A. If they were put to me I might.

11 122 Q. Try. I will put a name to you in a minute. But we

12 Will see if you can remember it without me putting

13 it to you?

14 A. There was John Guinness; he was Chairman.

15 There was Des Traynor himself certainly. There was

16 Maurice 0'Kelly. But not much dealing with

17 Maurice 0'Kelly; that would have been much later.

18 William Forwood was in Guinness & Mahon but while he

19 was there I don't think I had any dealings with him.

20 But I had dealings with him subsequently.

21 Martin Keane. Padraig Collery.

22 123 Q. Padraig Collery, you had dealings with him?

23 A. Yes, I did.

24 124 Q. Tell us about that. Do you know what his role was?

25 A. My view of it was that he was a kind of an assistant

26 to Des Traynor.

27 125 Q. How often would you have met him then?

28 A. Several times over the years.

29 126 Q. Surely more than that, Mr. Stakelum, surely more

 1 than several times over the years?

2 A. I thought several was a lot.

3 127 Q. A lot of times. Over a year how often would you

4 have met him?

5 A. That would depend upon what client was doing what

6 and where and when.

7 128 Q. Taking an average, how often would you go into

8 Guinness & Mahon and see some of these people.

9 Once a week?

10 A. There could be times there when you could be in

11 three times a week and then you might not be in for

12 three months. When Des Traynor was in Guinness &

13 Mahon I would have had little, if anything, to do

14 with Padraig Collery because I would have been

15 dealing mostly with Guinness & Mahon.

16 129 Q. With Des Traynor?

17 A. With Des Traynor, yes.

18 130 Q. When you would go in three times a week for

19 particular clients, that would be Des Traynor you

20 would be seeing?

21 A. Mostly my dealings would be where Mr. Traynor would

22 be the Principal. But if you were ironing out

23 financial arrangements or something, you could be

24 dealing with Martin Keane and going back for further

25 information.

26 131 Q. When Mr. Traynor left the bank you were then dealing

27 with Mr. Collery, is that it?

28 A. Yes. I can think of a couple of specific

29 situations with Mr. Collery thereafter.

 1 132 Q. In relation to your association then with

2 Guinness & Mahon, you have described your general

3 consultancy work. Is that the relationship you had

4 with Guinness & Mahon, that you went to Guinness &

5 Mahon to organise financial assistance, loans of one

6 sort or another for clients?

7 A. That's right.

8 133 Q. This would have been a situation where sometimes you

9 would be in regularly three times a week and

10 sometimes a gap of months would elapse, is that the

11 position?

12 A. Absolutely.

13 134 Q. Was this an important connection from your point of

14 view, your connection with Guinness & Mahon and the

15 fact that you were able to get loans for clients on

16 behalf of clients from Guinness & Mahon. Was this

17 an important aspect?

18 A. It would be very important. When you are

19 endeavouring to get loans the personal connection is

20 of the utmost importance, yes.

21 135 Q. I would have thought so.

22 A. It is most important.

23 136 Q. Would I be correct in saying that in most cases you

24 would have first gone to Guinness & Mahon to see if

25 you could get loans for your clients rather than to

26 some other financial institutions?

27 A. No, I don't think that would be correct necessarily.

28 The clients would probably of their own volition

29 have their own bank. You would deal with their own
 1 bankers. You wouldn't switch bankers lightly.

2 137 Q. If the client needed funds and wasn't able to get

3 it, you would advise them and you would advise to

4 try Guinness & Mahon, would you?

5 A. I might. You would generally try at the bank where

6 they were doing business. If there was more

7 awkward financing, with the good connection in

8 Guinness & Mahon, certainly in the earlier days I

9 would have used Guinness & Mahon a fair bit for

10 clients because I had this entree to Des Traynor and

11 you could talk to the managing director.

12 138 Q. That is what I would have thought. In relation to

13 them requiring security for loans did you come

14 across any suggestions made in relation to security

15 for the use of Ansbacher deposits or deposits by

16 Guinness & Mahon in Guinness Mahon Cayman Trust in

17 the bank or otherwise?

18 A. In dealing with the bank, I would want to emphasise

19 that you wouldn't get anything out of Des Traynor

20 that wasn't proper banking approval. Because I

21 knew him there weren't any concessions that would be

22 made to me. He would tell me where to go with a

23 proposition that wasn't bankable more quickly than

24 he might a stranger.

25 139 Q. I am asking you about security?

26 A. I am leading into that, Mr. Costello. On the

27 question of security, I think what you are referring

28 to is a question of back-to-backs.

29 I certainly would have had deposits of clients

28
 1 there. I don't have recollections of back-to-back

2 accounts -- although I am well aware of them --

3 except for one in connection with Mr. Keane that I

4 referred to. I have to say, I cannot be absolutely

5 sure that is the sole back-to-back one because

6 certain things have been suggested at stages along

7 the way. I was personally opposed to ever utilising

8 a back-to-back situation.

9 140 Q. Why was that?

10 A. Because I had to deal with the client, some on a

11 day-to-day basis. There was a great tendency that

12 if anyone operated a back-to-back situation the

13 client believed that there was no money due. If he

14 had £100,000 and he borrowed £100,000 up front, the

15 danger was that he gets into thinking that the

16 £100,000 doesn't have to be paid back because it is

17 backed. That is a disastrous financial situation.

18 141 Q. I think you understand from our letter and probably

19 from elsewhere that I am not just concerned about

20 ordinary back-to-back situations, I am concerned

21 about Ansbacher deposits being used as security for

22 loans given to your clients?

23 A. That is what I refer to as back-to-back, that is the

24 security on the backing to the front loan.

25 142 Q. But the security was an Ansbacher deposit?

26 A. That's right, yes.

27 143 Q. When you are talking about back-to-back loans, we

28 are being specific, we are talking about clients who

29 would have had a security for loans which Guinness &

29
 1 Mahon had given; a deposit which was in the name of

2 Ansbacher in its former name, perhaps as Guinness

3 Mahon Cayman Trust and later Ansbacher?

4 A. From my point of view it would only be let us say

5 the funds that I would have had placed with

6 Mr. Traynor. I wouldn't know whether they were

7 Ansbacher or College Trustees or Jersey or what.

8 144 Q. But they were outside the jurisdiction?

9 A. That's right.

10 145 Q. What we are then talking about is funds which you

11 had deposited on behalf of clients with Mr. Traynor

12 which were out of the jurisdiction and which were

13 being used as security for loans to your clients?

14 A. I am only aware of it in one situation. There may

15 have been others but I certainly don't recall.

16 146 Q. What we are discussing now are loans which were

17 secured in the way we have been discussing. But it

18 does appear from what you have been telling me that

19 part of the service that you gave to your clients

20 was arranging the transfer of funds to Mr. Traynor

21 who deposited them offshore, is that correct?

22 A. That's correct.

23 147 Q. When did that start?

24 A. I am inclined to believe 1976 but it might have been

25 1977. I would have started on my own in late 1975.

26 I only had one month of operations in 1975.

27 148 Q. Would you tell us what the arrangement in a general

28 way was with Mr. Traynor. How was this service

29 operated?
 1 A. If I can take a typical example, a client may have

2 asked me to look after funds that in almost all

3 cases that I am aware of were already abroad.

4 I would have asked Mr. Traynor to advise me where

5 the funds might be transferred to, and then the

6 client would issue instructions when I got the

7 tracking route or account name or code or whatever

8 they might be.

9 149 Q. Could you not be a little bit more specific because

10 you know these terms, I don't know. Would you mind

11 explaining them to us?

12 A. If the client wished to place the funds with me and

13 they were in some Royal Bank of Scotland in Jersey

14 or wherever.

15 150 Q. This is client's of yours?

16 A. Yes .

17 151 Q. Why would they want to place their funds with you?

18 A. They might be unhappy about monitoring the funds in

19 the sense of what interest rate...(INTERJECTION).

20 152 Q. But you were not a bank?

21 A. No.

22 153 Q. They were asking your advice as to where to put the

23 funds ?

24 A. They were asking me whether I could monitor those

25 funds on their behalf.

26 154 Q. Monitor is a word you use; I don't understand it.

27 Your clients have funds and they come into you.

28 What do they ask you to do?

29 A. They would say 'We have funds offshore' wherever

31
 1 they might have been 'Can you look after these funds

2 for me.'

3 155 Q. "Can you look after these funds." What did that

4 mean?

5 A. Would you endeavour to get the best interest rate.

6 Would you monitor the funds.

7 156 Q. Take it slowly. Would you endeavour to get the best

8 interest rate. Were they asking you to change

9 where their funds were into some other financial

10 institution?

11 A. I don't think they would come in and say 'We have

12 funds. Will you change them for some other

13 financial institution.' I think a discussion would

14 have arose with them that they would have advised me

15 that they had £X in funds and say 'Can you look

16 after these funds on my behalf.'

17 157 Q. What does that mean?

18 A. It means that they might not want to correspond

19 directly with whatever foreign bank they were using.

20 They might not want to get mail received from

21 foreign banks on the basis of monthly statements.

22 They wouldn't feel that necessarily competent about

23 looking at whether the funds should be placed

24 one month or three months or six months. And that

25 they would like me to look after those factors.

26 158 Q. What did you do then?

27 A. I would probably advise them at some stage that

28 there would be a facility available through

29 Guinness & Mahon.

32
 1 159 Q. You then contacted Guinness & Mahon?

2 A. Yes.

3 160 Q. You used the word "facility." What does that mean

4 in this connection?

5 A. It means I would probably have contacted

6 Des Traynor. I would have said 'I have a client

7 -- for the most part he wouldn't know who my clients

8 were -- that wishes to have funds monitored abroad

9 by me.'

10 161 Q. Don't used the word "monitored" because I don't

11 understand what it means. You have a client.

12 What is he to do?

13 A. Des Traynor is to give me an account number, a

14 reference, a bank where the client who would have

15 the funds would have to give instructions to his

16 bank to have the funds moved. Those funds --

17 I don't understand these things either -- might be

18 moved to a receiving bank.

19 162 Q. This is very important. If you don't understand it,

20 I understand even less. Let us take a typical

21 client with funds in Jersey. You tell Mr. Traynor

22 that this client is dissatisfied. What does

23 Mr. Traynor then do?

24 A. He gives me coded references. I don't remember but

25 it might well be a reference to a bank account in

26 London for so and so, for the account of so and so.

27 163 Q. What was the bank?

28 A. Mr. Costello, I don't remember and I am sure those

29 instructions would have varied over the years.

33
 1 164 Q. What was the account, in whose name was the account

2 to be placed?

3 A. I have a difficulty answering that question, not

4 wanting to be uncooperative. All I am saying is

5 that Mr. Traynor would be seeking to get the funds

6 under his control and there is a transfer process.

7 165 Q. You must have known the financial institution in

8 which your clients's funds were going to be placed?

9 A. The only answer I can give to that is I don't recall

10 because over the years they probably used different

11 financial institutions.

12 166 Q. Tell me some of them that were used that

13 Mr. Traynor would have told you about. Give me the

14 names of some of those, Mr. Stakelum?

15 A. It is very difficult under oath, but let us try

16 Guinness & Mahon London for a start. I don't know.

17 But if it was Guinness & Mahon London, it would

18 probably be account of so and so, reference so and

19 so etc. etc.. But I am not absolutely positive of

20 that. It could also vary depending on the currency.

21 If it was dollars it might be something else.

22 167 Q. What other financial institution did he tell you

23 that the money was going to be deposited in?

24 A. I don't know, I just don't know. It would be a

25 once-off instruction. I don't know. It probably

26 would depend on where the funds were coming from

27 too.

28 168 Q. Do your best. I am sure you are under strain,

29 Mr. Stakelum. Tell me the numbers of other

34
 1 institutions that clients of yours had money

2 deposited as a result of your contact with

3 Mr. Traynor?

4 A. I just cannot answer that. That is not wanting to

5 be uncooperative, I just cannot remember.

6 169 Q. Why can't you remember?

7 A. How do I answer a question of why I cannot remember?

8 170 Q. For example, were any of the funds lodged in any of

9 the Guinness & Mahon subsidiaries in Cayman or in

10 the Channel Islands?

11 A. I don't think so. But I think the funds would be

12 initially lodged somewhere maybe for the account of

13 Guinness Mahon Cayman, reference number so and so,

14 maybe for the account in Guinness & Mahon London for

15 Guinness & Mahon Dublin. I am not too sure.

16 You would get specific instructions.

17 171 Q. It may have been the account of Guinness & Mahon in

18 Dublin or Guinness & Mahon in London. Was this the

19 offshore bank we are talking about, Guinness & Mahon

20 Cayman Trust, the Ansbacher bank. They would have

21 been lodged in its account in Dublin or lodged in

22 its account in London?

23 A. It may well have been, I don't remember.

24 172 Q. But you are under oath now?

25 A. That's right.

26 173 Q. You are under oath. Can you say that funds your

27 client had asked you in relation to assistance were

28 lodged in an account in the name of Guinness Mahon

29 Cayman Trust in Dublin or in London?

 1 A. I cannot remember. I suspect that some of the

2 instructions given at the time would be what was at

3 the best requirements of the Guinness & Mahon bank,

4 what their internal ...(INTERJECTION).

5 174 Q. A few minutes ago you to said to me that you gave

6 Mr. Traynor instructions and that you transferred

7 funds to him and they were transferred offshore, is

8 that not right. Didn't you say that to me a few

9 minutes ago?

10 A. They were probably offshore already. I thought we

11 were talking about a client...(INTERJECTION).

12 175 Q. They were offshore already you think?

13 A. Yes, most of the funds were offshore already.

14 176 Q. All the funds of these clients we are talking about

15 were offshore. Did you ever have clients coming in

16 to you with funds that weren't offshore?

17 A. Yes .

18 177 Q. What would happen then?

19 A. At different stages, in the early stages I think

20 Irish pounds could be converted without any problem

21 into Sterling. It is one and the same in the

22 1970's. Then they could be moved from Sterling.

23 178 Q. Were they put offshore, the funds?

24 A. Yes .

25 179 Q. Where?

26 A. All I know is that with Des Traynor I would have

27 assumed Guinness Mahon Cayman Trust, later

28 Ansbacher. But it could well have been

29 College Trustees or Guinness & Mahon Guernsey.

36
 1 180 Q. One or the other?

2 A. Yes, I assume one or the other.

3 181 Q. Did any of your clients to your knowledge establish

4 trusts with the assistance of Guinness & Mahon with

5 Mr. Traynor either in the Cayman Islands or in the

6 Channel Islands?

7 A. Not to my knowledge.

8 182 Q. None of them told you that they had done this?

9 A. No.

10 183 Q. Mr. Traynor didn't tell you that he was going to

11 suggest this to them?

12 A. No.

13 184 Q. You are pretty certain on that or are you doubtful

14 about it?

15 A. I am not aware certainly of any clients that

16 established such trusts. I am not aware of any

17 that did.

18 185 Q. If they didn't establish trusts, you are aware of

19 clients who transferred funds offshore?

20 A. Yes, that's right.

21 186 Q. We will break now for a cup of coffee,

22 Mr. Stakelum, for about ten minutes or so.

23

24 SHORT ADJOURNMENT

25

26

27

28

29

37
 1 INTERVIEW WITH MR. STAKELUM CONTINUED AS FOLLOWS:

3 A. I want to clarify something Mr. Hayes has brought to

4 my mind. In the last bit of evidence I may not have

5 made it clear that when I was talking about the

6 transfer of funds to a bank, I was really talking

7 about a receiving bank where they have what they

8 call a "routing." If you are transferring funds

9 from A to B there is often an intermediary bank that

10 takes the routing of the funds. That is what I was

11 referring to that I didn't know. The instructions

12 could vary each time on that. I wouldn't have known

13 what the specific instructions were any day. They

14 would be transferred from wherever the client had

15 the funds on his instructions to a bank routing.

16 Then they would come under the control of

17 Des Traynor and they would transfer them on further.

18 That is the norm.

19 187 Q. I have no further questions to ask you,

20 Mr. Stakelum at the moment. Ms. Mackey now would

21 like to ask you some questions.

22 188 Q. MS. MACKEY: Mr. Stakelum, I would

23 like to ask you some

24 questions about Ms. Banotti. Do you have a copy of

25 your response to our letter?

26 A. I do.

27 189 Q. If I could refer you to that. That is your letter

28 of 11th October (EXHIBIT 1)?

29 A. That's right.

38
 1 190 Q. You say under the heading

2 "Part One:

3 Having read Ms. Banotti's evidence to

you..."
4

5 I will just recall to your mind that the evidence

6 related to three cheques from the European

7 Parliament made payable to Ms. Bannotti which

8 somehow or other ended up in the account of

9 Guinness Mahon Cayman Trust re College Trustees in

10 Guinness & Mahon. Ms. Bannotti told us when we

11 asked her about them that in fact she had no

12 Ansbacher account but that your firm, BEL, looked

13 after her office and administration here in Dublin

14 after her election to the European Parliament and

15 that in the course of that she must have passed to

16 you these European Parliament cheques, which were

17 cheques for expense incurred by her, in order to

18 reimburse you for services you carried out for her.

19

20 You say:

21 "Having read Ms. Banotti's evidence to

you I can confirm that her evidence in
22 relation to her contractual
relationship with my company is
23 correct."

24 First of all I would like to ask you a bit about

25 that contractual relationship. When it began first

26 of all. Did it begin before she became a member of

27 the European Parliament?

28 A. No. I am not sure on dates but I guess she might

29 have become a member in 1984?

39
 1 191 Q. It was, yes?

2 A. It would have been immediately at that time.

3 Evidently in the European structure it was and still

4 is necessary for the Members of the European

5 Parliament to have a secretarial company, which is

6 the company to which expenses are paid by the

7 European Parliament. They discharge the particular

8 expenses to the individuals that would be aides to .

9 Ms. Banotti. There was actually a signed contract

10 I know in existence at the time. Whether that was

11 repeated each session or not, I am not sure.

12 192 Q. A signed contract between?

13 A. Between Business Enterprises Ltd and Mary Banotti.

14 193 Q. Can I ask you how she first came in contact with you

15 or how you met her?

16 A. Yes. It was through a place called the

17 Rutland Centre which is an alcohol treatment centre.

18 Fr. Short was the founder of that organisation.

19 He is dead since. I worked with his brother in

20 Kennedy Crowley & Co. The brother rang me and said

21 Fr. Short needed somebody, he was getting involved

22 in some subject with the brothers in Donegal.

23 Fr. Short rang me. He came up to the house to

24 explain his concept of a treatment centre. It was a

25 different modality of treatment. He said we are

26 having a meeting in Ms. Banotti's house.

27 I didn't know Mrs. Banotti at the time. Five or six

28 of us met in her house. She had a small house.

29 194 Q. Not to cut you short, Mr. Stakelum, but perhaps we

40
 1 can short circuit this a little bit. You met her

2 through something that had no connection with the

3 business at all in the beginning?

4 A. None whatsoever.

5 195 Q. Was this some long time before her election?

6 A. Yes. The reason I would know that is because I

7 think we started the Rutland Centre in 1978.

8 196 Q. You had known her for some long time prior to this?

9 A. I had known her for five or six years prior to

10 before she became...(INTERJECTION).

11 197 Q. Did she then upon her election ask you to look after

12 her office administration?

13 A. That's right.

14 198 Q. That is how that began?

15 A. Yes. There would have been a reason in the sense

16 that it lead a little into her personal finances in

17 the sense that one night after a meeting she rang

18 me. She was very distraught; she had a break-in in

19 her house. I said 'You have to leave the area.'

20 I would have helped her organise a home loan in AIB

21 in Sandymount.

22 199 Q. You were dealing with her personally. She was one

23 of your clients in your capacity as a financial

24 adviser?

25 A. I don't know that she would go down as a client, she

26 would go down as a friend. I just arranged a loan

27 for her at that stage, but it was kind of natural

28 that when she went into the Parliament and when she

29 was looking for somebody she came to us.

41
 1 200 Q. Was that the only financial advice you gave her

2 prior to taking on this business?

3 A. Absolutely.

4 201 Q. This arrangement that you had for looking after her

5 office and administration costs, did you pay the

6 members of staff who were on her payroll on her

7 behalf. Was that how it was done?

8 A. Yes, that's right.

9 202 Q. Did you then send her an invoice setting out

10 whatever your expenses and costs had been and your

11 own fees?

12 A. No.

13 203 Q. What was the arrangement?

14 A. In the beginning there was quite a lot of work. We

15 were writing up her cheque books and things like

16 that.

17 204 Q. All I am asking you now is, how did you get

18 reimbursed. What did you do. Did you invoice her?

19 A. She used the word "reimbursed." I would have felt

20 that she would have paid us in advance mostly.

21 Certainly that would have been the case for the last

22 number of years. Whether in the beginning I would

23 have been paid? We wouldn't generally pay out

24 money on behalf of clients and recoup it later. We

25 would recoup the money and pay.

26 205 Q. I can understand that, they were the expenses you

27 incurred. But did you not charge her a fee for

28 doing this?

29 A. I did not charge her a fee; she was a close personal

42
 1 friend. After a while, some years later my

2 colleague who took it over, I think she paid him

3 something. I don't think I ever charged a fee as

4 such.

5 206 Q. You didn't invoice her. Your memory is that she

6 paid you in advance. How did she normally pay you.

7 What was the arrangement. Was it by cheque?

8 A. I brought some stuff from Business Enterprises Ltd.

9 I have a copy of her account. I only have this

10 from about 1991 but it does show the kind of

11 transactions for the last eight or nine years.

12 207 Q. That would be useful.

13 A. It is the only copy I have.

14 208 Q. We can make a copy of it now and give it back to

15 you. (EXHIBIT 4) SAME HANDED

16 A. Obviously looking at that, we did pay sometimes in

17 advance. There are some red figures there.

18 209 Q. We understand from Ms. Banotti that for the purposes

19 of office expenses and administration costs of

20 MEP's, the European Parliament would transfer money

21 directly into a bank account in the country of that

22 particular MEP and that she had such a bank account

23 here in Ireland. Presumably, normally you would

24 have been paid from that bank account. Would that

25 be the case?

26 A. I am guessing so. I wouldn't be close to it.

27 I presume so and this may show that.

28 210 Q. On this particular occasion Ms. Banotti can only

29 explain the appearance of these three cheques in the

43
 1 GMCT account by saying that she must have passed

2 these to you in the course of paying you or

3 reimbursing you for your services or for your

4 expenses incurred on her behalf. Can you recollect

5 that happening?

6 A. No. I think I said that I don't know how I got

7 those cheques. But I cannot at all recollect it.

8 But I would have to say that the probability is that

9 she was correct. What I believe may have happened

10 is that it wasn't paying any of her expenses but she

11 could have been in my office and saying 'I am short

12 of money. I don't have any money.' I could have

13 given her cash for them and then lodged them because

14 they were a foreign...(INTERJECTION).

15 211 Q. She may essentially have exchanged them?

16 A. For cash, yes. I don't know that but I suspect that

17 is the most likely answer.

18 212 Q. You say that in such case you must have lodged them.

19 Lodged them where?

20 A. What I am saying is that I haven't any recollection

21 or knowledge of that but I am told that they were

22 lodged on the assumption that she gave them to me.

23 213 Q. I understand what you are saying, Mr. Stakelum.

24 What I am trying to get at is where would you in

25 such a situation, if it arose hypothetically, lodge

26 them?

27 A. I would have sent them down to Guinness & Mahon.

28 214 Q. To Mr. Traynor?

29 A. Yes.

44
 1 215 Q. Where would you do that?

2 A. Because they were foreign currency. That was

3 foreign currency that you might treasure as opposed

4 to Irish pounds.

5 216 Q. You would give any foreign currency that came your

6 way to Mr. Traynor to exchange for you?

7 A. Yes. It would be rare.

8 217 Q. But why would you do that rather than exchange it in

9 the ordinary way. Why give it to Mr. Traynor?

10 A. Because I would have clients that might be giving me

11 Irish pounds that would want the foreign currency.

12 I could exchange that with them.

13 218 Q. You could exchange it with the client?

14 A. If I had the foreign currency I could.

15 219 Q. But in this case you gave it to Mr. Traynor?

16 A. But that kept it in foreign currency. That kept it

17 available.

18 220 Q. For you?

19 A. To exchange for a client who would want to change

20 money.

21 221 Q. By giving it to Mr. Traynor it kept it available for

22 you?

23 A. Yes. If I lodged it into a local bank it would have

24 been converted back into Irish pounds. But by

25 giving it to Mr. Traynor you kept it in a foreign

26 currency.

27 222 Q. In other words, you were giving it to Mr. Traynor to

28 keep for you essentially, is that it?

29 A. Yes, it would be general to keep it for clients that

 1 would want...(INTERJECTION).

2 223 Q. But in your name?

3 A. He never kept an account in my name. I don't know

4 that he kept the account.

5 224 Q. What I am trying to get at is, was this money that

6 you felt you could again access if you wished in

7 foreign currency?

8 A. Yes.

9 225 Q. Therefore, it was going to be kept in your name or

10 on your behalf; it was your money, is that it.

11 If you had exchanged your Irish money for

12 Ms. Banotti's Belgian Francs they were now your

13 Belgian Francs?

14 A. Right.

15 226 Q. Can you explain how they ended up in a GMCT

16 account?

17 A. That would be their thing. I don't know where they

18 would use it. That could be College Trustees or

19 Cayman Trust or whatever place they kept the foreign

20 funds. I wouldn't necessarily know. I would have

21 assumed incidentally that it was Cayman Trust.

22 227 Q. You would have assumed that money you gave to

23 Mr. Traynor for you would go into Guinness Mahon

24 Cayman Trust?

25 A. Foreign currency, yes.

26 228 Q. Why would you assume that?

27 A. Because I assumed that is where he kept all the

28 foreign currency.

29 229 Q. To understand what you are saying, you would assume

46
 1 that if you gave foreign currency to Mr. Traynor to

2 look after for you, he would put it into Cayman.

3 Is that what you are saying?

4 A. That is what I am saying, yes.

5 230 Q. In other words, Mr. Traynor would keep for you money

6 in Cayman?

7 A. Yes, I am using "for me" in the loosest sense.

8 231 Q. How can you use the phrase "for you" in a loose

9 sense?

10 A. Because I would have clients anxious to get foreign

11 currency.

12 232 Q. I understand that.

13 A. If he had money in foreign currency available, then

14 they could access that by giving me Irish pounds.

15 233 Q. I understand that. But the point is, this is your

16 money that we are talking about now?

17 A. Okay.

18 234 Q. What you would expect if you gave your money which

19 happened to be in foreign currency to Mr. Traynor,

20 he would put it into a Cayman account?

21 A. Yes. Into a foreign currency deposit account,

22 probably Cayman.

23 235 Q. I don't have any further questions, Mr. Stakelum.

24 Thank you.

25 MR. JUSTICE COSTELLO Mr. Rowan would like to

26 ask you some questions now

27 about Mr. Keane.

28 236 Q. MR. ROWAN: Mr. Stakelum, can I take

29 you back to the statement

47
 1 that you sent us please, the one of 22nd September

2 (EXHIBIT 2). That deals with Mr. Keane's affairs

3 in two places at paragraph 4 and paragraph 7.

4 Perhaps to start, can you tell us when Mr. Keane

5 became a client first?

6 A. I suspect in the early 1980's.

7 237 Q. Why did he become a client of yours?

8 A. He was introduced to me through another client, as I

9 recall on a golf course. I don't recall whether he

10 rang me or said to me at the time at the golf 'I

11 would like to come and talk to you' but he obviously

12 did come and talk to me.

13 238 Q. What services did he explain he needed from you?

14 A. His initial services were loans that he required in

15 connection with ... He bought out a partner that he

16 had. As I recall in his company here he had 45% of

17 the company. A non-active partner had 45%. There

18 was an employee he had who had 10%. He wished to

19 buy out the partner. That was my recollection of

20 the first transaction with Mr. Keane.

21 239 Q. So he came to you and said can you arrange a loan?

22 A. That's right.

23 240 Q. How did you approach dealing with that request?

24 A. I know that I would have raised a loan through

25 Guinness & Mahon with him. I have a feeling it was

26 in the order of £40,000.

27 241 Q. When you were looking at the client's needs,

28 presumably you could have raised a loan of that sort

29 through any number of banks. Why did you select

48
 1 Guinness & Mahon?

2 A. Obviously I cannot remember exactly but his company,

3 Gerry Keane Ltd, would have been dealing with and

4 still deals with AIB Ltd. But AIB Ltd would have

5 been supplying the needs for the company, the

6 trading facilities overdraft. This would be not a

7 company item, it would have been a personal item to

8 buy shares in the company. That is the only reason

9 that I can think of for using Guinness & Mahon at

10 that time.

11 242 Q. But you could perhaps have used Bank of Ireland?

12 A. Yes, I could but I have very ready access to the top

13 echelon in Guinness & Mahon where it was easy to

14 discuss unusual items of financing if you like.

15 It was a bit unusual in the terms of the banking

16 sector to be going from AIB to Bank of Ireland in

17 connection with the shares of the company. It is a

18 bit unusual. Guinness & Mahon were a more

19 investment orientated bank.

20 243 Q. When you went to Guinness & Mahon and they agreed to

21 advance this loan to Mr. Keane, did they require

22 terms, securities, that sort of thing. Can you

23 remember broadly?

24 A. I don't remember.

25 244 Q. Was it an unsecured loan?

26 A. I don't remember that. But see if this would be

27 helpful: Sometime after that, I don't know how long

28 after that, he required another loan. He was

29 separating from his wife. My knowledge or my

49
 1 memory was that he had to borrow about another

2 £40,000. I don't know whether the first one was

3 secured or not but Mr. Keane had become a depositor

4 with me at some stage and had offshore funds.

5 So the extreme likelihood is that whether at the

6 outset of the first loan or at the outset of the

7 second loan or somewhere in between, he would have

8 acquired some offshore deposits with Des Traynor

9 through me.

10 245 Q. May I just stop you there. How soon after you

11 became an adviser to Mr. Keane would he have started

12 to have offshore deposits?

13 A. I just wouldn't remember that.

14 246 Q. Was it soon or was it some years?

15 A. I suspect it would have been relatively soon

16 afterwards.

17 247 Q. On the one hand Mr. Keane was borrowing money to buy

18 a partner in his company out and on the other hand

19 he was putting money offshore on deposit?

20 A. Right.

21 248 Q. Is there a contradiction there?

22 A. No.

23 249 Q. Can you elucidate on that?

24 A. Because he would have wanted to maintain

25 confidentiality about funds offshore and he couldn't

26 do that using those funds that would be offshore to

27 make the payments that he wanted to up front.

28 250 Q. Mr. Keane had some money on deposit offshore.

29 How did that topic come up with Mr. Keane as far as

50
 1 you are concerned as an adviser?

2 A. I am not sure. I am sure he would have introduced

3 the topic at some stage and asked me could

4 I...(INTERJECTION).

5 251 Q. He had some funds and he would have said to you at

6 one of your meetings 'I have these funds,

7 Mr. Stakelum, can you advise me how to look after

8 them well from an investment point of view.'

9 Is that what he would have said?

10 A. Investment is too fancy a word. I didn't invest

11 money on behalf of clients, only with their specific

12 instructions. Monies were on deposit purely or in

13 some cases at some stages clients asked me

14 specifically to arrange the purchase of shares.

15 But that would be totally at their discretion.

16 252 Q. Let us concentrate specifically on Mr. Keane, which

17 is what I want to do: Did Mr. Keane have these

18 funds on deposit somewhere else before he raised the

19 issue with you?

20 A. I don't think so.

21 253 Q. This was an arrangement where he proposed to put

22 money on deposit?

23 A. That's right.

24 254 Q. He asked for your advice?

25 A. He must have.

26 255 Q. Would he have been aware of the sorts of offshore

27 arrangements that there might have been or is this

28 information that would have been new to him?

29 A. I really don't know whether he would have funds

 1 offshore. I don't know how the subject would have

2 arisen. I am not saying this is how it did, but it

3 could well have arisen in a discussion whereby he

4 was saying that he needed funds. The first one was

5 to purchase the partner. Subsequently the

6 separation with his wife. And he probably would

7 have advised me that he had funds or funds available

8 to him or whatever.

9 256 Q. And asked for advice as to how to deal with them?

10 A. Yes, presumably.

11 257 Q. You would have given him advice. What would that

12 advice have been?

13 A. I don't know what arrangements he might have had or

14 might not have had. I would have told him I presume

15 that if he wished, the funds could be placed through

16 Guinness & Mahon and I would look after the funds on

17 his behalf.

18 258 Q. Would you have indicated to him that the funds would

19 have gone offshore?

20 A. Presumably but I think he would have known that.

21 259 Q. Would he have asked you where offshore they would

22 have gone when you placed them with Guinness & Mahon

23 on his behalf?

24 A. No, I don't think any of my clients ever asked that.

25 But I think that they would have been well aware

26 that it was going through Guinness & Mahon.

27 260 Q. Does that imply that would have given them comfort?

28 A. No, I think it implies that they were aware that I

29 had close connections with Guinness & Mahon. They

52
 1 were probably aware of Guinness Mahon Cayman Trust

2 or Guinness & Mahon.

3 261 Q. We are talking about Mr. Keane specifically. Why

4 do you say that you believe that clients, and if I

5 can infer Mr. Keane in that, would have necessarily

6 known about Guinness Mahon Cayman Trust and things

7 like that. We are talking about the early 1980's

8 now?

9 A. I would suspect through me that if he asked could

10 these funds be handled, I would say they could be

11 handled through Guinness & Mahon. As I said, I

12 would have assumed that they were handled through

13 Cayman.

14 262 Q. You would have provided them with the information?

15 A. Presumably.

16 263 Q. Which of course was information you in turn would

17 have obtained from Guinness & Mahon?

18 A. Yes. When you say "obtained" it was just

19 knowledge.

20 264 Q. But you gain knowledge from some source?

21 A. Yes, I was aware of Mr. Traynor's involvement with

22 Cayman. He was travelling frequently to Cayman.

23 265 Q. When it was established that it was suitable for

24 Mr. Keane's money to be placed offshore through

25 Mr. Traynor, did you advise Mr. Traynor of

26 Mr. Keane's name?

27 A. I don't remember that.

28 266 Q. But with your best estimate?

29 A. At some stage. It may have been the second loan

53
 1 that he needed it for. His credit worthiness

2 wouldn't have established that. We may then have

3 advised Mr. Traynor that there were funds. I don't

4 know whether that was for the first or the second or

5 subsequent loans.

6 267 Q. We are going on a little faster than I want.

7 The situation is that you would have got a

8 negotiable instrument or cheque, presumably from Mr.

9 Keane and would you have passed that over to

10 Mr. Traynor. Would Mr. Traynor have known that

11 cheque or draft or whatever it was, was on behalf of

12 Mr. Keane?

13 A. Probably not.

14 268 Q. Mr. Traynor would have indicated to you where he was

15 going to put it on deposit?

16 A. No, not at that point.

17 269 Q. Would you have been aware from Mr. Traynor as to

18 where he was then going to deposit this money within

19 the Guinness & Mahon organisation?

20 A. If I was asked that question a year ago, I would

21 have said yes, I would presume it was Guinness

22 Mahon Cayman Trust. But subsequent matters have

23 arisen that leads me to question where it might have

24 been. It was offshore but whether it was Guinness

25 Mahon Cayman Trust, whether it was in Jersey,

26 whether it was in Dublin in the account of

27 Guinness Mahon Cayman Trust, I don't know any of

28 those factors.

29 270 Q. At this point Mr. Traynor may not have known

54
 1 Mr. Keane's name and Mr. Keane would not have known

2 because you didn't know where his money was being

3 deposited?

4 A. That is if the sequence of events is as I say.

5 Mr. Traynor would have known Mr. Keane's name if a

6 loan had already been raised because there would

7 have been a front up loan. But I don't know

8 whether he had funds offshore before the first loan

9 was raised with him or not. Mr. Traynor generally

10 wasn't aware of my clients names because it was a

11 hotchpotch account with him. It generally wasn't.

12 But where there was a situation where they had to

13 back-to-back funds on a security, they would

14 presumably do some adjustment on their accounts to

15 do that and they would have to be aware.

16 271 Q. So that you don't know whether in fact Mr. Keane's

17 money went into the hotchpotch account, which is

18 your description of it?

19 A. I suspect it did. But then to the extent that

20 borrowings were needed to be secured by that,

21 presumably the bank may have moved it.

22 272 Q. The hotchpotch account would have been identified as

23 being an account of yours?

24 A. That's right.

25 273 Q. So that Mr. Keane would have deposited money with

26 you to be put offshore from time to time, is that

27 correct?

28 A. Right.

29 274 Q. How often might he have had money to deposit, can

55
 1 you remember?

2 A. No.

3 275 Q. Annually?

4 A. I would suspect in the early days maybe more than

5 annually. It might be whenever he got the money

6 from wherever he got it. But in later years not at

7 all.

8 276 Q. But in event he came back for a second loan.

9 You inferred it might have been something to do with

10 the difficulty with his wife or something like that?

11 A. Yes.

12 277 Q. At that point what happened. Did Guinness & Mahon

13 say 'We would like to change the arrangements.'

14 A. I don't know but that is certainly possible that

15 they might have said ...My recollection is that at

16 some stage he had two loans with Guinness & Mahon,

17 one of about £90,000 and another of about £90,000.

18 One being his personally and one being the

19 company's, Gerry Keane Ltd. His personal loan

20 arising from two main transactions, firstly funds

21 borrowed to pay his partner. Secondly, funds

22 borrowed to pay his wife as part of a settlement.

23 278 Q. I understand that.

24 A. The other one was a company trading loan that he

25 would have had with Guinness & Mahon. Somewhere

26 along the way I suspect his offshore funds were used

27 as part security.

28 279 Q. How did that issue get raised?

29 A. It may have been raised on the basis of the level of

56
 1 borrowings that he was rising to. I don't exactly

2 know when his company would have borrowed the money.

3 It may have borrowed and increased along the way.

4 I don't know at what stage Guinness & Mahon might

5 have said that they needed some additional security.

6 I don't know. It may have been very early on or it

7 may have been later on. I don't know at what stage

8 it was.

9 280 Q. It is the sort of thing that a bank would do

10 whenever borrowings were going up, they would look

11 for their cover?

12 A. Of course.

13 281 Q. Would that make it likely that Mr. Traynor raised

14 the issue with you when you met him on some occasion

15 or was it something which was prompted by the

16 request, the application for a second loan?

17 A. I don't know. I suspect that the loans were

18 reviewed generally on an annual basis with the banks

19 and at some stage maybe in the review they would

20 write to Clyde Road because we would have arranged

21 it on behalf of him. They may have written and

22 said that at review stage there are repayments

23 necessary or whatever. And there would have been a

24 discussion where they presumably sought and looked

25 for funds that were offshore to back the security.

26 282 Q. So the back-to-back arrangement was proposed by

27 Mr. Traynor?

28 A. Presumably.

29 283 Q. How was it effected?

57
 1 A. I am not sure. But the simple way that you agreed

2 is to move such funds as were needed out of the

3 hotchpotch account. I cannot remember that they

4 would leave them there, but they might earmark them.

5 I don't know.

6 284 Q. Would you have been advised of any movement of

7 monies out of the hotchpotch account?

8 A. I would. Most definitely I would have to be

9 advised.

10 285 Q. Because it was an account in your or your company's

11 name?

12 A. No, not my or my company's name. There was

13 probably a code name but I cannot remember code

14 names from those days. I am finished in

15 Guinness & Mahon a long time and I don't remember

16 what the code names would have been.

17 286 Q. Give me a flavour of the code. Was it a five-digit

18 code or something more or something less?

19 A. No, it would be an initial and a number. I am

20 trying to recollect but I cannot really do it.

21 It could have been B7 or M10. I don't know what

22 they would have used.

23 287 Q. Then there was the other side of course, which was

24 the arranging of the second loan. That would have

25 involved Mr. Keane in some paperwork with Guinness &

26 Mahon. Normal loan arrangements presumably?

27 A. Yes, there would be normal loan arrangements. I am

28 not sure but there were clients that I would have

29 certainly brought down to Guinness & Mahon.

58
 1 Mr. Keane isn't big on paperwork. I have a feeling

2 he could have come to my office and completed

3 paperwork there. In connection with the company

4 you would have the usual thing: Memorandum and

5 Articles of Association and all that.

6 288 Q. But would you have sorted all this stuff out?

7 A. Yes, I would tend to do all that.

8 289 Q. And act as an intermediary with the bank?

9 A. Yes.

10 290 Q. Going on to the second reference in your letter

11 (EXHIBIT 2) where you discuss at the top of page 4

12 of your letter Mr. Keane's desire to purchase a

13 residence in Ireland. How did that issue arise?

14 A. He had separated from his wife. I think part of his

15 arrangement was that she was left in possession of

16 the family home. I think he lived for a couple of

17 years in apartments or rented accommodation. Then

18 he wished to purchase a residence off Waterloo Road.

19 I forget the name of it. He didn't have a

20 borrowing capacity here to borrow the funds that

21 would be a bankable proposition but he had offshore

22 funds. I advised him against buying the property

23 for a couple of years. I am not sure on dates,

24 anyway at some stage I took him out of Guinness &

25 Mahon as being too dear but he obviously wasn't

26 dealing with them at this stage. He wanted to use

27 his offshore funds. In order to preserve his

28 confidentiality I advised against buying but he was

29 keen to do it. He would have to use an offshore

59
 1 company. Then I went to Mr. Traynor and I asked

2 him could he provide an offshore company. He did

3 this through Guernsey. That was the Beesley

4 Properties. It was arranged that Beesley Properties

5 bought this property and Mr. Keane went into a

6 rental arrangement with Beesley Properties and went

7 into occupation.

8 291 Q. Mr. Traynor suggested Beesley Properties

9 Incorporated?

10 A. He suggested that would be the method and presumably

11 that was the company. I presume it came off a

12 shelf somewhere.

13 292 Q. That was the company registered in Guernsey?

14 A. I don't know that but I think it would have been

15 provided by ...It may be College Trustees but

16 Guernsey. It would have been provided by Guernsey.

17 They may have used a Guernsey company or

18 other...(INTERJECTION).

19 293 Q. The point I was trying to get at was that it was a

20 Channel Islands company?

21 A. Certainly provided by the Channel Islands. It might

22 have been some other jurisdiction company that was

23 appropriate but it would have been provided by the

24 Channel Islands.

25 294 Q. Presumably recognising that, you recognise that

26 there was some sort of connection between a

27 Channel Islands company and where Mr. Keane's

28 deposits were?

29 A. No, that wouldn't strike me at all. This was all

60
 1 being handled by Mr. Traynor through Guinness &

2 Mahon, through their connections. I wouldn't have

3 presumed that there was a deposit then with the

4 Channel Islands. There may have been but that

5 wouldn't follow.

6 295 Q. Mr. Stakelum, Beesley acquired the property?

7 A. Beesley acquired the property.

8 296 Q. Using as a back-to-back funds on deposit?

9 A. No, using the actual funds.

10 297 Q. Using the funds on deposit?

11 A. Not back-to-back.

12 298 Q. He rented the house from Beesley?

13 A. Yes .

14 299 Q. Sometime afterwards he decided to buy the house?

15 A. Yes, about 18 months later I think. The reason he

16 would have decided that later is because a situation

17 developed where he would have the funds available to

18 do it.

19 300 Q. Approximately how much after Beesley acquired the

20 property did Mr. Keane decide to buy it?

21 A. I think it was about 18 months.

22 301 Q. How was that transaction arranged?

23 A. I don't know. All I can tell you is that there

24 were transactions that did take place. I would have

25 had a lot to do with it. I don't know whether they

26 are concurrent with those things or not but they may

27 well have been.

28 302 Q. You said earlier that Mr. Keane when he was first

29 thinking about buying a house, didn't have the

61
 1 borrowing capacity. That was the term you used?

2 A. That's right.

3 303 Q. A year and a half later he did have the borrowing

4 capacity?

5 A. Yes.

6 304 Q. So he borrowed from someone to do that?

7 A. I can explain why I think that happened. I am not

8 exactly sure of the dates. I know that at one

9 stage he owed Guinness & Mahon about two by £90,000. One

10 was the company trading situation. He was trading

11 normally with AIB. I arranged for Mr. Keane to sell

12 his shares. He owned all the shares; he had bought

13 out the other 10% shareholder somewhere along the

14 way. To sell all his shares, which was 100% of the

15 share capital, in Gerry Keane Ltd to a company

16 called Gerry Keane Holdings Ltd for £180,000 which

17 was the value of the shares at that time but also

18 coincided with what the needs were. At this stage

19 Gerry Keane Holdings Ltd owed Gerry Keane £180,000

20 because he had sold his shares to this company. He

21 owned the shares in Gerry Keane Holdings of course.

22 I got AIF to advance £90,000 to Gerry Keane Holdings

23 Ltd, which Gerry Keane Holdings Ltd paid to

24 Gerry Keane, who paid off his personal overdraft in

25 Guinness & Mahon. I also got loans from AIF to pay

26 off the company borrowings. But just to stay with

27 that particular thing, he then was repaying that

28 loan to AIF and 18 months later had sufficient of it

29 paid off for him to borrow another £90,000 by

62
 1 Gerry Keane Holdings Ltd from AIF and have that

2 extra £90,000 paid to him which he used to buy the

3 house. Subject to the dates, that was the thing and

4 it operated well.

5 305 Q. When Mr. Keane was buying the house from Beesley

6 Properties was there any issue about exchange

7 control?

8 A. No. I fail to see where it would arise there. All

9 he was buying was the property. He was personally

10 buying it. Whether he was buying it from a

11 non-resident or a resident didn't matter. I don't

12 think it ever mattered when he was buying it as a

13 resident here.

14 306 Q. Do I conclude from your answer that you did not give

15 much thought to the issue of exchange control?

16 A. I wouldn't have given much thought to it; I wouldn't

17 have thought it would have arisen. I don't see

18 where it would have arisen there.

19 307 Q. Can I show you a document which we have. You can

20 see that this is an exchange control application to

21 make a payment to a non-resident of the

22 State. (EXHIBIT 3). It is on behalf of Gerard Keane

23 for £98,000 Sterling. The payee is Beesley

24 Properties of St. Peter Port, Guernsey. The purpose

25 is described here as the sale of 54, Heytesbury

26 Lane. This is an application which was made to the

27 Central Bank for exchange control approval. Who

28 would have made that if you didn't?

29 A. I have no recollection of that. I wouldn't know

63
 1 anything about exchange control. I don't even

2 understand this. Name and address of which

3 application is made to "National Irish Bank,

4 0'Connell Street, Dublin 1."

5 308 Q. There seems to be some contradictions in this from

6 your recollection of the situation?

7 A. I am not sure other than it appears to be an

8 application under exchange control Acts that I

9 certainly have no memory of.

10 309 Q. The point about it is, you have no recollection of

11 this application?

12 A. None whatsoever. What is the contradiction?

13 310 Q. I hadn't understood from you that National Irish

14 Bank played a part in this?

15 A. I never heard of that. I don't even know where

16 they are on 0'Connell Street. He has dealt with

17 AIB, O'Connell Street for donkey's years, probably

18 before I knew him. We dealt with AIF and AIB,

19 O'Connell Street. I never heard of a thing with

20 National Irish Bank. I don't even know what this is

21 to tell you the truth. The name and address of

22 payee. Is that an application by Beesley Properties

23 to do something?

24 311 Q. I don't know. We will not speculate because time is

25 going on, Mr. Stakelum. From time to time some of

26 your clients might have availed of the withdrawal

27 service which Mr. Traynor operated?

28 A. Right.

29 312 Q. Do you know did Mr. Keane avail of that?

64
 1 A. I would suspect not. I think Mr. Keane's position

2 was the reverse. I think Mr. Keane had some funds

3 offshore but then got borrowings probably up to the

4 extent of what he had offshore so he wouldn't have

5 been in a withdrawal situation until he came out of

6 it. I don't think so.

7 313 Q. I don't have any further questions. Thank you.

8 314 Q. MR. JUSTICE COSTELLO Mr. Stakelum, there are

9 one or two matters I want

10 to clarify. These documents you have given us,

11 it is Mary Banotti (EXHIBIT 4)?

12 A. Yes.

13 315 Q. It seems to be running from January 1991 down to

14 1998?

15 A. That is only because those are the records I have.

16 316 Q. Where did you have that record?

17 A. That was in Business Enterprises Ltd client's

18 account.

19 317 Q. Where did you get it now to produce to us?

20 A. I got it from Business Enterprises Ltd Client's

21 Account Ledger.

22 318 Q. Where is that ledger now?

23 A. That is ledger is at my house.

24 319 Q. You have a ledger. What date does it run from?

25 A. It seems that about 1991 is the first one there for

26 Mary Banotti.

27 320 Q. All your other clients would be in that, would they?

28 A. No, not in the sense of talking about offshore

29 clients.

65
 1 321 Q. Not offshore clients?

2 A. No.

3 322 Q. Where are they?

4 A. They would have been Irish funds held in

5 banks...(INTERJECTION).

6 323 Q. What is the name of this ledger; what is it called?

7 A. Business Enterprises Ltd Client's Ledger.

8 324 Q. That isn't clients who would have offshore funds?

9 A. No.

10 325 Q. What ledger was that called?

11 A. I didn't have a ledger.

12 326 Q. That is a technical term. You had a record?

13 A. I had a month by month record, a schedule.

14 327 Q. You kept that, did you?

15 A. Yes.

16 328 Q. Nobody else in your office kept it?

17 A. No.

18 329 Q. Where are those records?

19 A. They are all gone and destroyed.

20 330 Q. When did you do that, Mr. Stakelum?

21 A. They tended to be destroyed as soon as they were no

22 longer needed. My arrangement with clients was that

23 if I got or gave them money, there was no receipt

24 exchanged either way. They were at liberty -- and

25 clients used it in different ways -- to ring up at

26 any stage and find out what the balance on their

27 account was. But the tendency would be to destroy

28 the records within some months each month.

29 331 Q. When was the last time you had any records of these

66
 1 transactions?

2 A. Up to maybe 1998.

3 332 Q. It is all gone since 1998?

4 A. All gone.

5 333 Q. Mr. Stakelum, as I told you we have to meet again

6 because we have to examine now the information that

7 you have given us. I was suggesting not next week

8 but the week after. I was wondering if it was

9 possible to fix a date so that we can resume this

10 interview. Would Wednesday, the 22nd suit you?

11 A. That is great, yes.

12 334 Q. Very well then. Say ten o'clock this day

13 fortnight. Thank you, Mr. Stakelum.

14

15 THE INTERVIEW WAS THEN ADJOURNED TO WEDNESDAY,

16 22ND NOVEMBER 2000

17

18

19

20

21

22

23

24

25

26

27

28

29

67
V>u4vU

Yj<2.ceT*W 00
Appendix XII (b)
PRIVATE EXAMINATION OF MR. JACK STAKELUM

UNDER OATH

ON WEDNESDAY, 6TH DECEMBER 2000

I hereby certify the

following to be a true and

accurate transcript of my

shorthand notes in the

above named interview.

Stenographer
 PRESENT

The Inspectors: MR. ROWAN FCA

MS. MACKEY BL

Solicitor to the Inspectors MS. M. CUMMINS

 2 THE EXAMINATION CONTINUED, AS FOLLOWS, ON WEDNESDAY,

3 6th DECEMBER 2000.

6 MR. ROWAN: Good morning Mr. Stakelum.

7 The interview on Wednesday

8 the 8th of November was adjourned and this is a

9 continuation of that interview. You were on oath on

10 that interview and you continue to be on oath. My

11 name is Paul Rowan, as you know, and this is

12 Ms. Mackey and our solicitor Ms. Cummins.

13 Ms. Mackey would like to ask you some questions.

14

15 MR. STAKELUM WAS INTERVIEWED AS FOLLOWS BY

16 MS. MACKEY

17 MS. MACKEY: Mr. Stakelum, today I want

18 to concentrate

19 specifically on two issues, one with your own

20 personal affairs and the other are your clients.

21 I want to go back, have you a copy still of your

22 statement.

23 A. I do, yes.

24 1 Q. I want to go back and have a look at that. Now you

25 say in it, at paragraph four, that in dealing with

26 your clients you used the facilities of Guinness and

27 Mahon to dialogue with Mr. Traynor. What I would

28 really like to get clear is, you were telling us on

29 the last occasion that when your clients wanted

3
 1 their fund monitored, which is the word you used,

2 you would approach Mr. Traynor, do you recollect

3 this?

4 A. Yes.

5 2 Q. What I was wondering is, on the first occasion that

6 you did this what led you to believe that you could

7 approach Mr. Traynor in order to assist with the

8 monitoring of your clients funds?

9 A. It is difficulty to recall. Mr. Traynor and I were

10 close personal friends and we would have had a lot

11 of business dealings together. I was aware

12 obviously of the existence of Guinness Mahon Caymen

13 Trust, I don't know what conversations would have

14 taken place but I would have equally been aware that

15 there was a facility available for having funds

16 handled abroad. I believed all along that up to

17 recently that they were in what was then known as

18 Guinness Mahon Caymen Trust and later Ansbacher but

19 other matters arose which meant that they could have

20 been in Guernsey or some place.

21 3 Q. In your understanding of the thing at the time then

22 when you approached Mr. Traynor in relation to your

23 clients funds you approached him in the belief that

24 you would avail of a service for your clients in

25 Guinness Mahon Caymen Trust, that was your

26 understanding at that time?

27 A. Yes, that's right.

28 4 Q. I see. Now, can I ask you one other question of a

29 very general nature, can you tell me what company

4
 1 Clyde Enterprises is?

2 A. Clyde Enterprises is not a company, it is a business

3 registration name.

4 5 Q. Yes?

5 A. One of the needs of the clients would be

6 occasionally to withdraw funds from funds abroad.

7 One didn't know how much or how often or how

8 immediate their needs would be . I had an Irish bank

9 account which was in the name of Clyde Enterprises,

10 where I would keep a float of funds to meet the

11 needs. You might get a phone call in a morning

12 requesting £5,000 in cash and that would be supplied

13 within probably 24 hours but the source of feeding

14 that account would be withdrawing funds from

15 offshore and they would be lodged into Clyde

16 Enterprises.

17 6 Q. How would that happen?

18 A. I would make a request to Guinness Mahon to write me

19 out a cheque.

20 7 Q. You would?

21 A. Yes .

22 8 Q. So, the situation was this, there was always a

23 certain float in this account?

24 A. Yes .

25 9 Q. And a client would come to you for an amount of

26 money that you could give him from that account, so

27 you could deal with that yourself. You would

28 withdraw the money from the Clyde Enterprises and

29 give it to the client?

 1 A. Yes, that's right.

2 10 Q. Did you keep an eye on whether that account

3 was...(INTERJECTION)?

4 A. Sorry?

5 HQ. Was it you or was it Mr. Traynor who kept an eye on

6 whether that needed to be topped up?

7 A. Me.

8 12 Q. You kept it?

9 A. Yes.

10 13 Q. When you saw it needed to be topped up you then

11 approached who?

12 A. Guinness Mahon.

13 14 Q. Who in Guinness Mahon?

14 A. It could be Mr. Traynor.

15 15 Q. Well would it usually be Mr. Traynor?

16 A. You are talking about a long time ago, a lot of the

17 time he -- because I would be meeting him anyway.

18 16 Q. Yes.

19 A. I would say probably Mr. Collery would be the guy.

20 17 Q. Mr. Collery or Mr. Traynor. You would ask them to

21 put that account in funds?

22 A. No, I would ask them for a draft payable to that

23 account.

24 18 Q. Where would that draft come from, whose money would

25 that be?

26 A. That would be clients funds, from the account

27 wherever the clients funds were abroad.

28 19 Q. The account you referred to on the last day that you

29 were here was the Hotchpotch Account.

6
 1 A. Exactly.

2 20 Q. So, out of that would come funds into Clyde

3 Enterprises ?

4 A. That's right.

5 21 Q. If we could get on then to more specific matters,

6 Mr. Stakelum. You told us in your statement, I

7 think, yes, at paragraph four, that you never had

8 any personal dealings with Ansbacher?

9 A. That's right.

10 22 Q. Is that correct?

11 A. Yes .

12 23 Q. Did you ever have an Ansbacher trust, did you ever

13 have an account in Guinness Mahon Cayman Trust

14 yourself?

15 A. No.

16 24 Q. Were you beneficially entitled to any funds at all

17 in the Hotchpotch Account?

18 A. No.

19 25 Q. Or in Ansbacher at all?

20 A. No.

21 26 Q. Right, could I ask you to look at some documents,

22 Mary page 33 please. Now, this is a letter from

23 Mr. Traynor to Mr. Humphries in Guinness and Mahon

24 on the 1st August 1990, referring to an account

25 number 13154973 and asking him to apply interest to

26 date on that account. Then he asks him to arrange

27 to have travellers cheques to the value of $6,000

28 issued in the name of John J. Stakelum, in

29 denominations of $100. The balance on the account,

 1 the account referred to above, can be used to meet

2 the charges and the balance of charges due should be

3 debited to Ansbacher Ltd Account number 13154 602.

4 These are travellers cheques in your name

5 Mr. Stakelum debited to Ansbacher, can you explain

6 that to me?

7 A. Number one I don't remember it, number two the

8 Ansbacher Ltd Account number I have never had any

9 knowledge of that.

10 27 Q. Right.

11 A. But I could explain it.

12 28 Q. Right?

13 A. The situation would be that I had the Hotchpotch

14 Account which was analysed each month.

15 29 Q. Yes .

16 A. Monies might have been drawn from that to Clyde to

17 feed funds to clients who would want to withdraw and

18 the reverse could be also true.

19 30 Q. The reverse, what do you mean the reverse?

20 A. The clients might give me money occasionally in

21 Irish pounds and if for instance client A wished to

22 withdraw -- and I will make it simple because it

23 wouldn't be quite as simple as that -- if client A

24 wished to withdraw £5,000 from funds abroad and

25 client B wished to lodge them there no funds need

26 move at all.

27 31 Q. Yes .

28 A. There would just be a credit to one client and a

29 debit to another. These would happen each month at

 1 the time.

2 32 Q. Yes .

3 A. That could be exactly in connection with that, that

4 funds would be taken out there and debited to me.

5 33 Q. These were not funds been taken out, these were

6 travellers cheques in your name?

7 A. Yes .

8 34 Q. This was obviously something for your personal use?

9 A. Yes, but I would have to do a journal entry to

10 charge me with that and credit -- you see, all the

11 funds balanced every month.

12 35 Q. Yes .

13 A. So, whatever withdrawals might be from a situation,

14 whoever they would be for, somebody would have to

15 get the necessary credit.

16 36 Q. Yes .

17 A. And that is what would happen.

18 37 Q. Yes, maybe I am being very slow on the uptake here

19 but it seems to me that if you were getting

20 travellers cheques, which was something for your

21 personal use, then this was being paid with money

22 that was your money?

23 A. But paid in the Irish scene, paid through Clyde.

24 38 Q. Well, perhaps. Can we may be look at another

25 document at page 327. Now, this is a statement of

26 the account of Ansbacher Ltd care of Mr. J. D.

27 Traynor, 42 Fitzwilliam Square, Dublin 2. So, it is

28 actually an Ansbacher statement and if you see in

29 the middle of it, just to the right of the name and

 1 address of Mr. Traynor, you will see "Ansbacher

2 Limited, reference A/B Special, copy statement". So

3 this is a copy statement of a coded account, coded

4 A/B Special. Now, way over on the top left-hand

5 corner, it is very very hard to see, the photocopy

6 is quite bad, but you will see the figures 54973, do

7 you see that, on the top on the left-hand corner?

8 A. 1315...(INTERJECTION).

9 39 Q. 13154973.

10 A. Right.

11 40 Q. Now, if we go back to the document that I showed you

12 a few minutes ago about your travellers cheques that

13 is headed "Re Account No. 13154973". You see the

14 date of that letter requesting the travellers

15 cheques is the 1st August 1990, do you see that?

16 A. Yes, sorry, yes.

17 41 Q. So, it is 1st August 1990 referring to Account

18 13154973. We go back to this Ansbacher Account

19 A/B Special and we see that it is entitled 13154973

20 an external call deposit account US dollars. If we

21 look at the date of the 8th August 1990, the last

22 entry, we see travellers cheques $6,000. So that

23 is clearly the account referred to in the letter of

24 Mr. Traynor. This is Ansbacher coded dollar account

25 and it is from this that your travellers cheques

26 have come.

27 A. Well, I mean, I accept that the travellers cheques

28 in dollars would have come from an offshore account.

29 I never saw that account before and I suspect that

10
 1 is only an offshoot of what I call the Hotchpotch

2 Account.

3 42 Q. Yes.

4 A. Because that just shows a balance brought forward of

5 $6,011,50.

6 43 Q. I will be able to show you in a minute where that

7 came from. In fact, the account that it came out of

8 which indeed may well be the Hotchpotch Account,

9 nevertheless this is a specific account "A/B

10 Special" which appears to have been opened and

11 closed for the purpose of the one transaction and it

12 appears to be an account totally for your benefit?

13 A. Yes, I wouldn't deny that I would have got say

14 $6,000, I mean I don't remember it but I might have

15 got $6,000. But I personally would never have had

16 an account in Ansbacher. If that was for my benefit

17 I suspect that that is an entry within Guinness and

18 Mahon records where they...(INTERJECTION).

19 44 Q. Sorry, this is not a Guinness and Mahon document at

20 all, this is an Ansbacher statement?

21 A. Sorry, an Ansbacher care of J. D. Traynor, 42

22 Fitzwilliam Square, I mean I don't know what

23 accounts he may have kept and where he kept them or

24 under what heading. It wouldn't strike me that

25 there was ever an account of drawing $6,000 out,

26 like the suggestion there is did I put $6,000 in if

27 it was mine because there is an opening balance of

28 $6,011.
29 45 Q. Yes.

11
 1 A. I suspect that within their accounting systems

2 instead of just debiting a Hotchpotch account or

3 something they may have transferred or whatever.

4 46 Q. That is what they did do, Mr. Stakelum, I quite

5 appreciate that. My point is slightly different,

6 maybe I could approach it another way? You

7 obviously required travellers cheques for whatever

8 reason, do you recollect ever seeking to get

9 travellers cheques from Mr. Traynor?

10 A. To tell you the truth, I do not but I did operate a

11 situation in AIB in Jersey and I remember once and

12 once only getting $10,000 worth of travellers

13 cheques. I don't ever remember getting them from

14 Mr. Traynor, but I mean, I accept the fact that I

15 may have or did, it seems like it.

16 47 Q. Clearly you did. Just supposing for a moment, and I

17 accept that you can't remember doing so, but if you

18 had wished to do it, you would have gone to

19 Mr. Traynor and you would have asked for travellers

20 cheques on what basis; where would you have thought

21 they would come from?

22 A. Mr. Traynor didn't know what was in the Hotchpotch

23 Account or why they were there. I would have every

24 month a number of journal entries where I would be

25 debiting and crediting people for whatever

26 transactions they would take.

27 48 Q. Yes.

28 A. I obviously would have paid for them through say

29 Clyde and withdrew from that situation the money

12
 1 because that was the convenient place of getting the

2 dollars.

3 49 Q. You would have paid for them?

4 A. Yes, I would have taken the debit through my entries

5 for Clyde Enterprises.

6 50 Q. Yes .

7 A. Like I would, if you like, debiting Jack Stakelum

8 with the equivalent of $6,000 and crediting somebody

9 else.

10 51 Q. But the money in Clyde Enterprises was your clients

11 money, isn't that right?

12 A. That's right, yes.

13 52 Q. So, Jack Stakelum would never have been debited?

14 A. Well, I mean, I would pay if there was a need for me

15 to pay for whatever it was I would pay for it, I

16 would make a lodgement in Clyde presumably.

17 53 Q. Why would you need to do that, when all you had to

18 do was top it up from the Hotchpotch Account?

19 A. If it was my personal drawings I would have had to

20 pay for that.

21 54 Q. Right.

22 A. One place or the other.

23 55 Q. Yes .

24 A. I didn't have foreign funds.

25 56 Q. Why do it this way? Why would you not just go into

26 a bank and get your travellers cheques in the normal

27 way?

28 A. I don't know. I mean I can't remember what the

29 circumstances of the transaction would be.

 1 57 Q. All right, maybe we could look at something else.

2 Could we look now at page 34, please. This is a

3 letter from Joan Williams this time to the Irish

4 Intercontinental Bank. It is dated the 9th June

5 1992 and it is referring to an Ansbacher Account in

6 the Irish Intercontinental Bank. Again, it is the

7 A/B Special so it is the one we have been looking at

8 before but this time moved, as all the Ansbacher

9 accounts did in 1991 to IIB, so it has a slightly

10 different account number attached to it.

11

12 This time Ms. Williams is asking to let her have for

13 collection a US dollar draft for $2,000, payable to

14 you and drawing again on this A/B Special Account,

15 what might that be?

16 A. I know that I never had any dealings with IIB.

17 58 Q. I accept that you may not be aware that the

18 Ansbacher accounts had moved to IIB but they had and

19 therefore anybody dealing with the Ansbacher

20 accounts after 1991 was unknowingly dealing with IIB

21 because that was where they were kept, they were no

22 longer in Guinness and Mahon. Would you recollect

23 withdrawing a draft for $2,000?

24 A. No, I would absolutely believe that that wasn't for

25 my personal benefit.

26 59 Q. This may have been for one of your clients?

27 A. Yes, I have no recollection of it but I mean, I

28 would accept $6,000 in drafts as being a need that I

29 might personally have if I was travelling to the

14
 1 States or something.

2 60 Q. Yes .

3 A. I would not accept that I had a need for a personal

4 $2,092 draft.

5 61 Q. So, is your evidence then that this is a withdrawal

6 for your client?

7 A. Well, I...(INTERJECTION).

8 62 Q. Would you not have withdrawn from Clyde Enterprises

9 for your client?

10 A. It is a dollar draft, so there was some reason for a

11 dollar and I don't know what it is.

12 63 Q. Very well, we will move on again anyway. Mary if we

13 could look at page 38. Now, this is a letter of the

14 9th January 1990, from Mr. Traynor again, to

15 Mr. Lanigan O'Keeffe in Guinness and Mahon and he

16 says :

17 "Could you please let me arrange to

have a Sterling Draft for Stg. £6,500
18 payable to Clare Stakelum. The debit
should be to Ansbacher Sterling
19 Account".

20

21 And it gives the number. Is Clare Stakelum a

22 relative of yours, Mr. Stakelum?

23 A. Yes .

24 64 Q. Your daughter?

25 A. No. She would be a daughter of a cousin and that

26 would be on behalf of -- like her father who was

27 alive at the time, I mean I don't recollect it now.

28 65 Q. Who was her father?

29 A. He was a Mr. Connor Stakelum.

 1 66 Q. Was Mr. Connor Stakelum on of the clients that you

2 assisted?

3 A. Yes.

4 67 Q. Was he your brother?

5 A. No, cousin.

6 68 Q. Was he one of your clients within your own

7 memorandum account system?

8 A. Yes, or his company, which would be Stakelum's

9 Hardware Limited.

10 69 Q. So, this was his daughter?

11 A. Yes.

12 70 Q. Do you have a daughter Clare Stakelum?

13 A. No, that is the only Clare Stakelum I know.

14 71 Q. I see. Moving on again, can we look at page 36,

15 Mary, please. That is a memorandum of Des Traynor to

16 Pat O'Dwyer, much earlier, it is the 5th August 1980

17 and it says:

18 "This is to confirm having requested

you to purchase Stg. £500 in travellers
19 cheques in the name of Patricia
Stakelum, Innismann, Queen's Park,
20 Monkstown, Co. Dublin, and to debit the
cost of £505 to G.M.C.T. Guinness
21 Mahon Cayman Trust, Sundry Sub-Company
Account.
22
Also, to purchase IR.£300 worth of
23 Escudos and to debit the amount to
Amiens S/L Account.
24
When you have the above ready please
25 contact Jack Stakelum directly".

26

27 Is Patricia Stakelum your wife?

28 A. She is.

29 72 Q. Here we have your wife getting travellers cheques

16
 1 and the amount being debited to the Guinness Mahon

2 Caymen Trust Account in 1980. Can you recollect

3 what that might be about or how that could be

4 explained?

5 A. It looks like that with the Escudos that she may

6 have been travelling to Portugal or something like

7 that.

8 73 Q. It does, yes, but my interest is not so much why she

9 wanted it, it is where it was coming from. It was

10 coming from the Ansbacher Account.

11 A. All I can explain about that is that I didn't have

12 an Ansbacher Account per say and I didn't have any

13 benefit from the Ansbacher and the balances were

14 clients funds; but there would have been a facility

15 there in the sense that there were foreign funds to

16 draw funds from and I would have replaced whatever I

17 would have taken, either directly there or through

18 say the Clyde Enterprises Account.

19 74 Q. Right.

20 A. But I don't remember the particular transactions.

21 75 Q. In either of the transactions that we looked at your

22 own travellers cheques or this one, is there any

23 instruction to debit the Clyde Enterprise Account?

24 In each case it is an Ansbacher Account that is

25 being debited?

26 A. That is not my instruction, that's Mr. Traynor's

27 instruction presumably and I don't know what

28 accounts they are dealing with because I wouldn't

29 have access to their coding, no more than they would

 1 have any access to Clyde Enterprises.

2 76 Q. I see. Can we now look at page 46. Just before we

3 pass that can I ask you, Mr. Stakelum, are you

4 familiar with the phrase "suitably secured"?

5 A. Yes .

6 77 Q. Are you familiar with the explanation that Guinness

7 and Mahon give for that phrase?

8 A. Yes, I have contested it on a few occasions with the

9 Moriarty people in private because there were some

10 situations there where they believed there was a

11 back-to-back and I knew there wasn't in the sense of

12 how far one would know. There are situations about

13 those that evidently the belief was that the phrase

14 "suitably secured" or "adequately secured" in

15 connection with reviewing a loan meant that there

16 were funds elsewhere backing that.

17 78 Q. Yes .

18 A. I contest that, I accept...(INTERJECTION).

19 79 Q. You may contest it Mr. Stakelum, but it is the

20 evidence nevertheless of Guinness and Mahon to us

21 that is what it means.

22 A. Oh, yes, but...(INTERJECTION).

23 80 Q. So, I would now like you to look at a document here?

24 A. Before I even look at the document I would like you

25 to hear me out in connection with it.

26 81 Q. Right?

27 A. There were certainly situations I am aware where the

28 words "suitably secured" and "adequately secured"

29 was used by Guinness Mahon where I certainly believe

18
 1 there was no back-to-back. I am not saying it

2 wasn't a general rule but it could also have applied

3 if there was an instruction given to consider that

4 it was so, or that there was a cast iron guarantee

5 or something like that or indeed maybe where

6 Mr. Traynor may have given instructions.

7 Furthermore, I believe there were situations where

8 there were back-to-backs where the clients weren't

9 aware of them.

10 82 Q. Yes .

11 A. And there were reasons for them.

12 83 Q. That may well be the case where the client wasn't

13 aware but if there was such a back-to-back and the

14 client was unaware of it nevertheless it meant that

15 there were funds there to be able to back it up?

16 A. Not necessarily the clients though, that is the

17 point that I am making.

18 84 Q. I see. Can I ask now you to look at this

19 Mr. Stakelum. It is a loans listing from Guinness

20 and Mahon in 1974, showing lists of certain resident

21 loans of over £10,000 and you appear there for two

22 loans. The second one down has beside it "suitably

23 secured"; do you recollect this loan, Mr. Stakelum,

24 the loan for £40,000 with a repayment date of 1975?

25 A. Is there a date when the loan was granted.

26 85 Q. No?

27 A. Yes. I don't recall the top one.

28 86 Q. Well it is not the top one that I am interested in.

29 It is the second one, the one that is described as

 1 "suitably secured"?

2 A. Yes, I can. It is just that the repayment date

3 puzzles me. If I may explain? When I was in

4 Haughey Boland and Company and I left there on 1st

5 December '75, prior to that, Des Traynor had left

6 maybe in 1970 or 1971, some time after he joined

7 Guinness Mahon and my recollection is we were -- the

8 top rate of tax in this country was maybe in the

9 order of 80%. He came to me and he said there was a

10 scheme, a very legitimate scheme, for mitigating

11 your tax and what we did at the time and it would be

12 entirely he, because I wouldn't have had any funds

13 whatsoever of any nature, is he arranged for

14 Guinness and Mahon to loan me £40,000 on which I

15 would pay interest. That is the figure I remember

16 and that's why I am not sure of the ten at the top.

17 I don't know what that is. It was a personal

18 borrowing and that interest at that time was allowed

19 for tax purposes.

20

21 The £40,000 was given as -- I am trying to remember

22 this as a scheme, it's a long time back, -- £40,000

23 was loaned to a company, presumably in Caymen and

24 earned interest there. There would be certainly a

25 differential but I would have paid the gross

26 interest here and claimed it for tax. This is why

27 the date puzzles me about '75, maybe that was a

28 repayment date.

29 87 Q. That is the repayment date.

20
 1 A. But I think it might have been paid back before

2 that.

3 88 Q. I think it was because we see

4 there...(INTERJECTION)?

5 A. Would it have been paid back before March '74?

6 89 Q. It could have been because the comment there it

7 says, due to interest since repaid?

8 A. I think it was paid back before March '74 because in

9 April '74 capital gains tax came in and the concept

10 was that you liquidated the company in the Caymen,

11 which now had a worth of, well let's say £43,000 or

12 something, I am not sure what the figures were,

13 which was a tax free gain, quite legitimate, but in

14 the meantime you had the advantage of having the

15 interest paid having allowed for tax.

16 90 Q. Yes.

17 A. A perfectly legitimate scheme, liquidated, in my

18 view, at March '74 because capital gains tax was

19 coming in and the benefit of that would have been

20 lost then.

21 91 Q. What was the name of company Mr. Stakelum?

22 A. I have no idea. I have no idea, I had no money. It

23 was a thought put to me by Mr. Traynor, I wouldn't

24 have known of the existence of the ability or tax

25 advantage, but they lent me the money and they never

26 gave me the money, if you like, it was lodged there,

27 so, I suppose they had that as security for it all

28 the time and it was liquidated then in March '74, a

29 once off.

21
 1 92 Q. The interest that had been earned on it was yours?

2 A. Yes, when the company was liquidated, capital gains

3 tax. It would be less than what they would have got

4 on interest here, but the advantage would have

5 arisen to me and the tax deduction.

6 93 Q. The Caymen company that had control of those funds,

7 obviously invested it some where so that they would

8 earn interest?

9 A. No, no, the £40,000 loan that was granted to me.

10 94 Q. Yes.

11 A. Was evidently placed into that company on deposit.

12 95 Q. The company was not a bank. I presume it was a

13 company incorporated in Caymen. The company would

14 have to deposit that money somewhere, isn't that

15 right?

16 A. Presumably it was within the banking structure of

17 the Guinness Mahon or the Guinness Mahon Cayman

18 Trust, I don't know.

19 96 Q. Presumably Guinness Mahon Caymen Trust, most likely,

20 wouldn't that be the case?

21 A. Right, because it would be outside the jurisdiction

22 so it wouldn't fetch tax liability.

23 97 Q. This money loaned to you by Guinness and Mahon would

24 have been on deposit in Guinness Mahon Caymen Trust,

25 which would explain why your loan was described as

26 suitably secured, wouln't that be the case?

27 A. I would never have got a penny into my hands for

28 that, they held the money all the way.

29 98 Q. Yes.

22
 1 A. I don't know whether it would be lodged in Caymen

2 Trust, you see you have the thing that it could have

3 been, for instance, a Caymen company that lodged the

4 money in Dublin. I mean they could have had the

5 £40,000 sitting side by side

6 because...(INTERJECTION).

7 99 Q. But wouldn't it have had to be offshore for the

8 thing to work?

9 A. It is the ownership of the funds that was offshore.

10 100 Q. Yes .

11 A. I mean if a foreign company lodges money in Dublin

12 it would be tax free, you know.

13 101 Q. Yes .

14 A. So, I wouldn't know where that was. Mr. Traynor

15 merely came to me, like it worked but it was only

16 for a relatively short period of time because

17 capital gains tax was introduced, it might have been

18 a year or two.

19 102 Q. Yes .

20 A. Or something like that.

21 103 Q. The interest that had accrued on that did you leave

22 it there?

23 A. No, no. That was a capital gains tax, the interest

24 had accrued because the company was liquidated so I

25 would have taken it back and that would have been

26 what paid off the loan.

27 104 Q. Yes .

28 A. What I would have got into my hands, I would have

29 presumably paid the interest up front and then they

23
 1 got the capital gain back which would be something

2 less that that interest would have been.

3 105 Q. I see.

4 A. I remember the other loan too now, but that is of no

5 interest to you, no?

6 106 Q. It is not, no. Now, can I ask you to look at page

7 69 please. This is another document a letter from

8 Mr. Traynor to Guinness and Mahon dated the 6th

9 September 1990, referring to Ansbacher Limited

10 account A/B-CZ. This is a different one to the one

11 that we have looked at before and he says:

12 "Dear David,

13 The above deposit matures on 10/9/90.

14 On that date could you please arrange

to let me have a cheque for IR£1,500.00
15 payable to Business Enterprises and
roll the balance of £63,462.88 for one
16 month".

17

18 Now this was the situation where a sum of money, a

19 specific sum of money, was clearly on fixed deposit

20 and your company Business Enterprises seems to have

21 been able to draw apparently the interest from that

22 before it was rolled over to another fixed term. Can

23 you suggest what that might be about?

24 A. Yes, I think so. Do you remember you mentioned

25 Clyde Enterprises?

26 107 Q. Yes .

27 A. That is a business registration name not a company.

28 108 Q. Yes .

29 A. Prior to Clyde Enterprises we had a business

24
 1 registration named Business Enterprises and I

2 suspect that is what that is, to be payable to

3 Business Enterprises and that would have been duly

4 paid out to whatever client. I obviously don't know

5 this but I mean that is what I can assume. That is

6 not Business Enterprises Limited and there was a big

7 distinction between the two.

8 109 Q. I see.

9 A. I don't know what that is. If that were Business

10 Enterprises Limited, I can only assume that would

11 have been an invoice from Business Enterprises

12 Limited to somebody who was being paid some fee for

13 something. If it is Business Enterprises not

14 limited.

15 110 Q. Yes.

16 A. Then it would be like a payment into Clyde for

17 interest earned.

18 111 Q. I see.

19 A. Some client may have wanted to withdraw his

20 interest, I have no idea.

21 112 Q. Clearly if this was one of your clients then it was

22 a client who hadn't got his funds in the Hotchpotch

23 Account but had a very specific fixed deposit.

24 A. That's right. Generally speaking it was a

25 Hotchpotch Account but you could have had situations

26 where -- the Hotchpotch Account merely earned money

27 generally on a rollover of one month's interest; but

28 some clients would specifically want say a three

29 month and that might be segregated.

25
 1 113 Q. Yes.

2 A. When I say segregated, Guinness Mahon wouldn't have

3 knowledge of who they were.

4 114 Q. Right.

5 A. Let's say well £60,000 on three months at whatever

6 but as far as I was concerned it was all a

7 Hotchpotch Account.

8 115 Q. How would you be able to account to your particular

9 client for this since Guinness and Mahon wouldn't

10 know to tell you who the client was. How would you

11 know how this client account was doing. By what

12 means would Guinness Mahon communicate?

13 A. Every month we reconciled. Every month with

14 Guinness Mahon, the totality of the funds and every

15 month I would have reconciled the balance on Clyde

16 Enterprises Account.

17 116 Q. How would you describe this account if you wanted

18 information on it since Guinness and Mahon didn't

19 know who's it was?

20 A. I really don't know. I really don't know, I mean it

21 might be when we are sitting down or talking over

22 the telephone about it like, "and what about the

23 £60,000 on deposit", or there might be other ones

24 etc, what were they and get information about them.

25 117 Q. It is clear that Guinness and Mahon described this

26 account by a code, "A/B-CZ", Mr. Traynor is writing

27 to David Humphries referring to that. So, that was

28 how Guinness and Mahon saw that account, it was an

29 account described as "Ansbacher Limited Account

26
 1 A/B-CZ".

2 A. Yes, I mean I have no idea what coding they were

3 using or reference.

4 118 Q. I understand that.

5 A. To tell you the truth I thought I knew everybody in

6 Guinness Mahon, I don't ever remember David

7 Humphries.

8 119 Q. Well leaving aside that for a moment, would

9 Mr. Traynor have known the identity of this person?

10 A. The probability is not, but I don't know for sure.

11 120 Q. Well then this brings me back, if Mr. Traynor did

12 not know who it was but gave it a code, you knowing

13 who it was, then in order for Mr. Traynor to tell

14 you about this he had to refer to it by the code to

15 you, didn't he, what other way could he refer to it?

16 A. No, he wouldn't, he wouldn't. Was he still in

17 Guinness and Mahon? No, he wasn't in Guinness and

18 Mahon at that stage if he is writing letters from

19 Fitzwilliam Square.

20 121 Q. Yes.

21 A. So, I probably wouldn't be dealing directly with Des

22 Traynor in connection with that at all.

23 122 Q. Well that is even more puzzling then, how would

24 Guinness and Mahon be able to tell you how this

25 client's account was doing other than by referring

26 to it by this A/B-CZ?

27 A. Because if I was sitting down -- there wouldn't be

28 that many accounts involved like -- if I was sitting

29 down and I was talking on the telephone to somebody

27
 1 and if I wanted to reconcile balances at the end of

2 month and at that stage if Mr. Traynor was gone it

3 would probably have been Padraig Collery, then I'd

4 be saying, like on the general account how much is

5 the interest earned and agreeing if there were

6 withdrawals, etcetera, etcetera, and what about on

7 the £60,000.

8 123 Q. You could refer to it like that?

9 A. I think that's the most logical way to refer it

10 because I don't know that we would -- we wouldn't

11 have many separate accounts, we might have had

12 dollar accounts as well but we wouldn't have had any

13 separate accounts, so, there wouldn't be a problem

14 in identification. I mean I wasn't talking about

15 seven or eight or ten or twelve we'd only be talking

16 about a few accounts, you'd probably refer to them

17 as the principal sum. That's not being coy about it

18 because if there was a reference on those accounts

19 that reference would be a thing that Guinness and

20 Mahon would use rather than me.

21 124 Q. Mr. Stakelum, if I could just go back over what your

22 evidence has been this morning at least on this

23 point. We have seen that you and members of your

24 family had funds withdrawn from Ansbacher, debited

25 to Ansbacher for their personal use, now as I

26 understand it your explanation for that, I am still

27 not terribly clear about it, but if I am wrong now

28 in what I say correct me.

29

28
 1 Your explanation is that you might withdraw funds

2 like that for your personal use and then repay it

3 back into Clyde Enterprises, is that right?

4 A. Yes.

5 125 Q. Then in respect of your suitably secured loan or

6 what you described as a suitably secured loan, your

7 evidence is that Mr. Traynor had explained this

8 particular type of tax avoidance scheme?

9 A. That's right.

10 126 Q. Whereby you would borrow money from Guinness and

11 Mahon and it would be put offshore in the name of a

12 company, a foreign registered company, where it

13 earned some interest. In the meantime you would pay

14 off the interest here which you would be able to set

15 off against tax. When the company was liquidated

16 the interest that had accrued on it would be a

17 capital gain to you?

18 A. That's right, absolutely. There is the possibility,

19 I don't remember, that instead of paying off the

20 interest here which would effect a cash flow because

21 I wouldn't have had many means at that time, they

22 may have deferred the collection of interest, the

23 charge for interest would be allowed for tax

24 purpose. They may have deferred the collection of

25 interest until the company was liquidated. I don't

26 think there was a long period of time in that

27 because capital gains tax coming in nullified the

28 effect of that.

29 127 Q. I don't have any further questions to ask you about

29
 1 that aspect of our interview this morning,

2 Mr. Stakelum. Mr. Rowan would like to ask you some

3 questions on another point now and I will come back

4 later to the issue of your clients.

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30
 1 MR. STAKELUM WAS EXAMINED, AS FOLLOWS, BY MR. ROWAN

3 MR. ROWAN: Before I ask you some

4 questions about another

5 aspect may I just clarify something? You explained

6 that the Caymen company to whom the £40,000 had been

7 loaned was liquidated and that produced a capital

8 gain for you, who owned or controlled the Caymen

9 company?

10 A. Entirely done by Guinness and Mahon. I mean I

11 wouldn't even remember the name. That was put

12 through to me as me being very close to Des Traynor

13 and he had to obviously -- Guinness and Mahon --

14 offer me the facility to put the £40,000 away so to

15 speak, because I didn't have those kinds of funds

16 and it was purely a legitimate means of some tax

17 avoidance at the time.

18 128 Q. Would you agree with me if I suggested that on the

19 liquidation of a company the shareholders would be

20 the beneficiaries of any increase in the value of

21 any of the shares?

22 A. Yes, presumably I would...(INTERJECTION).

23 129 Q. Would that not be correct?

24 A. I think so, yes.

25 130 Q. Were you a shareholder in that company?

26 A. I must have been, I mean I think I must have been.

27 131 Q. You said a moment ago that you didn't know that?

28 A. Well I don't remember.

29 132 Q. Can we have this straightforwardly please,

31
 1 Mr. Stakelum, you were a shareholder in that Caymen

2 company were you not?

3 A. I believe I must have been.

4 133 Q. Thank you. Earlier in the interview you explained

5 that Clyde Enterprises was a trading name or a

6 business name, is that correct?

7 A. Business registration, yes, that's what it is.

8 134 Q. So, it was just a business name?

9 A. That's right, it is registered.

10 135 Q. A registered business name?

11 A. Yes.

12 136 Q. Registered with?

13 A. Me as the proprietor.

14 137 Q. With you as the proprietor?

15 A. Right.

16 138 Q. Registered with the business names registry?

17 A. Exactly.

18 139 Q. It had a bank account with which bank please?

19 A. AIB.

20 140 Q. When you required further monies you asked for money

21 for withdrawal from GMCT, for Mr. Traynor and a

22 draft would be produced a a result of that request?

23 A. That's right.

24 141 Q. Which you lodged into the AIB bank account?

25 A. That's right.

26 142 Q. And arising from that you them made payments to your

27 clients?

28 A. Right.

29 143 Q. When your clients were depositing money with you to

32
 1 go to GMCT did you lodge those moneys into you AIB

2 account in the name of Clyde Enterprises?

3 A. Sometimes, if they were Irish funds.

4 144 Q. Mr. Stakelum, I think as customary at about this

5 time in the morning we stop for a cup of tea or

6 coffee, I think you know the routine, we are going

7 to do that now for ten minutes or so.

9 SHORT ADJOURNMENT

10

11 145 Q. MR. ROWAN: Mr. Stakelum when you were

12 last here for interview we

13 explored with you a certain amount of how much

14 contact you had had with Mr. Traynor and Caymen

15 Trust and so on, it was a somewhat disjointed

16 discussion at times and we wanted to clarify some of

17 the matters which seemed not to have been adequately

18 dealt with. That is what I want to do now, if I

19 may?

20

21 I think you indicated to us last time that from

22 approximately 1956 to 1958 you worked as a article

23 clerk, if I may use that term, which I think was the

24 term relating to the day?

25 A. Right.

26 146 Q. What sort of work did you do as an article clerk,

27 broadly?

28 A. It was a relatively small practice. There was just

29 Charlie Haughey and Harry Boland, the two partners.

33
 1 Des Traynor would have been manager. He would have

2 been shortly qualified around '55/'56. There were

3 maybe six to eight article clerks, I think there

4 were four each allowed, I am not too sure. A couple

5 of secretaries, mostly auditing work.

6 147 Q. So you would have been working as a junior on an

7 audit team or a series of audit teams?

8 A. Arguably, yes.

9 148 Q. Mr. Traynor, as you have just said was a manager at

10 that stage, a qualified manager?

11 A. Yes.

12 149 Q. He would have been heading up audits?

13 A. That's right, yes.

14 150 Q. Did you work with him as a junior on some of those

15 audits?

16 A. Yes, very closely I would say.

17 151 Q. Did you work with him quite a bit?

18 A. Yes, quite a bit.

19 152 Q. In those days, I think I am correct in saying, that

20 the Institute of Chartered Accountants and you are a

21 chartered accountant I believe?

22 A. That's right.

23 153 Q. The Institute of Chartered Accountants exams were

24 five parts, if I recall?

25 A. No.

26 154 Q. They weren't?

27 A. No.

28 155 Q. How many parts were there?

29 A. Intermediate and final, two parts.

34
 1 156 Q. Right. Can you recall the sorts of subjects that

2 would have been included in those examinations?

3 What sorts of subjects did you have to answer on?

4 A. There would have been to final maybe there was, as I

5 recall about 16 subjects covered in eight papers.

6 There would have been accounting one and two,

7 executive accounting, partnership accounting, branch

8 accounting and general accounting. They would have

9 been two papers. There would have been a paper on

10 auditing, that is three. There would be a paper on

11 taxation, four. There would be a paper on what we

12 would called cost accounting, would be five, that's

13 now management accounting I think. There would have

14 been company law, six. I don't know, there would

15 have been eight papers done in my final anyway.

16 157 Q. I think you have provided me with the piece of

17 information that I was looking for, there was a tax

18 paper?

19 A. There was.

20 158 Q. Covering personal tax and corporate tax?

21 A. That's right.

22 159 Q. Thank you. Then from around 1962 when I think you

23 indicated you qualified?

24 A. I think '61 but I went back to Haughey Boland in

25 '62, yes.

26 160 Q. But as a qualified senior?

27 A. Yes .

28 161 Q. What changed then in the sort of work that you did?

29 A. Not a lot immediately except that I would have been

35
 1 the senior and taking charge of the audit for

2 clients. I also was in a kind of a managerial role

3 in Haughey Boland and Company where I might have

4 been scheduling work for the other auditors in the

5 firm or the other employees and that but generally

6 heading up the bigger audits.

7 162 Q. So you were heading up the audits. To what degree

8 did you have responsibility for the taxation issues

9 which would usually have followed on from preparing

10 a set of accounts for a firm or a corporate entity?

11 A. I don't know the exact date but at that time there

12 was a great tendency for the practitioners to employ

13 people from the revenue. We would have had some

14 ex-inspectors of taxes in and the tendency would be

15 when you completed an audit that you probably

16 prepared the computation or if you didn't, you

17 certainly got all the information ready for the

18 computation and then you got it approved by the

19 tax department.

20 163 Q. During that period when you were a manager,

21 obviously with more responsibility than before you

22 qualified, did you then have a further opportunity

23 to work with Mr. Traynor?

24 A. Yes, we would have been very close together on a

25 number of assignments.

26 164 Q. He was a partner at that stage?

27 A. He was a partner when I went back in '62, that's

28 right.

29 165 Q. So the relationship changed from being a junior to a

36
 1 manager; the relationship was one of manager to

2 partner?

3 A. Right.

4 166 Q. Did you work with him on his clients for which he

5 was the partner responsible. You worked with him as

6 manager on those clients?

7 A. Yes, that's a fair comment. I think I would have

8 been displacing him from a lot of situations. He

9 would have been moving on to other things. I

10 remember very heavy work loads and one particular

11 client that was his responsibility and he kind of

12 unloaded onto me and I always said that was almost

13 the last straw, that he was almost severing himself

14 from the normal auditing work. We would have worked

15 very closely together, undoubtedly.

16 167 Q. Nonetheless he remained as the partner to whom the

17 client looked in the first instance and you did a

18 lot of the work in preparing the data?

19 A. That's right.

20 168 Q. You have just indicated a moment ago that he moved

21 onto other things. Does that mean that he started

22 to specialise in some way?

23 A. Specialise, I don't know if that is the word. When

24 I say that he moved onto other things he certainly

25 seem to extract himself a lot from the day-to-day

26 work. He was a work-a-holic so it wasn't a question

27 of not working but there were things that he got

28 involved in. He got involved with clients in the

29 very big way, he was certainly with a company called

37
 1 Merchant Banking and he would have at least every

2 Friday morning, always been at a board meeting

3 there. I don't know if he was on the board now, but

4 he was always at a board meeting there and he would

5 get involved in other situations. It is hard to

6 relate when the dates were. I know before he left

7 to join Guinness and Mahon he got very involved with

8 projects that they were involved with, property

9 projects that the bank were involved in, he was in

10 an advisory capacity.

11 169 Q. Don't jump ahead too much. Let's try and keep the

12 thing in a logical flow. Was Merchant Banking a

13 client of Haughey Boland at the time?

14 A. That's right.

15 170 Q. And that was one of the clients for which

16 Mr. Traynor had a responsibility?

17 A. That's right but in addition to that, Matt Gallagher

18 would have been the owner of it and there were

19 groups of building companies there, I'm not sure

20 what they would have been but he would have been

21 very involved with that.

22 171 Q. Merchant Banking, if I recall correctly, had a

23 subsidiary in Northern Ireland. Was Mr. Traynor

24 responsible for that?

25 A. I don't have any memory of a Northern Ireland

26 connection.

27 172 Q. Right. So he worked with Merchant Banking and

28 perhaps that give him an interest in the whole area

29 of being involved with banking situations?

38
 1 A. I don't think that was the reason that he ultimately

2 finished up with Guinness Mahon. I think there was

3 a very specific reason for that. I don't know.

4 173 Q. We will come to that. Anyway the point was that you

5 started to take a lot of responsibility for clients

6 of which Mr. Traynor was the partner. In 1967 you

7 became a partner?

8 A. That's right.

9 174 Q. What age were you in 1967?

10 A. 33.

11 175 Q. 33 right. Were you a general partner or did you

12 have specialised responsibilities?

13 A. I think before he left, obviously we would have had

14 discussions about things, the partners and that. I

15 tended to specialise in liquidations and

16 receiverships because the appointment of liquidators

17 or receivers is a personal thing. It is not a firm,

18 it is an individual that gets appointed a liquidator

19 so you have to push a name of an individual if you

20 were to become known in the field. There weren't

21 sufficient liquidations and receiverships at that

22 stage where it would be exclusive to all other

23 things; so to that extent I would specialise in

24 liquidations and receiverships but continue to

25 handle a number of auditing situations as well.

26 176 Q. How much of your time would you have spent on those

27 two main parts of your work?

28 A. The liquidations and receiverships?

29 177 Q. The insolvency work, if I may describe it as that,

39
 1 and the auditing or other general part?

2 A. I think it would have grown one way as opposed to

3 the other. Obviously when you came to liquidation or

4 receivership it was a fairly urgent 'fire brigade'

5 situation where you might have to go in immediately.

6 More and more it became that way. I know that when

7 I left Haughey Boland in '75 that I took something

8 like 43 or 44 liquidations or receiveships with me,

9 in the sense that it was a decision that I would

10 remain rather than resign and pass it onto somebody

11 else, and wrap them up.

12 178 Q. Receivership work is quite different from

13 liquidation work, is it not?

14 A. There are very distinct differences, yes.

15 179 Q. Can you just outline what you perceive were the

16 differences in the early 1960's?

17 A. Between receivership and liquidation?

18 180 Q. Yes?

19 A. You were appointed liquidator almost after the fact

20 in the sense that the company had gone and had

21 passed its resolutions and appointed you liquidator.

22 That was a total question of winding up the company

23 and paying the creditors in the order in which they

24 were entitled to be paid.

25 181 Q. So the company, effectively, had come to an end as a

26 result of the liquidation.

27 A. Exactly.

28 182 Q. Receivership?

29 A. In the receivership area that wouldn't necessarily

40
 1 be so. It was very often a mortal blow to a company

2 but there was still the possibility that you could

3 revive the company if you could correct the problem

4 that had caused the receivership in the first place.

5 Your responsibility was to the debenture holder who

6 appointed you subject to certain other criteria but

7 you had no responsibility really to the general

8 creditors other than not to be negligent about the

9 assets.

10 183 Q. In what proportion of the receiverships were you the

11 principal, did you find yourself with a trading

12 receivership on your hands, approximately?

13 A. That was never wound up?

14 184 Q. No.

15 A. You always traded for a while.

16 185 Q. Where you perceived it was possible to continue

17 trading the business perhaps before passing it on?

18 A. Not many, because often and the tendency was that

19 people didn't seek to make appointments until the

20 companies were mortally wounded. But on occasions,

21 there were some.

22 186 Q. So the trading element of it was for a better

23 realisation of the assets?

24 A. Generally.

25 187 Q. Prior to your appointments as partner, who had done

26 insolvency work in Haughey Boland?

27 A. I probably did a lot of it but either Mr. Boland who

28 was a partner or Mr. Traynor who was a partner.

29 Either one of them would have been the nominee.

 1 188 Q. So Mr. Traynor understood something about insolvency

2 work?

3 A. Mr. Traynor was very brilliant on a cross-section of

4 work.

5 189 Q. So, Mr. Traynor decided to leave Haughey Boland and

6 join Guinness and Mahon?

7 A. Yes.

8 190 Q. He was then an established partner in Haughey

9 Boland?

10 A. Very much so.

11 191 Q. And a very able man as you have just said. Did that

12 decision come as a surprise to his partners and you

13 in particular?

14 A. I think the word would be shock.

15 192 Q. Why?

16 A. Because he would have been, he was a work-a-holic.

17 He would have worked morning, noon and night. He

18 would have been a real corner-stone of the

19 partnership and he would have been considered a

20 massive loss to a relatively struggling partnership.

21 That's why it would have been a shock.

22 193 Q. Nonetheless he decided to go?

23 A. Yes. I don't recall the exact time but I suspect

24 that he would have come in at some partnership

25 meeting and his announcement wouldn't have been

26 that I am leaving next week, it would be that he was

27 leaving in some months time. But prior to that he

28 would have been substantially involved with work

29 connected with Guinness Mahon. He used to be with

42
 1 them far more than with us in Haughey Boland at the

2 time.

3 194 Q. When did he start to work with Guinness and Mahon?

4 A. I am not sure when he left. I'm always confused

5 whether he left in 1970 or 1971. I think it was the

6 31st March. I'm not sure, a year or two before

7 that. He worked on some property schemes and

8 taxation schemes with them. I'm not sure. I

9 wouldn't have known anything about it, whether

10 Guinness and Mahon were financing them or taking

11 equity in them or what they might have been, but he

12 obviously made a very able contribution to whatever

13 they were doing because they invited him to join the

14 board in a very senior capacity there.

15 195 Q. May I just enquire whether Guinness & Mahon were

16 clients of Haughey Boland or clients of other

17 people.

18 A. No. Guinness Mahon, no.

19 196 Q. So that Mr. Traynor was actually providing special

20 services of a non-audit nature to Guinness Mahon?

21 A. You have me thinking there because I would have been

22 very familiar with things like bills because I would

23 have looked after Haughey Boland's own accounts and

24 we never sent a bill to Guinness and Mahon but with

25 all the work he was doing who got paid for it, I

26 think he was keeping his end up in Haughey Boland as

27 well, working nights and weekends.

28 197 Q. At some point in his career he made contact with

29 Guinness Mahon and then got the opportunity to

43
 1 advise them on project related assignments?

2 A. You are being very definitive about it. I think how

3 he came to their notice was maybe acting for some

4 client in some property situation where they may

5 have been another party to it and were very

6 impressed with him that's all I can say. I don't

7 know.

8 198 Q. Having impressed them they made him an offer that he

9 couldn't refuse. Is that what it sounds like?

10 A. Absolutely.

11 199 Q. He went there as deputy managing director, joint

12 managing director?

13 A. I think joint managing director. The structure

14 there at the time, I think George Mahon was still

15 there and John Guinness was certainly there because

16 I had dealings with John Guinness afterwards. Then

17 there was a William Forwood who was a Solicitor. I

18 don't know let's say whether George Mahon was

19 chairman and the other two joint Managing Directors.

20 I think when Des went in George Mahon may have

21 retired, John Guinness may have become Chairman and

22 he became joint Managing Director with William

23 Forwood. That would be what I would believe but I

24 could be slightly wrong there.

25 200 Q. Here we have someone who was an experienced partner

26 in a small firm of chartered accountants, who had

27 had limited experience of banking, being invited to

28 become the most senior person or one of the most

29 senior persons in a bank. Is that the nub of it?

44
 1 A. Yes, that's the nub of it, yes.

2 201 Q. Right. Once Mr. Traynor had departed Haughey Boland

3 and joined Guinness Mahon, did your situation change

4 in Haughey Boland. Suddenly did more

5 responsibilities come you way?

6 A. It certainly changed in terms of percentage. I

7 would have been a junior partner and immediately

8 after that I became a senior partner.

9 202 Q. Who were your fellow partners at that stage?

10 A. At the time that Des Traynor left, Harry Boland was

11 a senior partner, Des Traynor was senior partner,

12 Frank Donnelly and myself two junior partners. But

13 there was an old situation with Mr. Haughey.

14 Mr. Haughey had never resigned from the partnership,

15 he never took benefit from it, but we, Mr. Donnelly

16 and myself were 10 percent partners each, that left

17 80 percent between the other three which was 26 and

18 2/3rd percent each. Will I skip all the thing and

19 say what happened at the end of day, at the end of

20 the day when we shuffled through the thing and

21 Mr. Traynor left, there were four twenty-five

22 percents being, Mr. Boland, Mr. Haughey,

23 Mr. Donnelly and myself. Mr. Haughey not

24 participating and his 25% was only memo and he never

25 took anything from it and hadn't for a number of

26 years.

27 203 Q. Because he was involved in other things?

28 A. Politics, yes.

29 204 Q. My question of you, did more responsibilities come

45
 1 your way?

2 A. I was now effectively a third equal senior partner.

3 You were very busy all the time in those days. I am

4 not sure what extra responsibilities because I would

5 have been shouldering loads of responsibilities

6 anyway.

7 205 Q. You have already told us that some of your work was

8 insolvency work?

9 A. That's right.

10 206 Q. But there wasn't enough of that for it to be full

11 time and some of your work was as a general, if I

12 can use the term, audit partner. Did you suddenly

13 inherit some more audit client assignments for

14 instance?

15 A. I think Mr. Traynor was away from the auditing for

16 quite some time before he departed the scene. What

17 would I inherit?

18 207 Q. Did you get his clients. Were his clients passed to

19 you as the focal point?

20 A. I think they would have been passing to me over the

21 years. He was backing off from that. I presume so.

22 I can't remember in detail but I would presume that

23 I did.

24 208 Q. So he had gone and you and he had built up

25 considerable friendship over the times?

26 A. Absolutely.

27 209 Q. Did you see him and or Guinness and Mahon as a

28 potential source of more project work? For

29 instance, he had been providing these projects. He

46
 1 had been servicing these projects and then he had

2 gone to be a managing director. Did that not

3 present you with an opportunity to work with

4 Guinness Mahon as a client?

5 A. No. I would have viewed Guinness Mahon as a bank.

6 They were an investment bank more than commercial

7 bankers. He was there. It would have been a

8 resource, I suppose, having a friend the managing

9 director of a bank is no harm, particularly when you

10 are in the insolvency and rescue operations and

11 things that might happen in that case. I don't know

12 that we tapped into a source in any particular way.

13 He was more friendly with me than with anybody else.

14 210 Q. Let me put a particular question, did you get the

15 opportunity to advise Guinness Mahon on any

16 troubled business assignments where, for instance,

17 things were going wrong and there was a business,

18 borrowing the money and what has subsequently become

19 know as a business review. Did you get a chance to

20 do that?

21 A. No, never on the assignment from Guinness Mahon.

22 211 Q. First, did you get invited by Mr. Traynor or indeed

23 others in Guinness Mahon, to attend any lunches

24 where they would have wanted to have told you what

25 they were doing?

26 A. It was the reverse in the sense in that I would have

27 given Guinness Mahon quite a bit of work, in the

28 sense of introducing clients to them, that they

29 would have provided facilities to and things like

47
 1 that so I would have been well known. I was

2 certainly invited to a number of golf outings after

3 which there would be a dinner and I remember Maurice

4 O'Kelly, he had joined the bank later on, at one of

5 those dinners saying: "Listen you lot" and there

6 would be load of business men, "we are not going to

7 the expense of feeding you and giving you dinner

8 without getting some feedback from you that we want

9 business from you". That sort of thing. There was

10 never any detailed discussion about Guinness Mahon

11 or projects.

12 212 Q. Did they ever hold any seminars when they would

13 outlined some of the interesting new products which

14 I have no doubt they would have wanted to have

15 persuaded advisors to encourage clients to avail of?

16 A. I can't recall Haughey Boland being invited to any.

17 213 Q. Right. So that there wasn't much work coming to

18 Haughey Boland from Guinness Mahon / Mr. Traynor,

19 but there were opportunities coming from Haughey

20 Boland to Guinness Mahon?

21 A. That's right.

22 214 Q. Tell me about those?

23 A. In situations where financing might be off the

24 straight and narrow with some unusual situations, I

25 could have introduced clients to Guinness Mahon,

26 probably to Des Traynor to discuss and they were

27 some of them that clicked and they provided

28 substantial funding to them.

29 215 Q. All right. Then you decided that you would leave

48
 1 Haughey Boland and I don't need to know anything

2 about why that was but, suddenly you had an

3 opportunity to setup your own business and last time

4 you told us that you had never been or didn't

5 consider yourself as a tax adviser.

6 A. I certainly never did that.

7 216 Q. And not an auditor either?

8 A. I was an auditor. Oh, sorry, when I set up in

9 business? No, no auditing and no tax.

10 217 Q. Mostly your business when you set up was in the

11 finance area with banks as raising loans and

12 organising securities and that stuff. Can I ask you

13 whether your business, at any stage because we have

14 been talking about the fairly early stage of all of

15 this up to now, at any stage from the time you set

16 up, did your business fall within the scope of

17 regulation of the Institute of Chartered Accountants

18 in Ireland?

19 A. Certainly not particularly in the earlier days or

20 even the later days I am not too sure where I would

21 fall within that scope.

22 218 Q. Let me suggest three areas, one might be auditing?

23 A. No, no auditing.

24 219 Q. The second might be insolvency?

25 A. I only completed the insolvency assignments where I

26 had been appointed liquidator or receiver. We

27 discussed it in Haughey Boland and it was easier, I

28 could have resigned and appointed somebody else but

29 it was considered better for me to finish out those

49
 1 assignments.

2 220 Q. As they were personal appointments.

3 A. They were personal appointments, yes.

4 221 Q. The third area might be financial services?

5 A. I don't know what category that comes within or

6 where that would be.

7 222 Q. Mr. Stakelum, either you know that you had an

8 involvement at some point in your company's life

9 with the Institute, in terms of regulation and

10 meeting the regulatory requirements of the Institute

11 or you didn't?

12 A. That I had meetings with the Institute? I had no

13 meeting with the Institute.

14 223 Q. Sorry, I think you misheard me. You must know that

15 either you did come within the requirements of the

16 Institute in terms of their regulatory requirements

17 or you didn't.

18 A. I have to plead ignorance but I am not sure what

19 their regulatory requirements would have been in

20 connection with financial services. But I can quote

21 you chapter and verse exactly what Business

22 Enterprises Limited did.

23 224 Q. We will get to that in just a moment?

24 A. Yes .

25 225 Q. Can you please tell me what were the trading or

26 business names under which you have operated

27 businesses post Haughey Boland?

28 A. Business Enterprises Limited was the cornerstone of

29 all that.

50
 1 226 Q. Starting?

2 A. Starting day one.

3 227 Q. 1975?

4 A. Yes. I might have had the company incorporated a

5 week or two beforehand.

6 228 Q. And being run down in 1998?

7 A. That's right.

8 229 Q. The next one?

9 A. I don't know if there is another one that I could

10 add to that but let me explain the peripherals.

11 There was a BEL Secretarial Limited. The BEL coming

12 from the Business Enterprise Limited, the initials.

13 That was incorporated with the purpose and view of

14 having it operate as secretary to companies and it

15 was certainly appointed as secretaries to some

16 companies. That has also been struck off but it

17 never issued an invoice, if I may so, or anything

18 like that. The work was carried out by the

19 personnel in Business Enterprises Limited. It was

20 just a name to have there for that.

21 230 Q. Could I clarify whether the name of that company was

22 B. E. L. Secretarial Limited or was it B. E. L.

23 Secretarial Services Limited?

24 A. The reason I am hesitating, I thought it was BEL

25 Secretarial Limited and may I go on about that.

26 B. E. L. Secretarial did nothing and was lying there

27 as a dormant company, until I was asked to take over

28 a situation for Mr. Haughey from Deloitte and I used

29 that company then. I believe it was B. E. L.

 1 Secretarial Limited. I don't think I would have

2 used Services but what I did then, and that was the

3 first time it had a bank account was, in connection

4 with an operation for Mr. Haughey that has been

5 fairly well publicised and then I closed that bank

6 account down in February, I don't know in '91 or '92

7 I start to work for the Mr. Haughey thing.

8 231 Q. Did you wind the company up at the same time?

9 A. No, no. B. E. L. Secretarial, would you believe that

10 I don't know the status of that company at this

11 stage. No I do, sorry, we asked for it to be struck

12 off at the same time as Business Enterprises

13 Limited, probably in 1999 some time. But I closed

14 the bank account for it which was the only bank

15 account it ever had, 18 or 19 months after starting

16 with Mr. Haughey and put in B. E. L. Secretarial,

17 without a 'Limited'.

18 232 Q. Did you register that as a business name?

19 A. Yes.

20 233 Q. Were you involved in any other business name trading

21 entities?

22 A. Well I had Clyde Enterprises and before that I had

23 Business Enterprises without the Limited and then

24 subsequently I had Raglan Enterprises and Elgin

25 Enterprises.

26 234 Q. Is an entity by the name of Secretarial Trust

27 Company? Does that mean anything to you?

28 A. Oh, yes I would have been the instigator of that.

29 In Haughey Boland & Company days we did exactly

52
 1 that; Haughey Boland being the auditors to a number

2 of clients we decided that it would be more

3 beneficial to have a secretarial company and

4 Secretarial Trust Company Limited was incorporated

5 as a company, way back in my days in Haughey Boland

6 & Company.

7 235 Q. So Secretarial Trust Company was a Haughey Boland

8 company?

9 A. That's right.

10 236 Q. And you set your own business up you told me?

11 A. December 1st '75.

12 237 Q. All right thank you.

13 238 Q. You told us that one of the services you provided

14 under Business Enterprises Limited was that you

15 would act as a non-executive director on behalf of

16 your clients?

17 A. Depending on their wishes. I would have been a

18 director of approximately 40 companies.

19 239 Q. Did you every perceive that acting in that capacity,

20 that is as a non-executive director, presented you

21 with a conflict of interest if you were also

22 promoting that company to a bank in respect of

23 obtaining a loan for the company of which you were

24 the Director?

25 A. I fail to see even now where the conflict of

26 interest would arise. Clients ask me to become a

27 director of AB Limited, in my capacity one of

28 functions is "look after our banking requirements;

29 go to see A.I.B or Guinness and Mahon or whoever in

53
 1 that capacity, seek for a loan, I fail to see a

2 conflict.

3 240 Q. So the answer is you didn't see any possibility of a

4 conflict?

5 A. No.

6 241 Q. Turning now to the early stages of your business.

7 We know that you continue to work on the insolvency

8 assignments which you had brought with you from

9 Haughey Boland?

10 A. Yes.

11 242 Q. How long would it have taken you to have completed

12 those, roughly?

13 A. I think at the time there were about 42 or 43. That

14 has always stuck in my mind and I would believe that

15 forty of them might have been cleared within 12

16 months. One of them took about 20 years.

17 243 Q. So that besides that, how did you market your

18 business? How did you go about attracting new

19 clients?

20 A. Before I left Haughey Boland and Company there were

21 clients that were making more demands on you than

22 just auditing work. It might have started with

23 auditing work that they would come, they would look

24 for much more additional involvement than an annual

25 audit or something like that and in going and

26 talking to, because there was a whole array of

27 situations when I gave notice, I gave 12 months

28 notice in Haughey Boland on my departure. We

29 reached agreement on a number of issues, one

54
 1 obviously being that I wind up the insolvency work.

2 In addition there were a number of clients that

3 continued to be clients of Haughey Boland and

4 Company in the auditing capacity but now that I

5 would have handled on more general work that I was

6 involved in with them and they would have come to

7 me, without leaving Haughey Boland. I wasn't doing

8 any auditing anyway.

9 244 Q. Does that mean that whenever you were leaving

10 Haughey Boland, all the clients that you dealt with

11 were written to say, by the firm, to say that

12 Mr. Stakelum was leaving?

13 A. No. I don't think that happened.

14 245 Q. So it was a case of you knocking on their doors

15 afterwards?

16 A. I think in discussion with clients you get close to

17 clients in talking to them and I would have said

18 that I am proposing to leave here in 6 months time

19 or 12 months time or whatever the case may be. Some

20 of them would have indicated that they wanted to

21 continue to utilise my services. Then that was a

22 question of discussing with Haughey Boland and

23 Company whether it was in order etc.

24 246 Q. Right. So that in essence, you may have been

25 consulted on, because this is what you indicated to

26 us last time, on helping them to raise money if they

27 needed money.

28 A. That would be one of the aspects of things, yes,

29 certainly.

55
 1 247 Q. Were you also asked to help them if for instance if

2 they had a business entity which started to perform

3 badly?

4 A. Yes.

5 248 Q. That would have been the sort of thing that you

6 would have had to deal with in terms of receiveship

7 work?

8 A. Yes, rescue work.

9 249 Q. All right. Let me just change tack for a moment.

10 One of the things you said to us last time was that

11 you didn't advise on tax related issues and I think

12 you gave us the impression that tax was not

13 something with which you had a great deal of

14 knowledge?

15 A. I always had my own tax affairs handled by somebody

16 else. I could not hold myself out as having.

17 Obviously there is a little knowledge that you gain

18 but tax is so complicated these days that it

19 requires specialist work. I never could advise on

20 tax because I didn't have that expertise.

21 250 Q. But we do know you would have studied some tax for

22 your accountancy exams?

23 A. Surely

24 251 Q. That presumably, while you were a qualified senior

25 in Haughey Boland you would have had to have some

26 understanding of tax to do whatever tax related

27 activities were necessary as part of the accounting

28 audit procedure?

29 A. Very little, very little on that because you

56
 1 obviously had to get the backup. I suppose there

2 would be sufficient knowledge to know where the

3 problems might lie but you would always be advised

4 by the specialist. You would have employed

5 specialists there. I couldn't give people advice on

6 even personal tax.

7 252 Q. But presumably you would have kept abreast of the

8 major events which were happening in terms of the

9 introduction of legislation by government. You

10 know, the budget issues?

11 A. You mean the taxation issues?

12 253 Q. Yes. I was thinking about the changes which came

13 about in 1974?

14 A. Capital gains tax came in then.

15 254 Q. Well, actually it was really about the transfer of

16 assets abroad legislation. Did that have an impact

17 on you?

18 A. No. I don't remember. I would probably as was

19 usual that immediately after a budget, seminars

20 would be arranged either by the Institute, like

21 breakfasts and lectures after breakfast for hours

22 or whatever or by Kennedy Crowley as it was, because

23 I was an ex-employee there which is now KPMG and

24 later on Deloittes and that and you would go to the

25 breakfast and you would listen to the changes but

26 you didn't absorb unless it was your particular

27 area.

28 255 Q. In 1975 of course the Government introduced import

29 and taxation legislation?

57
 1 A. I am not familiar now with what happened.

2 256 Q. You wouldn't be familiar with the capital gains tax

3 legislation which was introduced in 1975?

4 A. I thought that was the 6th of April '74.

5 257 Q. And the wealth tax?

6 A. There was wealth tax introduced at some stage.

7 258 Q. Would these have been areas, Mr. Stakelum,

8 if you were dealing with business people and in some

9 cases wealthy individuals, they would have expected

10 you to have known about?

11 A. I certainly never -- and nobody would ever be coming

12 to me to give them taxation advice but what I did

13 for clients was certainly if there were areas that

14 needed advice I was able to either bring them or

15 direct them to the place where they could get that

16 advice and I would have to do that I would often go

17 with them to get the particular advice.

18 259 Q. The information you are providing is that you didn't

19 keep abreast as a professional advisor of major

20 changes in statute as they affected tax?

21 A. Certainly not, you are making me feel very

22 incompetent here but I have to admit to that.

23 260 Q. I am just trying to clarify the position?

24 A. That's right.

25 261 Q. Going back then to business, you were helping your

26 clients raise money and you had been dealing with

27 Mr. Traynor and Guinness Mahon before you left

28 Haughey Boland and you had been putting client

29 opportunities his way so that meant that you had at

58
 1 least that relationship to start with?

2 A. With him.

3 262 Q. With him?

4 A. My relationship would have been far more, he was a

5 close personal friend as well.

6 263 Q. I understand. At the time did you perceive that

7 Guinness and Mahon had a particular interest in

8 lending money into any sector or sectors?

9 A. No, maybe excluding -- they weren't interested in

10 running things like overdrafts. I would have

11 thought probably fairly strong into property because

12 I certainly brought a few property situations there,

13 I think they were thrown out to tell you the truth.

14 264 Q. Property and maybe construction?

15 A. I am thinking of clients that might have a

16 development project you know for construction, yes

17 maybe construction would be part of that and if the

18 concept was unusual I used to say that I turned down

19 more propositions than bank managers because people

20 would come and be referred to me by somebody else

21 and they would come with crazy schemes that, my God

22 if I brought them to any bank the white-coat-men

23 would come and take me away, so I turned them down.

24 But if I felt the scheme was a runner or if you had

25 an existing client that let's say was insisting on

26 -- and you did your best and put your best foot

27 forward in application to wherever you felt it would

28 be best received.

29 Generally speaking is that where clients were

59
 1 already with a bank that is the bank you dealt with

2 unless the nature of the financing was something

3 unusual.

4 265 Q. You did make the point that difficult situations may

5 well have been resolved by an approach to Mr.

6 Traynor.

7 A. Yes, in the sense that you could explain and he

8 would have recognised the source of me being honest

9 with some industry put into the effort and what I am

10 telling him to be true. I would be having a

11 receptive ear of somebody with the authority to

12 recommend strongly if not direct a credit committee

13 to make a loan.

14 266 Q. But of course in putting forward these loan

15 applications your interest was your clients

16 predominantly?

17 A. It couldn't be anybody else, yes of course.

18 267 Q. If there was and I suppose there would have been a

19 business plan or something of that sort a

20 description at least of the intent of the project to

21 support the application?

22 A. Yes.

23 268 Q. Were there business plans as we might know them?

24 A. Sure, each one would vary. You could be ringing up

25 and saying "Des, I want £10,000 on a short term

26 basis for so and so, would you instruct somebody

27 that that would be Okay", and that might be alright

28 but if you are talking about something very

29 substantial you would probably say, can I see you

60
 1 and you would go down and see him and say listen I

2 have a concept of thinking, would this be a runner

3 with the bank and he might tell you fairly clearly

4 which is also a great advantage that it wouldn't be

5 because sometimes you can go through with bank

6 applications and discussions and find at the end of

7 the day that they were saying no but that were

8 always going to say no. So he could say no fairly

9 quickly, which would be helpful.

10

11 He might then say "well, you know, if you let me

12 have a,b,c,d,e whatever it might be and that might

13 include a business plan or a cash flow projection or

14 a profit projection or a schedule of assets or

15 whatever and then you would prepare that in that way

16 so there would be those things.

17 269 Q. How quickly after you started your own business did

18 Mr. Traynor raise with you the issue of supporting a

19 loan with a deposit elsewhere?

20 A. I really can't answer that, again that's purely a

21 question of looking back. We are probably talking

22 70's or 80's. I think I would have said in my

23 statement where you are talking -- if we are now

24 talking about back-to-backs as they were known.

25 270 Q. Well let me try and help you a little? You left us

26 with the impression last time that the predominant

27 part of your business was -- and incidently the

28 issue of insolvency work didn't crop up last time --

29 but the predominant part of your business was in

61
 1 helping your clients raise loans from the banks.

2 You also indicated that quite quickly after you

3 started perhaps one to two years, you then began to

4 place deposits with Mr. Traynor, which deposits were

5 deposited offshore so that -- and I may come back to

6 the question of deposits. In the interim, was it

7 that the issue of deposits was then matched in your

8 mind with the issue of those deposits being tabled

9 to support the back-to-back loan? I want to know

10 how quickly that issue was brought to you by

11 Mr. Traynor?

12 A. I have to say that I don't know that but it could

13 have been and probably was sometime in the 70's,

14 late 70's. I mean I kind of discount '75 in so much

15 as I was only one month there on my own, so '76 is

16 out. The way your question comes across is almost

17 as if Mr. Traynor rang me up one day and said "Come

18 down Mr. Stakelum and you know that there are funds

19 abroad that can be used to secure a,b, or c. I

20 don't see that happening at all.

21

22 I think I would have said in my statement,

23 personally I would be strongly opposed to what they

24 call back-to-back arrangements but you met the needs

25 of clients as best you could.

26 271 Q. Without wanting to seem impolite, we understand this

27 aspect because you explained it to us last time.

28 You see, you already explained to us that mostly

29 work flowed either from Haughey Boland or yourself

62
 1 to Mr. Traynor and GMI and not very much of anything

2 flowed back the other way?

3 A. I am trying to think at the moment if there was

4 anything that came back the other way.

5 272 Q. And that you only had a very hazy view of what

6 Mr. Traynor was doing in terms of his overseas

7 banking activities and GMCT and so on. At some

8 point along the line someone had to explain to you

9 the possibilities of doing a back-to-back situation,

10 that is what I am trying to understand.

11 A. Okay.

12 273 Q. How did all of that happen because it had to come

13 from Mr. Traynor because it couldn't have come from

14 you because you didn't know?

15 A. I am trying to think to put this as clearly as I

16 can. I think the knowledge of back-to-back

17 situations, of using funds that were somewhere else

18 would have been something that one would have known

19 about, maybe before I left Haughey Boland. Don't

20 forget he had arranged a scheme which was

21 effectively an eye view, a back-to-back by lending

22 me £40,000, that loan that you referred to. Now I

23 think that...(INTERJECTION)

24 274 Q. That is in 19?

25 A. That was certainly when I was in Haughey Boland and

26 Company because I thought capital gains came in '74

27 and you said '75 earlier on but it would have been

28 finished at that stage because there was no further

29 advantage. What would have happened is clients

63
 1 certainly approached me and asked me to -- now, I

2 don't want to use the word monitor because

3 Mr. Costello didn't like that word -- to handle

4 their funds, record, reconcile, I am not sure what

5 words to use, which would have been handled through

6 Guinness Mahon. Let me say, I believed Guinness

7 Mahon Caymen Trust. I believed and I don't know the

8 answer to that now because of other developments

9 that have taken place since but I believe that.

10

11 That part of my business was tiny. I wouldn't have

12 viewed it almost as a business, it was a convenience

13 or a facility offered to clients that looked for

14 that. I am even regretting saying that the major

15 part of my business was organising loans. Of

16 course, I organised loans and for the companies that

17 I was involved in I don't think, you know that that

18 would be a big function but if you then came along

19 and said to me "How many loans did you organise in

20 '84", it may have been two, I don't know because

21 there was a whole pile of other work that was done.

22

23 I think what would have happened there is that there

24 would have been funds placed abroad with Mr. Traynor

25 and at some stage some client or other is looking

26 for funds and Mr. Traynor is saying what about the

27 possibility of using the funds as security. Now, I

28 am not going to swear to that because I don't know

29 that that's the way it happened.

64
 1 275 Q. But it is likely that the idea was promoted by

2 Mr. Traynor, is it not?

3 A. It certainly is in the sense that I wouldn't be

4 generally in favour of that. That was a last resort

5 situation of financing.

6 276 Q. You told us to the best of your knowledge you could

7 only think of one situation, was it Mr. Keane?

8 A. That is the only one I can think of, we are talking

9 about...(INTERJECTION)

10 277 Q. Beside your own one of course which of course

11 preceded your business?

12 A. Yes, and wasn't the same at all. That certainly

13 wasn't the same at all. That wasn't funds that I

14 had abroad confidentially, that was a situation that

15 I would have known nothing about until he suggested

16 that to me.

17 278 Q. Right.

18 A. That is the one I can think of. It may be that out

19 of woodwork some other one would come but I am not

20 sure.

21 279 Q. All right. Then let me summarise where we are at

22 and let me say that I do appreciate that this is

23 quite a long time ago and I am not going to try and

24 ask you to remember things absolutely to a month or

25 even to a year because I recognise that that is

26 going to be very difficult unless one has something

27 more concrete to put forward.

28

29 After you started your business in the second half

65
 f
1 of the 7 0 f s you were helping your clients to raise

2 loans and you were helping your clients also to deal

3 with some monies which they had either already

4 abroad or which they wished to deposit offshore and

5 then arising from those two activities you learned

6 from Mr. Traynor about the possibility of supporting

7 a loan in Ireland with a back-to-back deposit in

8 Caymen or somewhere else in the second half of the

9 ' 70 ' s?

10 A. I think that is an accurate summary of the

11 situation.

12 280 Q. At our last interview we spent sometime talking

13 about the situation where one of your clients said I

14 have some overseas money and it is somewhere outside

15 of Ireland and the client said to you look,

16 Mr. Stakelum I would like you to monitor, may I use

17 the word manage?

18 A. Yes.

19 281 Q. As opposed to monitor, might we understand that a

20 bit better?

21 A. Yes.

22 282 Q. To manage this money for me and what we understand

23 from that Mr. Stakelum is that he wanted to make

24 sure he was getting the best rate of interest on his

25 money or if there was other issues of an investment

26 or taxation nature that he was doing the best he

27 could with his capital?

28 A. No.

29 283 Q. No?

66
 1 A. Absolutely not because that would give a

2 connotation that I would be giving advice about

3 investment and I never did that because you were on

4 a hiding to nothing. I wasn't a qualified

5 stockbroker or anything like that. So I never said

6 to a client, you should do this or you should do

7 that or you should do the other. They totally gave

8 me the instructions. They understood that their

9 funds were purely on deposit. I would have advised

10 them about rates available of deposit, that was it.

11

12 In some cases some clients asked me to buy shares

13 for them, public company shares, which I did, if

14 they so instructed. I instructed whoever it was who

15 would buy the shares and in many cases, no, now that

16 is not true, in one particular case I was abhorred

17 about share purchases.

18 284 Q. Sorry, we are digressing a little. Let me just keep

19 you to the point. Somebody had some money abroad

20 and he said look I would like you to manage this for

21 me by way of getting me a better rate of interest?

22 A. I doubt if the conversation was like that, but carry

23 on.

24 285 Q. That was the nub of it, would it not be? You looked

25 around...(INTERJECTION)

26 A. Well, I think there were other factors but go on.

27 286 Q. You looked around and you found that there may have

28 been a number of options, one of which might have

29 been GMCT, so, having established that you would put

67
 1 these options in front of your client and say which

2 of them are you going to select or would you have

3 said that there makes more sense?

4 A. No.

5 287 Q. How would you have done it?

6 A. I will tell you how I believe I would have do it, I

7 would have said -- there are other reasons for

8 looking after monies and monitoring or managing as

9 the case may be, from just the interest rate, but

10 letting that one go for a minute, what I would have

11 said I think is that Guinness and Mahon have an

12 offshore operation. That is the only place that I

13 can handle the funds through and it would be up to

14 them to decide whether or not they transferred to

15 there. I wasn't aware of other options or

16 presenting them with options.

17 288 Q. So you explained to people that Guinness and Mahon

18 had an offshore option. Did you then present them

19 with some sort of an information sheet about

20 Guinness and Mahon's offshore option?

21 A. Absolutely not.

22 289 Q. No?

23 A. In all the funds that I got over all the years from

24 all the clients never once did I give them a piece

25 of paper acknowledging that I got the funds. In all

26 the years, in all the clients passing back their

27 funds, I never asked for a piece of paper to

28 acknowledge that they received them back. This was

29 a situation where people trusted you and that was

68
 1 the end of story.

2 290 Q. So, effectively they trusted you to make a

3 recommendation?

4 A. About what? They would have been aware that their

5 funds were going on deposit in a bank.

6 291 Q. Yes and that as far as you were concerned you

7 believed that was first of all a solid institution

8 and that it was presenting the best interest

9 opportunity for them? You were recommending it,

10 because they had nothing else to go on except your

11 recommendation?

12 A. They were getting the value of my service in the

13 situation and that was being handled through

14 Guinness and Mahon who were a bank. I had the

15 occasional fight with Guinness and Mahon on their

16 interest rates and sometimes they weren't as good as

17 other people but that was the package, it was

18 Guinness and Mahon they were getting and that was a

19 bank.

20 292 Q. And you had...(INTERJECTION)

21 A. And their funds were just on deposit.

22 293 Q. And you recommended it?

23 A. The truth is, if you really want the truth, I

24 wouldn't have recommended any of it, because it was

25 a nothing for me, it has proven a hell of problem at

26 this stage in my life having got rid of it and I

27 didn't make any money out of it. So, I didn't come

28 along and approve this or recommend it. I provided

29 a facility that they looked for.

 1 294 Q. Did you every recommend any of your clients to put

2 money into merchant banking?

3 A. No.

4 295 Q. All right, thank you. Last time we discussed this

5 matter you explained that you thought the issue of

6 dealing with clients deposit, perhaps arose as an

7 issue made from some clients who had money abroad

8 and they wanted to organise it differently and you

9 would have -- because the money was abroad and you

10 knew that Mr. Traynor was dealing with offshore

11 interests, you would have gone along and talked to

12 him about that situation and having thought about it

13 he would have recommended a course of action. You

14 thought about it and you felt it was appropriate and

15 you would have gone back and suggested that to your

16 client. If your client was inclined to take your

17 recommendation then Mr. Traynor would have provided

18 routing. I think was the word you used,

19 instructions, for how the money got from wherever it

20 was in your clients control into Mr. Traynor and in

21 GMCT's control, is that right?

22 A. That's right.

23 296 Q. Routing instructions. I want to explore those

24 routing instructions with you. Did you provide

25 Mr. Traynor with your clients name?

26 A. I can't remember specific instances but by and large

27 he wouldn't have known the names.

28 297 Q. Yes, that is what you said.

29 A. By and large.

70
 1 298 Q. May I assume that it was unlikely or less likely

2 that he didn't know your clients name?

3 A. Less likely.

4 299 Q. But he might have?

5 A. He might have.

6 300 Q. He would have said to you, would you ask your client

7 to lodge his money to a particular bank, account

8 reference this, isn't that right?

9 A. That's right.

10 301 Q. So, that is all your client knew, that he had sent

11 money to a particular bank of Mr. Traynor's and that

12 thereafter you didn't worry about it and your client

13 didn't worry about it because Mr. Traynor looked

14 after it?

15 A. Yes .

16 302 Q. So, you didn't know where the money had gone?

17 A. No, I mean, I would have known with the

18 instructions, the first receiving back that we got.

19 303 Q. But that probably wouldn't have been Guinness and

20 Mahon Caymen Trust Limited, would it?

21 A. Probably not.

22 304 Q. You said last time that there was usually an

23 intermediate?

24 A. I think that's the way they operate, I guess if I

25 rang up somebody or somebody asked me to transfer

26 £10,000 from the bank of Madrid in Bilbao or New

27 York, I would have to get moving instructions and it

28 would probably go through other banks along the way,

29 because they were receiving banks we had.

 1 305 Q. Let's suppose that this money started off in your

2 clients control in dollars. It moved through in

3 dollars to GMCT and if it was felt that it was

4 desirable to retain it in dollars then there was

5 presumably opened a dollar account in GMCT, yes?

6 A. Well, yes I presume if they took dollars and kept

7 dollars they had a dollar account, yes.

8 306 Q. That's all I am asking you?

9 A. Yes.

10 307 Q. What sort of record did you keep of that

11 transaction?

12 A. Very same as any other.

13 308 Q. So, you kept a dollar account?

14 A. Dollar and sterling.

15 309 Q. Pardon?

16 A. Dollar and sterling.

17 310 Q. Yes but in this case we are just dealing with

18 dollars, you kept a dollar account?

19 A. Yes.

20 311 Q. Let me suppose another client came along to you and

21 said I want to transfer Deutschmark, the same

22 process and you kept a Deutschmark account?

23 A. Yes, except I don't think I every had one.

24 312 Q. And somebody else a French Franc account?

25 A. I think I only had two accounts, dollars and

26 sterling but it is possibly at some stage I may well

27 have had, I don't know.

28 313 Q. On that point you have told us that you had no idea

29 of the names of those accounts, sorry excuse me, the

72
 1 reference numbers of those accounts maintained by

2 Mr. Traynor?

3 A. No, I now realise I don't even know where the money

4 was but I mean...(INTERJECTION)

5 314 Q. That is the second point?

6 A. I think I would have had a reference or some code

7 reference but I can't remember. It certainly

8 wouldn't have been what was shown to me there.

9 315 Q. Would you try and think back please and tell me what

10 sort of code reference you might have had?

11 A. I think you asked me this the last day and I figured

12 it was probably an initial and a number but I just

13 don't know.

14 316 Q. Do you think you had some code reference for

15 Mr. Traynor?

16 A. I guess so, I think so, yes. You see you made

17 reference to the fact of how do you identify when

18 you ring up to get your monthly balances and the

19 likelihood -- first of all they would have known and

20 what account it was but I might have said something

21 like I wanted a balance on B7 or -- I don't remember

22 what that code was.

23 317 Q. I am prepared to accept that you may, you believe,

24 have been given some sort of reference code from

25 Mr. Traynor?

26 A. Yes.

27 318 Q. We have been speaking up to now about money, your

28 clients money, which was already overseas and it

29 moved from some overseas bank into the control of

73
 1 Mr. Traynor and you believe that probably meant that

2 it was with GMCT?

3 A. I did believe.

4 319 Q. Pardon?

5 A. I did believe that.

6 320 Q. You did believe that?

7 A. I am not sure I believe it now.

8 321 Q. What about clients who had money available in

9 Ireland which they wished to put into a good

10 investment?

11 A. If they wish to transfer Irish pounds abroad, I

12 think at a stage, at an early stage, there was no

13 problems about that because I think the pound and

14 the sterling were one of the same and that there was

15 no restriction on sterling so it could just be moved

16 abroad offshore. At a later stage that was a

17 problem and the only way that that could be done

18 would be to supplant and replace funds. If somebody

19 wanted to take funds back from abroad and somebody

20 wanted to put them out, you could do it by journal

21 entry.

22 322 Q. Before we get to that, if someone had a sum of money

23 which they wished to put on deposit as their advisor

24 you had a number of options open to you, you could

25 have advised them to deposit it in Ireland or you

26 could have advised them to deposit it offshore. If

27 you were talking about advising them to go offshore

28 it could have gone offshore with a number of other

29 organisations who provide offshore facilities or it

 1 could have gone through GMCT, how did you decide

2 when advising your clients which was the most

3 appropriate?

4 A. They weren't options that I perceived as being

5 available at that time. Anyway what I had was a

6 situation through Guinness and Mahon where there

7 were offshore funds, unless it was an initial

8 lodgement for a client he might already be in that

9 Hotchpotch account, so to speak.

10 323 Q. I am talking about a client that hadn't any previous

11 involvement with Guinness and Mahon?

12 A. I don't know what the circumstances was but in the

13 situation, it wasn't a question of sitting down and

14 putting various options to clients about whether he

15 would invest here or away. It would be taking

16 instruction from a client that he wished his funds

17 to be placed offshore.

18

19 So, I didn't had an option of saying well you really

20 should go down the road and put that on the Trustees

21 Savings Bank or something. I would be taking an

22 instruction and he would be aware that I was

23 operating through Guinness and Mahon. I wouldn't be

24 offering or indeed aware of other options that might

25 be available to me if he wanted to put funds

26 offshore.

27 324 Q. Your client would be aware that you were operating

28 through Guinness and Mahon?

29 A. That's right.

75
 1 325 Q. In effect if you had a client who wanted to put

2 money offshore you advise them to put it through

3 Guinness and Mahon?

4 A. Yes, if he was asking me to handle it that's the way

5 I would do it.

6 326 Q. That's what we are talking about isn't it?

7 A. Yes.

8 327 Q. You got the sum of money, would you explain to me

9 the process please from that point on. Your client

10 produced the money in what form?

11 A. Probably in cash.

12 328 Q. As in notes?

13 A. As in notes, yes.

14 329 Q. Large sums of money in notes?

15 A. Well, there might have been tens of thousands.

16 330 Q. All right, large sums of money in notes?

17 A. Yes.

18 331 Q. What happened then?

19 A. They would have been lodged to, let's say Clyde

20 Enterprises.

21 332 Q. Did you open the Clyde Enterprises Account fairly

22 early on in your business?

23 A. No, but I had one previous to that, Business

24 Enterprises.

25 333 Q. Right. So, the money that was put into Clyde

26 Enterprises?

27 A. Or Business Enterprises maybe, yes. Let's assume the

28 sum of money was £10,000.

29 334 Q. Yes?

76
 1 A. It would be lodged in there and I could only say,

2 and this is post the time when it was no longer

3 possible to transfer funds abroad.

4 335 Q. Yes.

5 A. I would be saying to the client, if and when I have

6 an opportunity I will transfer that abroad and when

7 an opportunity presented itself where somebody might

8 ask for £6,000 in cash I would draw the £6,000 in

9 cash.

10 336 Q. Out the £10,000 that you had received?

11 A. Yes, and then do a journal entry for the abroad sums

12 crediting one client with the £6,000 and debiting

13 the -- subject to whatever the exchange rate was

14 etcetera.

15 337 Q. But you had to do a bit more than that didn't you?

16 You had to tell Mr. Traynor?

17 A. No, I had not. I most certainly had not. Why would

18 I tell him.

19 338 Q. Because you had just taken a new deposit which was

20 allegedly going to...(INTERJECTION)

21 A. Into my Hotchpotch Account. He wouldn't have know

22 about it, I most certainly did not tell him and

23 that's why he couldn't know. The Hotchpotch Account

24 wouldn't have changed in balance, how would it

25 change.

26 339 Q. So, you explained to your client when he was

27 presenting you his £10,000 that you were going to

28 invest this on his behalf in an offshore account

29 with Guinness and Mahon. Did that not mean that you

77
 1 had to tell Mr. Traynor at some point?

2 A. No, it did not.

3 340 Q. No?

4 A. Absolutely not.

5 341 Q. So all Mr. Traynor knew was that every so often you

6 sent him a tranche of money?

7 A. That wouldn't involve a tranche of money.

8 342 Q. But we do know that every so often you withdrew some

9 money.

10 A. Yes, I did.

11 343 Q. Every so often you requested some money from

12 Mr. Traynor?

13 A. If the clients requests for funds were -- if I

14 didn't have funds to meet what their requests were.

15 344 Q. Yes. I am intrigued then because somewhere along

16 the line the accountancy doesn't work. How

17 Mr. Stakelum, if you never transferred money to

18 Mr. Traynor did Clyde Enterprises have money with

19 Mr. Traynor in the first instance.

20 A. Somebody has got lost in this thing. Clyde

21 Enterprises never had money with Mr. Traynor, never

22 had.

23 345 Q. Never had?

24 A. Never had and I am not sure where you are losing

25 the plot here Mr. Rowan.

26 346 Q. Try and help me because I understood -- let me put a

27 big idea to you -- I understood that you encouraged

28 your clients to put money into GMCT to avail of

29 whatever the advantages of doing that was?

78
 1 A. I have to question your "encourage", I did not but I

2 was asked to facilitate him by doing that.

3 Encourage them is that wrong word.

4 347 Q. Would you explain to me then please how that was

5 done?

6 A. Yes, I will. Let's take the simple situation, let's

7 assume that there is an account in existence in

8 GMCT.

9 348 Q. What do you mean by that?

10 A. I find that hard to explain.

11 349 Q. I am finding it even harder to understand?

12 A. There is an account in existence, the Hotchpotch

13 account.

14 350 Q. How did it start what was the first transaction that

15 started it?

16 A. Okay, I don't know what the first transaction was

17 but let me speculate may I, it was possible that a

18 client came to me and said, "Jack I have funds

19 abroad I would like you to monitor them", or in your

20 terminology, manage them, or reconcile or whatever,

21 control them or whatever the word is and "I am not

22 comfortable with wherever the funds are for what

23 ever reason" and there may be many reasons why he

24 might not be and I would maybe have said at that

25 stage, "Well, Guinness and Mahon have an offshore

26 operation and I can arrange to have the funds

27 transferred to Guinness and Mahon and I would look

28 after them for you from that point on.

29
 1 We talk about what the interest is, the only thing

2 that I would have told them was that the money goes

3 on a bank and it goes on deposit but they probably

4 were aware that it was Guinness and Mahon that I was

5 talking about. They would not be aware whether it

6 was Guinness and Mahon Caymen Trust as I suspected

7 or College Trustees or whatever which maybe it was

8 that I didn't know until recently.

10 I would say I'll have to find out how I get a

11 routing for this. I would probably, undoubtedly

12 initially have talked to Mr. Traynor and said; "I

13 have a client with foreign funds, he wants them

14 transferred into a situation where I would look

15 after them and what are you going to do for me?",

16 and he would say "Look you transfer them here and

17 here is the routing situation. The client has to

18 give instructions to Royal Bank of Scotland in

19 Jersey or wherever. He has to give instructions

20 where they are under his control to transfer X

21 pounds maybe to Guinness and Mahon London, Account

22 Caymen, reference number XYZ, I don't know what

23 those instructions would have been. I would come

24 back to the client and I would say "Here there is

25 your instructions now, you give instructions to

26 your bank whoever the authorised signatory is on

27 them and that's where the funds have to be moved to

28 and when they are moved tell me and I will tell

29 Guinness Mahon and then Guinness Mahon presumably

80
 1 did whatever they do with those bank funds. It may

2 suit them to use half them there in London and the

3 other half in Hong Kong but they would finish up

4 giving credit, presumably in GMCT and that's number

5 one point of a Hotchpotch Account because that would

6 have happened on a number of occasions and they all

7 finish up in the same account.

8 351 Q. So, the Hotchpotch started with funds that were

9 already abroad?

10 A. Yes, so, I believe, incidently it is possible that

11 somebody came in at a stage, and I didn't know this,

12 when exchange control regulations started that you

13 could transfer funds from Irish currency into

14 sterling and there was no restriction on sterling.

15 I don't know exactly how that started it is aeons

16 ago and that.

17 352 Q. If in fact the Hotchpotch Account started with

18 overseas money, let's suppose that the Hotchpotch

19 Account started with five hundred thousand pounds,

20 then providing you never needed to withdraw more

21 than five hundred thousand pounds the system worked

22 because each time you got a new deposit in Ireland

23 you put that into Clyde Enterprises and while you

24 had money in Clyde Enterprises you could repay

25 people who wanted to withdraw, yes?

26 A. Absolutely.

27 353 Q. If in fact the people who started the Hotchpotch

28 Account, the five hundred thousand, if they wanted

29 to withdraw that amount then you had a problem

81
 1 because there was no further monies overseas.

2 A. I don't know where I have a problem, where have I a

3 problem there? What you are talking about if

4 clients give you money they had it and they wanted

5 to withdraw they got it back.

6 354 Q. Yes?

7 A. No problem.

8 355 Q. Yes, but I think you might accept that if you

9 exclude any new deposits that once the five hundred

10 thousand pounds that started it all had been

11 withdrawn here in Ireland, then the Hotchpotch

12 account would have been zero?

13 A. That's right.

14 356 Q. If it got to zero?

15 A. Yes .

16 357 Q. New deposits in Ireland?

17 A. That's right I wouldn't be able to make further

18 deposits, I agree with you, yes.

19 358 Q. So effectively while that didn't happen, while the

20 amount that was originally used to create the

21 Hotchpotch Account, in effect when people gave you a

22 new deposit you lodged it in the AIB, in Clyde

23 Enterprises, if somebody wanted a withdrawal you

24 gave hem a withdrawal and as far as they were

25 concerned they had money on deposit with Guinness

26 and Mahon offshore?

27 A. Yes, I would say that is a reasonable conclusion.

28 359 Q. But if fact they had money on deposit with Clyde

29 Enterprises ?
 1 A. No, no, no, no. Clyde Enterprises had no deposit

2 account, Clyde Enterprises merely had a current

3 account and let me tell you some of the

4 restrictions? When people came with me, with just

5 say the £10,000 and they wanted it placed abroad I

6 would have to say to them, this is assuming that

7 there are exchange control restrictions in at that

8 stage, I would have to say to them, "if and when the

9 opportunity arises I will place the funds abroad

10 for you".

11 360 Q. That might have been a month later?

12 A. It might have been a month later.

13 361 Q. What did they do for the interest?

14 A. They were quite happy to understand and I explained

15 to them in detail, until such time as the money went

16 on deposit abroad they earned no interest.

17 362 Q. Did you explain this to them?

18 A. I did and furthermore you would have the situation

19 where it wouldn't be black and white that if they

20 gave £10,000 they might get £6,000 abroad in a week

21 and it might take them another month to get the

22 other £4,000 or it might be £3,000 would get in

23 another fortnight and the other £1,000 might be

24 another month and that would be explained to them

25 and understood.

26

27 I have and still enjoy a great trust relationship

28 with my clients and they understood it and I made

29 nothing out of that because it was on current

83
 1 account.

2 363 Q. Why?

3 A. Why.

4 364 Q. Why not put it on deposit?

5 A. Very simple. If I put that on deposit I would have

6 to explain where it came from and that wouldn't be

7 part of the confidentiality of the funds.

8 365 Q. Because you had it in a current account you wouldn't

9 have to explain it?

10 A. I wouldn't, who would I have to explain it to? If

11 it was on a deposit account it would earn interest

12 and attract attention.

13 366 Q. Attract attention?

14 A. Yes .

15 367 Q. Just explain that to me?

16 A. Well the Revenue would be aware of it for a start

17 off, of the funds, that there would have been

18 deposit interest earned and there would be returns

19 of that made by the banks at those stages.

20 368 Q. So, once you took a new deposit of £2,000, you put

21 that into your current account?

22 A. Clyde Enterprises current account, yes, which was

23 mine, I owned Clyde.

24 369 Q. Yes I understand. You didn't need to tell

25 Mr. Traynor he didn't need to know that?

26 A. Not alone did he not need but he would never have

27 been told and secondly he wouldn't have the remotest

28 interest, what interest would it be to him?

29 370 Q. Forgive me, I thought that a banker needed to know

84
 1 his clients?

2 A. Not necessarily the depositors.

3 371 Q. All right. Leave those aside. Earlier on I give

4 you some instances about money coming from a dollar

5 account and being held in a dollar account and some

6 more money coming in a different currency and being

7 held in that currency, how can all of that have been

8 recorded in a single Hotchpotch account?

9 A. It couldn't. There could have been two or three

10 Hotchpotch accounts. I can only remember two,

11 dollar and sterling were segregated. At stages I

12 think clients asked me to switch from dollar to

13 sterling or sterling to dollar, that would have been

14 their decision so you would be switching from one

15 Hotchpotch to another.

16 372 Q. Taking Mr. Keane for instance, Mr. Keane had a

17 back-to-back?

18 A. Yes.

19 373 Q. The way Guinness and Mahon had the back-to-back set

20 up was that the offshore deposit had to be known and

21 matched against the lending that Guinness and Mahon

22 provided, so there had to be a linkage between the

23 two?

24 A. Yes.

25 374 Q. The deposit was hypoticated, i.e., it couldn't go

26 anywhere while the loan remained outstanding, how

27 was Mr. Keane's deposit dealt with in the light of

28 what you have been explaining and in the light of

29 what I just told you?

85
 1 A. I don't know specifically but if I can tell you what

2 I believe would have happened, they would probably

3 have moved the appropriate amount out of the

4 Hotchpotch Account to a specially identified

5 account, probably.

6 375 Q. How would that have been recorded in your records?

7 A. No, need for it or I may have done the same thing, I

8 may have taken...(INTERJECTION)

9 376 Q. Which is it Mr. Stakelum?

10 A. I suppose I probably did the same thing, but the

11 same thing in my book would be a very simple thing

12 where I have a schedule of deposits and I merely

13 split Mr. Keane's deposit, let's assume that he had

14 £100,000 and they wanted to back £80,000, I would

15 probably have described Mr. Keane as £20,000 free

16 funds and £80,000, if you want to use the word

17 hypoticated.

18 377 Q. How would you known about that? Somebody would have

19 had to have explained that for you from the Guinness

20 and Mahon side of things?

21 A. Sure I would have arranged his loan.

22 378 Q. It would be all explained to you that while the loan

23 was outstanding he couldn't touch that element of

24 his deposit.

25 A. Yes, that doesn't take a lot of explaining.

26 379 Q. Forgive me, I don't know how it worked, I am trying

27 to get you to explain it to me, so now I understand

28 Mr. Stakelum that you would have known about the

29 back-to-back situation because on the one hand you

86
 1 knew about Mr. Keane's deposit and on the other hand

2 you knew because you had negotiated his loan?

3 A. That's right. I have my doubts if Mr. Keane was

4 ever in the premises of Guinness and Mahon in his

5 life, he may have been.

6 380 Q. For placing all this business with Guinness and

7 Mahon, did you earn remuneration?

8 A. From Guinness and Mahon.

9 381 Q. Yes?

10 A. Quite the reverse. No, I did not and eventually I

11 left Guinness and Mahon because their charges were

12 too high.

13 382 Q. You didn't earn any remuneration from Guinness Mahon

14 or Guinness Mahon Caymen Trust or any other related

15 entity controlled or directed by Mr. Traynor?

16 A. No.

17 383 Q. Did your remuneration then come from your clients?

18 I don't need to know the detail, I just need the

19 answer to that question?

20 A. The answer to that -- any remuneration that was

21 there came from the clients but it varied greatly

22 and it barely covered costs and eventually wasn't

23 covering costs so that is why I moved out of

24 Guinness and Mahon.

25 384 Q. So for providing all of these management services

26 you traded at a very modest if at all surplus?

27 A. Well, for all of these management services, Mr.

28 Rowan, it was a relatively simple operation, there

29 were only deposits earning interest and a

87
 1 reconciliation once a month, that's number one.

2 Number two, Guinness Mahon made the charges not me.

3 They had charges for this that and the other, there

4 is nobody like banks to be able to make charges,

5 that's number two. Number three, my clients that

6 used foreign deposits varied and there were

7 different kinds of categories. Some very close

8 friends or relations that weren't charged, some who

9 I was acting for in Business Enterprises Limited

10 anyway and charging fees to Business Enterprises

11 Limited where there was no additional charge and

12 others that were in neither of those categories that

13 I would have charged to cover costs.

14

15 One of the things that hasn't been understood and I

16 recognise that your inquiry is necessary on these

17 things, this was a tiny percentage of what I was

18 involved in. I was busy doing things all the time

19 trying to earn money for Business Enterprises and

20 this was nothing. It was a nothing so much that I

21 eventually moved out of Guinness Mahon because they

22 made some extra special charges and eventually gave

23 all the money back to the clients because it was no

24 good to me.

25

26 Therefore when you talk about whether I had an

27 account personally, I hadn't an account personally

28 in Guinness Mahon. I could have used the facility

29 to draw some dollars periodically for this but it

88
 1 would have compensated somewhere along the line.

3 So, it wasn't managing all these funds, it wasn't

4 investments, it was your money that they wanted to

5 put on deposit and the only other service to that

6 where they asked me "Can you buy shares with those

7 funds if you want to?", and they gave the

8 instructions "Buy AIB shares" or anything you want.

9 385 Q. Thank you very much?

10 A. That was my involvement.

11 386 Q. Okay. Ms. Mackey wants to pick up a matter with you

12 I hope will not be very long, I am conscious that it

13 is ten past one and we should be trying to take a

14 break.

15 A. Are we coming back after lunch.

16 387 Q. I am hoping that we can avoid doing that.

17 A. My solicitor has to leave at half one.

18 MS. MACKEY: We should finish in ten

19 minutes. Basically Mr.

20 Stakelum, because matters had gone on so long this

21 morning, we haven't got around to the question of

22 your clients at all and that is something that will

23 take some time. It seems to me that we if we can't

24 do that today, unless we come back after lunch and

25 since you weren't prepared for that I think the

26 better option would be to ask you to come back

27 another day to do that. We will be able to shorten

28 what will happen on the next day if I could suggest

29 something to you now.

89
 1 A. Sure.

2 388 Q. First of all you give us a list of clients on the

3 last day that you were here, that doesn't appear to

4 be a full list?

5 A. It is as full as I can come up with at the moment.

6 I would have -- like all the records were destroyed.

7 389 Q. Yes?

8 A. I am open to the fact that there may be other ones

9 but where I had to work from, if I may, is work from

10 the fact where I disengage with clients in '97/'98

11 and some earlier than that, because all the records

12 were destroyed. Look at closing transcripts of them

13 and worked back and said who was there in the days

14 of the Guinness and Mahon runs and who were there

15 subsequently in AIB.

16 390 Q. Basically are you saying that this is all that you

17 can remember but there may well be others?

18 A. Well, I mean you can produce documents to me that I

19 can't remember anything about and maybe you can do

20 that, that is possible but there is no client or

21 name deliberately left off that list.

22 391 Q. That is what I am asking you but is it possible that

23 if we were to put other names to you, you might

24 recollect them?

25 A. Absolutely.

26 392 Q. Well what I would like to ask you to do if you

27 would, in respect of all the names that you have

28 given us?

29 A. Yes.

90
 1 393 Q. If before our next meeting you could provide us in

2 written form with the particular services that that

3 client had in Ansbacher. In other words, whether

4 the client had a deposit, whether they had a

5 back-to-back loan and any detail that you can give

6 us of that person, except amounts, we don't require

7 amounts but any detail of the deposit, when it was

8 opened and when it was closed, insofar as you can?

9 A. Can I just say, Ms. Mackey, here I have no way of

10 knowing that and all I could do is go back to the

11 client in question and say when. I have been down

12 that route without a lot of success and that's all I

13 could do in connection with that. You are talking

14 about the date that is was open. You see the

15 service that is given is simple, I could look at the

16 clients and say, no back-to-back because I had very

17 few of them.

18 394 Q. Could you do that?

19 A. I will certainly do that and the dates of when they

20 were opened. All I can say is that I believe all of

21 the clients on that list were opened at or before

22 the mid 80's.

23 395 Q. Yes?

24 A. Do you know, because I think after that I was moving

25 to get myself out of Guinness and Mahon.

26 396 Q. For example could you tell us in respect of each of

27 them whether they were clients who already had

28 monies abroad or clients who came to you with Irish

29 money wishing to put it abroad.

91
 1 A. Some are in both categories, do you know what I

2 mean?

3 397 Q. Could you make your best estimate, you can say that

4 you are uncertain certainly but it would help us to

5 have whatever information basically you can give us

6 about each of those clients because otherwise I will

7 have to go through them one by one and ask you

8 detailed questions?

9 A. Let me tell you that I might say things that the

10 client would say the reverse.

11 398 Q. That may well be and if that is the case we will

12 have to look at what the client says and what you

13 say and see which one...(INTERJECTION)

14 A. I know that there is two different memories from one

15 particular client about something else.

16 399 Q. Absolutely.

17 A. Some clients believe that they gave me money before

18 I had set up in business and they didn't.

19 400 Q. I see, yes. Also there are a number of other names

20 if I could just mention them to you now and if you

21 might jot them down and indicate to us whether these

22 people were or were not your clients and what other

23 information you have about them.

24 A. Yes.

25 401 Q. I will just give you the names now. Anthony and

26 Brian Rhatigan, John Byrne, Mrs. D. Leydon who I

27 believe was your secretary at some stage?

28 A. No.

29 402 Q. Is that incorrect?

92
 1 A. No, that is incorrect. She is a widow woman from a

2 Mr. Leydon that lives...(INTERJECTION)

3 403 Q. Is she related to the Michael Leydon

4 that...(INTERJECTION)

5 A. She is his wife.

6 404 Q. I see.

7 A. Sorry, Anthony and Brian Rhatigan you gave me

8 somebody else?

9 405 Q. John Byrne.

10 A. Yes .

11 406 Q. Well, Mrs. D. Laydon anyway, you can just say what

12 you know about her. Brendan Deignan, Michael

13 Moynihan, Niall Moriarty, Harold Lindsey, Chris

14 Gooson, Joseph Sealy who was your colleague?

15 A. He was my colleague.

16 407 Q. Frank Glennon, Douglas Armstrong and then two

17 company names, if you could explain (A) whether they

18 were your clients and (B) if so who the beneficial

19 owners of company was, Diagem International Ltd.,

20 and Warehousing and Distribution Ltd. Also you

21 mentioned Connor Stakelum, a cousin of yours, so if

22 you would put him on the list as well. Would you

23 mind then and this would also expedite matters, if

24 you could also list for us separately all the

25 companies of which you were a director? If you can

26 do your best with that?

27 A. I have lists of former and current but how complete

28 they would be.

29 408 Q. As best you can do?

 1 MR. ROWAN: You presumably, Mr.

2 Stakelum, will have, or

3 companies of which you were a director will have

4 made returns to the registry of companies and at

5 lest for part of time you would have been expected

6 to have indicated what other directorships you had?

7 A. I have a couple of those lists but I am not sure

8 what goes back.

9 MS. MACKEY: Whatever you got back Mr.

10 Stakelum, if you wouldn't

11 mind. Would it be good to make another date today?

12 MR. ROWAN: I don't think so. Mr.

13 Stakelum I think what I

14 would like to suggest to you is that we would be

15 obliged if you could get this information to us at

16 your earliest convenience and once we have received

17 that then we will be in contact with you with a view

18 to reinstating this interview because effectively

19 this interview is being adjourned today and it will

20 be reinstated at a time which will have a

21 relationship to whenever you provide us with the

22 information.

23 A. Yes, it wouldn't take long anyway.

24 MS. MACKEY: So is that okay?

25 A. I don't think that will take very long, maybe Monday

26 or Tuesday I would have that information back to

27 you.

28 MR. ROWAN: That would be fine, thank

29 you very much. This

94
1 interview is being adjourned now. Thank you for

2 coming in Mr. Stakelum.

3 A. Thank you.

5 THE INTERVIEW WAS THEN ADJOURNED

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

95
Appendix XIII

(a) File memo dated 22 November 1990 made by Mr Liam Donlon together with
backing documentation

(b) Documentation relating to 1989 Back-to-back loan

(c) Two lists dated 22 July 1993 and 3 January 1996 showing the range of back-to-
back loans involving IIB

(d) Extract of IIB draft submission

(e) IIB internal memo of 12 June 1992

(f) IIB submission on the redesignation of Ru Leonard and SM Morris accounts "in
trust"

(g) Central Bank letter of 8 September 1997 and IIB's reply dated 11 September 1997

(h) IIB analysis which puts the Ansbacher/Hamilton Ross accounts into context
Appendix XIII (a)
 4T
IRISH INTERCONTINENTAL BANK
• i\
INTERNAL MEMO

From: To:
FILE LIAM DONLON
c.c. PMCE/JX/JR
Subject: Date:
€ DES TRAYNOR 22 NOVEMBER 1990
"

)
PHcE and the writer net with Des Traynor at his request. Inter
alia Des Traynor is.. chairman of GRH but this meeting was in
connection with his involvement in various trust companies, mainly
Ansbacher Cayman Islands which is now 75% owned by Richard
Fenhells.
Des outlined to us his interest in establishing a relationship with
IIB for a number of reasons :
(a) the main purpose would be to have a bank which would hold on a
continuous basis significant amounts of funds, mainly Sterling
4
but also other currencies as specified in a schedule given to
us. The accounts which would need to exist would have various
_ requirements - again these are set out in the schedule,
4L . including an indication of the likely number of transactions
across the account. They would expect to receive reasonable
market rates and would get quotes from* time to time but not
with a view to getting the best possible rate in the market as
) long as they were getting a fair rate. He would like us to
respond as to what elements of his requirements we could meet.
He also has a need for back to back loans from time to time. As a
sample of these he gave us the accounts of a company called Lydon
and a copy of a Facility Letter they had been offered from
Ansbacher.
He told us that the details of these various activities were dealt
with by Padraig Collery r ex Guinness 6 Mahon who now works part-
time for Des Traynor at his offices and that the best way to
proceed would be to discuss details with him after we had come to
some preliminary conclusions as to what we would like to do. »He
would like us to revert to himself directly in relation to the back-
to back loans -which we promised to do early next week.

16? Iff-
 He are to consider his needs in how we can respond to then and
arrange a detailed meeting with Padraig Collery and phone Des
Traynor about the back to back loans.

J
rs

)
S t e r l i n g Main Account*

Type
L:
Call S t e r l i n g £.

Average B a l a n c e Stg.£1Om.

Rate 1 month r a t e f i x e d on t h e f i r s t working

day of each month.
<

Transactions 150 per month.

T r a n s a c t i o n Type S t e r l i n g cheques l o d g e d .
S t e r l i n g Drafts issued.
"Foreign Currency l o d g e d .
F o r e i g n Currency and T r a v e l l e r s
Cheques i s s u e d .
IRE D r a f t s i s s u e d .
S t e r l i n g £ cash required.
S t e r l i n g £ cash lodged.
S t e r l i n g t r a n s f e r s i n / o u t v i a I n t e r Bank
F o r e i g n Currency t r a n s f e r s i n / o u t v i a
I n t e r Bank.
P u r c h a s e of Shares for O v e r s e a s Nominees
S a l e of S h a r e s .
[_£oli£L£±ion of D i v i d e n d s .
Part i n t e r e s t a p p l i e d a s a d v i s e d .
B a l a n c e of i n t e r e s t a p p l i e d q u a r t e r l y .
Statements weekly.

Sundry Account

Type Call S t e r l i n g £.

Average B a l a n c e Stg.£60K.

Rate Call.

Transactions 20 per month.

T r a n s a c t i o n Type T r a n s f e r s i n / o u t Main A c c o u n t .
T r a n s f e r s i n / o u t v i a I n t e r Bank.
IRE payments by d r a f t s t o AMEX, DHL, e t c

Statements Weekly.

Fixed Accounts

Type Fixed S t e r l i n g £.

Average B a l a n c e Stg.£7m.

Rate Quotes for 1 , 3, 6 and 12 months.

Transactions 30 A c c o u n t s r o l l i n g over d e p e n d i n g on
market t r e n d .
 IRE A c c o u n t s

Type - Fixed

Average B a l a n c e - E100K.

Accounts - 2

S w i s s Francs

Type Call
Average B a l a n c e Sw.Fcs.290K.
Accounts 1

Statements Monthly.

ECU

Type - Call

Average B a l a n c e - ECU 75K.

Accounts - 1

Statements - Monthly.

DeutscheMarks

Type Call

Average B a l a n c e DM.30OK.

Accounts 1

Statements Monthly

French Francs
Type Call
Average B a l a n c e - F.Fes.1m.
Accounts 1

Statements Monthly.
Australian Dollars

Type Call

Average B a l a n c e A$1.5m.

Accounts 4

Transactions 20 p e r month.

Interest Applied weekly.

Statements Weekly.

T r a n s a c t i o n Type T r a n s f e r s i n / o u t I n t e r Bank.

Transfers t o other currencies.

I n t e r Account transfers.

U.S. Dollars

Type F i x e d and C a l l .

Average B a l a n c e US$1.00 m.

Accounts 6

Transactions R o l l o v e r of f i x e d a c c o u n t s few call.

Interest M a t u r i t y and h a l f - y e a r l y on C a l l Account

Statements Call monthly.

T r a n s a c t i o n Type Transfers i n / o u t I n t e r Bank.

Transfers to/from other currencies.

 Other Requirements *

IRE Account Cheque Book

Lodgments
Cash i n / o u t
No.2 Account o v e r d r a f t £30,000

/ Loans IRE ..
Stg.E &
US$ B/B

i/^ Guarantees Stg.E

. (4WJ' 1 tt&n^-
Cfd* Fee 4

L e t t e r s of Credit

Performance Bonds

F . X . Quote

M.M. Quote

D e p o s i t s IRE - R a t e s

Investment Management\- Holding Equities/Gilts/Bonds

iluations

Quarterly Schedule B a l a n c e on a l l Accounts

 91 MERRION SQUARE DUBLIN 2

• s TELEPHONE 619744 (25 lines) 76461I-I9 (9 lines) TELEX 33322

, IRISH INTERCONTINENTAL BANK

LIMITED
Our Ref: GQ/VH/2803 February 23, 1989

x
Murrays Europcar Limited, ^ *
Baggot Street Bridge,
".Dublin 4.

Dear Sirs,
We are pleased to confirm the willingness of Irish,,
Intercontinental Bank Limited/? "IIB") to make the/following
facility available to Murray/Europcar Limited/* the Borrower")
The facility will specifically include the right of IIB to
require repayment on demand at any time and p ° enforce any
security therefor.

TYPEOFAND AMOUNT OFFACILITY

A term loan eff up to IR£l,200,000 (one million two hundred
thousand Irish pounds) to be ifeed by the Borrower for
general working capital purposes.

2. CURRENCY OP FACILITY;
The facility shall be drawndown in Irish pounds but may
be drawn down in any other freely available currency subject
to the agreement of IIB and the Central Bank of Ireland.

3- LATEST DRAWDOWN DATE:

The facility is to be drawn down in full not later than
March 31st 1989. Each drawdown will be for a minimum of
IR£200,000 and not less than two business days notice of an
intention to make a drawing will be provided by the Borrower
to IIB.

10 to

Registered Number 40SJ7 Republic of Irchrvd

 INTEREST:
The interest rate or rates on amounts outstanding under the
facility will be set for each drawing on the date of such
drawing and for subsequent rollovers on the first day of
each interest period. In each case the interest rate will
be 3/4% above the rate at which IIB shall be offered funds
of like amount on the Dublin or London Interbank Market for
the remainder of the relevant interest period.
The Borrower may, by notice in writing to IIB, not later
than three business days before the date of first drawdown,
or as the case may be before the expiry of an interest
period, elect whether the next following interest period
will be of one or three months duration, or such other
duration as may be agreed from time to time by IIB and
failing such election by the Borrower, the next following
interest period will be of three months duration.
Interest will be calculated on the daily balance outstanding
and will be due and payable on the last day of each interest
period with the final interest payment on the date of final •
repayment of the loan. i

RESERVE ASSETS;
The Borrower will pay to IIB such additional rate per cent
per annum as IIB shall certify to have been additional costs
to it in respect of its compliance with any reserve assets
or special deposits or other similar requirements imposed by
any Regulatory Authority from time to time.
Amounts payable pursuant to this Clause will be payable on
the relevant interest payment date.

LATE PAYMENTS:
Insofar as any amount shall, be due pursuant to this
Agreement and unpaid such amount shall bear interest until
paid at 3% above IIB's Prime Rate from time to time (or at
such lesser rate as IIB shall, at its discretion, determine)
calculated with monthly rests. IIB is hereby authorised to
debit any such amount due and any interest in respect
thereof to a separate account of the Borrower to be opened
for this purpose.

\0V>
 PERIODOF FACILITY
Without prejudice to IIB's right to require repayment of tie
loan on demand at any time, it is agreed that, unless and
until IIB shall exercise such right, the loan will be repaid
not later than January 31st, 1990.

PREPAYMENT,:
Prepayment or part prepayment of the loan may be made only
upon the Borrower giving to IIB one months prior notice in
•writing to expire on an interest payment date. Such notice
will be irrevocable and will oblige the Borrower to
repay the loan or part thereof on the date specified. Any
such prepayment will be subject to the payment of additional
interest of 1% of the amount so prepaid.

SECURITY
Any and all indebtedness or liability of the Borrower to IIB
is to be secured by a guarantee from a bank acceptable to
IIB.
CURRENCY AVAILABILITY

If IIB shall notify the Borrower that the currency in which

the Borrower requires to avail of the loan will not be
available to IIB in sufficient amount in respect of the next
following interest period, the Borrower shall either:-
(a) Elect to prepay the loan on the last day of the then
current interest period together with all interest
accrued due to such interest payment date;
or
(b) Notify IIB of an alternative currency in which it
wishes to borrow the loan.
If the Borrower notifies IIB of an alternative currency in
which it wishes to borrow the loan, the Borrower will, on
the last day of the then current interest period, repay the
loan then outstanding together with all interest and other
costs due and will subject to the availability of such
alternative currency to IIB on the London Interbank market
and to the consent of the appropriate Regulatory
Authorities, draw down such alternative currency in an
 amount equivalent to the loan.
The terms and conditions of this letter will apply mutatis
mutandis to all drawings in such alternative currency from
time to time.

COSTS:
All legal costs and fees, together with all other costs and
expenses incurred by IIB in the arrangement of these
facilities during their tenor or in obtaining repayment
thereof are for the account of the Borrower.

PAYMENTS:

All payments made by the Borrower are to be made free and

clear of any and all deductions, including withholding taxes
which are for the account of the Borrower.

CONDITTOW5 PRECEDENT.'
Drawings under this facility are subject to:-
(a) Completion of such legal documents and in such form as
IIB may reasonably require and IIB's security
requirements having been completed in a manner
satisfactory to IIB;
(b) Completion by the Borrower of warranties in a form
acceptable to IIB. The warranties relate to such
matters as the accuracy of information furnished in the
course of negotiations for the facility and the absence
of any pending or threatened litigation;
(c) Receipt by IIB of appropriate instructions as to the
management of the account;
(d) IIB being satisfied that adequate overdraft facilities
will continue to be available from the Borrower's
bankers;
(e) All appropriate Exchange Control and other regulatory
consents having been obtained and being in full force
and effect;
(f) There being no developments between now and the date of
final drawdown which in the opinion of IIB, would be
 -5-

likely to have any adverse effects on the business of

the Borrower or on its future prospects.

14. COVENANTS:
The Borrower hereby covenants with IXB on its own
behalf and on behalf of the Guarantors that:-
(a) It will not incur total borrowings in excess of
IR£4,200,000 (borrowings to include leasing,
discounting and hire purchase) without the prior
approval in writing of IIB; .
^
(b) It will not pledge or charge any further property or
assets/without the prior approval in writing of IIB;
" Y (a) It will, -.LIB, keep
all appropriate assets insured against all reasonable
business risks and will also maintain other insurance
policies appropriate to the its business. The Borrower
will produce to IIB on demand annually any policies of
insurance due and renewal notes, and will have IIB's
interest noted on the insurance policies;
(d) It will furnish the following information to IIB in
relation to itself and the Guarantors
(i) A copy of their certified audited Profit and Loss
Account and Balance Sheet together with the
Auditors Report thereon within months of their
financial year end;
(ii) Within one month of the end of each month end,
uncertified Trading and Profit and Loss Accounts
and Balance Sheet;
(iii) A monthly statement signed by a director in a
format to be agreed with IIB setting out details
of motor vehicle stocks;

(e) it will not without the prior approval in writing of

IIB enter into any business of abnormal nature outside
the normal course of its business.

lot*
 DEFAULTSs
<1
Without prejudice to IIB's right to require immediate
repayment on demand at any time, IIB will terminate its
commitment to lend hereunder and will require immediate
repayment of all monies due, including interest and other
charges, should any of the following events occur
(a) If the Borrower or Guarantor shall default in the
payment of any sum due hereunder;
(b) If the Borrower or Guarantor shall default in the
performance of any term, covenant or agreement
contained in this agreement and such default shall
continue unremedied for ten days;
(c) If a Receiver or other similar Officer is appointed of
any of the assets of the Borrower or Guarantor;
(d) If an order is made or an effective resolution is
proposed or passed for the winding up of the
Borrower or Guarantor;
(e) If a distress or execution is levied upon or sued out
against any property of the Borrower or Guarantor;
(f) If the Borrower or Guarantor shall stop payment of its
debts or without the prior approval in writing of IIB
shall cease or shall intimate its intention to cease to
carry on its business;
(g) If the Borrower or Guarantor is unable to pay its debts
within the meaning of Section 214 of the Companies Act,
1963, or any statutory modification or re-enactment
thereof; .
(h) If the Borrower or Guarantor shall without the prior
approval in writing of IIB create or purport or attempt
to create any mortgage or charge over its assets other
than the charge to IIB, or shall sell or attempt to
sell any part thereof or shall deal otherwise than in
getting in and realising the same in the ordinary
course of business;
(i) If any event shall occur which in the opinion of IIB is
likely to have adverse effects on the business of the
Borrower or Guarantor or their future prospects or is
detrimental to the interest of IIB.
 -7-

WflRRftHTTffff:
The Borrower hereby warrants to IIB that:-
(a) The making and performance of this agreement are within
the Borrower's corporate powers and have been
authorised by all necessary corporate actions and do
not contravene any law or contractual restriction
binding on the Borrower;
(b) There are no pending or threatened actions or
proceedings before any Court or Tribunal which would be
likely to have any adverse effects on the business of
the Borrower or its future prospects;
(c) Full disclosure has been made to IIB of all facts which
ought properly to be made known to a bank contemplating
the provision of facilities to a borrower;
(d) The Borrower is not in default of any terms or
conditions of this agreement.

GENERATES

(a) Any indulgence by IIB in the enforcement of any term or

condition of this letter (or any agreement relating
hereto) or a waiver by IIB of any breach of any term
shall not constitute a general waiver of such term or
condition and will be without prejudice to any other
term or condition;
(b) Ho failure or delay by IIB in exercising any right;
power or privilege granted to it hereunder shall
operate as a waiver thereof nor shall any single or
partial exercise of any such right, power or privilege
preclude the future exercise of any such right, power
or privilege;
(c) The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by
law.

TIKE a
In construction of the provisions herein relating to the
payment of monies, time shall subject to any applicable
periods of grace, be of the essence of the contract.

IOU
19- ASfilSHHBBC:
The facility is personal to the Borrower and shall not be
capable of assignment by the Borrower in whole or in part.
IIB reserves the right to assign all or part of the loan to
any company controlled by Kredietbank N.V. or its parent
company without the prior consent of the Borrower.

20. GOVERNING TAW:

This agreement shall be governed by the Laws of Ireland.

21. ACCEPTANCE qf OFFER?

This offer will lapse on 10th March 1989.
To accept this offer on the above terms and conditions, the
enclosed duplicate of this letter should be signed and
returned to us.

Yours faithfully,•
for and on behalf of
IRISH INTERCONTINENTAL BANK LIMITED

Deputy Chief Executive

\6Vh
 91 MERRION SQUARE DUBLIN 2 SSS1
TELEPHL £619744 (25 Una) 764611-19 (9 Una) TELEX 33322

IRISH INTERCONTINENTAL BANK

LIMITED
25 April 1989

Our Ref: GQ/VH/2803

Murrays Europcar Limited

Baggot Street Bridge
Dublin 4

Dear sirs
We are pleased to confirm the willingness of Irish
Intercontinental Bank Limited ("IIB") to make the
following facility available to Murrays Europcar Limited
("the Borrower") on the following terms and conditions:-
1. TYPE OF AND AMOUNT OF FACILITY:
A term loan of up to STG£700,000 (seven hundred
thousand Sterling pounds) to be used by the Borrower
for general working capital purposes.

2. CURRENCY OF FACILITY:

The facility .may be drawndown in any freely

available currency other than Irish pounds subject
to the agreement of IIB and the Central Bank of
Ireland.

3. LATEST DRAWDOWN DATE:

The facility is to be drawn down ir, full not later

than May 31st, 1989. Not less that two business
days notice of the Intention to make the drawing
will be provided by the Borrower to IIB.

— US z
Rcfiilcml Number <0337 Republic or Ireland
 /2.
<

INTEREST:
The interest rate or rates on amounts outstanding
under the facility.will be set on the date of first
drawdown and for subsequent rollovers on the first
day of each interest period. In each case the
interest rate will be 3/4X above the rate at which
IIB shall be offered funds of like amount on the
London Interbank Market for the remainder of the
relevant interest period. ,
The Borrower may, by notice in writing to IIB, not
later that three business days before the date of
first drawdown, or as the case, may be before the
expiry of an interest period, elect whether the next
following interest period will be of one or three
months duration, or such other duration as may be
agreed from time to time by IIB and failing such
election by the Borrower, the next following I
interest period will be of three months duration.
Interest will be calculated on the daily balance
outstanding and will be due and payable on the last
day of each interest period with the final interest
payment on the date of final repayment of the loan.

PERIOD OF FACILITY:
Without perjudice to IIB's right to require
repayment of the loan on demand at any time, it is
agreed that, unless and until IIB shall exercise
such right, the loan will be repaid not later than
January 31st, 1990.

SECURITY:
Any and all indebtedness or liability of the
Borrower to IIB 1s to be secured in a manner
acceptable to IIB.

/i i • i
V i' *
"V —
/3.

7
' CONDITIONS PRECEDENT:
In addition to the Conditions Precedent set out in
clause 1 of IIB's Standard Terms and Conditions,
drawings under this facility are subject to:-
(a) Completion by the Borrower of warranties in a
form acceptable to IIB. The warranties relate
to such matters as the accuracy of information
furnished in the course of negotiations for the
facility and the absence of any pending or
threatened litigation;

(b) Receipt by IIB of appropriate instructions as

to the management of the account;
(c) IIB being satisfied that adequate overdraft
facilities will continue to be available from
the Borrower's other bankers;

8
" STANDARD TERMS AND CONDITIONS:

The facility is subject to IIB's Standard Terms and

Conditions which are attached hereto and which form
part of this facility letter.

9
- ACCEPTANCE OF OFFER:
This offer will lapse on 1st May 1989.
To accept this offer on the above terms and
conditions, the enclosed duplicate of this letter
should be signed and returned to us, together with
the attached form for the opening of an account

Yours faithfully,
for and on behalf of
IRISH INTERCONTINENTAL BANK LIMITED

E A MARAH rr la WU1V3I
Deputy Chief Executive -^ssoctat^Di
Accepted on the above Terms and Conditions
For. a n d on Behalf of MURRAYS EUROPCAR LIMITED /1
^S&^fjJU N N ^
Authorised Signatory Authorised Sipnator,
Appendix XIII (c)
/-s "f R is' H I NT E R C O N T I N E N T A L BANK LTD

INTERNAL MEMORANDUM

FROM Maurice Leonard TO Maureen Collins

cc.JR/CG/pF

SUBJECT C I B T C / H a m i l t o n Ross DATE 22nd July, 1993

The following is a summary of the "CIBTC/Hamilton Ross related" cash backed facilities
arranged by IIB:-
Loan Facilitv Lender/ Facilitv Minimum Cash Deoosttor Location of Cash
Guarantor Limit ' Deoostt Required Deposit

[ Carlisle Trust MB GBP7.3m GBP7.47m approx CIBTC • KB London

m i
[ Lyndon Properties
1
Alstead Securities (1)
Tepbrook Properties
IIB
IIB
KB London
GBP1.45m
GBP5.Sm
GBP1.75m
GBP1.49m approx
GBP5.51m approx
GBP1.775m
CIBTC
CIBTC
Tristan Securities
KB' London
KB London
IIB02/72605/77
02/72605/00

Field Corbett, Carey. Russell IIB •GBP120k GBP140k CIBTC (2) 11802/06639/77
YNi*
Joe Malone IIB USD350k USD350k CIBTC IIB03/01545/77

Messrs. Mortis. IIB IEP150k GBP150k CIBTC (2) 11802702737/77

Guarantees
•SSSS"? •
Galtymore Dance Club IIB GBP100k GBP100k CIBTC HB02/BS9B4/77
VCZr-' IEP30k GBP30k CIBTC
-y^ytx.
IIBO2/0S*64/77
Ru Leonard IIB
IIB my IEP25k GBP50k (3) CIBTC (2) IIB02/00272/81
Kentford Securities
Celtic Helicopters ||Q\ USD75k USD75k Hamilton Ross IIB03/393.IV77
u

^ ^ Celtic Helicopters > IEP100k GBPIOOk CIBTC (2) • IIB02/01618/77

IIB-
Notes

" ) Credit approval exists for limit of GBP9.5m with matching cash deposit.

(2) Depositor expected to be changed from CIBTC to Hamilton Ross Co. Ltd.

(3) Credit approval exists for deposit to be reduced to GBP30k.

rim*
ML

Z.400V
icher Cayman/ Hamilton Ross Company - Related Facilities 03-Jan-96

ver Note Lender/ Facility Limit Min Cash

Guarantor Deoosit Reauired
-acilifies *

C GBP 8.8m GBP 8.8m

!e Trust (1) KB
d SecuiiliRS (2).(3) IIB GBP 7.8m GBP 7 8m
n Properties (4) IIB GBP 1,4m- GBP 1:4m • •
Corbelt,Carey & Russell IIB IEP 120k GBP 140k
s. Morris IIB IEP 150k GBP 150k
la Investments Ltd IIB IEP 310k IEP 310k
la Investments Ltd IIB IEP 646k IEP 646k

inlee Facilities
ook Properties HB .... GBP-k5m— —GBP.1.55m-
: ook Properties IIB GBP 950k GBP 950k
jnore Dance Club IIB GBP 100k GBP 100k
j Mrs T Leonard IIB IEP 45k GBP 46k
Helicopters IIB USD 75k USD 75k
Helicopters IIB IEP 100k GBP 100k
Eastwood IIB USD 15k GBP 15k

iposil of IEP88.000 (02/06838/77) also charged to IIB

iposil of IEP37.500 (02/06838/77) also charged lo IIB
edil approval exists for limil of GBP 9m with matching deposit,
jposit of IEP24.500 (02/06833/77) also charged to IIB
 ) )

Depositor and Location of Review' Maturity

Guarantor Cash Deposit Date Date

Ansbacher Cayman KB London 300886 30-Sep-95 31-Mar-98

Ansbacher Cayman KB London 300887 30-Sep-95 31-Mar-97
Ansbacher Cayman KB London 300885 2B-Feb-9$ > 28-Feb-§ft a
Hamilton Ross IIB 02/39406/77 30-Nov-9B 30-NOV-98
Ansbacher Cayman IIB 02/02737/77 30-Jun-96 30-Jun-96
Ansbacher Cayman IIB 01/45630/00 i<f/a/*>34-«Jul-95- 28-May-98
Ansbacher Cayman •IIB 01/45630/00 30-Jun-99 "

-Tristan-Seeufities— -IIB-O2/7260Sff7- 31-Dco-05 31-Deo-97-

Tristan Securities IIB 02/72605/78 31-Dec-95 31-Dec-97
Ansbacher Cayman IIB 02/02991/77 31-Aug-96 31-Oct-O1
Ansbacher Cayman IIB 02/03164/77 31-Oct-97 31-Oct-OO
Hamilton Ross IIB 03/3931?/77 30-Jun-96 30-Apr-01
Hamilton Ross UB 02/39359/77 30-Jun-96 30-Jun-96
Ansbacher Cayman IIB 02/00642/77 30-NOV-96 30-Nov-97

\
Appendix XIII (d)
 The Restructuring of the Security for the Lyndon and Carlisle Loans

The nature of the security held by KB London as against Ansbacher changed

in 1993. It ultimately ended up in the form that Ansbacher held the London
deposits in trust for two Cayman Island companies called Yale and Tristan
which had substantially common directors with Ansbacher, but which were not
subsidiaries of Ansbacher. Yale and Tristan declared that they were the
beneficial owners of the deposits and joined in the security accordingly.
Because Ansbacher now only held the deposits in trust for Yale and Tristan, it
was no longer necessary to show these deposits as secured deposits on
Ansbacher's accounts (or in the consolidated accounts of Ansbacher's new
owners, a South African Bank). This was probably a' matter of concern to the
South African Bank because a bank in the normal course of events would hope
that its own guarantee is sufficient standing alone without the necessity for any
form of cash backing and the disclosure of cash backed guarantees in a bank's
accounts might be taken as a sign that the bank was not financially strong or
otherwise in the highest standing. IIB, for example, as a matter of policy,
never pledges its own deposits as security.

It took nine months of very detailed negotiations, primarily between IIB's

London solicitors and Ansbacher's attorneys in the Cayman Islands (Myers
and Alburga) to devise, negotiate and complete this restructuring which was
entirely internal to Ansbacher and its new South African owners, i.e. it was an
internal requirement of Ansbacher and the South African bank. It had nothing
whatsoever to do with the borrowers in question (Lyndon and Carlisle Trust)
who to the knowledge of IIB were not even aware that such restructuring was
taking place and their consent was not needed in any way (because the loan
facility letter with its general reference to such security as IIB might require
ensured that no further consent was needed from the borrower). Even IIB was
not particularly concerned or involved in the matter save for keeping an eye on
it to ensure that nothing was done which would adversely impact on IIB's
guarantee from Kreditbank (bearing in mind that the guarantee was only good
for so long as Kreditbank had effective recourse against the deposit in
London).

This process started, from IIB's perspective, with a request from Mr. Traynor
to IIB at a meeting on the 9 t h September, 1992. Mr. Reynold's note records
that Mr. Traynor asked IIB to facilitate restructuring the transaction so that the
deposits would be "off balance sheet" of Ansbacher. Mr. Traynor explained

Evidence of Siobhan Lynch, page 33-34; also page 46.

 that Ansbacher had now been acquired by a South African bank and the
request to take the deposits "off balance sheet" was in that context. Ms. Lynch
attended that meeting and has given evidence of it. 95

A very long process of negotiation and discussion then took place between the
solicitors in London and the Cayman Islands. IIB were, happy with the
security they already had and, as Ms. Lynch put it, "we really didn't drive this
, at all. Frankly, from our point of view, it was more of a nuisance."96 When the
; final version of the structure emerged, IIB were satisfied :

"From our point of view, we had Cayman lawyers review it, we had our
own lawyers review it. We got confirmation that Yale and Tristan were
the beneficial owners of the deposits. So the new structure gave us the
security we had when we started off in 1992 with this process and we
ended up with the same security structure. So it was implemented
essentially in June, 1993

A somewhat more detailed account of how the restructuring came about is

contained in a document sent by IIB to the Inspectors as part of the response
of IIB to issues raised by the Inspectors during their interviews with Mr.
Barnes and Mr. Reynolds. Ms. Lynch confirmed in her evidence that the
account which is produced in the transcript at pages 103-106 is correct.

In matter VII in the Inspectors' preliminary conclusions, the Inspectors seem

to be under the impression that the funds with Kreditbank in London could
have been changed and were changed to a trust status "without any difficulty"
On a number of times, in the course of examining witnesses, Inspector
O'Leary has questioned how a deposit could be changed to a trust status "at
the stroke of a pen" with, presumably, the same implication that it could be
done without any difficulty.

Although the Inspectors have never spelt this out, the point they are
presumably making is that if it could be done without difficulty, then perhaps
the monies in question were trust monies all along and this presumably is then
used by the Inspectors to support the conclusion that IIB were aware that the
Ansbacher deposits in Dublin were held in trust for Irish residents which in
turn is the spring board for the leap to the conclusion that IIB was aware that
Mr. Traynor was accepting deposits from persons in Ireland and thus carrying
on an unlicensed banking business in Ireland.

Even were the facts as the Inspectors assumed (ie. that the status of the money
could be changed to a trust status "without any difficulty") the leaps in
inference and logic required to get to the conclusion are, in IIB's submission,
entirely unwarranted. It is respectfully submitted that if one attempts to
identify the chain of reasoning which may have been adopted by the
Inspectors one can see how tenuous it is.

Evidence of Siobhan Lynch, page 80-81.

Evidence of Siobhan Lynch, page 84.
Evidence of Siobhan Lynch, page 84.
 But in any event, on the facts, the premise is wrong. The deposits in London
could not be and were not changed to a trust status "at the stroke of a pen."
The documents reflect the very long and involved process which was gone
through in order to restructure the security. Indeed, Ms. Lynch was careful to
make clear that it was not, as was suggested by Inspector O'Leary, merely
raised as a "possibility" in September, 1992 and then "acted on" nine months
later: <
i.

"No, it was acted on for nine months, we worked on it for nine months.
We dealt with it all during that period. In other words, the difference
is I think in September he obviously came and said "again, would you
put it in trust ?" and we said "look we have to get X amount of
advisors" and we asked him to pay the fees, which he agreed to do for
[that] exercise. On that basis we then went and spent the nine months
dealing with this particular request."99

The fees which were paid by IIB to Cameron Markby Hewitt in 1993 came to
Sterling £25,000.00 approximately." This was a substantial amount and belies
any notion that this was a change effected without any difficulty.

Whether it was difficult or not, the fact that it was restructured so that the
beneficial ownership was vested in two other companies controlled by
Ansbacher but not subsidiaries of Ansbacher and thus achieving the
requirement to keep the deposits in the name of Ansbacher off balance sheet,
does not imply that the monies that were in Ansbacher's name had always
been trust money. Indeed, the very strong implication is precisely the
opposite. The whole problem that Ansbacher had over the nine months was
that the funds were beneficially owned by Ansbacher. If they were held in
trust for a third party, there would have been no difficulty and they could have
been kept off balance sheet without further ado. It was precisely because they
were beneficially owned by Ansbacher and that they were trying to create a
divorce between the legal and beneficial ownership that created the difficulty.
Thus, it seems certain (on the evidence available to HB) that the true and
correct position is that the deposits were beneficially owned by Ansbacher and
were not held in trust until such time as a specific structure was created
whereby Ansbacher executed some form of declaration of trust and held the
money for the benefit of Yale and Tristan. Still less can it be said that the
deposits in question were held for the benefit of Lyndon or Carlisle Trust (as
the case may be). They had nothing to do with the matter at all.

Q. Judge O'Leary : "Would it have struck you at all that

companies that ultimately popped up as being the beneficial
owners were in fact companies serving exclusively the interests
of Mr. Clayton Love and Mr. John Byrne ? " m

Evidence of Siobhan Lynch, page 100-101.

Evidence of Siobhan Lynch, page 102.
The Inspectors have not furnished us with any evidence to support the suggestion in this
question.
 A. "Not at all. So the whole thing is to do with Ansbacher, it's
balance sheet requirements, that was constantly re-iterated in
the correspondence we saw. So no. In fact our perception
would have been that the borrowers, being Lyndon and Carlisle
had no knowledge of this because we certainly, this was all to
do with Ansbacher, we had no interactions with the borrowers
about this." [She then makes the point that the general nature
of the security clause in the facility letter facilitated this] So
the borrowers never featured in any of this from our point of
view.

Q. "You never had to go back to the borrowers to get them

involved in this restructuring ? "

Q. Judge O'Leary .• "Did you think it was being done without their
knowledge ? "

A. "I think so, I think it was all to do with Ansbacher Limited and
its change of ownership and its accounting requirements. That
is it, what I think it had to do with it. " m

In the original interviews with Mr. Reynolds and Mr. Barnes, the Inspectors
had focused on a letter from IIB of the 24 th June, 1993 from Ms. Claire
Gannon to Ms. Joan Williams in which Ms. Gannon referred to the fact that a
new security structure had been implemented and "CIBT now holds the
deposits with KB London as trustee for the beneficial owner"101 It is clear
form the letter to which this is the reply (letter from Ms. Joan Williams of the
21 st June, 1993 to Ms. Claire Gannon) that Ms. Williams had raised two points
of detail in relation to reconciling figures from the accounts and the bulk of
Ms. Gannon's letter is taken up with explaining those particular queries. The
introductory sentence which refers to the new security structure is only by way
of background and does not add anything to the matter one way or the other.

Tepbrook Properties

The Inspectors also raise a question concerning a loan to an English company,

Tepbrook Properties Limited which was established to acquire a property in
London. This was a mirror image of the Lyndon and Carlisle Trust
transactions in that the loan was actually made by KB in London secured by a
guarantee from IIB in favour of KB London which guarantee was in turn
secured by the guarantee of Tristan Securities Limited supported by a lien on
deposits held by Tristan with IIB.

It is apparent from an internal memo from Claire Gannon of the 26 th August,

1992 that when this transaction was initially proposed, it was suggested that
Ansbacher would give a guarantee supported by a lien over a deposit account
held in trust by Ansbacher. However, this was not acceptable because of the

Evidence of Siobhan Lynch, pages 87-88.

CIBT was Cayman International Bank and Trust Company Limited, which was the same
corporate entity as Ansbacher which had changed its name.
Appendix XIII (e)
 I R I S H ® T T E R C O N T I N E N T A L ® b A N K

INTERNAL MEMO

•
From To
4

Claire Gannon File

CC SL

Sub ject Date

S.M. Morris Limited/Ru June 12, 1992
Leonard

Security for the above facilities includes a lien over deposits

held by Ansbacher Limited with IIB. We have received a request
from Ansbacher Limited to rename these Deposit Accounts "Ansbacher
Limited In Trust For F6894", and "Ansbacher Limited in Trust for
T7003" and not to include these accounts on any audit
! confirmations.
I contacted Kevin McHugh of SKC regarding the duty of the Bank to
the auditors under audit letters and the amount of information on
customer accounts required to be disclosed. He informed me that to
omit accounts held on trust would be misleading to the auditors,
however such accounts may be omitted provided the Bank specifies in
a footnote that the customer holds additional accounts with IIB on
trust.

CG/as

CjgOl
Appendix XIII (f)
 The Request to Redesignate Two Accounts In IIB as Trust Accounts

On the 5 t h June, 1992, Mr. Traynor wrote to Mr. Paul Naessens, a solicitor
within the Legal Documentation Section who reported to Ms. Lynch. The
letter reads as follows :-

"I would be grateful if this deposit account [which was a deposit

account which secured a small loan to Mr. Ru Leonard] presently
standing in the name of Ansbacher Limited could be designated
"Ansbacher Limited In Trust Re. C. 7003 " and NOT included on any
audit confirmations to Ansbacher.

I would be grateful if you would confirm that this is in order. If you

have any concerns I would appreciate if you could ring me."m

Mr. Naessens who had joined the bank the previous year as an executive in the
Documentation Unit gave evidence that he remembered the letter of the 5t h
June, 1992. He thought Mr. Traynor probably wrote to him because Mr.
Naessens had prepared the documents on the Ru Leonard account and would
have sent them out to Mr. Traynor. Ms. Lynch asked Mr. Naessens what he
thought of the request and after a very short period of consideration (one or
two minutes), Mr. Naessens said that it was not appropriate to redesignate the
account as a trust account because the funds were beneficially owned by
Ansbacher:

"I was certain of that really because of the overall background

knowledge and how the transaction was put together and the
documents that Ansbacher signed and so forth."105

In relation to the Tepbrook transaction, where the file memorandum is dated the 26 th August,
1992, Ms. Lynch said in evidence "the request in relation to the KB London deposit was
raised in September, 1992, it just took nine months to come up with a structure. Clearly in
this case [Tepbrook] we didn't come up with a structure, and, therefore, they weren't in trust.
So we were able to conclude the loan on the basis of Tristan giving us the deposit." Page 100.
Emphasis in original.
 The impression Mr. Naessens formed at the time on reading the letter was that
Mr. Traynor wanted to redesignate the account for accounting purposes to
keep the deposit account off the audit confirmations which would be given to
Ansbacher (or perhaps more precisely, Ansbacher's auditors). Mr. Naessens
confirmed that this was his actual impression at the time on reading the letter
and not merely surmise that he was now making. 1 0 8 Furthermore, he
confirmed that even reading it now, he forms the same impression, namely
that it is a request which is driven by a requirement to keep the deposit
account off the audit confirmations to Ansbacher.

Ms. Lynch agreed with Mr. Naessens and said that she would get Claire
Gannon to look at the accounting side of the matter.

Although Ms. Lynch does not have an actual recollection of the matter, she
has given evidence that she probably asked Claire Gannon to look at it
because she had a post graduate degree in business and would be more
I , familiar with accounting type issues.107 It is clear from Ms. Gannon's
memorandum of the 12 th June, 1992 that she checked with IIB's own auditors,
SKC, as to the duty of the bank to auditors under audit letters and the amount
of information on customer accounts required to be disclosed. This was a very
proper request for Ms. Gannon to make having regard to the fact that the
bank's customer, Mr. Traynor, was asking the bank to redesignate an account
(in fact two accounts, because by this stage a similar request had obviously
been made in relation to the deposit securing the loan to S. & M. Morris
Limited) in a way designed to affect what IIB would disclose to Ansbacher's
auditors by way of audit confirmations.

Mr. Kevin McHugh of SKC informed Ms. Gannon that to omit accounts held
on trust would be misleading to the auditors unless the bank specified in a foot
note that the customer held additional accounts with IIB on trust. Ms. Lynch
surmises that they would have not ignored the request from Mr. Traynor:

"I actually surmised that we would not [have] ignored the request from
Mr. Traynor, I think we would have reverted to him and advised him
that even if we did redesignate the accounts per his request, we would
still have to disclose them on the audit cert."m

Ms. Lynch thinks, as a matter of probability, that she went back to Mr.
Traynor with the information which Ms. Gannon had got from SKC and that
Mr. Traynor left it at that.

"Nothing happened. The accounts were not redesignated, they

continued to be disclosed on audit certificates. My own suspicion
would be that Mr. Traynor, presumably, recognised that we could not
accommodate his request and he did not ask us to pursue the question

105
Evidence of Paul Naessens, 2 8 th February, 2002, pages 4-5.
106
Evidence of Paul Naessens, page 5.
107
Evidence of Siobhan Lynch, page 49.
108
Evidence of Siobhan Lynch, page 53.
 of redesignating the accounts. If he had done so, we would have had
to redo all of our security, we would have had to seek legal advice as
to what the implications for our security of this were, so I know we did
not do that. Therefore, we just left the accounts09as they were and I
assumed that he actually confirmed to us to do so.'"
i
Ms. Lynch also confirmed in evidence that Mr. Traynor,'is request did not
spark any concern on her part that the deposits which were concerning the
loans to S.M. Morris Limited and Ru Leonard were trust accounts or that any
of the other Ansbacher deposit accounts were therefore trust accounts. She
explained that if it had raised such a concern, then :

"I would have been very concerned about the basis of our security and
all the security documentation which I was responsible for, and I
would have immediately had to basically raise this issue, get legal
advice and I personally would have felt very responsible about that
issue. So, no, I did not think that this changed the basis of the deposits,
I thought that these were Ansbacher's deposits and Ansbacher had
given us the security in relation to the deposits."110

She also confirmed that she did not think otherwise in relation to the two
particular deposit accounts in question as distinct from the general body of
Ansbacher deposit accounts.

Ms. Lynch was asked to speculate as to why Mr. Traynor might have thought
that the redesignation of these deposit accounts would have been an acceptable
mechanism to take the deposits out of the audit confirmations. She replied
that since the deposit accounts were hypothecated and were thus not freely
available to Ansbacher, it may have been that Mr. Traynor thought that in such
circumstances the bank might have been prepared to designate the account as
"in trust" which, of course, the bank was not prepared to do because it did not
reflect the reality of the situation.

It seemed, at the time, very unlikely that Mr. Leonard had in fact any sort of
deposit account. Mr. Donlon gave evidence in relation to the loan application
by Mr. Ru Leonard. Mr. Donlon knew him slightly and knew that he had
worked in Guinness & Mahon but had left when they were reducing their staff.
He had worked at some stage with a company called IAS in Shannon but that
company got into financial difficulties and he was laid off. He came to Mr.
Donlon looking for a job with IIB which Mr. Donlon could not give him.

Mr. Donlon was thus surprised to see about a year later a loan application
coming in from Mr. Leonard with the support of Ansbacher. The purpose of
the loan was to buy a garage or a filling station in Greystones. Mr. Donlon
assumed that Mr. Traynor was helping him out to find a way of making a
living.1"

Evidence of Siobhan Lynch, page 54.

Evidence of Siobhan Lynch, page 57.
Evidence of Liam Donlon, 28 lh February, 2002 pages 17-18.
 Mr. Donlon therefore considered Mr. Leonard as very unlikely to have money
on deposit somewhere, particularly in the context of Ansbacher. We can
speculate that Mr. Traynor was assisting Mr. Leonard because he probably
knew Mr. Leonard from the days when Mr. Leonard had worked in Guinness
& Mahon.
4

Indeed, there were only four resident personal borrower^ ,!whose loans were
introduced and secured on Ansbacher deposits. They were :

Mrs. Ciara Byrne (wife of John Byrne)

Conor & Jacqueline Haughey
Mr. Ru Leonard
Mr. Sam Field Corbett and his two partners

With the exception of Mrs. Byrne, it did not appear to IIB that the others were
persons who would, in the nature of things, have necessarily had substantial
deposits. The position of Mr. Leonard has already been explained. Mr.
Donlon has given evidence that the loan to Conor and Jacqueline Haughey
was to fund an overdraft to Bank of Ireland which was initially £60,000.00
with another tranche of £25,000.00.112 It seems inherently unlikely therefore
that Mr. & Mrs. Haughey had substantial deposits with Ansbacher or
otherwise. Mr. Field Corbett who was clearly working closely with Mr.
Traynor, was actually turned down in his loan application with his partners
which was for the purpose of a small property in South Circular Road and only
managed to get the loan subsequently when he was able to bring Ansbacher on
board as offering the security (which he was presumably able to do by virtue
of his connection with Mr. Traynor and where he had, apparently, opened a
deposit account with Ansbacher.113

The Inspectors have suggested that Mr. Traynor's letter of 5 t h June, 1992
could equally be read as identifying that his primary concern was trust status
and that the audit confirmation was a mere secondary consequence. The fact
that Mr. Leonard did not have a deposit account with Ansbacher demonstrates
conclusively that Mr. Traynor's primary concern was not only trust status per
se but was a concern to remove the secured deposit account from the audit
confirmations.

In summary, the Inspectors have referred to the following "matters""4 in

support of their preliminary conclusion that IIB knew that accounts opened by
Ansbacher (and Hamilton Ross) were trust accounts for and on behalf of Irish
residents :-

• The initial proposal by Ansbacher in 1992 that the deposit to be placed by

Ansbacher with IIB to secure the proposed facility to Tepbrook Properties
should be placed by Ansbacher in trust.

Evidence of Liam Donlon, 20 th February, 2002 pages 19-20.

The Sam Field Corbett loan will be dealt with in more detail in the next chapter.
Other than the unconnected reference to Mr. Field Corbett having "entrusted" monies to
Ansbacher which is dealt with in detail at Chapter 5.
 • The request made by Ansbacher in September 1992 that the deposits
placed by Ansbacher with Kredietbank to back Ansbacher's guarantees
securing facilities granted by IIB to Lyndon Properties and Carlisle Trust
should be redesignated from "Ansbacher" to "Ansbacher in trust" and the
subsequent redesignation of such accounts (after a period of nine months
of negotiation). '

• The request made by Mr Traynor in June 1992 that the deposits placed by
Ansbacher securing facilities given by IIB to Ru Leonard and S & M
Morris should be redesignated as being held by Ansbacher "in trust".

It is IIB's submission that the evidence clearly shows that the matters referred
to above are related and arose as a result or a desire to move deposits placed
by Ansbacher (to back guarantees being provided by Ansbacher) off balance
sheet in advance of the proposed sale of Ansbacher to a South African bank.
It is also IIB's submission that the evidence clearly shows that the deposits
placed to secure the facilities as referred to above were not held on trust for
Irish residents (including the borrowers).

In relation to the Ru Leonard/S&M Morris deposits, the relevant evidence is

as follows:-

• Mr Traynor expressly stated that the reason for his request was that he did
not want the existence of these deposits to be included in any audit
confirmation to Ansbacher which indicates that this request was part of Mr
Traynor's intention to move certain deposits securing Ansbacher's
guarantees off balance sheet.

• The deposits were placed by Ansbacher as beneficial owner and IIB's

security was dependent on the deposit being beneficially owned by
Ansbacher. If IIB had any suspicion that this was not the case then IIB
would have taken immediate steps to protect their security by ensuring that
the beneficial owner of any such deposit was joined to the transaction.
This would also have cast doubt over the validity of IIB's security for
other Ansbacher secured facilities which would have added to the
seriousness of any such suspicion and, in these circumstances, it is
inconceivable that IIB would not have taken immediate action to protect
its security if it had developed any suspicion that these deposits were held
on trust by reason of this request.

• IIB have been advised during the course of recent interviews before the
Inspectors that Ru Leonard did not in fact have a deposit with Ansbacher.
This shows that the request by Mr Traynor to redesignate the deposits
securing Ru Leonard's facility (and presumably the identical and
contemporaneous request made by Ms Traynor in relation to the deposit
securing the S&M Morris facility) could not have been motivated by the
fact that such deposits were in fact held on trust for those borrowers.

In relation to the Tepbroook transaction and the restructuring of the

Lyndon/Carlisle facilities, the evidence is as follows:-
• Ansbacher expressly warranted in legal documentation that it was the
beneficial owner of deposits placed by it securing the Lyndon and Carlisle
facilities.

• When Mr Traynor requested IIB to redesignate the deposits securing the

Lyndon/Carlisle facilities from "Ansbacher" to "Ansbacher in trust" in
September 1992, he was asking IIB to facilitate Ansbacher in the
maintenance of these deposits off balance sheet in a "similar fashion to the
recent Tepbrook transaction ". It was Mr Traynor's stated intention that the
purpose of the request was to move these deposits "off balance sheet" as
was clearly his intention during the earlier Tepbrook transaction also. If
these deposits were, as a matter of fact, held on trust for third parties, then
those deposits would have already been "off balance sheet" and therefore
Mr Traynor's stated intention would already have been achieved

• Mr Traynor's stated intention could only arise, by definition, in

circumstances where Ansbacher owned the deposits in question in the first
place Mr Traynor's stated request was with a view to retaining the de
facto ownership of those deposits notwithstanding the balance sheet
treatment of those deposits after the event. There would have been no
reason for the parties to enter into nine months of negotiations which
involved both London and Cayman Island lawyers if, in fact, the deposits
were already held on trust.

When considered in hindsight it is clear that the requests concerning the

treatment of certain of the hypothecated deposits commencing in mid 1992
and ending in mid 1993 (with the creation of the Tristan and Yale structures
for the Lyndon and Carlisle facilities) are wholly and only consistent with an
exercise by Ansbacher in relation to the movement by it of these deposits off
balance sheet in advance of its sale to a third party. It is precisely because
these deposits were not trust monies that this whole exercise was necessary.
There is accordingly no basis on which these requests or references to "trust"
could or should have led IIB to conclude that the hypothecated deposits were
trust monies for the benefit of Irish residents.
Appendix XIII (g)
 Dame St., Dublin 2.
C E N T R A ! BflNK Telephone: (01) 671 6666
Fax: (Of) 671 6528
o f H i a m o

PADRAIG MCGOWAN
Dfcector General

8" September 1997

. v; | i iMr. Edward A. Marah

: Chief Executive
Irish Intercontinental Bank Ltd.
91 Merrion Square
Dublin 2

Dear Mr. Marah

The report of the Dunnes Payments Tribunal draws attention to the fact
that in respect of certain transactions there may have been an evasion of
- exchange control legislation. The Minister for Finance has asked the
Central Bank to investigate and report to him on this matter. The Bank
acted as agent for the Minister in the implementation of the exchange
controls which would have applied to such transactions. In turn,
Authorised Dealers - among them Irish Intercontinental Bank Ltd. - had
specifically delegated authorities and obligations under the exchange
control regulations.

In response to the request from the Minister, the Central Bank is

undertaking a full and urgent investigation into the references in the
Tribunal Report which appear relevant in the context of the exchange
controls. Instances of specific reference, inter alia, to Irish
Intercontinental Bank in the Report are on pages 39, 40 and 47.
 CGMTRfll OflNK
O f IRCLAIND
r^
Continuation Sheet

Prima facie it would appear that certain funds deposited With your bank in
the name of non-resident entities were beneficially owned by Irish
residents. As an Authorised Dealer your bank was required to verify on
the opening of such accounts the residential status of the beneficial
owner(s) of thedeposits in question In addition, it would appear that the
instructions p openand pperajg tfrese accounts were receivedfrqrn Irish
residents who also carried out transactions across the relevant accounts.

I would ask you to undertake an appropriate examination of Irish

Intercontinental Bank Ltd. records and to inform the Central Bank of all
relevant details in relation to these accounts and transactions. I would like
^ you to deal with this as a matter of urgency:

Further clarification in relation to this matter, if required, is available from

Dr. Liam O'Reilly of this office.

Yours sincerely

T I
 IRISH INTERCONTINENTAL BANK

EDWARD MARAH
CHIII IXtCUTIVI

Dr. Padraig McGowan

Director General
Central Bank of Ireland
P.O. Box 559
Dame Street
Dublin 2
11th September, 1997

Dear Dr. McGowan

I refer to your letter of 8th September regarding the report of the
Dunnes Payments Tribunal and to my subsequent conversations with
Dr. Iiam O'Reilly.
'/

We have carried out an examination of our records and have satisfied

ourselves that we have not breached any exchange control regulations
inforce at the relevant times.
The position may be summarised as fallows:-
1. The relationship with Ansbacher Cayman Ltd. was introduced to
Irish Intercontinental Bank ("IIB") by Mr. Richard Fenhalls, a
former non executive director of IIB and chief executive of Henry
Ansbacher in London.
2. Before opening the account, we satisfied ourselves that Ansbacher
was a properly constituted bank licensed in the Cayman Islands. Its
chairman was Mr. Des Traynor, former managing director of
Guinness & Mahon in Ireland and then chairman of CRH pic and
Hibernian Insurance pic. Mr. Traynor was a man of considerable
standing in the Irish business community.
' 3. The Tribunal also focused on the deposit accounts maintained by
Hamilton Ross Co. Ltd. with IIB. Again, on the opening of these
accounts, appropriately authorised account opening documentation

IRISH (NTtDCONTINENrAL BANK LIMITED • 91 MEKMON SQyAM, DUBLIN I • TEUfHONE. 01 4619744 • FACSIMILE. 01 6783034 • TELEX. 33522
MG1STCAED IN THE REPUBLIC O f IRELAND NUMBER 4 0 S 9 7 .

A SUBSIDIARY O f KUOIETBANK N.V.

 Dr. McGowan,
Central Bank of Ireland
11th September, 1997

was received. This included appropriate board resolution from the

non resident company and appropriate declarations confirming the
beneficial owners of the deposits were non resident.
4. At no time prior to the Tribunal were we aware that (or had any
reason to enquire further whether) the beneficial owners of the
deposit monies might be other than non resident.
5. In each case, the authorised signatories on the accounts included,
!
inter alia, Mr. Traynor. Withdrawals from the accounts were
properly authorised in accordance with the authorised signatory
list furnished to us. As a matter of interest, in no case were
withdrawals made payable to the individuals the subject of Mr.
Justice McCracken's enquiry.
6. In all cases, lodgements info the accounts were from off-shore
sources.
In relation to the specific question raised by Dr. O'Reilly as to the three
drafts eachfor GBP70,000, these were sent on different dates to us by
the secretary to Mr. Traynor on behalf of Ansbacher Cayman Ltd. for
lodgement to Anshacher's sterling deposit account. Hie drafts were
issued by an Isle of Man bank. Their lodgement by Mr. Traynor's
secretary to the sterling account of Ansbacher, a non resident bank, did
not in our view, have any exchange control implications.
Needless to say, if you require any further information or explanation
we are at your disposal.

Yours sincerely,

EDWARD A . MARAH
CHIEF EXECUTIVE
Appendix XIII (h)
 ANALYSIS OF LODGEMENTS

IEP
Millions
Irish Bank Originated No. % Value %
Bank Transfers 7 1.1 3.3m 3.4

Cheques & Drafts Payable to Ansbacher/IIB (Note 1) 22 3.4 0.99m 1.0

Cheques & Drafts Payable to Third Parties (Note 2) 16 2^5 2.0m 2J_
Sub Total 45 2A 6.29m 6.56

Non Irish Bank Originated

Bank Transfers 353 54.6 81.77m 85.3

Cheques & Drafts Payable to Ansbacher/IIB 49 7.6 0.97m 1.0

Cheques & Drafts Payable to Third Parties 125 19.3 6.82m 7.1

Dividend Warrants 75 11.5 0.04m 0.04

Sub Total 602 93 89.6m 93.44

TOTAL 647 100 95.89 100

Note 1: 4 of these were Irish pounds

Note 2: 8 of these were Irish pounds

TB Analysis of Lodgements SCH 20 March 02

 Cli
ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

CREDIT ENTRIES

1991 1992 1993 1994 1995 1996 1997 Total No.

Ansbacher Credit Entries

(excluding inter account) 170 118 100 76 53 126 4 647

Total IIB Credit Entries 41,000 42,000 44,000 50,000 53,000 53,000 55,000 338,000

Cli Sch Credit Entries 20 March 02 Page 1 of 1

 ) >
C2i

ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

r

ANALYSIS OF CREDIT TRANSACTIONS

Total No. 1991 1992 1993 1994 1995 1996 1997

Total No. of Ansbacher Credit Entries 2,215 435 486 456 380 171 200 87
Less . Inter account transfers 1,568 265 368 356 304 118 74 83

Lodgements of funds 647 170 118 100 76 53 126 4

No No % Value Value
IEP %
Bank Transfers/drafts/cheques
payable to Ansbacher 421 65.08 86.21 89.91 84 63 51 53 46 120

Bank Transfers/drafts/cheques
payable to IIB 12 1.85 0.83 0.87

Dividend Warrants 75 11.59 0.04 0.04 39 32

Cheques and drafts payable to

Third Parties 139 21.48 8.82 9.18 44 23 44 17
647 100 95.89 100

Total IIB Credit Transactions 338,000 41,000 42,000 44,000 50,000 53,000 53,000 55,000

C2iCr Trans 20 March 02

Page 1 of1
 C3i

ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

ANALYSIS OF THIRD PARTY CHEQUES AND DRAFTS

Cheques & Drafts Payable to Third Parties No. % Amount %

IEP
Foreign Currency 131 94.24 7.02 80
Irish Pound 8 5.76 1.8* 20

Total 139 100 8.82 100

* One of these 8 cheques, payable to College Trustees totalled DEP1,777,500. The other
7 cheques represent 0.33%, by value of total third party lodgements.

Of the 131 foreign currency cheques only 8, with a total value equivalent to IEP210,120
originated from Irish banks. This represents 3% by value of total third party lodgements.
 ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

LODGEMENTS BY SOURCE

No. Value
IEP (Million)
Transfers and Bank Drafts Payable to
Ansbacher/IIB from Banks and Third 433 87.04
Parties

of which No. Value (IEP

Million)
Irish Bank Originated Note 30 5.15

Guinness & Mahon 32* 9.57

Foreign Bank Originated 371 72.32

* 13 of these lodgements totalling IEP7.1 million occurred in 1991

Note: 4 of the 30 lodgements are Irish Pounds

C4iLodge by Source 20 March 02 Page 1 ofl

 ) )

Pli

ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

DEBIT ENTRIES (I.E. MOVEMENTS OUT OF ACCOUNTS)

1991 1992 1993 1994 1995 1996 1997 Total No.

Ansbacher Debit Entries

(excluding inter account) 322 369 437 299 203 182 85 1,897

Total IIB Debit Entries 64,000 66,000 74,000 78,000 79,000 80,000 67,000 507,000

Pli Debit 20 March02 Page 1 of 1

ANALYSIS OF AN SBACHER/HAMDLTON ROSS TRANSACTIONS 1991 TO 1997

WITHDRAWALS (DEBIT ENTRIES) BY VALUE

Value Value
IEP (Millions) %

Irish Pound Withdrawals 8.0 8.3

Foreign Currency Withdrawals 88.1 91.7

Total Withdrawals 2LI 100

ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

ANALYSIS OF WITHDRAWALS BY PAYEE TYPE

Number % Value %
IEP (Millions)
Irish Pound Withdrawals:

to Banks 343 39.8 2.72 33.87

to Companies 474 55.1 4.79 59.65
to Individuals (transfers) 5 0.6 0.08 1.0

to Individuals (cheques & drafts) 39 4.5 0.44 5.48

Total 861 100 8.03 100

 ANALYSIS OF ANSBACHER/HAMILTON ROSS TRANSACTIONS 1991 TO 1997

ANALYSIS OF IRISH POUND WITHDRAWALS TO COMPANIES

Number % Amount %
IEP
Kentford Securities Ltd. 138 29 0.45 9.4
BEL Secretarial 114 24 2.30 48.0
Credit Card Companies 83 18 0.13 2.7
Other (Office Services etc) 139 29 1.91 39.9
Total 474 100 4.79 100
 ANALYSIS OF ANSBACHER/HAMELTON ROSS TRANSACTIONS 1991 TO 1997

ANALYSIS OF PAYMENTS

Payments where Payees were Individuals No. % Amount %

IEP (Million)
Irish Pound Transfers 5 0.3 0.08 0.1
Cheques/Drafts 39 2.0 0.44 0.5

Foreign Currency Transfers 122 6.4 7.63 7.9

Cheques/Drafts 164 M 2.00 11
Total 330 17.3 10.15 10.6

Other Transfers 350 18.45 74.95 78.0

Cheques/Drafts 1,217 64.25 11.01 11.4

TOTAL M£2 100% 96.11 100%

Appendix XIV

(a) Order of the High Court of 13 March 2001 of Johnson J.

Appendix XIV (a)
 THE HIGH COURT
1999 No 163 COS

Tuesday the 13th day of March 2001

BEFORE MR JUSTICE JOHNSON

IN THE MATTER OF THE COMPANIES ACTS 1963-1990

AND IN THE MATTER OF PART 2 OF THE COMPANIES ACT 1990

AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED

(FORMERLY GUINNESS & MAHON CAYMAN TRUST LIMITED

ANSBACHER LIMITED AND CAYMAN INTERNATIONAL BANK AND

TRUST COMPANY LIMITED)

AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION

7(4) OF THE COMPANIES ACT 1990

Upon the application of Counsel for Noreen Mackey one of the three

inspectors appointed by the Order herein dated the 22nd day of September 1999 to

investigate the affair of Ansbacher (Cayman) Limited made ex parte to the Court

on this day Counsel for the Minister for Enterprise Trade and Employment also

present

And on the application of Counsel for the inspectors IT IS ORDERED that

application be heard in camera

On reading the said Order dated the 22nd day of September 1999 and the

Order dated the 8th day of December 2000 whereby pursuant to Section 8 of the

Companies Act 1990 the persons named hereunder were appointed inter alia as

inspectors to investigate the affairs of Ansbacher (Cayman) Limited (formerly

Guinness & Mahon Cayman Trust Limited Ansbacher Limited and Cayman

International Bank and Trust Company Limited)

(a) His Honour Judge Sean O'Leary

(b) Ms Noreen P Mackey Barrister-at-Law

 G.1. THE HIGH COURT
(c) Paul F Rowan Chartered Accountant and

(d) Michael Cush Senior Counsel

and on reading the Affidavit of the said Noreen Mackey made on her own

behalf and on behalf of and with the authority of her fellow inspectors and filed in

Court on this day

By Consent

IT IS ORDERED that in discharging their obligations on foot of the said

Order of the 22nd day of September 1999 the Inspectors are required to investigate

and report upon the clients of Ansbacher only in so far as it is necessary to do so

for the purpose of examining and defining the nature and extent of Ansbachers

Irish business from 1971 to the 22nd day of September 1999 for the purpose of

identifying the clients of the company and for the purpose of examining the affairs

of Ansbacher

Reserving the costs of this application and Order

Mary Cummins
r^ Solicitor

mk(163COS)ph
(Ol K^IO) THE HIGH COURT
The 13th day of March 2001

RE-

IN THE MATTER OF THE

COMPANIES ACTS 1963-1990
AND
IN THE MATTER OF PART 2 OF
THE COMPANIES ACT 1990
AND
IN THE MATTER OF ANSBACHER
(CAYMAN) LIMITED

Nature of Document:-
ORDER

Entering Fee:-

TWO Pages

Solicitor:- MARY CUMMINS

Address
 RECORD NUMBER: 1 9 9 9 / 1 6 3 COS

THE HIGH COURT

IN THE MATTER OF THE COMPANIES ACTS 1963 to 1990
AND IN THE MATTER OF PART II OF THE COMPANIES ACT 1990 AND SECTIONS 8 AND 17
AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED
(formerly GUINNESS MAHON CAYMAN TRUST LIMITED,
ANSBACHER LIMITED and CAYMAN INTERNATIONAL BANK AND TRUST COMPANY
LIMITED)

REPORT OF THE INSPECTORS

APPOINTED TO ENQUIRE INTO THE
AFFAIRS OF ANSBACHER (CAYMAN)
LIMITED

Published by Order of the Court made on 24 June 2002

VOLUME [2]: APPENDICES I TO X I V

 ISBN 0-7557-1355-9

© Government of Ireland 2002