For a man who famously cherishes his privacy, today must have been an intensely uncomfortable experience for Paddy McKillen as he took to the witness stand in London’s High Court. Here’s what happened.
Again just to paint the scene. The case is taking place in Court 26 at the Royal Courts of Justice in London. Court 26 is in the New Rolls Building just around the corner from the main courts building which is grand gothic edifice we generally see on TV. It’s a modern building, with an atrium and lots of glass, and Court 26 is modern also, no wooden cladding on the walls, hard-wearing carpet on the floor. The judge is seated on a bench of sorts but everyone else is on the same level save for the witness stand. There’s no press gallery. There are three rows of desks facing the judge, the first occupied by senior counsel, the second by junior counsel and the third by solicitors and behind them are two rows of chairs where everyone else is seated. And at 10.30 this morning there was hardly a seat remaining, with nearly 100 people in the 30 x 50 foot room. The judge Mr Justice David Richards has a gown but no wig and sits a couple of feet above everyone else. To either side of him is a carousel, like a tie rack, in which the many, many, many files in this case are accessible to him. Down on the floor there is a hive of activity even as the case is heard with yellow Post-It notes being passed up from the back to the solicitors to the barristers to the lead barristers, like salmon swimming upstream. The barristers are bewigged and be-gowned, and the lead barristers, judge and witness have microphones.
Today the case started at 10.30am and as billed, the reclusive Paddy McKillen took to the witness box. A diminutive figure just over 5 ft, he was smartly dressed in a dark suit, light blue shirt and dark tie. Silver-white haired and deeply tanned, not mahogany brown like George Hamilton, more the reddish hue that you get on Celtic skin. A man with delicate features, but his amiable disposition was still evident on his face, at least before the real questioning started today. His voice is a softer version of Barry McGuigan’s and in the witness box, after taking the religious oath, he was very focussed and considered in his performance, frequently donning and doffing his reading glasses to examine documents. Paddy didn’t once look over in the direction of Derek Quinlan who was seated some 30 feet away.
After confirming the statement submitted was his, Paddy was given over to cross-examination by Kenneth McClean, barrister for four of the respondent companies, and the cross examination went on from 11am to nearly 4.30pm with a 1-hour break at lunch. There seemed to be four strands to the narrative that Kenneth McClean was trying to create today
(1) That Paddy’s main motivation is his dealings with his shareholding in the Maybourne hotels was to secure secret side deals or “disguised consideration” for his shares. It was suggested that Paddy had worked out a deal with Middle Eastern investors which would pay Paddy GBP 5m (€6m) per annum for 3-5 years and that this was going straight into Paddy’s pocket. It was also suggested Paddy was negotiating a side deal with the Middle Easterners – Qataris in fact – which would see him get a percentage in any uplift in the value of the hotel group based on independent valuations every five years. Paddy denied the former accusation saying that any payment was for project management of the €200m redevelopment of Claridges and the Berkeley hotels, and that Paddy would only receive his expenses and Paddy denied the second deal, saying it never made it as a feasible option. It was further suggested that Paddy supported an investment deal by the Qataris which was worth GBP 875-900m to Maybourne and which would require due diligence at a time when the Barclay brothers were seemingly offering GBP 900m without requiring due diligence and warranties. It was suggested that the Barclay brothers’ deal was superior in value and absence of strings attached, whereas the Qatari deal was potentially worth less and did have strings attached. The implication was that Paddy was supporting the Qatari deal so as to secretly feather his own nest.
(2) That Paddy is inherently shifty. Paddy was asked where he was “domiciled” in 2010, 2011 and 2012 and the answer was “I don’t know” which prompted some guffaws from the respondents’ solicitors and this questioning went on for a minute or two before Paddy’s barrister finally piped up and suggested to the judge the term “domicile” was not defined. Paddy was unable to say where he was tax-registered and explained that he spent his time travelling but he had bases inLos Angeleswith his family,DublinandLondon. The judge intervened and asked Paddy “where is home” and again the response wasn’t straightforward. Several times it was suggested to Paddy that he was lying and when Paddy said at one point the management fee deal with the Qataris was for five years, which was contrary to the three years he had given in evidence, he was asked if that was a “slip of the tongue” and when Paddy said “yes”, he was insolently asked “are you sure” to which he also replied yes. Paddy denied telling lies.
(3) That Paddy withheld information from fellow shareholders in Maybourne, which seems designed to ultimately demonstrate that Paddy’s behaviour is no better or worse than the Barclays whose avowed intention is to take over the hotel group. It was shown that Paddy did not tell other shareholders about the full detail of the deal he had negotiated with the Qataris. When asked if he “kept it secret from the shareholders”, his reply – which garnered more guffaws from the other side – was that “he just didn’t reveal it”
(4) That Paddy did not suffer any damage at all as a result of the closure of the so-called “Data Room” in January 2011 which was set up to provide a one-stop shop of information to potential funders/investors. It seemed to be one of the four strands of Paddy’s petition that the closure of the “Data Room” was at the behest of the Barclays (and Derek Quinlan) and resulted in Paddy not being able to maximise value from his shareholding. But he appeared to concede under cross examination today that there really were no viable investors in Maybourne at the end of January 2011.
Elsewhere Derek Quinlan was there from the start of proceedings today, together with his good wife Siobhan. He sat impassively throughout as the cross-examination took place and although his bull-headed frame was looking over in the direction of Paddy, seated some 30 feet, there were no dagger glares, as he calmly took in what was being said. He left the room nearly every hour for a few minutes – there is no mobile phone reception allowed in the court-room as it interferes with the sound system. A confidentiality order covering payments made by the Barclays to the Quinlans has been continued, and will continue until lifted.
The gossip: Paddy doesn’t have an email address and communicates with his assistant Ann-Marie Ryan in Dublin via fax. Paddy does do texting but hasn’t tried typing on a computer! Paddy’s 29 year old son, also called Paddy, managed the Captain America restaurants here in Dublin. Besides the Qataris, there was interest from a Malaysian fund, called Wynton, to buy Maybourne for GBP 900-1,000m. I have not come across Wynton before and if it is this group, it looks too small to have been a feasible investor in Maybourne. Although Paddy keep cool throughout, answering many questions after a noticeable pause with “that is correct”, he will be feeling pretty frayed this evening but he could relax with a vigorous aerobics work-out, perhaps kicking his barrister Philip Marshall up the arse for five minutes in pay-back for the delay in intervening in the domicile question.
In respect of NAMA, we learned that Maybourne petitioned NAMA in June 2010 not to take over the GBP 660m of loans which NAMA ultimately did take over anyway – it should be remembered that Paddy McKillen’s success at the Supreme Court in Ireland last year meant that only a portion of his loans remained outside NAMA, other loans which were to the Maybourne group did in fact go into NAMA. NAMA was willing to refinance the GBP 660m of loans which it acquired for two years but only if there was a stable shareholding arrangement in Maybourne which there wasn’t in January 2011 with the Barclays now on the scene having acquired 28% of the group and emerging tensions between Paddy and the Barclays. It seems that NAMA gave up on the notion of refinancing the loans in February 2011, and went into sales mode thereafter.
Paddy is still on the witness stand – actually a dais about a foot off the ground with a desk and a chair – and tomorrow is likely to concentrate on the next strand in the narrative – that Paddy hasn’t a bucket to pee in. A lot of the information around Paddy’s wealth is confidential, at least at present and tomorrow will begin with a closed session where it seems the respondents may ask for more openness in terms of Paddy’s finances and the investors he claims to now have.
Simply Excellent Reporting.
@ NWL Again may I concur with Patrick, great report.
I note Mr. Quinlan is with his current wife. Not the original one. She of course originally bankrolled him when he left the Revenue.
Touché
@Niall, Derek Quinlan’s current wife was his solicitor. He brings his own legal counsel with him!
Feedback from the Barclays legal team was that Paddy McKillen gave a “formidable” performance in court today.
@WSTT, I couldn’t square that comment with the reality yesterday where most questions were met with either “that is correct” or “I can’t recall”. There were very few questions to which Paddy risked more expansive answers though he did get exasperated in the afternoon when it was repeatedly put to him that the management fee of GBP5m per annum that the Qataris were offering was “disguised consideration” and he stated authoritatively that the management fee was to oversee difficult development of Claridges and the Berkeley, that he would be employing people to do the work and that he would merely be taking his expenses. There were about 4-5 sentences in that, and that was the longest reply Paddy gave.
Not “formidable” but he escaped with his skin at the end of the day, which isn’t a bad result when you have 30+ lawyers out for your blood in one room.
Deja vu….elements of this remind me of the time following the Liam Carroll case in what seems like an eternity ago; Justice Kelly’s description of the Byzantine Web certainly comes to mind. I hope you have the time to keep this up nwl; brilliant! Comments on the imagined arse-kicking of PMK’s barrister: priceless!
Not being in attendance, I rely on rumours and of course the more balanced and excellent reporting from Namawinelake.
So, NWL might like to confirm the rumour that Paddy delivered an Exocet that put a hole below the waterline in one of the Barclay brothers’ main arguments viz. that Paddy has not got the cash. Apparently, Paddy told the court this morning that he has the money (from his Quatari backers) and can buy the shareholdings of both the Barclays and Derek Quinlan.
If true, that’s one leg of the opposing team’s argument gone.
@WSTT/Sam, today’s proceedings were very much stop/start with hearing in camera on issues over the confidentiality of the statement of means submitted by Paddy. That statement is subject to a confidentiality order.
On Day 1, Paddy’s lead barrister Philip Marshall claimed that Paddy had now got a 100% certain source of funding. Given the obvious interest by the Qataris – who vehicle is called Al Mirqab – in January/February 2011 with an offer of cGBP 900m, and the decent subsequent performance of the Maybourne group throughout last year (2010 accounts referred to here, but it is stated that the group was trading “strongly” in 2011)
http://www.independent.ie/business/irish/mckillen-rues-rocketing-maybourne-hotels-profit-2913897.html
It would not be surprising for the Qataris to be still interested and to possibly have enhanced their offer. The offer last year was however subject to due diligence and warranties whereas the Barclays’ offer wasn’t.
It is true that part of the focus is alternative investors, but it seems more particularly focussed on Paddy’s own wealth, which has been a source of some speculation. In 2009 the Sunday Times Richlist estimated his wealth at the equivalent of €75m.
I was told by two separate sources there today that it was discussed in open court and it is not subject to a confidentiality order. The two sources do not even know each other and yet they gave the same information. Expect to read about very soon in media reports. If Paddy has formed a binding partnership with the Qataris then his finances are not an issue.
@Sam, it was discussed in open court by reference to the Qataris. Paddy McKillen’s personal wealth, a statement of which was provided under extraordinary conditions to the Barclays’ side, but only accessible by their legal representatives, remains an issue.
It is claimed that the Qataris are willing to make a bid and have the readies to do so. But questions remain over Paddy’s own wealth and whether or not the Qatari offer contains any “disguised consideration” for Paddy’s private benefit, something which Paddy strenuously denies.
@wsht I heard that rumour also. Paddy has a binding agreement with the Qataris and the judge announced it a short while ago. NWL were you there? Is this correct? If so it is great news for Paddy. He has the money and he just needs the opportunity to buy the shares.
I have just heard it from another source and the rumour seems to be correct. Paddy has the money and has formed a partnership with Al Mirqab.
Very engaging account.
NWL, I didn’t realise you’re a reporter.
An interesting and well written update from Ronald Quinlan in the Sunday Independent.
http://www.independent.ie/opinion/analysis/ronald-quinlan-allegations-of-secret-deals-add-to-intrigue-3067574.html
I get no satisfaction from the fact that the usual “Paddy factor” is recognised and even named as the “Paddy plan” here. Whether it refers to Paddy McKillen himself or the Oirish in general is a moot point. It just shows the distain held for the Irish interests in the “sale of the century” of Irish assets in London. (I will write more on NAMA’s performance on disposals here at a later date)
What is also worthy of note is the collusion between NAMA and the Barclays as shown by the following:
“When it was put to him by counsel for Mr McKillen that this “Paddy plan” would see a new company, controlled by the Barclays and the Qataris, buying up Mr McKillen’s debt from Nama and other creditors with a view to squeezing him out of the Maybourne Hotel Group, Mr Faber didn’t disagree, saying: “That is possible, yes.”
An email sent to Mr Faber by senior Nama executive John Mulcahy last February, however, suggests the ‘bad bank’ was receptive to the Barclays from an early stage.
“. . . prefer if all is kept below radar until we have completed our business together,” Mr Mulcahy wrote to Mr Faber’s satisfaction, judging by the comments he attached to the email before forwarding it to the Qataris.”
“See emails below. Nama wish this deal to remain as private as possible, which suits us. Perhaps this gives us a chance to extend our co-operation with Nama regarding Paddy,” Mr Faber wrote.
“Mr Faber’s relations with Nama were solidified in the months after that, to the point where he felt comfortable enough to text Nama official Paul Hennigan to say it would be “helpful” if the agency were to refuse a request from Coroin, seeking an extension of its loan facilities beyond September 30 last.”
So much for the requirement for NAMA to exhibit “candour” (definition: the quality of being open and honest) in its dealings with its borrowers.
Note to NAMA: Get ready to pay the damages.
@WSTT, the case is set to continue this week, and Derek Quinlan and NAMA are expected to take the stand. Hopefully Irish media will ensure someone turns up to take notes. RTE is not closing the London bureau until September so there are a couple that it can send, and given the prominence of NAMA and Derek Quinlan in Irish discourse, hopefully the IT and INM can cobble together some attendance.
The “Paddy plan” appears to be a reference to “Paddy McKillen” rather than a pejorative reference to all of us, but it’s unfortunate both meanings are feasible.
A pity that the Barclays who were “lending” €3m to the Quinlan’s couldn’t spell Derek’s name correctly – he’s “Derrick” in their texts.
My read of the case so far is that Paddy has a good chance of demonstrating that NAMA did not consult as required before selling the loans and given that Paddy now has the Qataris on board, that places NAMA in a really difficult position though it remains unclear what damages Paddy might be entitled to because the Barclays have not foreclosed the loans, and if Paddy wins then presumably the judge can order the loans be sold to Paddy. Should that happen, NAMA might find itself at the wrong end of an action by the Barclays!
In NAMA’s defence though, the case so far seems to show NAMA’s concern all along had been to maximise the value of the loans, and the Barclays were pursuing shares in the company with the virility of men one third their 77 years, though the Barclay juniors were also involved. And every man was for himself and that extends to Paddy also.
The case, as they say, continues.
2 Corinthians 9:6
The Cheerful Giver
The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully[a] will also reap bountifully.
Donating that oul site to the BIllionare bro’s was very charitable of Dereck!