Haughey's Forty Years of Controversy (15 page)

Once he was back in government in 1977 things got even worse. He began building his holiday home on Innisvicillaun at enormous expense, seeing that most the building material had to be ferried to the island by helicopter. But that did not deter Charlie; he was content to leave his accountant, Des Traynor, to worry about the money. ‘I just decided to go ahead with the building, leaving it up to Mr Traynor to fund the operation,' he later explained.

He was being charged penal interest in the hope that he would seek better terms from another bank and clear off his debt with AIB. In July 1979 Michael Phelan, concluded that Haughey obviously ‘does not believe the bank will force a confrontation with him because of his position.'

Haughey even sought to exploit his position when he suggested he could put some business the way of the AIB and he offered £400,000 as a final settlement of his debt. He had recently returned from Iraq, which he had visited as a result of the Aer Lingus subsidiary PARC taking over the running of a Bagdad hospital, and he suggested the possibility of getting the Iraqi Rafidain Bank, which was controlled by Saddam Hussein, to deposit £10 millions with AIB. The offer was not taken up.

‘The account appears to be out of control,' Phelan wrote in August 1979. Charlie owed £913,279 and this was due to rise a further £100,000 when the interest became due. At the time the interest rate was 26%. On 18 September, Des Traynor began some protracted negotiations with the bank on Haughey's behalf to clear his debt.

Barely three months later Charlie became Taoiseach and suddenly Phelan adopted an almost sycophantic approach. ‘It gives me great pleasure to convey to you my warmest congratulations on your election to the high offices of leader of Fianna Fáil and Taoiseach and to offer you my sincere good wishes for success in both,' Phelan wrote to him. ‘To say the task you have taken on is daunting is an understatement but I have every faith in your ability to succeed in restoring confidence in this little nation.'

AIB had already virtually despaired of Haughey's ability to handle his indebtedness, which had proved intractable over the past decade. Now that he had finally achieved power, however, he was able to resolve the problems with the help of Traynor within a matter of weeks.

Charlie personally sought help from Patrick Gallagher, whose father, Matt, had helped to make Haughey a rich man by advising him to buy the house and lands in Raheny in 1957. After Matt Gallagher died in 1974, Patrick took over the business and was more than willing to help finance Charlie. He provided at least £15,000 to him in political donations during the next five years.

As soon as Haughey had achieved his ambition of becoming Taoiseach, he turned for financial help to young Patrick Gallagher, then still in his twenties. On Sunday afternoon, 7 December 1979, he invited Gallagher to Abbeville to ask him for financial help.

‘What is the mess?' the 26-year-old Patrick asked.

‘£750,000,' replied Haughey.

‘Can you get someone to raise half of it?' Gallagher asked.

Haughey affirmed.

‘Say no more, I'll sort it out with Des Traynor,' Gallagher said. He had his own selfish motives. ‘I was naive enough,' he later admitted, ‘to think I could get a favour. But not a thing. You might be introduced to people who could help, but he was not slow to tell you to go and sort out your own business.'

Anybody who thinks that they could buy favours from Haughey does not know the man, according to his long-time mistress Terry Keane. ‘They don't understand Charlie's character,' she later emphasised. Haughey would think the money was his by right. ‘It would be like the three wise men putting gold, frankincense and myrrh in front of the saviour and that he would have no obligation because of a gift,' she argued.

Even if he had intended to do favours for some of his building and property friends, Colley was determined to frustrate any effort to help those people. John Byrne, a Kerry man who had made his money in construction and Irish dance halls in Britain following the Second World War, was persuaded to return to Ireland in the Lemassera like Matt Gallagher. Byrne built a number of prominent buildings in Dublin, like O'Connell Bridge House, D'Olier House and Parnell House. He leased office space to the state, but as Minister for Finance, Colley blocked any further deals with Byrne, and he enlisted the help of Garret FitzGerald, the leader of Fine Gael, to get Dublin County Council to block planning permission for any development on what had been Baldoyle Race Course, which had been bought by Byrne in the 1970s. In that instance, Byrne's friendship with Haughey was a distinct handicap.

Gallagher's company provided the promised £300,000, as a non-refundable deposit on 35 acres of land at the Kinsealy estate that he would buy for £1.225m. This was subject to a provision that he would find a suitable stud farm that would be purchased for the Haugheys out of the price of the land and the whole deal had to be finalised by 1986. (It seemed like a crazy way of doing business and within a couple of years the Gallagher Group and its Merchant Bank, worth an estimated £70 million, went into liquidation. The receiver deemed any claim on the lands at Kinsealy unrecoverable, and Patrick Gallagher's ties to Haughey were of little value to him, because he went to jail anyway in Northern Ireland over his business dealings.)

In talks between AIB and Des Traynor, it was agreed that the only way to deal with Charlie's borrowings ‘was to clear the debt totally'. Traynor made a deal with the bank that Haughey would pay £750,000 by mid February 1980 and that he would promise to pay £110,000 at some time, while the remainder of the debt would be written off. The three-quarters of a million amounted to all the money he had actually borrowed and a little of the interest, while the £110,000 covered only interest and it was to be cleared as a matter of honour without any further interest.

There were rumours of that AIB had written off a large chunk of a loan for Charlie, but nobody was prepared to go on the record with the story, so the media were not in a position to report what had happened for almost 20 years. The opposition attacks on Haughey on the day of his election as Taoiseach had backfired badly and generated sympathy for him in the press. For the next two months, he enjoyed a virtual honeymoon with the media.

While some of Haughey's old enemies were more implacable than ever, he was enjoying good media coverage. His victory was clearly welcomed by prestigious editors like Douglas Gageby of the
Irish Times
, Tim Pat Coogan of the
Irish Press
, and Michael Hand of the
Sunday Independent
and Vincent Browne of
Magill
magazine, though the latter did persist in asking how Haughey had apparently become so fabulously wealthy.

Addressing the Fianna Fáil Ard Fheis on 16 February 1980 Charlie said that his government's ‘first political priority' was to end partition. To further his aim he intended to enlist international help in order to put diplomatic pressure on Britain. As far as the Taoiseach was concerned, Northern Ireland was failed as a political entity; so a new beginning was needed. But it was noteworthy that he did not call on the British to announce their intention to withdraw from the area. Rather, he asked them to declare ‘their interest in encouraging the unity of Ireland by agreement and in peace'.

When Charlie went to London to meet Prime Minister Margaret Thatcher in May, his chances of securing any kind of advance seemed remote because, on the eve of their meeting, she told the House of Commons that the constitutional affairs of Northern Ireland were ‘a matter for the people of Northern Ireland, this government and this parliament and no one else.' In short, the Northern Ireland question was none of Charlie's business.

The two of them got on surprisingly well next day. He brought her a silver Georgian teapot as a present, and she was apparently charmed by him. One member of her cabinet later told friends ‘he was sure he detected a “sexual” attraction for the smallish, rather worse-for-wear Irishman'.

After their meeting the two leaders issued a joint communique emphasising that they had decided to have regular meetings in order to develop ‘new and closer political co-operation between our two countries'. The most significant aspect of the communique was their agreement that ‘any change in the constitutional status of Northern Ireland would only come about with the consent of a majority of the people of Northern Ireland'.

In the following weeks there was a controversy over the proposed appointment of a new Irish ambassador to the United States that was played out largely behind the scenes. Part of Haughey's overall plans for the north was to enlist diplomatic pressure on the British government to work for a settlement. Traditionally Irish-Americans were the Dublin government's most influential supporters, but they were usually faction-ridden. In 1980 they were divided on the Northern Ireland question, with a large, vocal and well-organised minority supporting the campaign of the Provisional IRA. Ever since his appointment as Irish ambassador to the United States in 1978 Seán Donlon had sought to isolate those militants and in the process he ran foul of the organisations they controlled – Noraid, the Irish National Caucus and the Ancient Order of Hibernians. Charlie decided to replace Donlon with someone acceptable to a broader spectrum of Irish-Americans so that their voice could be consolidated behind Haughey's own settlement plans. He decided to transfer Donlon to the United Nations, but word of this leaked and some powerful voices were raised in Washington, where Donlon was held in high esteem by influential Irish-American political figures like Thomas ‘Tip' O'Neill, Speaker of the House of Representatives, Senators Edward Kennedy of Massachusetts and Daniel Patrick Moynihan of New York, as well Governor Hugh Carey of New York and the former California Governor Ronald Reagan, then engaged in his successful bid for the presidency. Faced with such opposition, Haughey backed off and left Donlon at his post in Washington.

As his first year in the Taoiseach's office was coming to a close, Charlie desperately needed some kind of real achievement. He was obviously indebted for his reinstatement within Fianna Fáil to the so-called green wing of the party, which wanted the government to take a more active part in seeking a solution to the northern problem. The whole question took on added significance on 26 October 1980 when seven Republican prisoners went on hunger-strike for what amounted to political status. A week later Charlie was in Letterkenny, Co. Donegal, for a by-election rally. He watched aghast from the platform as Síle de Valera denounced ‘Mrs Thatcher's lack of compassion' and her ‘callous, unfeeling and self-righteous statements'. Síle's controversial address revived memories of her speech outside Fermoy, which marked the public beginning of the push to secure the removal of Jack Lynch as Taoiseach.

Although Charlie made no reference to Síle's speech during his own address moments later, he was obviously taken aback. Immediately after the rally he and some senior colleagues retired to a local hotel to discuss the situation. About an hour later Ray MacSharry issued a statement to the press as director of elections. He emphasised that neither the Taoiseach nor any member of the government had seen Síle's script in advance. He added that her remarks had not reflected the views of the government.

She expressed surprise at the statement disassociating the party from her remarks. Lynch had banned her from making any public comments on the northern situation following her speech in September 1979, but Charlie lifted the ban when he became Taoiseach. ‘Mr Haughey told me when he assumed office that the ban no longer applied,' she explained. ‘I was working under the assumption that there was no ban when I spoke in Letterkenny.'

Privately Charlie may well have agreed with Síle's sentiments, but he clearly did not like her timing. He was anxious lest the incident would impair his relations with the British prime minister before their next meeting, which was due to take place in Dublin Castle on 8 December 1980. Since he had been sitting beside Síle on the platform when she made the remarks, it would appear that he was openly endorsing her comments, unless some kind of repudiation were issued.

Thatcher was accompanied to the Dublin Castle summit by chancellor of the exchequer Geoffrey Howe, foreign secretary Lord Carrington and Humphrey Atkins, the secretary of state for Northern Ireland. The inclusion of Carrington gave rise to speculation because he had recently played a major role in changing the direction of British policy in regard to the Rhodesian question. Prompted by the foreign secretary, Thatcher had radically altered her Rhodesian policy and agreed to a settlement which brought one of the guerrilla leaders to power.

Charlie, with his almost Messianic belief in his own capability, seemed to think he had a real chance of persuading the British to settle the Irish question for once and for all. He was accompanied by Brian Lenihan and Michael O'Kennedy, his respective ministers for Foreign Affairs and Finance. They were included in most of the day-long discussions, though not in the private meeting lasting an hour and a quarter between the two leaders.

Afterwards a joint communique was issued describing their talks as ‘extremely constructive and significant'. Both sides ‘accepted the need to bring forward policies and proposals to achieve peace, reconciliation and stability' in Northern Ireland. To further these aims they agreed to promote ‘the further development of the unique relationship between the two countries' by commissioning ‘joint studies covering a range of issues including possible new institutional structures, citizenship rights, security matters, economic co-operation and measures to encourage mutual understanding'.

Around a hundred reporters from different parts of the globe were present at a press conference afterwards when Charlie explained that there had been ‘an historic breakthrough'. He was not prepared to elaborate publicly, but he was more forthcoming immediately afterwards in an ‘off-the-record' briefing for Irish political correspondents. He indicated ‘by implication and innuendo' that the British leader had agreed that the joint studies could reconsider Northern Ireland's whole constitutional position, according to Bruce Arnold. The Taoiseach anticipated an early end to partition during this briefing, and Lenihan declared in a RTÉ interview that the Northern Ireland question was on the verge of resolution.