A US businessman has told the Commercial Court his proposal to Anglo Irish Bank to sponsor a New York hotels investment fund was first suggested at a Rolling Stones concert in New York in September 2005.
Anglo confirmed it would get involved when Timothy Haskin was its guest at the Six Nations rugby tournament in Paris in February 2006, Mr Haskin said.
Mr Haskin, general partner with Anglo in the Anglo Irish Hotels Fund, began evidence yesterday in proceedings by businessman Gerard McCaughey over the Anglo Irish New York Fund, a private equity investment in which 50 people invested an average $1 million each in 2006. Mr McCaughey’s action is a test case for 23 other investors in the fund.
Mr McCaughey, with addresses at Sandymount, Dublin, and Manhattan Beach, California, alleges fraudulent and/or reckless concealment and/or misrepresentation concerning the fund, set up to purchase and renovate the Beekman Tower Hotel and Eastgate Tower Hotel in Manhattan.
Among various claims is that Anglo failed to disclose issues relating to zoning of the two hotels and issues relating to renovation costs. A brochure distributed by Anglo to investors referred to $24.8 million renovation costs for both hotels but final renovation costs were put at $103 million, beyond the capacity of the fund, it is claimed.
The proceedings are against Anglo Irish Bank and the Anglo-owned Delaware-based Mainland Ventures Corporation (MVC), which deny the claims.
Mr Haskin has provided a 30-page witness statement to the court and was asked about aspects of that by Martin Hayden SC, for Mr McCaughey, yesterday.
Mr Haskin said he was “absolutely furious” about how Anglo representatives negotiated aspects of the 2006 deal. He said both he had and Anglo wanted an $8 million reduction in the purchase price from the hotel vendors because of undisclosed zoning and compliance issues related to the hotels.
However, an Anglo representative had in April 2006 excluded him from a side meeting with the vendors and agreed to a $1 million reduction and also agreed there would be no further physical due diligence carried out, he said.
Mr Haskin agreed with Mr Hayden that renovation costs were central to the project and said the Anglo side had also recognised that. He said he had told Anglo prior to September 2006 – when the investors signed up to the deal – that renovation budget figures provided were preliminary and would not be final prior to the deal being closed.
He also said he was aware a brochure was being prepared for investors and he and his lawyers believed issues concerning zoning should be disclosed in that. His lawyers had drafted material for the brochure concerning the zoning disclosure point and he had e-mail exchanges with Anglo about this.
In his witness statement, Mr Haskin said he had joined Tishman Hotel Corporation in 1992 as a vice-president and later became its managing director. He left Tishman in 2006.
From 2002, he had had discussions with John Livingston, president of Tishman Construction, about creating their own real-estate business. He raised the possibility of Anglo sponsoring such a business with a vice-president of Anglo Irish New York, Garrett Thelander, after taking Mr Thelander and his fiancee to a Rolling Stones concert in New York.
He said Mr Thelander was “very receptive” to the idea and Mr Haskin had in October 2005 made a formal presentation to the bank about his proposal, which Anglo US modified slightly before sending it to Anglo in Dublin. Discussions went “quite smoothly” and a meeting with then chief executive David Drumm at the bank’s 2005 Christmas party in New York also went well, Mr Haskin said.
The case continues today.
