Lawlor's financial dealings probed further by tribunal

The former Fianna Fail TD, Mr Liam Lawlor, has admitted that he never intended to repay two loans totalling £900,000 sterling given to him by a family trust during the 1990s.

He told the Mahon tribunal this morning that the loan was organised by a friend of his former financial adviser, tax lawyer Mr John Caldwell. Mr Lawlor claimed Mr Caldwell owed him a substantial amount of money, but had refused to accept liability.

Mr Lawlor said he was involved in two separate land deals with Mr Caldwell. The first, in 1987, concerned 55 acres of agricultural land in Coolamber, Co Dublin, while the second was a deal to buy industrial land in Baldoyle, Co Dublin.

Mr Lawlor claims he never received his full share of the proceeds of the profits of these deals from Mr Caldwell and was considering suing him or complaining to the Incorporated Law Society about him.

He says he was approached by the late Mr David Morgan in 1995 with a deal designed to prevent him taking action against Mr Caldwell.

Under the agreement, a Bahamian-registered trust controlled by Mr Morgan, Longwater Investments, would loan Mr Lawlor the money. The tribunal heard Mr Lawlor was loaned £500,000 in 1995, followed by a second loan of £400,000 in 1998. He never paid any of this back, and owed £1.1 million, including interest of £456 per day, by 2001.

"My understanding is that Longwater was a David Morgan trust and a vehicle for him to advance the funds for me," Mr Lawlor said.

But it was within Mr Caldwell's power to call in this loan, Mr Lawlor conceded when asked by the tribunal chairman, Mr Justice Alan Mahon. Mr Lawlor also admitted there was no documentation detailing the loan. Mr Lawlor admitted he had contacted Mr Morgan's son, Nicholas, to ask Mr Caldwell to dispose of this loan, but he never received confirmation of this.

Mr Lawlor said he was confident Mr Caldwell didn't "have the stomach for the fight that was necessary" to recoup the debt.

Mr Des O'Neill SC for the tribunal asked: "These were not loans you would ever have to repay, were they?"

"No," Mr Lawlor accepted.

Mr Justice Mahon interrupted the questioning to ask Mr Lawlor to explain the circumstances behind this alleged loan. "So the person who denied he owed you any money was prepared to advance you substantial money without any security?" he asked. "Isn't that very unusual?"

Mr O'Neill earlier asked Mr Lawlor if he was aware of the laws on money laundering. He suggested the account administered by Haynes & Trias solicitors in Gibraltar to control the £690,000 he had received for the sale of an acre of land adjoining his house at Somerton in Lucan Co Dublin, was in fact a fake account used by Mr Lawlor to move money out of Ireland.

Mr O'Neill said this account was set up to make it look like it was being used to pay off the loan to Longwater, when in reality Mr Lawlor had no intention of ever repaying this debt.

Mr Lawlor said he was "totally surprised" that he should be asked such a question. "I don't see what is has to do with the sale of an acre of land in Lucan."