Bertie Ahern: The Man Who Blew the Boom: Power & Money (25 page)

If you asked him four or five hard questions, or a question that had four or five parts, he would pick up the part of the question that he could most use, and waffle. Pat Rabbitte tried very hard to question him forensically, and at times he succeeded, but other times Pat Rabbitte just ended up in a rage. I found it, when trying to question him about tax stuff or about the economy, Bertie’s first tactic would be to agree with you. And agree with you extensively, worry about it, empathise about it, and by the time he’d finished with that, sure [there was no time left].

Miriam Lord, in her Dáil sketches, noted Ahern’s delivery of answers and speeches that were lists of statistics, and how, when unquestionable Government failures were being discussed, Ahern might chew on his fist and then express sympathy with the views of the Government critic and bafflement as to how those who were in charge could be so inept.

Getting the public to associate the economic success a country is experiencing with your government, and with you yourself, is far from being an inconsiderable achievement for a politician, and it is one that is recognised by Ahern’s political opponents. ‘He had marvellous insights,’ said Rabbitte.

Bertie had a great capacity to see around corners. He must have had some very good people behind him too, because he captured the
zeitgeist
of the times very well. That period from 1994 to 2000 was a period of tremendous achievement and hope for this country. It is not a partisan point to make to say that when the rainbow Government handed over it was generally regarded as a good government and a fair government, and Bertie didn’t much alter that when he took over, it seemed, initially. He was going to maintain an equilibrium, and the extraordinary growth continued right through to the wobble in 2001, and he did manage virtually to obliterate the role of the previous Government, and to have ascribed to himself the extraordinary economic expansion that continued, and to have attributed to Fianna Fáil the period of the boom. People believed that on the high street, associated it with him, and unlike Brian Cowen [his successor as Taoiseach] he was always positive, upbeat, optimistic. It coincided with the Northern Ireland settlement. That added a great deal of lustre to Bertie. He became a statesman. His skills were very suited to that.

Ahern was far from being the type of public representative who suddenly begins appearing on people’s doorsteps once an election has been called. A Friday evening knock on the door on a winter’s night, with election day years away, was not at all an unusual event, even when Ahern was Taoiseach. One Friday evening he knocked on this writer’s door, looking particularly well dressed. The next day’s newspapers featured photographs of him attending a meeting of
EU
leaders in Bonn.

As well as recognising the importance of canvassing in winning votes, Ahern appeared to like it and to draw encouragement and energy from it. Once in the Taoiseach’s office he transferred his practice in Dublin Central to the national stage. For the entire period of his first Government he devoted all the Thursdays and Fridays he could to canvassing, subjecting himself to schedules that would exhaust a younger man.

Opposition is always a difficult task, but in the late 1990s the circumstances confronting Fine Gael and the Labour Party were particularly challenging. Pat Rabbitte cites the halving of the capital gains tax rate as an example of the difficulties his party faced. The Labour Party opposed the cut, arguing that it was an inequitable measure and one that meant that labour was being taxed at a much higher rate than dealing in assets. However, a result of the cut was that capital gains tax receipts to the exchequer shot up. When the Labour Party complained, Ahern and McCreevy would cite the improved exchequer figures for the tax, trumping the equity issue with the size of the figures. For Rabbitte,

it was perfectly logical that the yield would shoot up, because there was so much pent-up demand in a growing economy and so many guys prepared to cash in their chips. So there was an initial flood of money. And, you know, it made it difficult.

Attacking the cut should have been an easy one for the Labour Party, but, ‘confronted with the reality of dollops of cash coming in,’ the criticism failed to find traction.

For Rabbitte the cut in the tax was the beginning of the property boom. ‘That flood of money, and the property speculation that would henceforward only be taxed at the lower rate—that was the beginning of the property, speculative boom that took off.’ Ruairí Quinn agreed. He believed that the 40 per cent rate may have been too high and contributed to a building up of capital that people did not want to release. The sudden halving of the tax, however, ‘just triggered an avalanche of cash into the economy.’ The problem for the opposition was that—even though, for a country dependent on exports, a sharp rise in the cost of housing is a negative development—this wasn’t how it felt to the general public. Most, even if they were still on very modest salaries, were dazzled by the increase in value of their homes.

The partnership agreements also created a difficulty for the Labour Party. Sometimes when Rabbitte adopted positions in the Dáil concerning the Government’s tax cuts, he found himself at odds with positions taken up by the unions. On occasion he was contacted by trade union leaders, who complained that his party was embarrassing them in front of their members. On balance, according to Rabbitte, social partnership was good for the trade union movement but bad for the Labour Party. Trade union leaders’ speeches included repeated attacks on the ‘
PD
wing’ of the Ahern Government and calls for that wing to be driven out, Rabbitte said. ‘They never attacked Bertie.’

For Richard Bruton the problem for the opposition was that it had to criticise the Government’s economic policies when those same policies were putting more money into people’s pockets and supplying increased services to members of the public. ‘Nobody likes a Jeremiah.’ In his opinion, the cut in capital gains tax was not the core cause of the later property bubble, though it was a contributory factor. The real error was the unleashing of public expenditure in the latter stage of Ahern’s first Government.

McCreevy went in the face of the election for having a grossly irresponsible growth in public expenditure. I remember looking at 24 months, and he had increased spending by about 45 per cent. The notion that you could increase public spending by 45 per cent over 24 months was just incredible, but that’s what he did. There seemed to have been a sudden decision, ‘It’s party time, the election is coming up.’ He went for this homespun notion: when we have money we spend it. I think it was then the cost base started to go seriously awry. This massive increase in public expenditure, into the teeth of a strong economy already close to capacity, definitely set the environment for [public-sector] benchmarking which followed quickly on its tail. You had a huge increase in the pay bill. It put pressure on the construction sector. It started the whole rot.

One of the threats that Ahern faced during his first term of office was the possibility that his public image would be dented by what was emerging from the Dublin Castle tribunals, both in his association with the past actions of people such as Haughey and, more directly, because of his own activities. When he appeared before the Moriarty Tribunal to give evidence in July 1999 and June 2000, the intensity with which he fielded questions from tribunal counsel John Coughlan
SC
was striking. There was an atmosphere of tension in the room that few other witnesses who appeared there over the years managed to create and that bordered on being menacing.

The tribunal’s inquiries into Haughey disclosed that he had made personal use of the Fianna Fáil party leader’s account. Not only had he lodged to the account money given to him by others but he had also dipped into funds that had been raised to pay for medical treatment in the United States for his long-time friend and political colleague Brian Lenihan and which had been lodged to the account. Withdrawals were by way of cheque. Two signatures were needed, and the main signatory after Haughey was Ahern.

Ahern had become a signatory at the time of his being appointed party chief whip. It was party practice for the chief whip to be assigned that role, though when Ahern moved on from that position he remained a signatory. Haughey had decided that he should do so. Ray MacSharry was also a signatory but was rarely involved. The account was first drawn to the attention of the tribunal by a cheque for £25,000 that was lodged to Guinness and Mahon Bank, the bank where Des Traynor ran his Ansbacher deposits operation. The cheque was dated 16 June 1989, the day after the general election of that year, and it was signed by Ahern and Haughey. The tribunal’s inquiry into the use of the account proved labyrinthine, with no fewer than forty-five witnesses being called, some on more than one occasion.

A suggestion that Haughey had improperly used the party leader’s account arose in 1997 after the McCracken Tribunal had reported and as the Oireachtas was in the process of establishing its successor. Spring raised the matter in the Dáil, but Ahern assured the chamber that the account had not been misused.

I am satisfied, having spoken to the person who administered the account, that it was used for
bona fide
party purposes, that the cheques were prepared by that person and countersigned by another senior party member. There was no surplus and no misappropriation. The account, as far as her excellent recollection goes, was normally short, not the other way around. I have spoken to her at some length.

It was an extraordinary and misleading statement. The amount that went through the account in the period 1984–92 was more than £500,000 above what the exchequer gave the party. Ahern himself was the ‘senior party member’ who countersigned the cheques, and, as his subsequent evidence was to show, his performance of that function provided no safeguard against misuse of the account. The person who administered the account was Eileen Foy, Haughey’s private secretary, who had previously worked for Jack Lynch when he was Taoiseach. Ahern obviously knew her well. During her evidence to the tribunal she frequently couldn’t remember the most basic facts. When she was asked what she had said to Ahern that could have prompted him to give his reassurance to the Dáil, she said she couldn’t remember.

Ahern would sign the cheques first, and then Haughey. Foy’s evidence was that it was frequently difficult to contact Ahern once he became a minister. Ahern was sometimes referred to by the staff as the ‘Pimpernel’, so difficult was he to get hold of. When Ahern appeared at the tribunal he had to admit that, on occasion, for reasons of ‘administrative convenience’, he would sign a number of blank cheques so that Foy would have them available. In fact it emerged that he sometimes sat down and signed a whole book of blank cheques.

Miriam Lord was among the large number of political reporters who came from Leinster House to Dublin Castle in July 1999 to cover Ahern’s appearance there.

His evidence was the evidence of a man who was extremely naïve and trusting and really a bit thick given the position he was in, and even at that stage everyone knew that he was anything but naïve and trusting and thick. But that was passed over and the legend grew.

Ahern’s second visit to the tribunal, in June 2000, was to give evidence about a large payment given to Haughey during the 1989 election campaign. His involvement in this matter was not as straightforward as signing blank cheques which were then used by Haughey to, among other matters, buy tailored shirts from the Charvet shop in Paris, or pay for expensive lunches and dinners in the Coq Hardi restaurant in Ballsbridge. As a consequence it didn’t register as deeply with the general public.

The tribunal was told that on the morning of the 1989 poll the wealthy businessman and property developer Mark Kavanagh left his home in Co. Wicklow and travelled across Dublin to Haughey’s home in Kinsealy, where he handed over £100,000. The payment comprised a cheque for £25,000, made out to Fianna Fáil, and three bank drafts made out to cash. At the time, Kavanagh was part of a consortium, the Custom House Docks Development Company Ltd, that had won the contract to develop the Dublin docks site where the International Financial Services Centre is now. The money given to Haughey came from this company, with the consent of its directors. Kavanagh told the tribunal that he and his business colleagues wanted Fianna Fáil returned to power because of their interest in the docks project.

Haughey brought the £25,000 cheque to Fianna Fáil head office and handed it over. During that election he had made an unprecedented request of the party’s financial controller, Seán Fleming, later a
TD
for Laois-Offaly. He asked that some of the receipts for sums he had delivered to the party be sent to him (Haughey) rather than to the donor. Furthermore, he asked that some of them be made out to ‘anonymous’. In all, nineteen receipts were sent to Haughey during that election campaign, including a receipt for the cheque for £25,000 and another receipt for £100,000 received from a donor whom the tribunal did not identify. The receipt for the £25,000 cheque was made out to ‘anonymous’ and sent to Haughey’s office; the three £25,000 drafts made out to cash Haughey apparently gave to his bagman, Des Traynor, as they ended up being lodged to Guinness and Mahon Bank.

In 1996, when Ahern was party leader and leader of the opposition, Fianna Fáil member Eoin Ryan Senior approached Kavanagh and requested a donation to Fianna Fáil. Kavanagh indicated that he was disposed towards giving money but was annoyed that he had not received a receipt for his contribution in 1989. Ryan’s evidence was that he did not recall Kavanagh naming an amount but that he was clear that the donation for which he had not received any receipt had been a substantial one. Ryan told Kavanagh he would speak to Ahern about it.

Ryan did so, and Ahern said he would look into it. Ahern contacted Fleming. The £25,000 cheque Haughey had given him in 1989 had come from the Custom House Docks Development Company Ltd, so Fleming had known it was from Kavanagh, even though, as instructed, he had sent a receipt made out to ‘anonymous’ to Haughey’s office. According to Fleming, he consulted his records and told Ahern that the party had received £25,000 from Kavanagh in 1989 and that the receipt had been sent to Haughey. Ahern told the tribunal that he could not recall the detail of what he had been told in 1996, but he accepted Fleming’s evidence.