ansbacher cayman report appendix 1 & 2

8/14/2019 Ansbacher Cayman Report Appendix 1 & 2

1/763

Appendix I(a) Order of the High Court(b) Order of the High Court(c) Order of the High Court(d) Order of the High Court

of 22 September 1999 of Johnson J.of 8 December 2000 of Finnegan P.of 6 April 2000 of Finnegan P.of 25 May 2001 of Finnegan P.


2/763

Appendix I (a)


3/763

THE HIGHCOURT1999 No J6'3COS

Wednesday the 22nd day of September 1999BEFORE MR JUSTICE JOHNSON' IN TUE MATTER OF THE COMPANIES ACTS 1963 TO. 1990AND IN THE MATTER OF PART II O'F HIE COMPANIES ACTS 1990 ANDSs.8 AN D 17 .AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED(FORMERLY GUINNESS MAHON CAYMAN TRUST LIMITED *ANSBACHER LIMITED AND CAYMAN INTERNATIONAL BANK ANDTRUST COMPANY LIMITED)ONTHE APPLICATION OF

TH E MINISTER FOft ENTERPRISKXttADE AND EMPLOYMENTUpon the application of Counsel for the Applicant made unto the

Court on this day pursuant to Notice of Motion hereinfiled on the 30th day o f July1999

The Honourable Mr Justicc Frederick H Morris the President of dieHigh Couri assigned The Honourable Mr Justice Richard Johnson to hear theapplication

Upon reading the said Notice of Motion the Affidavits of service of .John Lawless Brian Cox Christina Loughlm Ilal McGuckin allfiled n Court onthis day and the documents and exhibits in said Affidavitsreferred to the Affidavito f Gerard Ryan filed in Court on this day the Affidavit of Paul Appleby sworn onThe 26th day of July 1999 the documents and exhibits in said Affidavit referred tothe second Affidavit of Paul Appleby filed in Court on (his day .(seeking inrcr alia


4/763

tl t* i

6.1. THE HIGH COURT* a-ivd exhibits ill said Affidavit referred to and on hearing said Counsel there beii

no appearance oil behalf of the Company in the title hereofTlic Court doth deem good and sufficient" service the scrvicc effecte

*by rhe said Hal McGuekin and referred to in his Affidavit filed in Court 011tin'IT IS ORDERED pursuant to Section 8 of the Companies Act 1990

thai the persons named hereunder be appointed as Inspectors to investigate theoffices of Ansbacher (Cayman) Limited (formerly Guinness Mahon Cayman Tr

Limited Ansbacher Limited and Cayman lnte national Bank and Trust Company

Limated) a) The Honourable Mr Justice Declan CosfeUo*>) Ms Noreen P Maokey Banister-at-LaW

Paul F Rowan Chartered AccountantIT IS ORDERED that the said Inspectors investigate and report to th

Court on the affairs of the Company in the title hereof and in particular to examine and define the nature and extent of the Company's Irish

business from 1971 to dale ie . the business carried out in the State oany other business carried out on behalf oflrish residents whether inthe State or elsewhere

GO to identify as far as possible all of the parties who were either officers(including shadow directors) and agents of the Company clients of theCompany or who otherwise assisted in the canying out of the businessat the relevant time

( 0 to examine whether the Companies Acts 1963-1990 were breached by the Company its officers (including shadow directors) agents or third


5/763

THE HIGH COURTparties at the relevant time and if so to identify the provisions involveand the persons in default in each cane

(d) to examine whether the affairs of the Company Were conducted withintent to defraud its creditors or the creditors of any other person orotherwise for a fraudulent or unlawful purpose arid i f so to identify thestatutory provisions involved and the persons in default in each case . (e) toreporton any related matters .XT IS ORDERED that the Applicant be at liberty to furnish to the sole

chairman ofthe Tribunal of Enquuy (Payments to Mr Charles JFfaughey and MrMichael J Lowry) the exhibits referred to at paragraph 16 ofthe Affidavit of PaulAppleby sworn on the 26th day of July 1999

And IT IS ORDERED thai therestrictionson the disclosure of theexhibits referred ton the said Affidavit of Paul Appleby sworn on the 26th day ofJuly 1999 be continued save those opened and read in open Court on this day

REGISTRARChief State Solicitor GOg&y Whfefc i attfifttSolicitor for the Applicant k

V S^riateacfemt.af

hbli3ais


6/763

' M k j ^ i 0 ( J $ / W THE HIGH COURTThe 22rid day of September 1999

KE:-THE MINISTER FOR ENTERPRISETRADE AND EMPLOYMENT

Nature of D o c m n e n ^ . ^ g g u g ? ^ . ^O R D E R

Entering Fee':-. THREB

P&ges

Soliciton-CHIEF STATE SOLICITORAddress


7/763


8/763

1999 No. 163 COSTHE HIGH COURT

IN T H E M A T T E R O F T H E C O M P A N IE S A C T S 1963 T O 1990A N D I N T H E M A T T E R O F P A R T II O F T H E C O M P A N I E S A C T S 1 99 0AND SS. 8 AND 17A N D I N T H E M A T T E R O F A N S B A C H ER (C A Y M A N ) L I M I T E D ( F O R M E R L YG U I N N E S S M A H O N C A Y M A N T R U S T L I M I T E D )A N S B A C H E R L I M I T E D A N D C A Y M A N I N T E R N A T I O N A L B A N K A N DT R U S T C O M P A N Y L I M I T E DO N T H E A P P L I C A T I O N O FT H E M I N I S T E R F O R E N T E R P R I SE T R A D E A N D E M P L O Y M E N T

Upon the application of Counsel for the Applicant m ade ex-parte un to the Courtthis day and upon reading the affidavit of Paul Appleby filed in Court this day the documentsand exh ibits therein referred to the Order herein dated the 2 2 n d day of September 1999appointing Inspectors to investigate the affairs of Ansbacher (Cayman) Limited (formerlyGuinness Mahon Cayman Trust Limited) Ansbacher Limited and Cayman International Bankand Trust Company Limited as amended by Order dated 5 t h day of October 1999 and onhearing said Counsel

IT IS ORDERED that said Order dated the 22 n d day of September 1999 as" amended be varied by substituting His Honour Judge Sean O'Lcary and Mr Michael Cush,

Senior Cou nsel as Inspectors in place of Th e Honourable Mr Justice Declan Costello, as fromthe date of this Order. ^

t

BEFORE THE PRESIDENT


9/763

P K W A * a s s o c i a t e sOn 15th January 1985 John Furze wrote to Dublin, informing it that some time agoCayman had set up a $200,000 loan for a Cayman entity w hich was to follow theusual "back-to-back" procedure. Unfortunately, the security was neverfolly agreedby Cayman's client and, as a result, Dublin was never advised The loan, which wasmade by Cayman, had since been repaid.Advances w ere made asfollows

1.4.84 $40,0009.4.84 100,0003.5.84 $60,000.

The loans were at 14% per annum, with a 2% differential in the value shared equallybetween Dublin and Cayman. Cheques totalling $327,299.92 were enclosed with theletter of 15th January 1985. There were three cheques, all made payable to Dublin.They were drawn by Maxima Investment Corporation, Florida. Mr. Fernando Primawas the President and Chief Executive of the said Maxima Investment Corporation.On 22nd February 1985 Dublin credited Cayman's account with Guinness Mahon &Co., Ltd. in London with the sum of $325,349.96, representing the balance plusinterest on the backing deposit accountsfor Maxima Investment Corporation. The neteffect of this, it would appear, was that Cayman entered into transactions, usingDublin, without notifying Dublin of thefeet. The three cheques had to be put throughDublin, as they were made payable to Dublin.Dublin made a series of loans to Mr. Fernando Pruna and his wife, Edulia. Themaximum amount outstanding at any one time by them in their own names was$1,068,000. These bans were secured by deposits by Cayman with Dublin.Dublin agreed to advance the sum of U.S.$75,000 to a Mr. Jesus and Maria Barrios.This was secured by a property in Dade County, Florida. A deposit was also b dgedby Cayman with Dublin as security.In August 1985 Dublin appeared, according to correspondence, to have offered tomake available to a Mr. and Mrs. Andreas Pruna the sum of U.S.$70,000, secured ona property in Miami Beach, Fbrida. The Bank has checked the Credit CommitteeMinute Books fo r 1985, the Executive Directors Minute Book for 1985 and cannotfind any reference to any loan to M r. and Mrs. Andreas Pruna. The Bank,furthermore, cannot locate any statement of accountfor such a loan. The Bank doesnot believe that such a loan was made by Dublin.In November 1985 Andreas Pruna wrote to Dublin, saying that he would not be ableto make thefirst nterest payment and that he had serious doubts that he could makethe principal payments when they were due. As a solution, he offered to transfer thedeeds of his property in Fb rida to Dublin in lieu of foreclosure.

)


30/763

In December 1985 Dublin wrote to Mr. and Mrs. Andreas Pruna stating that, in lieu offoreclosure proceedings, they would take in Dublin's name or that of its nomineecompany, the title to the property.In December 198S Dublin arrangedfor he title to the property belonging to Mr. andMrs. Andreas Pruna to be registered in the name of Mars Nominees Limited, which isa wholly-owned subsidiary of Dublin. Subsequently, M r. and Mrs. Pruna tendered aquit claim deed in favour of M an Nominees.I believe that Cayman was using the notepaper of Dublin to conduct business andsuch notepaper was used in relation to Mr. Andreas Pruna.In December 1986 Dublin agreed to advance to Raymond G. Fitzgerald $243,000.This loan was made at the request of Cayman. It replaced a loan of $243,000 made toMr. Fernando Pruna and his wife. The loan was secured by a deposit by Cayman withDublin and a mortgage over a property in Florida.In September 1987 Dublin wrote to an Attorney in Florida, instructing him to draft awarranty deed, wherein Man Nominees Limited conveyed the property surrender byAndreas Pruna to Maria Isabella Moore de Pruna, the wife of Andreas Pruna.The warranty deed was duly signed and sealed by an officer of M an NomineesLimited on 25th September 1987 in favour of Mrs. Andreas Pruna. It was thenreturned to the Attorney or to Andreas Pruna. It is not certain who obtained same.In September 1987 John Furze wrote to Padraig Collery regarding Dublin's advancingU.S.$2.1 million to Northside Management & Development Company. This companywas involved in a property development in Atlanta, Georgia. Dublin would receivecorporate guaranteesfrom Maxima Investment Corporation, of which Mr. FernandoPruna was President, as well as Barrows Holding Limited (a Channel Islandscompany). Dublin would also receive a depositfrom Cayman of U.S. $2.1 million,which deposit Cayman would hypothecate infavour of Dublin.On 1st October 1987 Cayman wrote to Dublin, informing it that they had advancedU.S.$2.1 million, held m escrow, pending the closing on 2nd October of thetransaction in Atlanta, Georgia.On 1st October 1987 Dublin agreed to advance to Maxima Investment Corporation asum of U.S.S2.1 million. A deposit was placed by Cayman with Dublin.On 4th February 1988 Dublin wrote to Cayman, saying that there were no paymentssince 28th July 1987 on the Raymond Fitzgerald ban . On 10th February 1988Cayman wrote to Dublin. They stated that they had received no responsefrom Mr.Raymond Fitzgerald and suggested that Dublin would write the loan off against thedeposit at a value dated 3rd February 1988.On 3rd June 1988 the U.S.$700,000, being the balance of the loan to Mr. and Mrs.Fernando Pruna was discharged.


31/763

On 9th September 1988 a firm of lawyers, Wallace, Engels, Perteaoy, Martin &Solowsky, baaed in Miami, Florida, wrote to Cayman. They informed Cayman thatGrand Jury Subpoenas had been served on theirfirm regarding Cay&an, Dublin andMars Nominees Limited The Assistant U.S. District Attorney overseeing theinvestigation stated that he was interested in obtaining documents from the threecompanies and that he might issue additional subpoenas to the companies themselvesfor the production of the documents. The Assistant U.S. Attorney had apparently,received information that Mars Nominees Limited was a subsidiary of Cayman andthat it held property in Dade County, Florida. Mr. W allace of the firm was theRegistered Agent for Cayman and Dublin and therefore the service of the subpoenason him was valid as against Cayman and Dublin.The Subpoenas sought -1. All documents and records pertaining to loans made to Fernando Pruna,Andreas Pruna and their wives/or other family members, including allcorrespondence related to such bans .2. All documents and records pertaining to bans made to any corporation, otherbusiness en tity to which Fernando Pruna o r Andreas Pruna was an officer,director or major stockholder3. All docum ents, correspondence and other records pertaining to any transfer ofproperty, either real or personal, between Fernando Pruna or Andreas Pruna andeither Guinness Mahon Cayman Trust Limited Dublin or Mars NomineesLimited4. All documents, correspondence and records pertaining to Man NomineesLimited5. All records pertaining to any account in name or names of Fernando Pruna,Eudalia Pruna, Andreas Pruna, Maria Isabella (nee Moore) Pruna or any personor entities acting as nomineesfor any of those named persons, including withoutlimitation, (a) accounts statements, (b) certificates of deposit and (c) depositbooks, box records.6. Allfinancial statements prepared by or on behalf of Fernando Pruna, AndreasPruna or any corporation or other business entity in which Fernando Pruna orAndreas Pruna is an officer, director or major stockholder.The period covered by the subpoenas was 1st January 1981 to 1st September 1988.The subpoenas were to be complied with by 23rd September 1988.On 20th September 1988 Mr. Wallace wrote to the Assistant United States Attorney,raising issues as to jurisdiction and whether or not the subpoenas were binding onCayman, Dublin or M an Nominees LimitedOn 22nd September 1988 Cayman changed its name from Guinness Mahon CaymanTrust Limited to Ansbacher Limited and wrote to the late Desmond Traynor. Mr.Furze, who was the author of the letter, stated that the Pruna brothers had been clients


32/763

for a number'of years. Although not mentioned in the correspondence, Cayman wasfairly certain that the subject of the Grand Jury investigation was narcotics. This wasbecause the subpoenas were served by a U.S. Federal Customs Agent as well as localpolice information that the Prunas involvement was with illegal substances.Mr. Furze stated that Dublin were involved, since at one time Cayman maintained aback-to-back situation with Fernando Pruna and his wife, which has been beencleared by the sale of the property in Miami Mars Nominees was involved by virtueof the fact that Andreas Pruna, registered the Florida property in that n a ^ . a fact notknown by Mr. Furze. Although Mars Nominees executed a transfer over the propertya year ago, apparently the documentation was never registered. Mr. Furze'sunderstanding was that Andreas Pruna was in custody in a Federal penitentiary andthat the United States Government was pursuing extradition proceedings againstFernando Pruna, who was in Argentina. Mr. Furze was copying the letter to PadraigCollery to put him on notice.On 22nd September 1988 Cayman wrote to Padraig Collery, enclosing a copy of aletter to Desmond Traynor. He said that he had discussed the situation with DesTraynor, as a result of which they were of the view thai, if Padraig Collery wereapproached by any person or entity in relation to the ownership of the property byMars Nominees and the intended sale of same, Mr. Collery should merely indicatethat he had received no instructionsfrom his client and was therefore unable to be ofany assistance.On 27th September 1988 Cayman wrote again to Padraig Collery and referred to atelephone conversation between Mr. Collery and Martin Lanigan-O'Keeffe with Mr.Furze.On 18th October 1988 Mr. W allace of Wallace Engels w rote to Padraig Colleryregarding the subpoenas. He stated that, unless there were special circumstances, hissuggestion was that Dublin expeditiously furnish the records which had beensubpoened.On 23rd March 1989 Dublin signed a quit claim deed on the property in Atlanta,wherein a b an had been paid by Dublin to Northside Management & DevelopmentCompany.On 18th July 1989 Cayman wrote to Dublin, stating that the U.S. Government hadfiled an arrest warrant against the property in Atlanta. Northgate Investments Limited(a Cayman company managed by Cayman) being the ultimate beneficial owner of theproperty had relinquished any claim which it might have to the property and did notintend to contest theforfeiture action.On 21st July 1989 Dublin wrote to the Attorneys acting in Atlanta, informing the firmthat Dublin did not intend to contest theforfeiture and, accordingly, would be gratefulif the firm of Attorneys would take no action to contest same. Any claim whichDublin may have had in the property was thereby relinquished and they would begrateful if the Attorneys could forward the appropriate quit claim deed for execution.


33/763

On 20th November 1989 the Attorneys in Atlanta received a quit claim deed forsubmission to Dublin.i

On 22nd November 1989 Cayman wrote to Dublin, enclosing a copy of the letterfrom the Attorneys in Atlanta. They stated that Mr. Collery would know the "back-to-back" loan was discharged from he deposit proceeds some time ago. Thereforethe execution of the deed would not now involve Dublin in any further participationwith the particular real estate development.On 30th November 1989 the U.S. States Attorney for the Southern District of Floridaserved a complaint on Dublin's Secretary. The complaint wasfor he forfeiture of theproperty previously owned by Mr. and Mrs. Andreas Pruna in Miami, Fbrida.On 30th November 1989 the U.S. States Attorneyfor he Southern District of Fbridaserved a complaint on Mars Nominees Limited's Secretary. The complaint W a sseeking theforfeiture of the property owned by Mr. and Mrs. Andreas Pruna.On 8th December 1989 Cayman wrote to Mr. Wallace, the Attorney in Fbrida. Theystated that they were aware of the property forfeiture notice but, since the client wasin jail and that all Cayman's other records had been surrendered to the U.S.Authorities under the Narcotics Agreement in 1984, Cayman suggested that no actionbetaken.On 12th December 1989 Cayman wrote, flgafry o Mr. Wallace. They said that in oraround 1984 they had been associated with Andreas Pruna and had various businessdealings through a Cayman company known as Fathom Five Rims Limited At thetime of their association Mr. Pruna owned the property in M iami ha 1985, unknownto Cayman, Mr. and Mrs. Pruna transferred the property to Mars Nominees Limited acompany wholly-owned by Dublin. Cayman was advised after the fact and inSeptember 1986, on instructionsfrom Cayman, Mars Nominees Limited transferredtitle to the property, by executing under seal a quit claim deed which was delivered byJohn Furze to Andreas Pruna, with instructionsfor he transfer to be registered Suchregistration, however, did not happen - hence the reference to M ars in the arrestwarrant. Cayman said that Dublin was concerned at the allegations that Mars wasowned by Pruna. Their concern was that, by mention being made in the complaint,the name has become tainted and associated with Pruna, asidefrom he statement thatthe company was owned or controlled by Pruna. Cayman was seeking advice onthree issues -(i) what action, if any, did Mr. Wallace recommend to be taken to correct the errorin the complaint relative to Mars Nominees Limited?(ii) to what extent might Mars Nominees Limited be adversely affected i^ in anyfoture transaction in the U.S. by virtue of having been named in the complaint?(iii) Dublin had been served with the arrest warrant and complaint, as naturally hadMars Nominees Limited To what extent should they acknowledge the serviceprocess?In January 1990 a partner of Mr. Wallace, Jay Sobwsky, wrote to Cayman and copiedthe letter to Dublin. Mars Nominees Limited had been listed on the Drug


34/763

Enforcement .Administration, Naddis, computer. He advised that, if Mars NomineesLimited had future transactions in the U.S., it was possible that the transaction wouldbe considered suspect.On 2nd March 1990 Mr. Solowsky wrote to Cayman, saying that he had spoken withthe Assistant U.S. Attorney. She had requested that the Attorney prepare an affidavitdisclaiming any interest in the property. Mr. Solowsky would send the Affidavit toCayman shortly. Subsequently, Dublin returned to Mr. Solowsky the Affidavit andWaiver of ClaimOn 23rd March 1990 the United States District Judge for the Southern District ofFlorida made an order that a Letter Rogatory be entered into and that same bedelivered to the Assistant United States Attorneyfor ransmission to suitable channelsof the appropriate judicial authorities in the Republic of Ireland. The letters Rogatorystated that the United States Attorney is conducting an investigation of an alleged,organised crime drugs smuggling operation, headed by Fernando Pruna. Anindictment had been handed down and it charged Pruna and the members of hisorganisation with crimes including operating and conspiracy to operate a continualcriminal enterprise dedicated to the importation of cocaine and marajuana into theUnited States, from 1981 to 1988. The U.S. Attorney was informed that evidencerelevant to the investigation might be located at a bank in Dublin, Guinness & MahonLimited, 17 College Green, Dublin 2. Evidence that had developed so far showed thatthe alleged organisation utilised several bank accounts located at Guinness & Mahonand Cayman Trust Limited in the Cayman Islands to deposit profits from alleged drugsmuggling operations and to facilitate the movement of the profits from drugsmuggling to other bank accounts located in countries throughout the world. ThisCayman Trust was a subsidiary of Guinness Mahon Limited, a Dublin bank at 17College Green. The Dublin bank had now sold the Cayman Trust to AnsbacherLimited. The Dublin headquarters of Guinness & Mahon Limited held certainmortgages for the Pruaas and their associates and made loans and hypothecateddeposits made by the Prunas. Correspondence concerning these matters passedbetween the Trust in Grand Cayman and the offices of Pat O'Dwyer, J. D. Traynorand Padraig Collery and others in the Dublin bank. These deposits and transactionswere not only in the Prunas' names and their associates* names but also in the namesof their nominees' operations. For example, records show that Guinness & MahonLimited held mortgages or interests in Pruna property. The entities and persons thatthey were the subject of the request w ere as follows:1. Fernando or Eudulia Pruna2. Ixora mortgage3. Andreas Pruna4. Mars Nominees5. Westwind Investment : Maxima Investment : Northside Management &Development, Northgate Investments Limited, Texas ATM Ranch, BarrowHoldings Limited, Westfare Condominium Project6. Jesus Barrios and Maria Barrios.


35/763

On 5th November 1990 Mr. Justice Lavin in The High Court in Dublin made an orderthat M artin Lanigan-O'Keeffe or another official of Dublin, nominated by MrO'Keeffe, attend before the President of the District Court on 23rd November 1990 tobe examined under Oath touching upon the testimony in the Letters Rogatory. TheBank is not aware of the outcome of the hearing in the District Court.


36/763

Appendix II (c)


37/763

Confidential

INFORMATION FOR THE ASSISTANCE OF INSPECTORS(APPOINTED BY THE IRISH H IGH COURT ON

22 SEPTEMBER 1999)ANSBACHER (CAYMAN) LIMITED

27 JULY 2001


38/763

CONTENTSSECTION 1 1INTRODUCTION 1SECTION 2 7GENERAL BACKGROUND 7SECTION 3 19THE EARLY MANAGEMENT OF A(C)L AND BACKGROUND TO THE IRISH BUSINESS.... 19SECTION 4 31THE MEMORANDUM ACCOUNTS 31SECTION 5 48ALLEGED DESTRUCTION OF DOCUMENTS 48SECTION 6 50CURRENT BUSINESS 50


39/763

SECTION 1INTRODUCTION

1. It is intended that this document will provide the Inspectors with Ansbacher's perspective and- understanding of the Irish business conducted by the late Mr Des Traynor and the late Mr

John Furze during the period that they were directors of Ansbacher (Cayman) Limited("A (C)L") and the more extensive earlier period when they were directors of GuinnessMahon Cayman Trust Limited (" GM CT "). This document distinguishes between A(C)L andGMCT depending upon the period of ownership in question. Where reference is intended tobe made to the bank over the entire period, this document makes reference to"GMCT/A(C)L". In addition, this document addresses the specific queries raised by theInspectors in their letter of 31 May 2001 to Mr Bryan Bothwell, the Managing Director ofA(C)L.

2. As previously stated, A(C)L does not accept that it conducted business within the Republic ofIreland and does not consider itself to be subject to the Irish Companies Act 1990. However,A(C)L has sought (and continues to seek) to provide assistance to the Inspectors wherever itproperly can. Accordingly, this document is prepared and submitted voluntarily by A(C)L.

3. A(C)L is concerned that serious allegations have been made in the Republic of Ireland byvarious investigating authorities regarding the use of coded accounts (the so called"Ansbacher accounts") and other structures to evade tax and to make payments to politicians(most notably to Mr Charles Haughey, the former Taoiseach of the Republic of Ireland).These allegations have been made absent A(C )L's observations; it is hoped that theinformation contained in this document will help to redress that imbalance and assist theInspectors. Further, A(C)L is concerned at the routine misuse of its name in connection withmatters properly the responsibility of the Guinness Mahon Group.


40/763

Similarly, unsustainable assertions and allegations have been made that the activities of MrTraynor and Mr Furze can be identified with or attributed to GMCT/A(C)L. Whilst it iscorrect that Mr Traynor and Mr Furze were directors of GMCT, and that after the sale ofGMCT to Ansbacher in 1988, Mr Traynor held the positions of non-executive Chairman(until 27 April 1993) and then non-executive director (until his death on 11 May 1994) and

tMr Furze held the position of executive director (until his resignation on 28 April 1995), it isimportant to recognise that both gentlemen acted in a variety of capacities at various times.Thus for example they acted for two Cayman Companies, Hamilton Ross Limited ("HRL")and Poinciana Fund Limited ( "P FL") (referred to below) in their dealings w ith Irish clients.In addition, in certain Tespects they clearly acted on their own behalf, such as (for example) inthe sale of their shares in GMCT to Ansbacher. Ansbacher does not accept, save so far as ismade clear in this document, that the acts or omissions of Mr Traynor and/or M r Furze can beimputed to GM CT/A(C)L or that they were purporting to act on behalf of GMCT/A(C)L.A(C)L has not sought in this document to offer a general treatment (even in so far as it isable) of the matters being investigated by the Inspectors. In particular, it has not sought toaddress every allegation which (from earlier reports or from newspaper reports) has been ormay have been made. Similarly, it has not sought to set out lists of persons and functions or ageneral history (save where necessary), on the basis that the Inspectors will be very familiarwith such matters. A(C)L has, rather, sought to address the issue of its (and, so far as it canbe discerned, GM CT's) involvement in the matters under investigation, by reference to thedocuments held by A(C)L and the internal inquiries undertaken. In seeking to achieve this,A(C)L has avoided the disclosure of any client confidential information given the provisionsof the relevant Cayman legislation to which A(C)L is subject (the Confidential Relationships(Preservation) Law (1995 Revision)) and in light of the recent Cayman judgment of TheHonourable Mr Justice Smellie, the Cayman Islands Chief Justice. Whilst by order dated 24May 2001, A(C)L is directed to divulge certain documents relating to business conducted by


41/763

GMCT/A(C)L with Irish residents to the Inspectors, it has been ordered to redact thesedocuments in order to prevent the identification of customers. The Inspectors haveacknowledged and accepted this restriction on the scope of the information which may becontained in this document.

6. It was after the appointment of the McCracken Tribunal in 1997 that reports were received ofa concern within the Irish Republic that some of Ansbacher's Irish business involved themaking of "payments to politicians". The Ansbacher Group gave assistance to theMcCracken Tribunal. On two occasions Mr Peter Greenhalgh, the then Group ComplianceDirector, gave evidence to the Tribunal in London. He did this at a very early stage of thismatter, without the benefit of the facts and matters which have since come to light and, on thesecond occasion, without legal representation. In this document, A(C)L has taken theopportunity to indicate (by way of footnotes) where the information given now differs fromthe preliminary views of Mr Greenhalgh.

7. Allegations of wrong-doings other than payments to politicians such as tax evasion andbreach of exchange control were first made in detail against GMCT/A(C)L in the RyanReport which is dated 22 June 1999 (summarised in the Affidavit of Paul Appleby swom on30 July 1999). It was said that banking and trust structures and loan arrangements madeavailable by GMCT/A(C)L facilitated a scheme of tax evasion by Irish residents (and thatGMCT/A(C)L conspired w ith them in that tax evasion), and were used to make payments toMr Charles Haughey and other Irish politicians.

8. In light of these allegations, A(C)L, supported by the Ansbacher Group, carried out a reviewof the Irish business which had been conducted by Mr Traynor and Mr Furze. As part of itsown review, GM CT/A(C)L's records have been considered and legal advice has been receivedfrom lawyers in a number of jurisdictions where appropriate.


42/763

Whilst an enormous amount of time and cost has been committed to the process of this review(legal fees together with court applications etc amount to about U S$4 million), it has beenrecognised that a complete understanding of the Irish business conducted by Mr Traynor andMr Furze will be impossible because:9.1 Mr Traynor and Mr Furze died in May 1994 and in July 1997 respectively. The clear

impression gained by the review is that Mr Traynor was the primary contact withIrish clients and was, by virtue of his professional expertise and standing in the Irishbusiness community, the impetus behind the various arrangements and structures thatwere established. Mr Furze's contact with clients was necessarily less than that of MrTraynor simply because Mr Furze was based in Cayman, making visits to Dublinonce or twice a year. The inability of A(C)L to question Mr Traynor and Mr Furzemeans that it cannot know why certain steps were taken, with the result thatalternative explanations cannot now be tested;

9.2 inevitably, over a 30 year period, documents have been lost or destroyed. Since thepractical merger in the early 1990's of A(C)L and Cayman International TrustCompany Limited (" CITC O"), A(C)L has maintained a policy of not destroying anydocumentation. It is believed that some archived documentation may have beendestroyed before A(C)L moved to its new premises in 1990. The absence of certain(in some cases, important) documents after searches leads to the conclusion that theyhave been either lost or destroyed;

9.3 in addition, it is alleged in the McCracken Report that Mr Furze destroyed some filesfollowing Mr Traynor's death. No evidence has been located to support such acontention, and it is not possible to identify which documents m ight have beendestroyed by Mr Furze. This is a matter dealt with in greater detail in section 5 of this


43/763

importantly, A(C)L and its legal advisers are unable to determine whether anyallegations that Mr Traynor and Mr Furze assisted clients to evade Irish tax arecorrect because A(C)L does not and cannot know whether those clients were (or are)liable to pay Irish tax. In addition, A(C)L understands that during the period underreview by the Inspectors, legislation was introduced to charge to income tax assetswhich have been transferred abroad and a very wide ranging general anti-avoidanceprovision has also been introduced. There have also been a number of tax amnesties.To investigate this issue comprehensively and properly, given the time span of over30 years, is not feasible. A(C)L has no entitlement to the records of third parties andmoreover it would be unusual for them to be given. In the absence of those records(and Mr Traynor and Mr Furze), it is not possible to ascertain whether there was everany intention by them to evade payments of Irish tax. The difficulty of responding tosuch allegations is compounded by the fact that tax legislation and the circumstancesof the individuals concerned would have changed significantly over the extensiveperiod under review. The latter general proposition was recognised in the RyanReport. As a matter of revenue law this is an issue (if relevant at all) between theindividual taxpayer and the revenue authority;

the then current records of HRL and PFL were transferred to Mr Furze as part of theexercise of disposing of the business of HRL and PFL in 1992. Some historicalrecords relating to those companies were left at A(C)L, although these appearincomplete. As with the allegations dealt with above, this lack of documents,combined with the inability to interview Mr Traynor and Mr Furze about theactivities of HRL and PFL, introduces a regrettably unavoidable degree of conjectureand speculation into any conclusions drawn in relation to these two companies;additionally, in the 1970s and 1980s the standard of record-keeping and the waybusiness was conducted in offshore financial centres was less diligent than today,


44/763

particularly in areas of client identification and the implementation of financialcontrols. This was an industry matter and not something specific to GMCT orAnsbacher. Mr Traynor appears to have been poor at maintaining documentaryrecords of his activities. Accordingly, it is often difficult to assess from thedocuments that still exist the intention of those involved in taking any particular stepor steps.


45/763

SECTION 2GENERAL BACKGROUND10. GMCT was incorporated as part of the Guinness Mahon Group on 25 January 1971 and

remained part of that group for 17 years until mid 1988. More specifically, fromincorporation until 1984, GMCT w as a wholly owned subsidiary of Guinness & Mahon(Ireland) Limited, an Irish Bank based in Dublin which was then part of a larger group headedby Guinness Mahon Limited, a London merchant bank. GMCT also had a wholly ownedsubsidiary, Overseas Nominees Limited, which, as the name suggests, was established (on 4April 1972) to provide nom inee services (an entirely usual service for a company such asGMCT to offer). It provided these services to all clients of GMCT who required them, notjust Irish clients.

11. In 1984, the shares in GMCT were transferred to Guinness Mahon Overseas InvestmentsLimited, an English company. It is understood from Mr Fenhalls, a former Chief Executiveof both the Guinness Mahon Group and the Ansbacher Group, that the shares were sold at hissuggestion (with the knowledge and approval of the Irish Central Bank) because Guinness &Mahon (Ireland) Limited had made a series of disastrous venture capital investments whichmade a total loss of some IR7 million which threatened the solvency of the bank. The pricepaid by Guinness Mahon Overseas Investments Limited for GMCT offset the venture capitalloss. As noted above, the company is referred to as GMCT or A(C)L depending uponwhether the context is before or after the acquisition of a 75% shareholding in GMCT byHenry Ansbacher Holdings Pic (now called Ansbacher (London) Limited) in 1988, orcollectively as GMCT/A(C)L.

12. In one form or another, the Guinness Mahon Group owned GMCT's operation from January1971 to mid 1988 (in other words, for a period of some 17 years). The accounts ormemorandum accounts (which are referred to in more detail below) should therefore be more


46/763

accurately and appropriately referred to as the "Guinness Mahon accounts" rather than the so-called "Ansbacher accounts". This inaccurate description of the accounts has appearedconsistently in media and other reports since at least 1997. Even the Eleventh Schedule to thereport of the McCracken Tribunal incorrectly and misleadingly carries the banner headline"Extract from 1987 Audit Report of Ansbacher Cayman Limited" when it should refer insteadto the 1987 Audit Report of GMCT not A(C)L.

13. After its incorporation in 1971, GMCT was granted a restricted class "B" licence under theCayman Banks and Trust Companies Regulation Law 1967. GMCT initially obtained thewhole of its business from the Guinness Mahon Group, it having been incorporated byGuinness & Mahon (Ireland) Limited to provide trust and other corporate services to wealthycustomers of the Guinness Mahon Group. Between its incorporation in 1971 and 1973 (whenit was granted a full unrestricted class "A" licence), the local administration of GMCT wascarried out by the Bank of Nova Scotia Trust Company (Cayman) Limited, which acted as"authorised agent" of GMCT and provided administrative services. These services wereperformed on a non-exclusive basis by a number of different Bank of Nova Scotia employeesincluding Mr Furze and Mr Collins1, who were nominated by the Bank of Nova Scotia to actas directors of GM CT, the provision of local directors being part of the administrativeservices which that bank had contracted to provide to Guinness & Mahon (Ireland) Limited.The contract between Bank of Nova Scotia and Guinness & Mahon (Ireland) Limited wasterminated in 1973 by Guinness & Mahon when GMCT set up its own offices with its ownstaff. Messrs Furze and Collins, together with two other Bank of Nova Scotia staff, thenbecame employees of GMCT. Mr Furze and Mr Collins continued as executive directors ofGMCT/A(C)L until April 1995 when Mr Furze resigned and Mr Collins became a non-

Neither Mr Furze nor Mr Collins were Irish. This corrects the view given by Mr Greenhalgh to the McCracken Tribunal on 8May 1997 at pages 14/15,. Lines 46 to 57 and lines 1 to 23 respectively. This view was considered correct by some at the timebut is not.


47/763

executive director. Mr Furze died in July 1997. Mr Collins resigned his position on 31October 2000.

14. Mr Traynor had been a director of Guinness & Mahon (Ireland) Limited since 1968, andbefore that a partner in the then leading Irish accountancy firm of Haughey Boland (nowDeloitte & Touche), a firm in which Mr Charles Haughey had also been a partner. MrTraynor had been the de facto Chief Executive officer of Guinness & Mahon (Ireland)Limitedfrom 1976 until his resignation from Guinness & Mahon in 1986. He was originallyintroduced to Mr Collins in the late 1960s by Mr Lindsey Welner who was then manager ofthe Bank of Nova Scotia's office in Dublin. It is not known when Mr Traynorfirst met MrFurze.

15. On the date of Mr Traynor's appointment as a non-executive director of GMCT on 18 March1981, the board of GMCT (whilst wholly owned by Guinness & Mahon (Ireland) Limited)passed a resolution stating that:

"....the duties of. Mr J D Traynor will be performed solely in the Cayman Islandsand that the authority of the appointee to act on the company's behalf is limitedaccordingly".

^ 16. There was therefore a clear intention on the part of GMCT to ensure that all activitiesundertaken by Mr Traynor for GMCT were effectively taken in Cayman, and to ensure thatthe "mind and management" of GMCT was wholly resident in Cayman.

17. GMCT remained a subsidiary of Guinness Mahon Overseas Investments Limited from 1984until June 1988, when it was purchased by a company called Chichester Investments Limitedincorporated in Cayman, the beneficial owners of which were Mr Traynor, Mr Furze, MrCollins and Mr Hugh Hart. In August 1988, four companies (representing Messrs Traynor,Furze, Collins and Hart) sold 75% of their shareholding in GMCT to Henry Ansbacher


48/763

Holdings Pic (now called Ansbacher (London) Limited). It is not clear how the shares inGMCT which w ere sold by these four companies were acquired by them from ChichesterInvestments Limited. In January 1989 (as part of a re-organisation of the Ansbacher OffshoreGroup) that majority shareholding was transferred from Henry Ansbacher Holdings Pic (an

English registered company) to Ansbacher Offshore Holdings Limited (now called AnsbacherTrust Group Services Limited) in Guernsey. On 30 April 1993, the company which is nowAnsbacher Trust Group Services Limited had transferred to it all of the remaining shares inA(C)L (to which see below) and on 30 September 1995 all of the issued shares in A(C)L weretransferred to Henry Ansbacher Holdings Limited (now called Ansbacher Holdings Limited).There have been no ownership changes since that date.2

18. Mr Fenhalls, who was, as stated previously, a former Chief Executive of the AnsbacherGroup, knew Mr Traynor because, prior to his appointment at A nsbacher in January 1985, hehad taken over as Chief Executive of Guinness Mahon Limited in London in 1981. Upon hisappointment at Guinness Mahon, Mr Fenhalls, as part of his appraisal of the group, madecontact with the Irish Central Bank in order to assess their opinion of the directors ofGuinness Mahon's Irish subsidiary Guinness & Mahon (Ireland) Limited.

19. Mr Fenhalls had the advantage of a very good working relationship with the Central Bank ofIreland. Some years before joining Guinness Mahon Limited, Mr Fenhalls had beeninvolved in the rescue of Irish International Bank which became known as IrishIntercontinental Bank. He was a director of Irish Intercontinental Bank from 1971 to 1976.In particular, Mr Fenhalls had worked with Mr Bernard Breen of the Irish Central Bank on therescue of Irish International Bank and they remained on good terms when Mr Fenhalls leftIrish Intercontinental Bank.

This (together with the previous paragraphs) corrects views expressed by Mr Greenhalgh on 1 May and 8 May 1997 concerningthe background and history of A(C)L. Mr Greenhalgh has based his comments on a precis document made available to himwhich had been prepared for another puipose. See 1 May 1997, page 2, lines 16 to 36 and lines 55 to 57; page 3, lines 1 to 26.


49/763

20. In 1981, having joined Guinness Mahon Limited, Mr Fenhalls, accompanied by hiscolleagues Mr James Guinness (a director of Guinness Peat Group Pic, London) and MrGraham Hill (the Chairman of Guinness Mahon Limited and Guinness Mahon HoldingsLimited, London), visited M r Breen in Dublin. There they received glowing reports aboutMr Traynor and they were assured of his good standing by Mr Breen. It was during this visitin 1981 that Mr Fenhalls first met Mr Traynor.

21. During his appraisal of Guinness & Mahon (Ireland) Limited following his appointment toGuinness Mahon Limited, Mr Fenhalls first became aware of GMCT and, in very broadterms, the business conducted by it. He knew that it had deposits in Ireland with G uinness &Mahon (Ireland) L imited and that it provided trust and managed company services to clientsof the Guinness Mahon Group. He did not however, as Chief Executive of Guinness MahonLimited in London, receive detailed information concerning the business conducted byGMCT; there was however, a management reporting line which ran through Guinness &Mahon (Ireland) Limited to Mr Donald Robson a member of the Credit Committee inLondon, who had previously been a very senior manager with NatWest. Mr Robson receivedmonthly reportsfrom Dublin, but these were focussed upon credit issues. Whilst at GuinnessMahon Limited in London Mr Fenhalls met with representatives of the Cayman regulators,the then Inspector of Banks, on about ten separate occasions. At no stage was the businessconducted by GMCT (a regulated bank in Cayman) ever raised as a problem.

22. After Mr Fenhalls moved to Ansbacher in early 1985, he decided, in consultation with hisfellow directors, that the bank should expand its offshore banking group because, given itsrelatively small size, it would struggle to compete if it remained as little more than a Londonmerchant bank. This was a common strategy at the time as other international merchantbanking groups were expanding their offshore operations (most already had), especially into

See 8 May 1997; page 2, lines 21 to 25; page 11, lines 20-47; page 12, lines 14 to 49; page 25, lines 52 to 57; page 26, lines 1 to


50/763

the Channel Islands and Caribbean. At the time of his arrival, the Ansbacher Group had anunderdeveloped offshore banking structure. It had a Guernsey bank and trust administrationcompany with capital of 7m, a small trust administration company in Gibraltar and a smallmanagement company in Monaco. Ansbacher identified Cayman as an obvious location for asignificant offshore banking presence. Given his knowledge of the existence of the Caymanoperation in GMCT, Mr Fenhalls told Mr Traynor that if the Guinness Mahon Group wasever interested in selling the Cayman business, Ansbacher would be interested in purchasingit.As part of the planning for a larger offshore group, thought was given to establishing an Irishholding company for all of the Ansbacher offshore companies. This was to take advantage ofthe tax reliefs which the Irish government w as offering to set up in the Irish InternationalFinancial Services Centre and also the good quality labour and comm unications. Whilst itwas clear that the Central Bank of Ireland would not sanction a mere investment holdingcompany, on 9 November 1989 Mr Fenhalls met with Mr Tim O 'Grady W alshe, a Director incharge of banking supervision at the Central Bank, at which meeting they discussed thepossibility of establishing a back office services company which might, in time, grow into abranch. Mr Fenhalls asked if there would be any objections to Mr Traynor taking charge;Mr O'Grady Walshe said there would be no problem with this at all. Ansbacher, which wasstill planning how to expand its Offshore Group at the time, eventually decided not to proceedwith an Irish presence and decided that the Offshore Group would instead be held using aGuernsey registered company.

After joining A nsbacher in 1985, Mr Fenhalls stayed in contact with M r Traynor. In late1987, Mr Traynor contacted him and asked whether he remained interested in purchasingGMCT. Mr Fenhalls said that Ansbacher would be interested. When Mr Traynor explained


51/763

that he, together with other directors of GMCT, were purchasing it and would be prepared tosell a majority shareholding to Ansbacher,. Mr Fenhalls asked if it would be possible to buyGMCTdirectly from the Guinness Mahon Group. Mr Traynor said no; a deal had been agreedbetween the directors and the Guinness Mahon Group and the directors did not want tochange that arrangement.On 11 May 1988, the Guinness Peat Group Pic issued a document which was an interimstatement and proposals for a number of issues including the disposal of GMCT. Thedocument sets out that the disposal of GMCT was in keeping with the "stated policy" of thegroup to place more emphasis on earning profits in London. It recites conditional agreementssigned on 20 April 1988 for the disposal of the whole of the issued share capital of GMCT,the proposed purchaser being Chichester Investments Limited, the shareholders of which arerecorded in the document as "Mr J Collins and Mr J Furze, two directors of GM Cayman".The consideration for the sale was stated as 5.86 million in cash payable on completion (dueto take place in June 1988). The document further reported that the net assets of GMCT were6.66 million at the balance sheet date and further recorded that following the year end, thenet assets had been reduced by 1.04 million as a result of a sale by GMCT to Guinness Peat(Bermuda) Limited, of an investment in a "United States oil and gas company". It was alsonoted that historically substantial sums had been placed on deposit by GMCT w ith membersof the Guinness Mahon Group on arms length terms and that deposits would be retained withthe Guinness Mahon Group on a transitional basis.

Mr Fenhalls recalls that GMCT was attractive to the Ansbacher G roup because of itsprofitability and stable deposit base. The wisdom of that view was demonstrated in therecession of the early 1990's: while other banks suffered a fall in deposits , those of A(C)Lpeaked at jus t over US$400 million after consolidation with CITCO (disregarding fiduciarydeposits). In short, Mr Fenhalls recalls that he felt this was a first class acquisition and onethat he thought would be of great importance to the expanding Ansbacher Offshore Group.


52/763

As a result of trading in Cayman for a number of years the deposit base was, of course, notjust Irish.

27. During negotiations for the purchase of a majority shareholding in GMCT (handled in themain by Mr John Button, a director then within the Ansbacher Group), Ansbacher wasinformed by the directors of GMCT that it was m aking profits of 450,000 per annum (afteradjustments) and that they were prepared to warrant earnings of at least that amount to 30June 1989. Ansbacher estimated a valuation for the Cayman bank of 4 million. This wasbased on the profit of 450,000 and a multiple of 8.9 which was in accordance with industrynorms at the time. Ansbacher was aware that the capital of the bank had been reduced to 1million as a result of the management buyout and the restructuring of the shareholding ofGMCT. It was intended, as part of the purchase, that Ansbacher would (with a contributionfrom the vendors) recapitalise the bank to a figure of 6.5 million so returning the capital toapproximately the level recorded at 31 December 1987 (ie when the bank was still part of theGuinness Mahon Group). Ansbacher was then, together with the minority shareholders,committed to investing a further 5.5 million in the bank (see later).

28. In addition to the stable deposit base and its profitability, GMCT was also attractive toAnsbacher because of the expected synergy between its existing business and that of theacquired bank. For example, it was recognised that GMCT had a deposit base ofapproximately 105 million and a loan book of 23 million of which 8 million was securedagainst cash deposits. If a significant part of the deposit base could be held by HenryAnsbacher & Co. Limited (and assuming a l/8th of a per cent margin was made on deposits)it would give rise to additional earnings for the group. If 100 million of deposits were heldin this way it was calculated that it would give rise to earnings of 125,000 per annum. It wasaccepted that because of the transitional agreements made w ith the G uinness M ahon Group,such earnings could not arise in full in the first two years. In addition, foreign exchangetransactions could be transacted through Henry Ansbacher & Co. Limited; that could give rise


53/763

to further earnings of approximately 50,000. Also, loans might be offered by HenryAnsbacher & Co. Limited to GMCT customers. Ansbacher estimated that such loans couldalso earn some 75,000 per annum. Finally, there could be additional earnings to theAnsbacher Group from business referred by GMCT, but no estimate was made of thatamount.The majority shareholding in GMCT was acquired by Henry Ansbacher Holdings Pic inAugust 1988. Payments for the existing shareholding and payments by way of additionalcapitalisation were agreed as follows:29.1 Consideration for a 75% shareholding in the existing shares of GMCT was 750,000

cash plus shares in Henry A nsbacher Holdings Pic valued at 2.25 million. This wasdivided equally between the four companies representing Messrs Traynor, Furze,Collins and Hart. Each of the companies was therefore to be paid 187,500 in cashand to receive 703,125 shares in Henry A nsbacher Holdings Pic.

29.2 Henry Ansbacher Holdings Pic took 2.25 million worth of shares in GMCT on anew issue. An additional 750,000 worth of new shares was subscribed for by thefour vendor companies in equal parts.

29.3 As agreed by Henry Ansbacher Holdings Pic, Henry Ansbacher & Co. Limited inLondon injected a further 2.5 million into GMCT through subscription forsubordinated loan stock.

To clarify the makeup of the investment of additional capital of 5.5 million in A(C)L, theequity at paragraph 29.2 above accounted for 3 million of the contribution, the remainderbeing by way of the 2.5 million subscription for subordinated loan stock set out at paragraph29.3 above.


54/763

Q 31. In addition to clauses dealing with the consideration, warranties were given by the vendors.There were also provisions dealing with the future buyout of all or part of the remaining 25%shareholding retained by the vendors by way of put and call options.

32. Judgingfrom documents which were created at the time, significant thought appears to havebeen given to the structure of the deal. Ansbacher retained the services of Linklaters &Paines (as they then were), a major City of London firm of solicitors in relation to thetransaction and significant fees were incurred as part of the purchase. Ansbacher alsoinformed the Bank of England about the proposed purchase. This was done at a meeting heldon 16 June 1988 at the Bank of England attended by M r Fenhalls and Mr Kevin M ortell (thethen Finance Director at Henry Ansbacher & Co. Limited) for Ansbacher and Mr Ian Cobboldand Mr Jeremy Stockwell for the Bank of England. The matter passed without more thannoting Ansbacher's intentions,

33. Although formal due diligence was not carried out, specific investigations were made into thebusiness of GMCT, most notably an investigation of the loan book by KPMG Peat Marwick.The review of the loan book focused on the recoverability of loans and whether the loandocumentation required under Cayman law was in place. Also, Ansbacher personnel headedby Mr Kevin McAuliffe (the Ansbacher Offshore Group's then Financial D irector) visitedCayman to conduct a review. This review focused on the degree to w hich Ansbacher couldrely on the information provided by the Directors of GMCT and which was being warrantedby them (eg profits), the strengths and weaknesses of the organisational structure, systems andcontrols w ithin GMCT and the compatibility of GMCT with the A nsbacher Offshore Group.Whilst the review identified matters w hich were not up to the standards expected byAnsbacher of its own business (eg too much independence for the directors (caused, it wassaid, by "the lack of parental interest and supervision in recent years in the operations ofGMCT..."), lower than expected internal control, documentation and co-ordination ofactivities and a slightly stagnant flow of business) and led to a number of recommendations,


55/763

nothing was disclosed which jeopardised the transaction. In particular, nothing was foundwhich raised a question or doubt regarding the business conducted with Irish resident clients.In particular, Mr Fenhalls and Mr Button discussed the findings of Mr McAuliffe's report butfelt the problems could be remedied.Mr Fenhalls has confirmed that, in fact, it was he who decided upon the level of duediligence. Mr Button wanted to go further but Mr Fenhalls, based upon the received industrywisdom at the time, thought that unnecessary. In common with most bankers at the time, hebelieved that a bank could only fail if its loans collapsed (ie through non repayment forwhatever reason). Corporate transactions were not seen as a likely cause of failure. Here,GMCT had a large deposit base (largely placed in the money markets) but, importantly,relatively little advanced in commercial loans. Having satisfied himself about the loan book,there seemed to him little need for any more comprehensive due diligence.

Reference has been made earlier in this document to the Eleventh Schedule to the McCrackenReport which is headed, incorrectly, "Extract from 1987 Audit Report of Ansbacher CaymanLimited". As well as pointing out that this should refer to the 1987 Audit Report of GMCT, itis also important to note that no evidence exists of this document having ever been seen bythe Ansbacher Group until its publication in the McCracken Report. Mr Fenhalls hasconfirmed, in particular, that he has no recollection of this document, whether before, at orafter completion of the acquisition of the majority shareholding in GMCT.

Following the share sale, GMCT changed its name to Ansbacher Limited on 29 A ugust 1988,remaining under that name until November 1992 when it became known as CaymanInternational Bank and Trust Company Limited. The bank assumed its present name ofAnsbacher (Cayman) Limited in September 1994.


56/763

37. In terms of reporting lines, after the acquisition in August 1988, the directors of A(C)L (aspart of the expanding Ansbacher Offshore Group) were required to report directly toMr Button (head of the Ansbacher Offshore Group) rather than Mr Fenhalls.

38. After Ansbacher acquired its 75% shareholding in GMCT, Messrs Traynor, Furze, Collinsand Hart retained minority shareholdings through individual companies owned and controlledby each of them. The 25% shareholding in GMCT/A(C)L owned by Messrs Traynor, Furze,Collins and Hart was acquired by Ansbacher Trust Group Services Limited (as it is nowcalled) on 30 April 1993.

39. The shares of Henry Ansbacher Holdings Plc were acquired on 20 January 1993 by FirstNational Bank of Southern Africa Limited w hich thus became the owner of the AnsbacherGroup. First National Bank was, in essence, Barclay's former operation in South Africa.

40. Thefinancial nterests of Rand Merchant Bank H oldings and Anglo American were mergedto form FirstRand Limited with effect from 1 April 1998 which then acquired the shares ofFirst National Bank of Southern Africa Limited and thus became the new owner of theAnsbacher Group.


57/763


58/763

Traynor, whereas local Cayman public relations and marketing were mainly the responsibilityof Mr Collins. Mr Collins never introduced or managed any Irish business, although fromtime to time he did complete administrative tasks on such accounts in the absence of MrFurze. In terms of new business, Mr Collins with Mr Hart concentrated on Jamaica and theAmericas.Messrs Furze and Collins relied heavily for administrative assistance on their personalassistants, Mrs Cavell Serrant and Mrs Delrose Williams. With the exception of Mr JohnJames, who was recruited shortly before the Ansbacher takeover as a trust manager (and waslater to become the Compliance Officer, a position he retained until his retirement aged 65years in 1998), the remaining staff of GMCT, until the merger of its business with that ofCITCO in 1990, were at trust/corporate officer or trust/corporate assistant level. The filessuggest that trust/corporate officers were often not given any great responsibility for runningclient matters on behalf of GMCT. Very detailed instructions would often be given by eitherMr Furze or Mr Collins and it was expected that trust/corporate officers would simply executethose instructions.

As noted above, prior to establishing its own physical presence in 1973, GMCTs businesswas referred to it solely from within the Guinness Mahon Group and no t surprisingly asignificant proportion of this early business was of Irish-origin rather than of UK-origin. Theincorporation of GMCT in Grand Cayman in 1971 coincided with the reduction in theterritories comprising the Sterling Area. Thereafter, the Guinness Mahon Group's Irish andUK sourced business tended to be referred to Guinness Mahon (Jersey) Limited (as Jerseywas in the reduced Sterling Area) in preference to the Cayman Islands and other offshorecentres. A(C)L cannot provide any information regarding the operation of the Jerseycompany, Guinness & M ahon (Channel Islands) Limited or College Trustees Limited; it hasneither the documents nor other knowledge now (even if it ever did) which would enable it toso comment. By the mid 1970's GMCT was attracting a significant amount of business from


59/763

other areas. It is estimated by Mr Collins that GMCT's Irish sourced business in the mid-1970s accounted for no more than 20% of the total.From the records reviewed, it appears that GMCT had four distinct areas of business in theyears prior to and including 1988:45.1 Business generated from the Americas and Caribbean. Mr Hart appears to have been

particularly active in generating worV. from the Caribbean whilst M r Collinsconcentrated on sourcing work from the Americas. This category represented thebulk of GMCT's business. By definition, this category of work has no Irish origin;

45.2 Business originatingfrom Ireland (whether introduced by Mr Traynor or not) whichwas administered in Cayman, some of it with little or no reference to Mr Traynor.This business was largely trust business, sometimes with associated companies, andoften involved the use of "Red Cross trusts", a subject discussed in more detail below,but there were also many administered companies which were not associated withtrust structures. By the 1980s this represented a small and declining proportion ofGMCT's business;

45.3 The PFL business originatingfrom Ireland (via Mr Traynor) which was administeredby Mr Traynor and by Mr Furze to the practical exclusion of any other personnel inCayman at any senior level. Messrs Traynor and Furze transferred most of the PFLbusiness to HRL in or about September 1988. The HRL/PFL business primarilyconcerned the deposit of monies in what have now become inaccurately termed the"memorandum accounts" but which were in practice coded accounts held withGMCT in Cayman. From GMCT's point of view, the value of this business wasnever significant. The total of deposits held through PFL rosefrom about GB Pfl.lmillion in 1 April 1980 to about GBP6.5 million in September 1988 when most ofthe business was transferred to HRL. The amount held through HRL was only about


60/763

45.4

46. It would seem that the majority of the work falling within the third category (paragraph 45.3)emanatedfrom personal contacts, acquaintances ;nd friends of Mr Traynor.

47. It is important to emphasise Mr Traynor's professional standing, as it is relevant to whatfollows. Mr Traynor was a well regarded member of the Irish financial community; he was ahighly gifted and respected chartered accountant specialising in tax matters and a banker. Hehad considerable personal charm and intelligence. He inspired very considerable trustamongst clients. For example, it appearsfrom he files that many clients allowed M r Traynoralmost unlimited control over funds deposited with GMCT and appear to have required orexpected very little by way of documentary evidence of his dealings with their funds on theirbehalf. It is likely that many had been clients of his whilst Mr Traynor was a partner inHaughey Boland. The clients would say of Mr Traynor that he was a person to be trustedabsolutely- it is not believed that this view has changed.

^ 48. When Mr Fenhalls, a former Chief Executive of the Ansbacher Group, met Mr Traynor forthe first time in 1981, he recalls that M r Traynor was a director of Cement RoadstoneHoldings Pic, Ireland's largest company. He was on the board of Aer Lingus and of NewLondon Insurance. When, in 1990 Ansbacher's Corporate Finance Department hadinstructions to convert the Irish Permanent Building Society from a mutual society into abank, they considered candidates for the position of Chief Executive for the new bank and MrFenhalls approached the Central Bank of Ireland to discuss potential candidates. Mr BernardBreen of the Central Bank again gave Mr Traynor a glowing recommendation. Given thescale and importance of the conversion of Irish Permanent into a bank, that recommendation

GBP7.5 million in March 1992, the year A(C)L terminated the business. Thiscategory of business is dealt with in greater detail later in this document; andBusiness generatedfrom he UK and Europe which was only a very small proportionof the total.


61/763

was a significant endorsement of the Central Bank of Ireland's high regard for, and trust in,Mr Traynor.Mr Furze arrived in Cayman in 1967 and was considered in Cayman one of the "pioneers" inthe evolution of the Island as an offshore financial centre. He was active in civil andcommunity affairs; he was a leading member of the Rotary Club. A report of his funeralwhich appears in the Irish Times of 4 August 1997 records a leading Caymanian politiciandescribing Mr Furze as "among the best of persons who emigrated to the Cayman Islands".

A striking characteristic of the third category of business (ie the PFL and HRL business) wasthe extent to which Mr Traynor effectively retained control. Mr Traynor appears to have beenassisted by Mr Padraig Collery, who acted as his personal assistant. Mr Traynor appears tohave known Mr Collery from heir time at Guinness & Mahon (Ireland) Limited. From theavailable documents, it would appear that Mr Collery took an active role in the Irish businesssourced to Cayman by Mr Traynor. However, Mr Collery was never an employee ofGMCT/A(C)L; it would appear that he was paid by Mr Traynor personally. (He was howeverpaid a retainer by A(C)L for a time after the death of Mr Traynor in 1994 to ensure an orderlytransition in respect of A(C)L's dealings with Irish clients.) Mr Traynor's communicationswith GM CT/A(C)L in relation to this type of business appear to have been primarily, if notexclusively, with Mr Furze. Whilst Mr Furze made visits to Dublin once or twice each yearto undertake work with Mr Traynor relating to these clients, the extent of Mr Furze's contactwith the clients is not known. It was clearly secondary to the contact and confidence enjoyedby Mr Traynor. The documents suggest that Mr Traynor kept this category of businessseparate from other GMCT/A(C)L business and, save to a limited extent with Mr Furze, didnot communicate with others at GMCT/A(C)L in relation to it (other than in relation to theexecution of simple instructions).


62/763

51. As the Irish business conducted through Mr Traynor was, in practice, known largely to him(together with Mr Furze), the Ansbacher Group relied on Mr Traynor to act properly. Indeed,as he was so respected it was assumed that he would so ac t. On the few occasions he wasasked by senior m anagement for assurances that the business (ie the depositing of money inCayman received from Irish residents and the provision of funds to clients in Ireland) did notcontravene Irish exchange control regulations (for example at a meeting which M r Fenhallshad w ith M r Traynor in November 1989) he gave unequivocal assurances that it was perfectlylegitimate business which took advantage of wholly lawful exemptions. When asked if therewere tax consequences for the clients he expressed the view that this was entirely a matter forthem to deal with.

The A ssimilation of the B usinesses of GMCT and CITCO52. Following acquisition of the majority shareholding in August 1988, the Ansbacher Group

believed that it had made an extremely valuable addition to its Offshore Group. However,senior management in both London and Guernsey were mindful of the concerns raised byMr McAuliffe and the recommendations which had resulted from his consideration of thebusiness (described in paragraph 33 above). Soon after the acquisition (in early 1989), theweaknesses observed by M r McAuliffe were confirmed when actual examples began to ariseof just how different the management of GMCT had been (and remained) as compared to thestandards required by the Ansbacher Group. For example, A(C)L repeatedly exceeded thelimits (set by the Ansbacher Group) on the amounts which could be deposited with variousbanks and the management returns which were provided to the Ansbacher Group in relation toA(C)L's activities often contained inaccuracies. It was quite clear that greater internalcontrols were required. However, it should be repeated that the problems highlighted did notraise a question or doubt as to the propriety of the business conducted with the Irish residentclients.


63/763

53. Attempts were made to bolster the internal controls through visits by Mr McAuliffe duringwhich he sought to better understand the reasons for the failings and to remedy them. It mustbe remembered that at the time of acquisition the management of GMCT had been in placefor very many years and had, it would appear, enjoyed a very great degree of autonomy fromGuinness & Mahon (Ireland) Limited. It was therefore hardly unexpected that difficultieswould be encountered assimilating this business into a group which required far greatermanagement discipline.

54. It should also be remembered that, during the mid 1980s, a decision had been taken byMr Fenhalls and his fellow directors to expand the Ansbacher Offshore Group. GMCT wasneither the only nor the main acquisition at the time. In 1989, the Ansbacher Grouppurchased the International Trust Group which included Bahamas International TrustCompany, the International Trust Company (British Virgin Islands) and (as previouslymentioned) CITCO. A sister company (GRATCO in the Turks and Caicos) was alsopurchased but later sold on. Accordingly, at the time, management focus within theAnsbacher Group w as on assimilation of those businesses into the Ansbacher OffshoreGroup. Specifically, in Cayman, the need to rectify the management failures within A(C)Lwas less of a priority than the need to merge the business of CITCO with that of A(C)L.Mr Fenhalls has explained that the head of Ansbacher's Offshore Group, Mr Button, and hisstaff were focusing on merger rather than management practices within A(C)L and CITCO.

55. After the acquisition of CITCO, the combined CITCO and A(C)L business had threemanaging directors in Cayman (Mr Furze and Mr Collins from GMCT, and Mr BryanBothwell from CITCO). The two businesses of GMCT and CITCO were initially run, inessence, as separate businesses. Only in October 1990, did the two businesses move into asingle premises. However, the effective merging of their operations w as hampered by the twocompanies having to continue to operate on completely separate computer systems until the


64/763


65/763

was concerned was confirmed to the Ansbacher Group as something requiring investigationby reason of a management letter to the board of A(C)Lfrom KPMG Peat Marwick in 1991.In essence, this highlighted a concern about the system of reconciling what was held in theNostro accounts (as to which see later) at Guinness & Mahon (Ireland) Limited in Dublin tothe accounts held in Cayman. It was recommended that one person be delegated to review thereconciliations and post the figures to the client accounts. It was, therefore, a matter raised inthe context of internal controls, being an issue Mr Jennings had been asked to investigate andremedy as necessary.

59. As explained below, although Mr Jennings' investigations did not yield a fully comprehensiveexplanation of the purpose and business of HRL and PFL (nor could they have done), heunderstood that these two companies were vehicles associated with Mr Traynor and/or MrFurze and with the operation of the memorandum accounts. These findings confirmed theoriginal concerns about GMCT/A(C)L's lack of control over the business being undertaken byMr Traynor which originated from Ireland and Mr Traynor and M r Furze were instructed toremove the HRL and PFL business from A(C)L. That removal was effected very quickly,being substantially completed within two weeks. Thereafter, further efforts were undertakento merge fully the two businesses. Continued resistance was maintained, particularly by MrFurze, and this, combined with the unease caused by the discovery of something of theunusual nature of the HRL/PFL business (to which we return in the next section of thisdocument), was one of the reasons which (together with the implementation of plans drawnup after the acquisition by First National Bank) caused the company which is now calledAnsbacher Trust Group Services Limited to seek and complete an early buy out of theminority shareholdings in A(C)L in 1993.

60. First National Bank of Southern Africa Limited was advised of the findings of Mr Jennings.Indeed, in late September/early October 1992 Mr Fenhalls visited Mr Traynor with Mr BrianLavelle of First National Bank. Mr Traynor gave an unequivocal assurance that the business


66/763

with Irish residents had neither breached Irish exchange control regulations nor constitutedbanking business which required a licencefrom he Irish Central Bank.

61. Following the severing of links with HRL and PFL in 1992/1993, Mr Jennings concentratedupon making sure that A(C)L became operationally better structured, employed more suitablepeople and complied with Ansbacher Group-wide policies and procedures (which hadundergone some change following acquisition of the Ansbacher Group by First NationalBank). As mentioned, Mr Traynor stepped down as non-executive Chairman in April 1993,became a non-executive director, and subsequently died on 11 May 1994. Whilst seniormanagement within the Ansbacher Group would have preferred Mr Traynor and Mr Furze tohave ended their connection with the bank at an earlier time, it had to be accepted that asudden departure of both directors might have had a significant detrimental impact upon thestanding of A(C)L both with clients and the market. As a matter of practicality, the way inwhich business had been conducted with some Irish (and other) clients meant that it needed aperiod of transition to allow others within A(C)L to gain an understanding of the business.

62. After Mr Traynor's death, Mr Jennings, during a trip to Dublin to improve A (C)L's knowledgeof its customers, was introduced to Mr Sam Field Corbett. Until meeting Mr Field Corbett,Mr Jennings had never heard of him and had no contact thereafter. A(C)L cannot provide anyinformation as to the role which may have been played by Mr Field Corbett in relation toGMCT/A(C)L's business with Irish customers. He also met Mr Jack Stakelum. Other than byreference to evidence given publicly in Ireland, A(C)L has no knowledge of the role MrStakelum allegedly played in payments to politicians or as to any other business dealings hemay have had with Mr Traynor.

63. By 1995 at latest, it was felt by A nsbacher Group senior management that matters of concernin Cayman (which very largely related to the business which had been GMCT and includedthe business conducted by PFL/HRL which had been removed in September 1992) had been


67/763

satisfactorily addressed. Further, it was felt that the bank, which by then constituted themerged firms of the old GMCT and CITCO, was conducting its business in a regular andacceptable fashion, with the Irish business having been further reduced either by beingmanaged out or because it had come to a natural end. However, the situation changedsignificantly following allegations made in Ireland concerning, initially, payments to theformer Irish Taoiseach, M r Charles Haughey. The Irish investigations which have followedhave been accompanied by extensive press coverage within the Republic of Ireland. It wasonly through the Ryan Report in June 1999 that the Irish authoritiesfirst set out, formally andin detail, allegations other than payments to politicians and, in particular, those relating topurported tax evasion.

64. A(C)L is currently administering only a few client relationships which fall w ithin thedefinition of "Irish business" contained in the Irish High Court's order of 22 September 1999.Most, but not all, of these relationships were originally administered by Mr Furze with theinvolvement of Mr Traynor. The way in which this business is administered today is verydifferent from the way in which Messrs Traynor and Furze administered it. As with anybusiness, A(C)L is prepared to retain it only on the basis that it complies with current bestpractice, including the anti-money laundering regulations and "know your client" guidelines 3.For example, the relationship with HRL and PFL (and the memorandum accounts) wasterminated in 1992. Payment of the retainer to M r Collery to ensure an orderly transition inrespect of A(C)L's dealings with Irish clients (which had started after Mr Traynor's death in1994) was terminated in 1997. A(C)L insisted that all clients of Mr Traynor/Mr Furze dealwith the trust officers in Cayman, either directly or through professional advisers such assolicitors and accountants whose role is clearly understood. All A(C)L's Nostra accounts

A(C)L has strict internal guidelines regarding such matters which were alluded to by Mr Greenhalgh in his evidence to theMcCracken Tribunal on 8 May 1997, namely, unilateral spot checks carried out by compliance (see page 10, lines 32 to 36; page11, lines 1 to 13).


68/763

with its correspondent banks in other jurisdictions, including Ireland, are controlled directlyby A(C)L in Cayman.


69/763

SECTION 4THE MEMORANDUM ACCOUNTSUse of the Memorandum Accounts65. There is no doubt that the way in which A(C)L conducted business with Irish residents was

influenced by Mr Traynor's presence in Ireland. Until 1986, Mr Traynor was an executivedirector of Guinness & Mahon (Ireland) Limited. By the time A(C)L became part of theAnsbacher Group in 1988, Mr Traynor was based at the offices of Cement RoadstoneHoldings Pic at 19 Lower Pembroke Street, Dublin. A(C)L understands that in 1989 hemoved to the new offices of Cement Roadstone H oldings Pic at 42 Fitzwilliam Square,Dublin.

66. Mr Traynor was the principal point of contact for many (but certainly not all) Irish residentclients. He was assisted by Mr Collery and, it is understood, Mrs Joan Williams in Ireland.Whilst A(C)L can comment very little on what Mr Collery is said to have done in Dublin, itcan say nothing about Mrs Williams; its knowledge of her alleged role is derived from theevidence and reports made public by the authorities in Ireland. It would appear that any detailwhich may have been known about why particular funds were being received in and wererequired to be paid out on behalf of certain Irish customers was known first and foremost (andpossibly only) to Mr Traynor. In particular, from the available documents it would appearthat GMCT in Cayman was often unaware of transactions until several weeks after theyoccurred.

67. The Ryan Report alleges that whilst at Guinness & Mahon (Ireland) Limited, Mr Traynor,assisted by Mr Collery, maintained memorandum accounts com pletely separately from theother records held on the Irish bank's computer system and that these records were notdisclosed to Guinness & M ahon (Ireland) Limited's auditors. A(C)L is not able to confirm ordeny this. It is said that Mr Traynor's Guinness & Mahon Irish clients were each allocated a


70/763

code and that whilst the accounts held by GMCT (later by A(C)L) at Guinness & Mahon(Ireland) Limited would provide little or no clue to what was going on, Mr Traynor would,through the memorandum accounts, be aware of how much money had been deposited andwithdrawn in relation to each particular client account. Mr Traynor or M r Collery (and noothers) would then provide GM CT (later A(C)L) with sufficient instructions to make thenecessary subsequent entries in the books held in Cayman which would reflect movements inthe GMCT (later A(C)L) accounts held by Guinness & Mahon (Ireland) Limited in D ublin.

68. In around 1978, there was a change to the system. In practice, the GMCT accounts held atGuinness & Mahon (Ireland) Limited in Dublin were, until 1978, in the form of coded subaccounts of the Nostra accounts (ie the accounts would, on the face of records held byGuinness & Mahon (Ireland) Limited, bear a client code). From, it would seem, 1978onwards Guinness & Mahon (Ireland) Limited held uncoded Nostro accounts in the name oftheir Cayman subsidiary bank, GMCT, which could be operated by Mr Traynor usinginformation held by him.

69. It is important to remember that every bank has Nostro accounts. This is standard bankingpractice. Such "Nostro" accounts are, put simply, certain of GMCT's own bank accounts withother banks which included, at the relevant time, those with Guinness & Mahon (Ireland)Limited. Nostro accounts are a vital part of the banking system by which funds aretransferred. In the case of GMCT's Nostro accounts with Guinness & M ahon (Ireland)Limited, some of these formerly comprised investments in the form of interest bearingdeposits.

70. GMCT (just as every other bank) had Nostro accounts with a number of banks in variouscurrencies. There were a number of Sterling Nostras held for GMCT at Guinness & Mahon(Ireland) Limited which, from 1977, Mr Traynor could operate as a sole signatory. EachSterling account in the records of Guinness & Mahon (Ireland) Limited was recorded (and


71/763

reflected) in GMCT's general ledger. Looking at the statements of Guinness & Mahon(Ireland) Limited and the GMCT general ledger entries, this would appear to be standardNostro practice. For example, on receipt of a sterling cheque with an instruction to remit thisto the account of GMCT (for the ultimate credit of a customer), the Guinness & Mahon(Ireland) Limited statement for the relevant period (received in Cayman) would show thereceipt as a credit in favour of GMCT on its Nostro. A corresponding debit entry for the sameamount would be made in the GMCT general ledger (ie the ledger used to record sumscredited to and debited from its Nostro accounts with Guinness M ahon (Ireland) Limited).The relevant client bank account, a sub-account of the general ledger account 779-990 wouldbe credited to reflect the transaction. The balances in those client bank accounts would beaggregated into ledger account 779-990, the balance of which reflected GMCT's overallliability to clients in Sterling.

GMCT/A(C)L also kept, for administrative purposes, general ledger accounts for clients'structures, so as to collect together the various entries (on a ledger basis) which made up thestructures (ultimately to prepare statements for the structures) . So, therefore, for the clientsin question, in order to record funds received into their account with GM CT/A(C)L throughthe Nostro accounts with Guinness & Mahon (Ireland) Limited in Dublin, a debit entry wouldbe made in the individual structure's general ledger account of its account withGMCT/A(C)L, with a corresponding credit to the relevant account, for example, in the case ofHRL/PFL, the "S" and "AA" series of accounts (which are recorded under PFL and HRL,those companies being the clients of GMCT).In 1991, A(C)L began the process of closing its Nostro accounts with Guinness & Mahon(Ireland) Limited and opening accounts with Irish Intercontinental Bank. Mr Fenhalls hasexplained that he had been concerned at the time whether Guinness & Mahon (Ireland)Limited would remain creditworthy, given that Guinness Mahon Limited in London had beensuffering huge losses. Its owners, the Bank of Yokohama, had undertaken to support the


72/763

Guinness Mahon Group but Mr Fenhalls was concerned that the Bank of Yokohama mightnot be large enough to honour that undertaking if required. He felt that A(C)L's exposure toGuinness Mahon had to be terminated and accounts moved elsewhere. As he knew IrishIntercontinental Bank (and believed its parent, Kredietbank, creditworthy), Mr Fenhalls wascontent that it should handle such accounts as were necessary in Dublin.The standard practice in relation to GMCT's Nostro accounts with Guinness & Mahon(Ireland) Limited and Irish Intercontinental Bank was that GMCT was not, it would appear,generally aware of what funds were expected into the Nostro accounts held in Ireland or ofpayments which were to be made out of the Nostro accounts. The practice was forMr Traynor (with assistance from Mr Collery and, it is believed, M rs W illiams) to recordmovements in the Nostro accounts using his own ledger system (ie the memorandumaccounts). Thus, if a payment was credited to one of GMCT's Nostro accounts at Guinness &Mahon (Ireland) Limited, GMCT would not generally be expecting that payment, but MrTraynor would be. The necessary entries to the GMCT ledgers and client bank accountswould then be made in the way explained in the previous paragraphs.

Often, GMCT and latterly A(C)L in Cayman would not be in a position to book receipts intoits ledgers for some weeks. Typically, Mr Traynor would arrange for regular batchreconciliation reports to be sentfrom Dublin to Cayman. The purpose of these reports was toinform GMCT how, in relation to sums received through each particular Dublin-held Nostroover a period of time, the amounts were to be allocated to each individual coded clientaccount in Cayman. It was that information which allowed GM CTs banking department torecord the funds through the general ledgers, the client bank accounts and through to theindividual client ledger accounts. Similarly, where monies were required to be paid out onbehalf of customers, Mr Furze would receive a request from Mr Tray

ansbacher cayman report appendix 1 & 2

Documents