Haughey's lunch date with bin Laden's brother-in-law
THE fabulously wealthy Saudi Arabian banker who bought 11 Irish passports for friends and family a decade ago is the brother-in-law of Osama bin Laden and has been accused of being a facilitator for those who provided funds to fuel bin Laden's terror network.
Sheikh Khalid bin Mahfouz, who sensationally purchased the Irish passports in 1990 in a secret deal handled personally by the then Taoiseach, Charles Haughey, has spent time under house arrest in a military hospital in the Saudi city of Taif, apparently as punishment for alleged involvement in channelling millions of dollars to bin Laden, chief suspect for the terrorist attacks on the World Trade Centre and the Pentagon.
Sheikh Mahfouz's son, Abdul Rahman bin Mahfouz, who was also one of those who obtained Irish citizenship in the 1990 transaction, has been a subject of controversy too. He was a member of the board of a charity called Blessed Relief, based in Sudan. Members of this charity are suspected of having links with an assassination attempt in 1995 on the Egyptian President Hosni Mubarak.
Sheikh Mahfouz invested in a number of important Irish ventures as part of the £20m investment commitment he made when he got the passports. He gave £3m to fund development projects at Kerry Airport. He is understood to have handed over a further £3m to help pay for projects associated with companies owned by the Millstreet entrepreneur Noel C Duggan.
Mahfouz, once said by Forbes magazine, the international business journal, to have a personal fortune of £2.5bn (positioning him as the 125th wealthiest man in the world), was the owner of National Commerce Bank (NCB) of Saudi Arabia, once the world's largest privately-owned bank. The company was also banker to the Saudi royal family. He is married to a sister of Osama bin Laden.
Senior US intelligence officials are said to believe that Sheikh Mahfouz was part of a series of transactions during the late Nineties in which a number of top Saudi business executives ordered the National Commercial Bank to transfer personal funds, along with $3m diverted from a Saudi pension fund, to New York and London banks. The money was deposited into the accounts of Islamic charities, including Blessed Relief and another suspected front for bin Laden, Islamic Relief, according to the report.
The intelligence sources said the businessmen, who were then worth more than $5bn, were paying bin Laden "protection money" to stave off attacks on their businesses in Saudi Arabia. The money transfers were discovered after the Saudi royal family ordered an audit of NCB and Khalid bin Mahfouz.
Mahfouz was forced into retirement from his banking activities. Reports from London last week suggested he was still in a military hospital.
Khalid bin Mahfouz first came to public notice in Ireland in the summer of 1994 when the Sunday Independent revealed exclusively that he and an associate had received 11 passports for themselves and their family members in 1990. The circumstances in which the Saudi banker received the passports, in the aftermath of the Kuwaiti invasion, became the subject of considerable public and political debate.
Sheikh Mahfouz was subsequently indicted by a grand jury in New York in relation to defrauding investors of the failed banking giant BCCI. This development raised even more eyebrows, when eventually, in 1994, it was disclosed that he had been granted Irish naturalisation papers.
Documents with the Moriarty tribunal suggested that the Mahfouz passports got a special priority in government circles when their issue came up for decision.
The documents were presented with considerable formality. A special lunch was arranged in the Shelbourne hotel in Dublin, which the then Taoiseach, Charles Haughey, personally attended for the purpose of handing over the documents to the Saudi businessmen.
The paperwork had been handled by the then Minister for Justice, Ray Burke. Burke's involvement later became a serious political liability for him. It emerged that he signed the certificates approving the issuing of the 11 passports on a Saturday and that the requirement of an oath of fidelity was waived. His involvement in the affair was one of the matters which created the pressure that led to his resignation.
Much debate has followed on the nature of the control that Mr Haughey exercised on the passports-for-investment scheme. He was said, even by political rivals, to put prospective investors through the wringer. But there was no requirement under the original scheme to say how many Irish jobs would be created in exchange for the passports.
However, the Mahfouz money that was paid for the passports has been fairly well tracked down. A "substantial" investment (believed to have been as much as £4m) went into a company called Leisure Holdings which was chaired by the head of the Kerry Group, Denis Brosnan, and backed by a number of senior Irish businessmen, including John Magnier and JP McManus.
Ironically, one of the biggest investments made by Leisure Holdings was in the David Lloyd chain of tennis clubs in Britain, hardly in line with the Irish job creation or job maintenance fundamentals of the passport scheme.
Mahfouz money went into Kerry Airport ("a great deal for the airport," Denis Brosnan declared) and also into the local entrepreneurial efforts of Noel C Duggan in Millstreet. However, Mr Duggan hastened to point out that this investment was later bought out.
The Saudi cash also went into Portarlington structural steel firm Butler Engineering, run by the late Pat Butler, a strong supporter of Mr Haughey and Fianna Fáil.
As far as is known, Khalid bin Mahfouz never lived in Ireland as the original passport documents required him to do. He is known to have bought a house in Ireland, however, and listed this as his address when the grant of the naturalisation papers was listed in the Government publication, Iris Oifigiúil.
He and the other passport recipients named Glenmore House, Clonee, Co Meath, as their local residence. The house was the former home of a well-known Irish industrialist, Denis Coakley, who died several years prior to the passports affair.