- Allied Irish Bank behind pay-outs for four U.S. dioceses in 2007
- Loans signed off by bank's headquarters in Dublin
- Lawyers brand AIB the banking arm of the Vatican
More than $400m of compensation to American victims of sexual abuse by Catholic priests was paid with loans and guarantees from Allied Irish Bank, it has ben revealed.
The funds,
in the form of loans, guarantees and lines of credit, were given specifically
to pay clerical abuse victims, and led to AIB being dubbed the 'Vatican's
banking arm' in U.S. legal circles.
The
revelation that a comparatively small Irish bank based on another continent was
used to pay off victims will raise questions about AIB's links to the church.
 |
| Corrosive links: Allied Irish Bank became known as the 'Vatican's banking arm' in U.S. legal circles |
One of the
payments, of $250m to the Los Angeles diocese, emerged in a new book entitled
'Render Unto Rome: The Secret Life of Money in the Catholic Church', by Jason
Berry, which outlines extraordinary links between the bank and the church.
But an
investigation by the MoS has established that in a few short months in 2007 AIB
emerged as the lender behind abuse settlements for four separate dioceses, and
the true figure was almost twice as high.
It also
emerges that while AIB was used to pay the bulk of the Church's abuse claims,
the dioceses were able to hold on to most of their properties.
More...
Berry also claims that out of 194 Catholic dioceses in America, 45 banked with AIB. In the book, he asks: 'Was AIB a pass-through for Vatican funds to help certain dioceses while others had no such advantage?'
Many
American dioceses, confronted in recent years with compensation cases, have
filed for bankruptcy and negotiated settlements with victims.
But instead
of being funded by the Vatican, which is fighting court cases by denying any
legal responsibility to pay, almost half a billion of the money paid out in
America was borrowed from AIB in Dublin.
 |
| Top men: The then- Allied Irish Banks director Eugene Sheehy, left, and the chairman of AIB at the time was Dermot Gleeson, right |
Many other
agreements may have been made out of court, in secret.
The MOS has
confirmed that all of the loans were agreed by the bank's headquarters in
Dublin, and amount to as much as a quarter of AIB's €2bn exposure in America
the following year.
The MoS has
also discovered that the loans are now being quietly repaid. In a revelation
that will prompt further questions about whether the Vatican is behind the
international deals, the supposedly-indebted dioceses have begun to pay off the
AIB debts with money from other, unnamed, institutions.
Just last
month a $40m line of credit to the Diocese of Portland in Oregon was taken over
by an un-named creditor.
Bob Krebs,
a spokesman for the diocese for many years, declined to name the new lender.
Asked why AIB had been used to help fund its abuse compensation cases, he said
he did not know who 'found Allied Irish for us'.
Of the
deals, by far the largest line of credit was for Los Angeles, for $256m. The
diocese avoided going into court with abuse victims by reaching a settlement in
advance.
 |
| Teen victim: Esther Miller was abused by a young deacon in Los Angeles |
It emerged
afterwards that AIB loans and guarantees accounted for almost half of total
settlement.
The deal
included $175m in cash and another $25m to pay the interest, and helped Los
Angeles avoid selling the bulk of its properties or reveal the true value of
its total assets.
In San
Diego AIB gave cash and credit of some $100m, almost half the $198m paid out to
144 victims.
That
diocese filed for bankruptcy on the eve of the first civil trial against it, a
case involving Monsignor Patrick O'Keeffe, originally from Kilkenny.
The Diocese
of Portland, in Oregon, also filed for bankruptcy because of compensation
actions.
Of a $129m
settlement for victims $40m came from AIB. The loan effectively allowed the
diocese to close the bankruptcy proceedings without selling any assets.
A loan
document obtained by this paper details the loans in Portland. On AIB headed
paper, it details how the loans were being specifically made to trusts set up
to pay known and future abuse claims for the diocese.
The letter
was written one day before a similar letter giving credit to the Diocese of Los
Angeles, again signed by its LA-based senior vice president Charles Lydon and
London-based vice president John McGrath.
U.S. lawyer
Jim Stang, who sat on nine bankruptcy committees charged with looking after
victim creditors, said: 'We joke that AIB is the bank of the Catholic Church.'
The bank is
still exposed on some of the loans. It is owed almost $10m by the diocese of
Wilmington in Delaware.
An AIB
spokesman said: 'AIB's business focus in America was in the 'Not for Profit'
areas and this included churches.
'Any loans
advanced were approved in accordance with AIBGroup policy.'
An AIB
source said they were 'standard commercial loans'.
A spokesman
for the Archdiocese of Los Angeles said the allegation of Vatican involvement
'is complete rubbish'.
'The
Archdiocese initiated the loan discussions with AIB and other potential lenders
in the summer of 2007. An arrangement was closed with AIB in November 2007,' he
said.
'Settlement
related financing was undertaken as a way to allow an orderly liquidation of
surplus assets by the Archdiocese, and provided time for the Archdiocese to
formulate a post-settlement recovery plan.
Financing
arrangements with AIB or any other potential lender had no impact on the
settlement timing or terms. The AIB loan was repaid in full during the 2011
fiscal year.'
AIB deal
meant US church could hide abuse documents
By John
Breslin
Esther
Miller was a teenager living in Los Angeles when she was repeatedly forced to
commit sexual acts with a priest who went on to abuse other young girls.
That period
in her life still haunts her as she enters her fifties.
The man who
abused her – a young deacon still at seminary college – groomed her by getting
close to her parents.
Over the
course of two years, until she was 17, the priest forced himself on her. He was
later appointed principal of a Catholic high school despite questions over his
behaviour.
He told
Esther to go to confession, but only to a particular priest. He called her
evil. He later turned out to be a serial abuser of boys too.
She
mentioned some details of the encounters to her mother, who slapped her and
told her never to speak ill of the clergy.
The abuse
had a profound effect on the next two decades of Esther’s life. She was married
four times and had dozens of jobs.
Only after
the revelations in the Boston diocese in 2002 did she set off on the long road
to forcing the Archdiocese of Los Angeles to reveal what it knew. Esther’s case
was one of hundreds, which were finally settled in mid 2007 for $660m.
‘I was
surprised at the dollar amount. I had no idea of the insurance and other ways
of raising money.’
And she had
no idea until this week that Allied Irish Bank had helpfully stepped in with
guarantees of hundreds of millions.
The deal
allowed the Archdiocese to avoid going to court and opening all its documents
to scrutiny.
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