Conlan had 'cut' businessman into land deal as a 'thank you'
Published 07/04/2011 | 05:00
Gerry Conlan was one of Ireland's highest flying property developers and the man who walked away with his share of €315m in 2006 from the sale of 400 acres near Naas that would turn out to be Ireland's most expensive land deal.
The Commercial Court heard that Philip Lynch knew Gerry Prendergast, one of three businessmen who paid this astronomical price for the land they planned to develop into a mini-city, complete with a hospital and high tech business park, and almost joined them in the purchase.
Mr Lynch was considering borrowing €25m to buy into that deal. The owners planned to collectively borrow another €190m for that development and Mr Lynch claims he pulled out at the last minute when AIB, that was providing the finance, wanted each of them to provide personal guarantees to be jointly and severally liable for that amount.
It was just too risky, he said.
Mr Conlan soon introduced him to another opportunity that might suit him better. The two men, who live close to each other, often played golf and had a business relationship.
As well as developing property, Mr Conlan headed the Harlequin Health group that owned private hospitals, including Mount Carmel in Dublin.
He was keen to expand this company and benefit from the Government's co-location plan that would give the green light to more private hospitals around the country.
In his evidence, Mr Lynch said Mr Conlan invited him, a chief executive of a public company, to join Harlequin's board to deepen its experience and credibility.
Mr Conlan had ambitions to one day put Harlequin on the Stock Market, according to Mr Lynch, who took no fees for his input at the company and explained to the court that Mr Conlan had "cut" him into the Waterford deal as a "thank-you".
The property developer was a "generous" man he said, whom he knew and trusted and who told him he would get the €25m loan from AIB on a non recourse basis.
Fresh from his big killing, Mr Lynch said the bank regarded Mr Conlan as a "prized customer".
He was also a valued customer of Anglo Irish Bank at that time and emerged as one of the famous 'Maple Ten' -- the group of businessmen Anglo's disgraced chief executive, David Drumm, rounded up to purchase Sean Quinn's 10pc of the bank in a last desperate attempt to stop it from imploding.
Mr Conlan was regarded as having a good track record in spotting good land deals and the Waterford site looked like a winner. The land in Kilbarry was being sold by the local Halley family, whom Mr Lynch knew.
Mr Conlan believed it was an ideal location for an out-of-town shopping and residential centre to serve Waterford city. Opportunities to develop a shopping area within the medieval city were scarce and with retailers like Marks & Spencer looking for suitable locations to open in the south east, he believed it was ideal.
His solicitors, Matheson Ormsby Prentice (MOP), handled the legalities and only learned shortly before the sale closed that Mr Lynch and his family were also involved.
Mr Lynch paid €2.5m of the €5m deposit and half of MOP's €50,000 fees for the transaction while his own solicitors, LK Shields, dealt with the family's legal requirements.
The Lynch family, who were 50:50 partners in the deal, never drew up a contract with Mr Conlan. They trusted him.
The court heard that Mr Lynch's long time close friend and associate, businessman Pascal Taggart, warned about getting involved in a deal with Mr Conlan, whom he also knew well.
"It sounds like a great deal," he told Mr Lynch. "But if you play with Gerry Conlan long enough, you will lose because he is a gambler", the court was told. Mr Conlan hasn't been called by the Lynch side to support their case. Indeed, AIB counsel Michael Collins inquired whether he was "alive and well?"
The court heard there was no evidence to the contrary but that he wouldn't be attending this case. He is fighting a separate action with the bank regarding this loan.
From evidence so far, the court has heard Mr Conlan hasn't repaid the interest on the loan for some time, while the Lynchs are continuing to make payments.
AIB claims Mr Conlan never asked for a non recourse loan when applying for it and that in his affidavit against the bank it is alleged he will say it was Mr Lynch who negotiated the loan.
The court also heard that by February 2007, AIB was reluctant to lend any more money to Mr Conlan because he already had huge loans from the bank.
It was suggested in court he needed Mr Lynch to join him in borrowing the money from AIB. Mr Lynch said he wasn't aware of that.
When the issue of who was liable to pay the bank arose in 2009, Mr Conlan met with Judith Whelan to discuss their problem.
According to correspondence, he advised the Lynchs that if a row was going to happen, they needed to decide who they wanted to have it with: AIB or NAMA? He also asked why the family didn't "put the squeeze on Larry Shields".
This week, Judge Peart said the Lynchs could take "comfort" from the fact AIB told the court it wouldn't be chasing them to pay any more of Mr Conlan's debts beyond their €25.3m loan.
This may provide some relief as Mr Lynch's daughter, Philippa, said in evidence she did not know the extent of Mr Conlan's debts to AIB but believed they were "a couple of hundred million".