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Ronald Quinlan: 'Upstart' McKillen takes on legal might of billionaire Barclay twins

KNIGHTED by the Queen and honoured by the Pope, the billionaire Barclay brothers are accustomed after a lifetime in business together to getting what they want, and on their terms.

And so it must come as something of a surprise to Sir Frederick and Sir David Barclay to find themselves in the twilight of their years forced to fight an upstart Irishman called Paddy McKillen for the ownership of Claridge's, the Berkeley and the Connaught Hotels -- the three most precious jewels in the Maybourne Hotel Group crown.

There was certainly more than one eyebrow raised in court 26 of the Rolls Building at London's Royal Courts of Justice last Monday morning when Mr McKillen showed up, determined to press his case for Nama's sale of €790m worth of loans associated with the prestigious hotels to the Barclays to be overturned.

Throughout the pre-trial hearings, lawyers for the Barclays and their interests had argued that the Belfast-born businessman didn't have the 'financial muscle' to buy the Maybourne Hotel Group out in its entirety, making his claim that as one of its biggest shareholders he should have been given an opportunity to do so, entirely irrelevant.

Add to that Mr McKillen's renowned aversion to any form of publicity in relation to himself or his business, and the Barclays may well have expected him to throw in the towel long before the first round of this monumental legal battle.

Court 26 was full to overflowing last Tuesday morning when Paddy McKillen, all 5ft 6ins of him, sat into the witness box to be cross-examined by Queen's Counsel for the Barclays, Kenneth MacLean, on the contents of his witness statement.

Smartly suited and sporting a healthy tan courtesy of his frequent travels between business interests in Argentina and the Far East and his luxurious homes in France and California, Mr McKillen did his best to make himself comfortable in his chair as Mr MacLean got to his feet to begin his interrogation.

Flanked by upwards of a dozen barristers arrayed across three benches like a murder of crows, Mr MacLean could also count on the support of numerous individuals in the court's public gallery as he sought to take the Belfast businessman's claims apart.

For while the Barclay brothers themselves weren't in London to observe the long-awaited evisceration of their latest enemy, Sir David Barclay's son, Howard, was there to keep a watching brief.

Elsewhere in the public gallery and seated directly behind his legal team was the man whom Ireland's great and good once held up as their very own King Midas, the former tax inspector turned financier, Derek Quinlan.

Accompanied by his petite redheaded wife Siobhan, Mr Quinlan was, as is his custom, dressed in the manner of a gentleman of significant means.

How significant Mr Quinlan's means really are will be the subject of intense debate as the case progresses thanks to the very serious claims now being made against him by Mr McKillen. For quite apart from the negative publicity he says Mr Quinlan's move to Switzerland in 2009 brought upon the Maybourne Hotel Group are the allegations he makes in relation to the financier's failure to pay the £284,913 (€340,879) bill he ran up entertaining his friends and family at the famous five-star hotels. Also down for consideration will be the small matter of the €500,000 loan the Barclays have already admitted to giving to Mr Quinlan and his family in 2010 when the financier found himself in financial difficulty.

There was no love lost between the two men last week judging by the manner in which they avoided each other both inside and outside the courtroom. It was all very much a long way from the day in 2005 when they had met with Saudi billionaire Prince Al-Waleed Bin Talal on his boat in Cannes and shook hands on a deal to sell him the Savoy Hotel for £230m. So close was their alliance, they celebrated the coup together on the terrace of the Carlton Hotel in Cannes that same afternoon.

Not that Paddy McKillen should feel too aggrieved at the deterioration in his relations with Derek Quinlan. Indeed, the financier's retinue of advisers were none too keen that he come face to face with me either last week. Indeed, I was reliably informed last Wednesday evening that Mr Quinlan was specifically instructed to remain inside the court building until a taxi arrived at the front door as "Ronald Quinlan is outside and might attempt to ask questions".

In terms of his own support in the case, Mr McKillen was backed up in court by his co-director and 'right-hand man', Liam Cunningham. As another of the key witnesses, Mr Cunningham was present throughout Mr McKillen's cross-examination, during which his name came up frequently in relation to the central role he had played in discussions and negotiations relating to the future of the Maybourne Group.

Given the number of times the name of Mr Cunningham -- or 'Canningham' as the Barclays' lawyer pronounced it -- came up, one could easily have concluded that Paddy McKillen was very much hands off when it came to the hotels he now insists he wants to own. But that inference was just one of many made by Mr MacLean as he questioned Mr McKillen over the course of seven hours last Tuesday and Wednesday.

Not that the Belfast man rose to this or the more provocative assertion that he himself had been secretly trying to sell the Maybourne hotels to the Qataris while alleging that Derek Quinlan and the Barclays were conspiring to oust him as a shareholder.

Notwithstanding that particular charge or the accusation that he would personally pocket up to £25m in project management fees for works on Claridge's and the Connaught Hotel to be paid by the Qataris, Mr McKillen remained calm as he slowly and carefully confronted each allegation.

It seemed the more Mr MacLean bellowed, barracked and berated him, the calmer and quieter Paddy McKillen became. Indeed, in the case of one question put to him in relation to a December 2010 board meeting it took the Belfast businessman a full 43 seconds to respond.

While that apparent hesitation may initially have been interpreted as a sign of Mr McKillen's vulnerability, it soon became clear that this detached and ponderous behaviour was being purposely deployed to counter and perhaps even provoke the combative style of Mr MacLean.

Asked, for example, by Mr MacLean to spell out the name of Norman McKibben, the project manager whom he had engaged for the redevelopment of the Connaught Hotel, Mr McKillen did just that, reciting each and every letter of both the first and second names for emphasis: "N-O-R-M-A-N. M-C-K-I-B-B-E-N".

Mr MacLean was not best pleased as he wrote both names down, judging by the curt 'thank you' he delivered through gritted teeth.

The reasons for Mr McKillen's quiet confidence became clearer last Wednesday morning after Mr Justice David Richards ruled that a confidentiality clause that had been applied to his financial affairs be lifted in part and opened up for questioning by lawyers for the Barclays.

Mr Justice Richards told the court how Mr McKillen had signed an agreement with the powerful Qatari investment vehicle, Al Mirqab, on March 16 last. As part of this arrangement, the Qataris have pledged to buy out the Barclays' stake in the Maybourne Hotel Group and enter into a 50:50 partnership with Mr McKillen.

As several jaws dropped in incredulity around the room, the man in the witness box sat impassively, wearing the same poker face he had worn all that morning and the day before.

Judging by the look of barely suppressed anger on his face and the firmness with which he pressed his horsehair wig down on to his head, it was quite apparent that Mr MacLean hadn't reckoned on this potential game changer.

For while the Barclays' legal team had been banging on for weeks that Paddy McKillen didn't have the 'financial muscle' to wrest control of his beloved hotels, it now appeared he had found some friends ready to do the heavy lifting for him.

Adding to their surprise, no doubt, was the fact that Mr McKillen's prospective investment partners had themselves very nearly done a deal with the Barclays last year.

Nor had they counted on the unusual support Mr McKillen enjoys from the Irish taxpayer courtesy of the Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank. The strength of this backing from a bank -- which is itself in wind-down -- became clear last Wednesday as Mr MacLean read out the contents of two text messages sent by IBRC chief executive Mike Aynsley to Mr McKillen on January 27 last in which he sought to reassure him that the State-owned bank would not sell his loans to the Barclay brothers, a position which would have given them extraordinary power over his future within the Maybourne Hotel Group.

"Barclay brothers have now been told that the bank has chosen a path to work consensually with you rather than to deal with them. I understand they are not happy!" Mr Aynsley wrote in his first message. In a follow-up text shortly after, the IBRC chief added: "Please keep that confidential as I can't have board positions like this leaking out!"

Not that the collective reputation of the Irish was helped any by the presence of another Irish developer who was involved in his own legal dispute down the hallway from court 26.

"How are tricks, Tom?" I inquired of Tom 'the bomber' McFeely as he ambled in my direction as the courts broke up for lunch last Wednesday afternoon.

While the bankrupt developer of Priory Hall infamy smiled in acknowledgement as he approached me, that smile gave way to a frown once he remembered who I was and just what I had written about him in this newspaper.

"Isn't it great to see all the concern of the press for Ireland's fiscal condition!" Tom thundered as he marched off down the hall bemoaning the harsh treatment he has received at the hands of the fourth estate.

That morning's headline in The Daily Telegraph -- a newspaper owned incidentally by the Barclay brothers -- appeared to sum up the unpleasantness towards Mr McKillen.

"Irish hotel owner accused of telling lies," it declared, referring to Mr McKillen's evidence the previous day.

In Sir Frederick Barclay's estimation, Paddy McKillen had arguably done much worse than that as far back as October 2010 at their first meeting in the Ritz Hotel.

Recalling their encounter in his witness statement, Mr McKillen said: "I specifically remember that when I arrived for the meeting and asked at reception a concierge brought me into a meeting room with Sir Frederick. The concierge introduced me to Sir Frederick.

"However, he initially ignored me and instead asked the concierge why I had been allowed to enter the hotel without wearing a tie. I thought this was a joke, however Sir Frederick continued to reprimand the concierge.

"Once we sat down he told me that the Ritz had a very strict dress code and that normally people are not allowed to enter without a tie. I felt he intended to cause me embarrassment. It was not a good way to start the meeting."

However badly their meeting started, it didn't get any better when the Irishman informed Sir Frederick he wasn't interested in selling the Maybourne hotels. Notwithstanding that position, the Barclays pressed ahead with their mission to gain control of them with or without his co-operation.

After buying out the shares in the hotels held by the Manchester-based Green family just three months later, Sir Frederick Barclay was once again snippy with Mr McKillen when he phoned him in Monaco to express his unhappiness at the transaction.

Recalling that contact, he said: "His first comment was to the effect of 'and what would Mr McKillen be doing ringing me? I'm sure it's not to find out about the weather in Monaco'.

"He explained the Barclay brothers operate a family business and do not like to enter into partnerships. He made a point of telling me that he and his brother had been knighted by the Queen, had been given an honour by the Pope and that they were major donors to charities."

However dismissive or offensive that might have sounded to the Belfast businessman, he himself admits that he may have made some sharp observations in relation to his compatriot, Derek Quinlan, in the same phone call.

"I may have said something like Mr Quinlan having sat around on his fat ass running up expensive hotel bills while I did the majority of the work in the hotels that had added value to his investment," he conceded.

Given the hands-on approach Mr McKillen has taken in relation to the improvement works at Claridge's, the Berkeley and the Connaught since buying them in 2004 as part of the consortium drawn together by Mr Quinlan, one can understand how he might feel just a little hard done by as the Barclays try to force him out.

For quite apart from the discussions with banks and financiers one would normally expect a company director and major shareholder to be involved in, Mr McKillen seems to have gone through all three hotels with both a magnifying glass and a fine tooth comb looking for ways to improve the exclusive product.

Recalling the lengths he had gone to personally to make the reopening of the Connaught Hotel in December 2007 a success, he said: "A mock-up bedroom was assembled by installing the proposed materials into a sample bedroom about half way through the project.

"I stayed in the bedroom for one night while the hotel was still a building site to test the facilities to ensure the quality and standards were acceptable and gave my report to the consultants the next morning. I also stayed on the site for over 48 hours without sleep on the run-up to the reopening."

At Claridge's, Mr McKillen showed an equal determination to bring forward the hotel frequented in the past by the likes of Winston Churchill, Jacqueline Kennedy Onassis, Edward the Duke of Windsor and famously favoured by the late Queen Mother for her afternoon tea into the 21st Century.

From the introduction of organic food to the removal of the 'old-fashioned' top sheet on all of the hotel's beds, Mr McKillen said his involvement "demanded my attention down to the smallest of details".

As I took tea in the lobby of Claridge's last Thursday morning, that attention to detail was still very much in evidence as several of the hotel's managers quietly consulted with each other on the removal of a barely-visible stain on the art deco carpet, which had been designed by Viscount David Linley at Mr McKillen's request.

Outside the hotel's front entrance, meanwhile, the Irish tricolour still takes pride of place among the flags of the world.

How long it stays there, however, will very much depend on how Paddy McKillen fares against the billionaire Barclay brothers and their newly-found Irish friend, Derek Quinlan, in the coming weeks.

Sunday Independent