The Moriarty Tribunal has been hearing how money made from drugs trafficking in the US was effectively laundered through Guinness and Mahon Bank in Dublin and its subsidiary companies. In 1990, the bank was subpoenaed by a grand jury in the US to be examined about its dealings with a man called Fernando Pruna, the head of an organised crime ring that had been smuggling cocaine and Marijuana into the US.
Sandra Kells, an employee of Guinness Mahon, was giving evidence to the tribunal today. She explained how the bank had given loans totalling around $3m to Fernando Pruna and his associates. The loans, taken out in the 1980s, were secured by deposits held in the Cayman Islands and by properties owned by the Prunas in Florida. In 1990, the US authorities wrote to Guinness Mahon. They were investigating Mr Pruna and believed that accounts linked to the bank were being used deposit the profits of alleged drug smuggling.
Fernando Pruna, who had fled to Argentina, was later convicted of smuggling drugs into the US. He went to prison. The tribunal examined a lot of documents dealing with the Pruna loans. The loans were held in Guinness Mahon files, but Sandra Kells said that, to her knowledge, none of these documents had been given to the authorities in the states.
The Moriarty Tribunal has heard earlier that, in 1982, there was just under £27m in sterling being held in Cayman Island accounts on behalf of Irish customers. By 1989 these deposits had risen to £38m. Counsel for the Tribunal also said that it may wish to explore more fully the role of the Central Bank regarding inspections it carried out at Guinness and Mahon Bank in the late 70s. The tribunal will give a detailed outline statement about this matter next week.
The operation of the Ansbacher accounts is being gone through in great detail by the tribunal, with evidence from Sandra Kells in Guinness and Mahon Bank. Lawyers started with the set-up of the operation in the 1970s, to avoid exchange controls, and the establishment of subsidiaries in the Channel Islands. It also emerged how Des Traynor left Guinnness and Mahon in Dublin in 1986, when a large commercial loan went wrong. Sandra Kells added that a "number of difficult situations were arising."
By 1989, an internal audit report, carried out by Guinness and Mahon's parent company in London in 1989, expressed grave concern about the fact that the Ansbacher deposits represented 35% of the bank's liability and recommended keeping them at arms length. Soon after, the deposits were gradually transferred to Irish Intercontinental Bank.
