Deal for repayment of £75,000 yacht-repair loan `not good security'

Arrangements for the return of the £75,000 loan to Mr Conor Haughey for repairs to the Haughey family's yacht would not be considered "good security", Mr Dermot Desmond told the Moriarty tribunal.

The financier said there was no documentation for the loan. He indicated to Mr Haughey that the loan for Celtic Mist was not of major importance to him and they eventually agreed it would be repaid "if and when Celtic Mist is sold, whether it is sold tomorrow or in 10 years time".

Mr John Coughlan SC, for the tribunal, put it to Mr Desmond that it was "on the books" but that "it's not something that you ever expect to get back". Mr Desmond replied: "In banking terms, it wouldn't be good security."

The money for the repairs originated from Freezone Investments Ltd, a Channel Islands company which, Mr Desmond said, was owned by Mr Colin Probets, its sole shareholder. Some of the payments came from that company's account with the Trustee Savings Bank, Grafton Street, Dublin. Mr Coughlan revealed that Mr Conor Haughey was interviewed by Mr John Glackin, a Government-appointed inspector who investigated dealings concerning a Johnston, Mooney & O'Brien site in Ballsbridge. Freezone was involved in dealings in the site prior to its sale for £9.4 million to Telecom Eireann in May 1990.

Mr Haughey was interviewed after Mr Glackin came across his name in Freezone documentation concerning money advanced for the Haughey yacht. However, Mr Desmond said he could not recall discussing with Mr Conor Haughey the fact that the money for the yacht came from Freezone.

He told the tribunal he had "unfettered discretion" in the use of the assets and accounts of Freezone. He had "full freedom of manoeuvre" over the affairs of Freezone and various powers of attorney over the affairs of Mr Probets - a Guernsey financier who was an original backer of NCB Stockbrokers, and who was a long-time business associate.

However, he insisted that Mr Probets was the sole owner of Freezone Investments Ltd.

When the company was liquidated in 1997, Mr Probets took on the Celtic Mist loan. The matter was subsequently settled between Mr Probets and Mr Desmond as part of the working balance on their running account, Mr Desmond said.

Mr Desmond rejected Mr Coughlan's claim that his statement to the media in January 1998 misled the public. Mr Desmond said in the statement that the loan to Mr Haughey had been "settled".

The financier said the matter had been settled in the sense that he had made an agreement with Mr Haughey that the loan would be repaid if and when the yacht was sold.

Mr Desmond said that the funds for the work on the Haughey yacht were treated as an asset in the accounts of Freezone and a liability in his own company Dedeir. The consolidated loan was taken over by Mr Probets and was subsequently taken over by Mr Desmond.