McKillen: I've lost this battle but not the war
Businessman breaks silence to Ronald Quinlan after High Court in London dismisses his hotel action against the Barclay brothers
'I never had a plan. I was brought up with the ethos of hard work and keep your head down and hard work. I have to say my father always warned me, 'son, stay out of the press and stay out of the courts'. Unfortunately I've let him down."
That's what Belfast-born businessman Paddy McKillen had to say of his life so far when he broke his near legendary silence to speak to the Sunday Independent yesterday in the aftermath of seeing his legal action against the billionaire Barclay brothers dismissed by the High Court in London.
Central to Mr McKillen's claim was that he had suffered unlawful or unfair treatment from the brothers, Sir Frederick and Sir David Barclay, in the battle to control the iconic Claridge's, Connaught and Berkeley hotels.
But while the Irishman's case fell down on that point, he said he is heartened by the court's confirmation that the pre-emption rights enshrined in the shareholders' document can and will help him to win the overall and ongoing war for control of the three most precious jewels in the Maybourne Hotel Group crown.
Asked if the Irish flag is still flying above the door of Claridge's Hotel following the dismissal by Mr Justice David Richards of his claim last Friday, Mr McKillen said: "Absolutely, and it will be there for a long time yet.
"The main issue of this claim was to clarify pre-emption. The Barclay brothers claimed they had 64 per cent of the company and they effectively claimed that they could bypass pre-emption to get Derek Quinlan's shares and we basically argued the point that this was a very important part of the shareholders' agreement.
"We are absolutely delighted that the judge confirmed that. It is rock solid and it is sacrosanct. It's enshrined in the shareholders' document and it makes it clear that Derek Quinlan cannot sell or transfer his shares. Under pre-emption I have to be offered those shares."
Asked if he now regretted having joined with Mr Quinlan and other investors in 2004 to buy the famous London hotels, given the role the former high-flying financier had now come to play both as an ally and as a key witness for the Barclay brothers in the recent court proceedings, Mr McKillen said: "I never look back on a deal. I look forward.
"What has happened has happened. My aim going forward is to protect the assets and the staff, protect our guests and to protect my shareholding. Let's move forward. My aim is to get my just allocation. If the Barclay brothers don't think I have the resources, then test me out."
Asked to comment on the statement released on his behalf last Friday evening, in which Derek Quinlan's financial condition was called into serious question, he said: "There's no doubt, he has multiple judgments against him.
"He's insolvent and there's several actions being taken against him presently and it's a given that his situation will worsen and that some of those judgments will be taken to a stage where pre-emption will be triggered.
"It's a given that his shares will come on the market and I will be willing, ready and able to buy my entitlement to [an additional] 20 per cent."
Also willing, ready and more than able to assist him in his battle for control of the Maybourne hotels, according to Mr McKillen, are the Qatari royal family.
On this, he said: "The Qatari royal family have signed a binding document with me on a 50:50 basis to go forward with me on the management of the [hotel] projects, which I have worked hard to get full planning for the Berkeley and Claridge's to do what we did with the Connaught, which is one of the finest hotels in the world.
"The Qataris are fully supportive and are very anxious to move on with the plan. They are 100 per cent supportive of me and my endeavours to get control of the hotels."
Asked if he regretted having taken his case against the Barclays in view of the necessity for him to sacrifice his legendary personal privacy and open up his financial affairs to wider public scrutiny, Mr McKillen said: "Yes. I'm very upset that the court spent five weeks delving into my private affairs.
"But it was irrelevant as the shares weren't offered. But I was prepared to spend 31 hours in the [witness] box going through that terrible cross-examination because I'm passionate about the hotels. I think that's clear to be seen."
He said it also hurt him to see the names of close friends including U2 lead singer Bono and former British prime minister Tony Blair being dragged before the court for its consumption.
"It was very hurtful but that was, I believe, a tactic to force me to back off. It was a tactic to embarrass and to force me to back off, but all my friends mentioned were 100 per cent supportive. They knew it was done purely to embarrass me and to force me to back off the case," he said.
Notwithstanding what he believes to have been a strategy by the Barclays to get him to back down, Mr McKillen insisted he would do it all over again.
"If I was asked to do it again I would do it again. It's a natural instinct to protect and fight for your rights. That's the way I was brought up. I work hard and protect my rights and I protect my friends and family.
"As far as I was concerned, I spent 10 years on these hotels. I intend to be there in the long term. I never got in there to get out in the short term. It was always long term investment.
"The Barclays' interest is to get in and out 'vulture style', sell the asset and make a profit," he said.
Responding to that particular allegation last night, a spokesman for the Barclay brothers insisted that their "record as long-term investors and as proprietors of the Ritz speaks for itself".
The property tycoon has also been stung by accusations levelled against him during the London case that he is either a tax exile or being subsidised by the Irish taxpayer through a 'cosy' relationship with the former Anglo Irish Bank.
Addressing those issues, he said: "My business is spread over several countries so I do spend time looking after that.
"However, a large part of our business is still based in Ireland where we employ over 3,000 people. We created 500 new jobs last year alone. We pay millions in taxes in Ireland each year.
"I personally pay several million euro in income tax in Ireland every year. In relation to the IBRC, I have never missed an interest payment. We saved perhaps €300m of taxpayers' money by preventing the transfer of our loans from the IBRC to Nama.
"The discount on those loans would have been over €300m. We paid multimillion euro amounts in debt reduction last year. Our relationship with the IBRC is no different to any major client who is paying his own way. What more is a citizen expected to do? We employ people. We don't suck money from the system. We pay our taxes."
Famously, Mr McKillen hasn't invested in Irish property since 1998 on the basis of his view that values had already begun to spiral out of control then.
Asked for his thoughts on Irish property values now, he said: "I have to be honest. I think Nama is continuing to depress property values.
"I think in some areas, it's probably bottomed out. Generally though, it still has a long way to go. Ireland, with Nama, has taken a bigger hit than most countries. Iceland didn't have a toxic loans agency and it's back producing jobs. It's back on track."
Returning to the most pressing item on his agenda now, that of the future of Claridge's, the Berkeley and Connaught hotels and his role in that, Mr McKillen said: "We will work on the hotels in a gentlemanly and businesslike fashion.
"I'm personally continuing to refurbish the hotels. I'm very much in touch with the hotels.
"As far as I'm concerned we will continue to run the hotels as they have been running.
"It's ironic that they are producing record figures this year. They are really trading their socks off.
"This is why the Barclay brothers want them."