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JUST how Paddy McKillen could ever have expected to come to a civilised arrangement with the billionaire Barclay brothers on the future of Claridge's, the Connaught and Berkeley hotels is anyone's guess at this point.
Having already drawn the ire of Sir Frederick Barclay for daring to cross the threshold of the Ritz without a tie, the Belfast-born businessman was pulled up once again last week up for conduct unbecoming of a gentleman.
This time around, Mr McKillen stood accused of being positively beastly to Siobhan Quinlan, the wife of his one-time business ally, the former tax inspector turned financier Derek Quinlan.
As the battle between Mr McKillen and the Barclays for ownership of the three most precious jewels in the crown of the Maybourne Hotel Group (MHG) continues, each day in court 26 of the Rolls Building at the Royal Courts of Justice in London seems to bring its own new drama.
Emotions were certainly running high last Wednesday as Richard Faber, the Barclay brothers' representative on the board of Coroin -- the company responsible for the management of MHG -- was taken to task for claiming that "very strong words" from Mr McKillen or "those acting for him" to Ireland's erstwhile property midas Derek Quinlan had left his petite wife and their "small children" in tears.
Pressed on this sensitive matter by Queen's Counsel for Mr McKillen, Phillip Marshall, Mr Faber was quickly forced to concede that he had no basis for making the allegation, save for his belief that Mr McKillen was to blame for Mrs Quinlan's obvious distress on the day he called to the Quinlans' house in Putney.
While Mr Faber's efforts to portray Mr McKillen as a cad won't influence Mr Justice David Richards when he comes to decide on the Irishman's bid to have Nama's sale of €790m in loans associated with the Maybourne hotels to the Barclays overturned, it certainly gives a telling insight into just how ungentlemanly things can become when the stakes demand it.
Allegations of secret deals, side deals and deals reneged on were all revealed during last week's proceedings as lawyers for both parties took turns to question Mr Faber and Mr McKillen's co-director, Liam Cunningham. Also in the witness box was former Maybourne Hotel Group executive Mark Hennebry, a man who just happens to be Mr Quinlan's cousin. Notwithstanding those familial ties, Mr Hennebry was very much pitted against the Barclays, having been summarily dismissed from his position by the aforementioned Mr Faber in September of last year. While the company reached an amicable settlement with Mr Hennebry after showing him the door, his appearance in court suggested he is still a little miffed.
But where the witnesses' testimonies were interesting, more compelling were the nuggets contained in the text messages recovered from the mobile phones of Sir David Barclay and Derek Quinlan's associate, Gerry Murphy, the contents of which were revealed in court last week.
Sir David, 78, seems to have been texting Mr Murphy with all the energy, poor spelling and punctuation of a teenager as he and his brother Sir Frederick came closer to their goal of owning Claridge's, the Berkeley and Connaught hotels.
Shortly after buying out the 25 per cent stake in the hotels, held by the Green family, in January 2011 for instance, Sir David texted Mr Murphy saying: "Gerry, deal done with greens, O Danny Boy, HE, SIR David. Your friend."
Clearly buoyed up by this early coup, Sir David texted Mr Murphy again, adding: "Will need your help with nama, PM [Paddy McKillen] now wants to meet with Richard [Faber]. I will stand by derrick [Derek Quinlan] and help him in every way I can on the road back to recovery. David."
Within days, Sir David texted Mr Murphy with his thoughts on Nama and how they should be handled, saying: "The purchase of Derrick shares present me with the opportunity to put forward my support based on a settlement I know what has to be said I am considering whether to make a direct approach or through my lawyer. I will think about it. My son, Chairman of the [Daily] Telegraph is meeting NAMA on Tuesday."
The obvious trust between Sir David and Messrs Quinlan and Murphy was further revealed by numerous other texts and emails disclosed in court.
Indeed, in the case of a letter Mr Murphy sent to Nama to explain the implications of the Barclay brothers' arrival as shareholders of the Maybourne Hotel Group and the nature of their relationship with Derek Quinlan, it seems he consulted Sir David repeatedly for his input.
In an early draft of that letter, Mr Murphy sought to explain a loan of €500,000 given in October 2010 by Sir David Barclay to Mr Quinlan saying: "In October, Sir David gave a personal loan to DQ of €500,000 to keep the family going financially and in return they asked DQ to ensure the Barclay brothers would have an opportunity to buy his Maybourne Hotel Group interest if he was selling. This was a gentleman's agreement to a friend in need with no documentation."
Mr Quinlan's needs stretched much further than that €500,000, however, judging by the £3m (€3.6m) the court heard the Barclays had given him and his family in the space of just over a year.
While Mr Faber stressed that the loan and subsequent payments to Mr Quinlan had been given on the basis of his friendship with the Barclays, counsel for Mr McKillen suggested their timing "fitted very well with the fact that the Barclays wanted to keep open the possibility of acquiring Mr Quinlan's shares in the face of competing offers".
Whatever truth there is in that assertion, the Barclays came to count on the support of Mr Quinlan and his associate Mr Murphy at Coroin's board meetings soon after the payments began.
Recalling this in his evidence, Mr McKillen's co-director, Liam Cunningham, said it soon became clear to him that: "Mr Murphy was acting consistently with Mr Faber in all respects so far as they related to the company."
By April of last year, the alliance between Mr Quinlan and the Barclays appeared to have been strong to the point where Mr Murphy felt sufficiently comfortable to email Mr Faber to broach the possibility that Mr Quinlan might be forced into bankruptcy.
Questioned in relation to the bankruptcy process, Mr Murphy asked Mr Faber: "Are you suggesting DQ [Derek Quinlan] elects to be declared bankrupt himself in short order?"
But, however healthy his relations were with Messrs Quinlan and Murphy, Mr Faber certainly established a solid relationship with both the Qataris (with whom a deal on the Maybourne hotels was then in the offing) and with Nama once he was appointed to the board of Coroin.
In the case of the Qataris, the court heard details of an email Mr Faber sent to their lawyer, Fady Bakhos, in which he discussed dealing with Mr McKillen in light of his refusal to sign an agreement with the Barclays and them. Referring to this, Mr Faber wrote: "I can give you my Paddy plan which I have dreamt up."
When it was put to him by counsel for Mr McKillen that this "Paddy plan" would see a new company, controlled by the Barclays and the Qataris, buying up Mr McKillen's debt from Nama and other creditors with a view to squeezing him out of the Maybourne Hotel Group, Mr Faber didn't disagree, saying: "That is possible, yes."
An email sent to Mr Faber by senior Nama executive John Mulcahy last February, however, suggests the 'bad bank' was receptive to the Barclays from an early stage.
". . . prefer if all is kept below radar until we have completed our business together," Mr Mulcahy wrote to Mr Faber's satisfaction, judging by the comments he attached to the email before forwarding it to the Qataris.
"See emails below. Nama wish this deal to remain as private as possible, which suits us. Perhaps this gives us a chance to extend our co-operation with Nama regarding Paddy," Mr Faber wrote.
Mr Faber's relations with Nama were solidified in the months after that, to the point where he felt comfortable enough to text Nama official Paul Hennigan to say it would be "helpful" if the agency were to refuse a request from Coroin, seeking an extension of its loan facilities beyond September 30 last.
Unaware of this text, or indeed of the offer of €790m made by a "company controlled by Sir David and Sir Frederick Barclay" to Nama for the Maybourne debt, the board of Coroin wrote to Mr Hennigan on September 26 last looking for the time frame for the repayment of its loans to be extended.
While Mr Hennigan replied to say Nama's credit committee would consider the request the following day and relay its recommendation to its board for its September 30 meeting, it appears the process of selling the hotels' €790m debt to Maybourne Finance Ltd (MFL) -- a company controlled by the Barclays -- was well under way.
Referring to this, Mr Cunningham pointed to an email Mr Hennigan sent to Coroin's company secretary Carole Walker at 1:03pm on September 27, in which he referred to a phone call he had held with Nama's head of legal, Aideen O'Reilly, and Mr Faber that very morning. In the course of that conversation, it appears Mr Faber had been informed that Nama was actively considering selling its interest in the company's loans to MFL. In the same email, Mr Hennigan informed Ms Walker that Coroin had until 2pm to inform Nama of its views on the sale if it wished to do so.
And while Ms Walker emailed Nama at 1:58pm to request more time to consider the deal, it appears the transaction was all but done.
Commenting on this in his witness statement, Mr Cunningham said Mr Hennigan had informed MFL director Philip Peters at either 1:06pm or 2:06pm (the recorded time of the email) that he had just told Mr Faber the sale had been completed.
The case continues.
