Barclay brothers’ loan to property baron ‘unconnected to bid for hotels’
Debt-ridden Irish tycoon tells court he merely asked brothers for financial help, as rival bidder for the three London properties pursues lawsuit against Barclays
Derek Quinlan, the fallen Irish property baron, has told a court that substantial payments made to his family by Sir Frederick and Sir David Barclay were unconnected to his helping the owners of the Telegraph newspapers controversially win control of three top London hotels – Claridge’s, the Berkeley and the Connaught – last year.
Quinlan transferred ownership of his stake in indebted hotel holding company Coroin to the Barclays at the start of last year, outmanoeuvring an attempt by fellow shareholder Patrick McKillen to secure a rival deal with Qatar’s ruling Al-Thani family. A furious McKillen is suing the Barclays, claiming they won by unlawful means.
His finances in a mess, Quinlan met Sir David by chance in June 2010 and went on to have a series of meetings in Monaco that summer at which the Barclays’ interest in winning control of Coroin was discussed. In his witness statement – made public after Quinlan entered the witness box at the high court in London – the Irishman recalled of the Monaco meetings: “Many times Sir David said, as a friend, that if I ever needed help, I only had to ask.”
Three months later, Quinlan, who was living in Switzerland, found he was not able to pay a tax bill and asked Sir David for a loan, which he was happy to provide without talk of repayment terms. There followed a series of advances to Quinlan and his family over several months. The Barclays’ payments to Quinlan’s children and to meet legal costs are ongoing, he said in his witness statement.
Denying allegations that this generosity was connected to the Barclays’ determination to win control of Coroin, Quinlan said: “The Barclay brothers would not seek to profit from a friend’s distress … Sir David has never made his support for myself or … [my wife] Siobhan conditional on anything in return.
“Although I was naturally well disposed towards the Barclay brothers because of their generosity to my family, at no point did my relationship with them lead me to take a decision which I thought was anything other than in the best interests of the company.”
In the wake of the Irish banking crisis in 2008, both Quinlan and McKillen had sunk deeply into debt to Nama, Ireland’s state-backed toxic loan book. While they each still technically controlled more than a third of Coroin, these holdings had been pledged as collateral for loans worth much more than the value of the shares.
In his witness statement Quinlan, a former tax adviser turned property tycoon, painted a picture of bitter feuding between himself and the fellow Coroin shareholders led by McKillen, a very private property investor best known for his close friendship with U2’s lead singer Bono.
Quinlan told the court that McKillen and other investors had sought to “marginalise” him as his investment empire began to fall apart. He refused “to be bullied into resigning” and claimed he was forced to take a cut in management fees.
Sued for running up bills at the group’s hotels of almost £300,000, Quinlan claimed this was part of a campaign orchestrated by McKillen. “Details of the legal action were leaked to the press to embarrass me.”
Quinlan said he was further embarrassed by a separate joint venture with McKillen, where the two men had invested along with Bono and the Edge in the Clarence hotel in Dublin. McKillen, he said, had attempted to arranged for him and the rock star shareholders to charge “penal” interest of 12.5% to Quinlan, who could not otherwise meet the terms of a proposed cash call on investors. “I took this to be a tremendous insult from Mr McKillen – he was trying to oppress me. I do not believe Bono or the Edge were behind this – this was McKillen’s doing.”
The case continues.