Saturday 16 December 2017

Casual flick through address book led to McKillen role in hotels deal

Bankers, billionaires, rockers, a prince and an ex-prime minister are caught up in court case reports Shane Hickey in London

AS Derek Quinlan flicked through his contacts to return a missed call to Kyran McLaughlin of Davy Stockbrokers, he came across the phone number of Paddy McKillen and decided to give him a ring over a deal he was organising.

This was no ordinary deal however. It was the middle of April, 2004 and on the table were four of the most prestigious hotels in London -- the Savoy, Claridges, the Berkeley and the Connaught.

The deadline for the sale of the Maybourne Hotel Group was coming close and Mr Quinlan only had a few weeks to finalise a group of investors when he came across the phone number of the Belfast-born businessman.

Although Mr McKillen is said to be hard to get hold of, he picked up the phone quickly and the deal was soon set in motion.

Eight years later and the partnership which bought the hotels lies in tatters.

After a court hearing which lasted two months, High Court Judge David Richards last week retired to go through the thousands of pages of evidence, allegations, claims, counter claims and denials which have made up the case brought by Mr McKillen against the Barclay brothers for control of the hotel group.

This, if we are to believe Mr Quinlan, all started in April, 2004 when he happened upon Mr McKillen's name while flicking through his contacts book and would eventually bring in a bizarre array of characters including a former UK prime minister, international rock stars and a middle-eastern royal family amongst others.

The original group of investors which made up Coroin, the holding company set up to buy Maybourne, was a cross-section of well recognised high profile figures.

With varying different shareholdings, the group was made up of Mr Quinlan, Mr McKillen and his partner Padraig Drayne, John McColgan and Moya Doherty of 'Riverdance', the Manchester-based Green family and a group led by Anglo's Sean FitzPatrick.

Shortly after the group was bought, moves were made to off-load the Savoy, seen to be in a poor state of repair, to Prince Al-Waleed bin Talal of the Saudi royal family who Coroin had outbid for Maybourne in the first place.

When settling the final points of the deal, Mr McKillen's old friend Bono joined them on the prince's yacht in the south of France.

In the years following, the profile of the shareholders changed. At the end of 2004, the FitzPatrick group left and their shares were split between Mr Quinlan and Mr McKillen.

At the same time, other business interests of the two men were taking shape as they both took an investment of the Clarence Hotel along with Bono and the Edge.

Early in 2008, John McColgan and Moya Doherty indicated they wanted to sell their shares, the subsequent deal leaving just four shareholders. Mr Drayne had sold his shares the previous year.

At this stage Mr McKillen and Mr Quinlan held just over 35pc, the Greens at 24pc and Mr McLaughlin at 5.5pc.

Shortly after, all changed as the financial crisis hit and the starting gun for what would eventually turn into the two- month trial in court 26 of the Rolls Building in central London sounded.

Mr Quinlan's finances, so closely associated with the boom in Ireland, went into increasing difficulty in 2008 with further pressure being exerted by the nationalisation of Anglo Irish Bank at the beginning of 2009.

Later that year, the former tax inspector resigned from Quinlan Private and moved his family to Switzerland.

Mr McKillen said he and the other shareholders became increasingly concerned about how these events affected the image of the hotels, being especially wary of pictures of Mr Quinlan in front of Claridges.

Concerns were also raised at the hotel bills which the financier had run up in the hotels which amounted to some £285,000 (€350,000).

Around this period, the Barclay brothers entered the fray. Multi-billionaires, they had come to public prominence with the purchase in 2004 of the Telegraph media group but made every effort to maintain their privacy.

David and Frederick Barclay, who already owned the Ritz, were interested in Coroin, yet attempts to get in contact with Mr McKillen failed. When they eventually met in October 2010, things did not go well.

By Mr McKillen's account, he was ignored by Frederick while the businessman berated a concierge for allowing Mr McKillen into the Ritz without a tie.

Mr Barclay claims they met at the front door and Mr McKillen had arrived with his shirt hanging out, to which he joked that he would not normally be let in. Either way, it was a frosty meeting.

Not so the relationship between Mr Quinlan and the Barclays. By both accounts, they were good friends since they met on Brecqhou, the Channel island the Barclays live on, in 2005.

Soon after, Mr Quinlan sold a property in Chelsea to Frederick Barclay for a single £1 for use as a special needs school. The Barclays did not forget this generosity.

As his finances deteriorated, Mr Quinlan continued to meet the Barclays occasionally. In the summer of 2010, they met regularly at the Cafe de Paris in Monaco for a coffee and cigar, "shooting the breeze" about world affairs.

Soon after, the Barclays came in to help their old friend, first with a loan of £500,000 (€615,000) and then £1m (€1.23m) through his wife Siobhan.

These sums were without strings, says Mr Quinlan, simply friends helping out a friend in need. His legal costs in the current trial are also being covered by the Barclays.

Last year, the Barclays started to make their play for Coroin. First, one of their firms bought up the Green family investment, which Mr McKillen says was "devastating news to me".

He claims Frederick Barclay told him he had no future in the hotel group and the brothers planned on buying up the rest of the shares.

Through a number of transactions, Quinlan's share of Coroin was soon also bought by the Barclays, leaving them with 64pc and Mr McKillen the remainder.

Mr McKillen claims Mr Quinlan is an agent acting for the Barclays, a charge which the financier rigidly denies. Mr McKillen says his pre-emptive right to buy shares from existing shareholders was ignored.

The Barclays claim he would not have had the money to do so. Mr McKillen said he does not have to prove this point.

The case in court 26 has been one of epic proportions, not least in the legal costs ratcheted up every day. Mr McKillen has employed two Queen's counsels, the Barclay brothers and their interests three, including Lord Grabiner -- who is reported to command fees of up to £3,000 (€3,700) an hour.

Public relations firms have been brought in by both sides to try and push their view of the proceedings on the assembled media.

Before the trial began, there were just two pictures of Mr McKillen in the public arena. Now the normally secretive developer has given up his cherished privacy to order to fight for the hotels.

It is expected Judge Richards will be back with a verdict in the case by the end of this month or the beginning of July.

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