‘Secret deals’
Lynn has told his trial that the banks were aware he had multiple loans on the same properties and that this was “custom and practice” among bankers in Celtic Tiger Ireland.
He has said he had “secret deals” with several bankers, who gave him permission to use the loan money for his property developments abroad.
Lynn named several witnesses yesterday (23 May) who, he said, were involved in these secret deals, and the prosecution told the jury it would hear rebuttal evidence.
Patrick McGrath SC, prosecuting, took Stephen McCarthy, formerly of Ulster Bank, through some of Lynn's evidence to the court earlier this month.
‘Holding the baby’
In his evidence to the jury, Lynn said McCarthy met him and told him that Ulster Bank would never agree that they allowed these flexible loans, and that it became clear to Lynn that he would be left “holding the baby”.
McCarthy said this conversation “never happened”. He told the court he only met Lynn once in relation to a loan involving 11 residential investment properties, and that this was at the start of the lending process.
McCarthy said he remembered the meeting, which took place in Lynn's office, because, at the end of the meeting, Lynn asked if his solicitor firm could provide the undertaking for the properties in question as part of the security.
‘Totally inaccurate’
McCarthy said the suggestion that Ulster Bank allowed the loan money to be used for developments abroad was “totally inaccurate”, and that the money was lent to Lynn “for the purpose of those 11 residential investment properties – and only those 11 residential properties”.
‘Ludicrous’
“To suggest the bank and I were fully aware of the alternative use of the finance other than the 11 residential investment properties is ludicrous, and could not make sense from a lending perspective,” McCarthy told the court.
“...Mr Lynn knew the system. He knew the banks were relying on the solicitor's undertaking. The banks were acting in good faith with the solicitor's undertaking.”
McCarthy said he never received cash or any benefit from Lynn during his dealings with him, and that he never heard of an ‘undertaking-only’ mortgage.
Shock
He told the court that when he found out that the bank had been defrauded by Lynn, he “nearly fell off (his) seat in shock”.
Under cross-examination from Paul Comiskey-O'Keeffe BL, defending, McCarthy agreed that he first gave a statement to gardaí in 2016, nearly ten years after the allegations came to light.
“I was asked to make a statement at that time,” he said.
McCarthy said that there was an internal investigation within Ulster Bank afterwards, but he was not sure what investigation documents were produced by the bank.
“They would have been handed over to the legal department,” he said.
Going through Lynn's loan documentation with Ulster Bank, defence counsel put it to McCarthy that there was a lot of detail in relation to Lynn's property developments abroad. McCarthy said it was normal practice to look at all a borrower's activity.
‘Categorically false’
Ciaran Farrell, former Blanchardstown, Dublin branch manager with Irish Life and Permanent (now Permanent TSB), also gave evidence yesterday. He told the court an allegation by Lynn that he had received money from him was “categorically false”.
“I received no monies whatsoever from Lynn in relation to my dealings with Irish Life and Permanent,” Farrell said.
He added that he had never heard about any “special deals” in relation to loans until the investigating garda said it to him last week. He said that any inference that the loan money was to be used for any other purpose was not correct. “I refute that,” he said.
Farrell commented that if he had been aware there were multiple mortgages already taken out in relation to the loans, “the application wouldn't have got past 'go'.”
“It wouldn't have happened. I wouldn't have entertained it,” he told the court.
Defence counsel put it to Farrell that he was aware that these were undertaking-only mortgages, and he was aware of this through his relationship with Lynn, and conversations with Lynn.
Farrell said he did not accept this at all.
'Flipping for a profit'
The senior counsel also put it to Farrell that he had discussions with Lynn about buying an investment property in Portugal at a 30% discount, with the aim of flipping it for profit.
“This would then amount as a benefit,” Mr Comiskey-O'Keeffe said.
“Okay, that is totally untrue,” Farrell replied. He told the court he had no interest in investing in properties abroad, and only ever owned his family home.
Retired National Irish Bank worker Nicholas Robert Hamilton also gave evidence. He said he had never met Lynn, nor spoken to him.
Lynn has told the court that he met with a Nicholas Patrick Hamilton, an NIB credit committee member, who was aware of the secret loan deal.
Mistaken
Hamilton told the court he had never been a member of the credit committee. When asked by defence counsel if Lynn was lying, Hamilton replied: “I just think he's mistaken.”
Former Bank of Ireland worker Sean Dooley told the court that he left the bank in October 2005. He said at no time was he involved in arranging loans for Mr Lynn, or anyone else, that were to be used for any purpose other than that set out in the agreement.
He agreed with the prosecution’s counsel that he left the bank nearly a year before the Bank of Ireland loan that the jury must consider was taken out.
The trial continues before Judge Martin Nolan and a jury.