Chapter 8 LIMERICK
n 2000, Pat Kennedy’s life changed dramatically. After being sentenced to
five years imprisonment for fraud by the Dublin High Court, his lawyers had
appealed, placing the blame fairly and squarely on those who had disappeared
when David Castlemain’s yacht, the Marie Gallant, went down in a tropical storm
off Cuba. Pat Kennedy was acquitted; given the benefit of the doubt. Perhaps it had
been the proverbial luck of the Irish, or a divine intervention in answer to his
devout wife’s prayers. Whatever, Pat vowed never again to be caught in the kind of
entanglement that had led to his terrifying brush with justice.
It was a different man who returned from the brief though grim sojourn in
Dublin’s bleak Mountjoy Prison with its degrading and overcrowded conditions.
Kennedy was very much chastened and his pride had taken a severe blow. He
returned to his accounting practice in Limerick City where his faithful staff had
pursued his modestly lucrative, but mundane, business of bookkeeping and tax
returns for the county’s farmers and small businesses.
He put the experience behind him and turned all his attention to his business,
reassuring his clients and rebuilding his reputation. Thanks to the strangities of
Irish law Kennedy was at the same time a certified accountant, auditor and
liquidator. This curious mix had given a free rein to his brilliant and fertile mind
landing him in serious trouble as he sought to escape the confinement of his small
and dull Irish home town.
Somehow the storm passed. Then when his wife’s parents passed away, Margaret,
an only daughter, came into a sizeable inheritance; mostly in the form of land in
and around Limerick City. It was about the same time property prices in the Irish
Republic started their meteoric rise. Kennedy, an opportunist at heart, jumped on
the occasion, developing the constructible land, building up-market individual
homes and making himself a very substantial profit. He then turned his attention to
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the Dublin property market where he bought land in the outlying docks area, which
soon doubled in price. Then like many Irish property investors he invested in
commuter developments, building new executive homes in the green fields
surrounding small towns and villages within a thirty or forty minutes’ drive from
the capital.
Kennedy had played his cards well during his trial before the Central Criminal
Court by defending the good name of the David Castlemain, head of the Irish
Union Bank, and the banker’s family. Almost two years passed before the
unfortunate Castlemain was miraculously found by turtle hunters; living the life of
a latter day Robinson Crusoe on an uninhabited island off the Cuban coast.
Kennedy’s version of the story told in the High Court was confirmed and he was
presented by the media as the innocent Irish victim of English crooks, which was
not however, entirely true. As for the poor Castlemain he had lost his head,
destined to pass his days interned in St. Senan’s Psychiatric Hospital, near to the
small town of Enniscorthy in County Wexford.
It was the start of a new life for Pat Kennedy. Encouraged by the turn of fate and
re-established as a well-connected and prosperous businessman in Limerick City,
he turned his attention to other ventures. Renewing his friendship with Michael
Fitzwilliams, who in the meantime had been appointed CEO of the Irish Union
Bank following his uncle’s presumed death, Pat set his sights on greater things.
After a fortuitous meeting with Jeroem Hiltermann, an Amsterdam banker,
Kennedy seized the opportunity of forging a link between the Hollander and
Fitzwilliams, setting up a sequence of carefully managed events that were to open
the door to banking, launching him on a sudden and vertiginous rise in the world of
international finance.
The Nederlandsche Nassau Bank, a venerable finance institution, was founded in
Amsterdam in 1796 for the development of business in the then booming Dutch
East Indies. During almost all of its existence it had been controlled by a single
extremely conservative family. Then, following the death of Martin Hiltermann, in
2001, his relatively young and ambitious grandson, Jeroem, took control of the
bank. The moment to broaden the bank’s business activities was long overdue and
what’s more there was no lack of opportunities; amongst them was the financing of
a new computer assembly plant for a leading Dutch electronics firm setting itself
up in the very favourable tax free zone of Shannon, situated on the west coast of
Ireland.
Jeroem Hiltermann was naturally present for the inauguration ceremony of the
plant and the cocktail that followed for the local dignitaries. Unfortunately this was
somewhat complicated by the difficulties Hiltermann had in understanding the
Irish brogue. However, he was pleasantly surprised when he was introduced to Pat
Kennedy, who to his surprise addressed him speaking a reasonably correct Dutch,
even if the accent was west-coast Irish. Kennedy's firm had been engaged as an
accounting and tax consultant by the owners of the assembly plant, thus providing
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a common ground of interest and facilitating their conversation. The two men hit it
off and at Kennedy’s invitation they met for lunch the next day at the Adare Golf
Club in the Irish countryside a few miles south of Limerick City.
The Adare Manor, more reminiscent of a château, had been first built by the
second Earl of Dunraven, then rebuilt by the Lord Dunraven and his family in the
19th century, then, in 1982, Thady Wyndham Quin, the 7th Earl of Dunraven sold
the Manor to the Kane family of Florida, who renovated it and transformed it into a
luxury hotel and golf club.
The air of genteel Irish tradition appealed to Hiltermann, and Kennedy sensing
the Hollander’s interest spun him his own fascinating version of Ireland and its
history. Pat, a regular visitor to the manor, assured the complicity of the maître
d’hôtel by his munificent gratifications. Hiltermann, warmed by the very best aged
Irish whisky, generously served by the maître d’hôtel with Kennedy’s discrete
encouragement, listened with interest as the Irishman spoke of his own experience
and contacts both in Ireland and abroad. Quite naturally Pat carefully omitted the
unsavoury details relating to his adventures in Estonia, Cuba, Mexico, Colombia,
and his almost catastrophic brush with the Irish criminal justice system. As
convincing as ever, Pat unconsciously vaunted the advantages of Ireland as a
growing financial centre, privileged by government and encouraged with low
corporate taxes and few regulations.
With Hiltermann sufficiently ripe, Kennedy had little difficulty in getting himself
an invitation to the Nederlandsche Nassau Bank’s headquarters in Amsterdam. As
soon as he had fixed his next trip to the owners of their common client, the Dutch
electronics firm, based in Schiphol on the outskirts of the Dutch capital, he
promised to inform the Hollander.
Later that month Hiltermann reciprocated Kennedy’s hospitality by inviting him
to lunch in Amsterdam. The banker was rewarded for his attention when he
discovered to his delight Kennedy’s friendship with the young head of the Irish
Union Bank. Kennedy needed little persuading to arrange a meeting for him with
Michael Fitzwilliams.
Fitzwilliams and Hiltermann soon developed a cordial relationship and agreed
that a link between their respective banks would be to their mutual advantage.
Then, in 2001, the situation changed dramatically. After being severely mauled by
the after effects of the dotcom crash and 911, the two bankers, forced to seek a new
way forward, decided on a merger. Together they could exploit their
complementarity, opening up opportunities in investment banking, and taking
advantage of rapidly expanding markets in the UK and Europe. At the conclusion
of the negotiations on the terms of the merger, in which Kennedy played a key
role, a new and ambitious international holding was born; the Irish Netherlands
Bank Plc., with its headquarters based in the City of London.
Both in Ireland and the Netherlands the banks were restructured, though retaining
their respective images to reassure their existing customer bases. Michael
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Fitzwilliams headed the new holding, whose goal was to broaden activities into
investment banking.
The new bank was ready to take on a bigger and more international role,
benefiting from the booming conditions in London as the City expanded to become
the world’s leading international financial centre. Irish Netherlands Bank Plc.,
diversified its activities, offering a whole range of new services to investors and
soon became the country’s fastest growing commercial and investment bank,
reputed for its lavish image building events and large bonuses.
The bank’s organisation was divided into three distinct geographical spheres of
operation. The Irish Netherlands Bank Plc., as well as being the holding, controlled
the UK and Caribbean markets; the Irish Union Bank managed its home market in
Ireland; with European and Far Eastern markets under the Nederlandsche Nassau
Bank NV.
Within a couple of years, thanks to the booming Irish and UK economies, the UK
and Irish entities outgrew the continental activities in Amsterdam. To facilitate
their international operations a new holding company, the Irish Netherlands
Holding Bank Inc., was formed in the British Virgin Islands, and Fitzwilliams
appointed its CEO. The new offshore holding company set up its operational
headquarters in the City of London in the same offices as the plc.
As for Hiltermann he remained in control of European operations. Now, with
direct access to the City and its vast financial resources, his objective was to
expand the group’s operations in Europe and more specifically into New Europe
and the ClubMed countries, developing finance and property business.
They were exciting times; the sky was the limit. The bank’s key executives jetted
around Europe signing new deals with an ever-growing list of new partners.
However, as the bank grew it became more reliant on loans to finance its
operations. Not so different from what just about every other bank on the planet
was doing during the euphoric growth of asset wealth in the middle of the decade.
When the sub-prime crisis triggered the catastrophic failure of Lehman Brothers
in September 2008, lending markets dried-up and a disastrous chain of events were
set into motion. In London, Dublin and Amsterdam the bank was caught-up in the
crisis that menaced its heavily leveraged Nassau Investment Fund and sudden need
for cash sucked its founders into dangerous territory.
