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Almost a perfect crime

Bank of Ireland took State funds intended for its stretched farmer clients

A farmer’s son from Kildare whose late father had monies wrongly deducted from his account by Bank of Ireland officials has claimed that hundreds of farmers may have lost their livelihoods due to the fraudulent management of a government rescue scheme in the mid-1980s.

Jim Behan owned a valuable farm of 240 acres at Dollardstown House, Athy, County Kildare but like many farmers in the early 1980s fell victim to rising interest rates and falling land values. Charles Haughey’s Fianna Fáil government introduced the Farm Rescue Package in 1982 in an effort to assist such farmers by filtering aid through AIB, Bank of Ireland, and the Agricultural Credit Corporation.

Average payments were less than £5,000 per annum but an estimated 7000 farmers applied for relief under the scheme which ended in 1985. To fund the scheme the Revenue agreed to waive corporation-tax profits for the banks which administered. In return the banks contributed 25% of the scheme’s cost.

Under this package farmers could obtain a reduced rate of interest of 10.5%. However, it did not work for Jim Behan, or perhaps for many other distressed farmers. Behan had borrowed €165,000 to transform his business into the potentially lucrative pea crop and had also developed a flour-making business. When difficulties arose, his manager at Bank of Ireland in Carlow advised him to apply for assistance under the Farm Rescue Package.

He never received the £6000 a year available to him under the scheme. He sold 170 acres to clear the debt a year later but in 1990 took legal action against Bank of Ireland for negligence and breach of contract, though not for fraud.

As the case before Judge Freddie Morris approached in the High Court, his lawyers discovered, from an anonymous source, that the bank had failed to pass on the benefits of the Farm Rescue Package to him and instead had used the money to reduce the debt he owed.

In his ruling, Morris determined that the bank had not entered any agreement to continue providing him with financial support and that it was entitled to call in his loans and to bounce his cheques as it had done. He ruled, however, that the bank should compensate him for not passing on the monies he was due from the Farm Rescue Package.

It emerged that the bank had, without informing him, opened an account in his name on the final day of the scheme in September 1985, drawn down the money and promptly closed it. In its accounts, the bank had claimed the benefit to which in fact Behan was entitled and had also reduced its corporation tax liabilities, as envisaged under the scheme. The judge assessed the benefit to the bank at £20,000 and awarded Behan this amount in compensation.

In an appeal to the Supreme Court, Behan was represented by former Fianna Fáil TD and Minister for Agriculture, Michael O’Kennedy. In the course of the hearing, in July 1998, Judge Hugh O’Flaherty asked O’Kennedy whether he intended to submit a claim for damages on Behan’s behalf. Following a bizarre exchange, during which the former minister declined to confirm whether he was seeking damages, O’Flaherty took off his wig, threw it on the bench and left the court.

The Supreme Court upheld the High Court decision and no damages were awarded. Within months, O’Flaherty became embroiled in the controversy over the release of Philip Sheedy and in April 1999 resigned from his Supreme Court position.

Before the case resumed that Autumn, O’Flaherty had resigned his Supreme Court position in the wake of the controversy over Phillip Sheedy.

Behan lost his case and failed in a subsequent fraud action against the bank in 2001 in which he represented himself. He took further court action in 2002 and 2005 but in 2008 High Court judge, Mary Irvine, ruled that his attempt to take proceedings against the bank, his former senior counsel Michael O’Kennedy, and two other lawyers, was inadmissible as the matters were ‘res judicata’ – already determined by the courts.

Finally, in March 2011, Supreme Court judge, Niall Fennelly ruled that, to the “extent that the bank had taken a benefit itself in its tax returns…any losses that flowed from that or otherwise in respect of any alleged wrongdoing by the bank had been assessed and considered by Mr Justice Morris and would have been no different if fraud had been pleaded against the bank as it had been in the second action in 2001”.

In effect the court dismissed his case against O’Kennedy for failing to plead fraud against the bank, on the grounds that it would have made no difference. It ruled the action frivolous and vexatious and an abuse of process.

Since his death from a heart attack two months later, in May 2011, Jim Behan’s son, Andrew, has continued to attack the bank and has also focused on the role played by leading members of the Irish Farmers Association, politicians and other legal representatives who, he believes, obstructed his father’s attempts to save his business, albeit legally.

In a letter last year to members of the Oireachtas Andrew Behan has described the abuse of the Farm Rescue Package as “almost a perfect crime” in which the banks were used as a “vehicle for a fraud by drawing down money from the State by means of corporate tax reductions and failed to pass on this benefit to its intended recipients”.

By Frank Connolly