Photo Credit: Sean Dwyer

“I don’t know what it’s like to be in jail. I’ve only watched Prison Break. But I don’t see why I should go to jail. I am not going to be made a scapegoat for the bankers’ – Michael Lynn.

By: Michael O’Farrell
Investigative Correspondent

FOR a man under so much strain, Michael Lynn appears remarkably calm – as his piercing blue eyes and steady voice carefully and deliberately emphasise every point he makes. Those attributes, and his famed ability to charm, once reassured high-flying bankers to part with millions.

Now they seek forgiveness and appear genuinely contrite – even if he knows that many will struggle to believe him after everything they have read in the past year.

‘I was on my own personal drug of ambition fuelled by the desire to succeed,’ he says, repeatedly raising both hands to his head as if even he can’t believe what happened.

‘Today I look in the mirror and ask myself who he was? I am disappointed that I lost some of my own fundamental principles that I was given as a young fellow. I have let my family down and I have let myself down. And that’s difficult and I need to live with that all of the time. But that’s my problem, that’s my bed and I have made it. The mistakes that I have made, I have to live with the consequences.’

Dressed simply in a creased, casual sports top, jeans and trainers he insists that he is determined to rectify the damage he openly accepts responsibility for.

‘I read some of the papers and see the reports on the internet and I think: “God I’d love to meet that fellow they’re writing about.” ‘Because it is not me, the high flyer they speak of. I’m an ordinary guy who had huge ambitions and who made huge mistakes. So I don’t want celebrity status. I do want to have a normal life if possible and I can only do that when I have done the right thing. I have to do the right thing first.

‘I have to also understand the consequences that that has had for other people. I am aware of how I have affected other people’s lives – the investors who invested with me – and I am truly sorry that the plan, the vision that I had, was interrupted because I never intended them to suffer and they have.’

The vision he speaks of – and he uses the term incessantly when he reverts to business-speak – is by now familiar to all as his now-defunct company, Kendar.

‘I had visualised a dream. I wanted to achieve, aggressively, growth in terms of Kendar as a company. I was driven by it.’

So too, we now know, were many in the banking world: and in the wake of the banking scandals of the past six months, his scornful claims about the insatiable greed of the bank bosses seems all too plausible.

‘I don’t want to sound arrogant when I say it was easy to get money,’ he says. ‘It was the way things were in Ireland. We have to understand that I’m a product of the system. Yes I am responsible for me but I am a product of the system.

‘I bought my first house with a 95pc mortgage. I was only starting my own business as a lawyer so I had no assets. My mother lent me £15,000, which I paid back to her. My second house I bought for €110,000 and I got a mortgage of €125,000. And that’s against valuations.

‘There was an absolute understanding in Ireland of “How much do you want?” It was a complete and utter disaster waiting to happen. All they wanted was cash-flow capacity in terms of perception and it was: “How do we give you the money?” ‘The banks couldn’t get enough of me. And if you were to get sight of certain decisions by credit committees you would see that they discussed openly my property portfolio abroad. When they were considering the merits of giving me a loan for an asset at home they would know about my development abroad. That’s their decision. They were their choices and it was all of our choices to borrow the money.

‘The banks were very interested in my story. They were very excited, as were my professional advisers and fellow directors. Very excited by the amount of money that could be made and we were all – including myself – following the trend. I was the Celtic Cub out of control in hindsight. And I was greedy and overambitious. But yes there were other parties involved. They didn’t conspire; we were all part of a mythical illusion.’

Now, though, he appears intent on accepting his share of the blame and unlike many in the banking world he has no qualms about apologising.

‘The critical thing for me is I owe the money to the banks. I have to repay the banks or do a deal with the banks. I am not immune to the global crisis. I didn’t cause it, contrary to what certain people might think, and I understand my responsibilities but I can’t do it overnight. I’ve got to try and sort it out as well as I can.

‘I owe the Irish banks money. I acknowledge that debt. I don’t deny it.’

Also acknowledged is an estimated E 12.5m debt to investors, many of whom handed over life savings for apartments in Portugal, Budapest, Slovakia and Bulgaria.

‘The reason I am constantly travelling throughout Europe is to try to realise the one thing that’s important to me, which is to honour the investor commitments in so far as it is reasonable and physically and financially possible to either get all or part of their money back or else give them the apartment they wanted.

‘These people did no wrong. I am sorry for what happened to them and I believe right now the key question for me is that if I am sorry I have to show it by action as opposed to just words because that’s just bulls**t – words.’

The problem for Lynn, though, is that in the Irish courts he stands accused of taking out multiple mortgages on the same property with different banks… sometimes with signatures that, the courts have heard, are forged. In short, he’s been painted as a fraudster and a thief. It is a label he furiously disputes.

‘Absolutely not. Absolutely not,’ he says when asked. ‘I never had a plan to steal from people. I’m Irish, I’m from Mayo. I want – I would have wanted – to have lived in Ireland. I had an intention to live abroad for a period of time but I never intended to be as I am at the moment. It’s like every day is a Good Friday. You know when you go to a country and say: “God I’d love to live out there?” Try living out there and not being allowed the choice of returning.’

However when it comes to explaining the multiple mortgages on his houses, he struggles to find a way of outlining in simple terms what really went on.

‘If you want to get to the key question – did I act fraudulently and had I two and three mortgages against the same property? – it’s true I had extensive borrowings. That’s absolutely true.

‘But it’s also true that the acts that I engaged in and the misguided deeds – on the basis of advice from various professionals and the acceptance of certain parties – was probably misguided. But was it fraudulent? I do not believe so.’

What he appears to be hinting at, however obliquely, is that while there were a lot of mortgages, nobody was deceived: that in the rush to make money out of him, blind eyes were turned and corners were cut.

‘The intention and plan was all built into the entire Kendar scheme. Not one bank which lent to me refused the commission or the plaudits that would have been gained by bank managers for the loans that they extended. I never had any difficulty with any of my loans. The monthly instalments were always repaid fully. And I would argue that this was not something that people were aware of.’

When pressed again on the issue of multiple loans he returns once more to a similar theme.

‘It’s true that the borrowings I had were extensive against the portfolio. But in order to understand that, it’s critical that you understand the agreements which were in place with the banks and that’s a matter between me and the banks. The only thing I admitted was that I owe them the money.’

Clearly he is displeased at the manner he is being portrayed in Ireland.

 ‘Can I just say one thing about this. Everywhere in the press you see “Michael Lynn: fugitive who absconded with €80m.” But I am not running from anybody, contrary to expectation, and when I left Ireland, my statement of affairs showed assets of €65m.’

To prove it he even says he would have no problem meeting fraud squad investigators immediately if they wish to visit him.

‘No problem,’ he shrugs. ‘The word fugitive is somebody who is a criminal, who is being chased and who is trying to escape the arm of the law.

It’s true that I am wanted in Ireland for a civil offence of failing to appear in Ireland for a court hearing in December 2007. That’s a fact.

But that’s a civil case which was investigating me as a lawyer. ‘I haven’t spoken to gardaí but my lawyer has spoken to them on a number of occasions and has made them aware that I am available for a meeting. We have no problem meeting them to answer the questions they wish to put to me for any investigation.’

That investigation and the court proceedings already taken against him have, he says, left him with nothing.

‘I own absolutely nothing. The bank – AIB – have seized in Portugal the property that I own as an individual..They also seized the 50pc interest I own in my own home in Portugal and they are trying to sell that as well. They took everything in fairness. They didn’t refuse me. So I have no property in Ireland. The only hope I have of having any property in Ireland is that my brother will let me walk on the farm in Crossmolina.’

It is clear as he speaks that after more than a year away from Ireland, he is now seriously considering a return – whatever the consequences.

‘The truth is I want to go back. The life that I am leading and the pressure is tough. I have a wonderful wife. She has been extremely loyal to me and loyal to us as a couple. I am extremely lucky and Ireland is where I am from. It’s my home.

‘I have seen my family. They have been so loyal, something that I appreciate hugely. It can’t be easy for them. You know, I have to say sorry but I have to do something about it as well. Sincere apologies are important but it’s important to have something behind it as well.’ And what future career would he like to pursue? ‘I don’t want to be a country and western singer,’ he says laughing.

‘I still think I have talent in business and I still have a belief in myself and I think I know now who I am. This has been – this is – a very difficult journey but for me what’s most important is that I am willing to put up my hand and say: “I was responsible and I was captain of the ship.” ‘And it’s important that at a crucial time I am not wasting time engaging in finger-pointing but trying to find solutions. Finger pointing can wait. But I won’t leave that without revisiting it.’

And it seems a return home may be on the cards even if that means a spell in jail. ‘I had discussions with my lawyer regarding the prospect of returning to Ireland and facing up to my responsibilities and the responsibilities of others.

‘I’d like to return to Ireland and the lawyer is investigating going to court on the basis that: “He is no longer a lawyer, these proceedings are finished, he’s entitled to return.” Or if the court were to say no, he has to serve one month, two months, three months, then I may return to serve that. I would like to return to Ireland if I can but what’s critical is that I can’t return until I have the investors absolutely secured. That’s the truth.’

Burning within him, however, is very clearly a sense that while he has got things terribly wrong, he is not a bad man, or indeed a criminal; and that he is simply not going to swing for the crimes of the Celtic Tiger while others who made fortunes slink off into the background.

‘Whatever the road I’m on presents me with, I have to meet those challenges.

I don’t know what it’s like to be in prison. I have only watched Prison Break. I wouldn’t see any reason why I would have to go to prison and the one thing I want to make clear is I am not going to be a scapegoat for others.

‘Absolutely not. I am not going to be used as an example for what was recognised as an acceptable form and practice of business by bankers, lawyers, accountants and auctioneers.

I am not going to be the poster boy who ends up in prison to my cost alone.’

Lynn also revealed how close he had come to breaking down under the strain as his empire collapsed.

‘I have lost everything in Ireland and I think it’s important that people understand that regardless what image people have of the individual who borrowed this extensive amount of money, there is a human being behind it. And that when this occurred it was a major, major shock. And suddenly they are taking your property left right and centre.’

Inevitably the strain took its toll.

‘I realised these guys want to morally, commercially beat me into a pulp until I simply go: “Take me, I am wrong”, and I just collapse.’

And he talks with astonishing frankness of his lowest point: the day when he almost collapsed as abruptly as his property empire.

‘There was one Friday when I came home to my wife and there was a rugby match on. But I didn’t see a rugby match. I saw nothing. I sat in front of the TV and I stared at the TV and I was lost. ‘My wife contacted her doctor and we ended up down in St Pat’s [St Patrick’s psychiatric hospital on Dublin’s St James’s Street] and they were going to admit me. I was there for two hours and I decided: “No I’m not going in there. Absolutely not. They can take every asset of mine but they are not going to defeat me. I will survive this and I will survive it because I must.” And I have. It was very difficult emotionally and personally and it still is.

‘I can’t go back to Ireland and that’s not really the way that I want to live my life nor is it the life that I wish to impose on my family or others.’

Michael Lynn Interview Part Two.

‘I was told: ‘F**k the small investors pay the banks.’ But I’ll pay it all back’

By: Michael O’Farrell
Investigative Correspondent

AS MICHAEL LYNN tells it, the plan was simple. Too simple, perhaps.

‘I had a definite business plan,’ he says preparing the way for an ill-timed joke. ‘I didn’t just have two mortgages on one property.’

When he speaks of the personal toll his ill-judged choices have had on his family he at times comes close to tears, if only for a split second. But when the subject is business, he automatically reverts back into what was once a well-oiled and clearly successful pitch for funding.

‘To explain this, the first thing I need to present to you is that Kendar had a plan and a vision and it was a real plan in terms of its property portfolio and the managing of its investments abroad. Its plan was that Kendar as a company – which is separate to Michael Lynn as an individual – would very simply acquire property abroad, that it would work that asset, sweat the asset to increase its value and thereafter sell the asset into a fund.

‘The banks loved it. ‘I’d reached the point with the banks that they were going to invest with me in shopping centres in Budapest. And with Anglo Irish I was buying it for €27.5m and they had a loan offer to give me €30m – against a contract purchase of €27.5m – figure that one out.’

But Lynn, who persuaded politicians such as former taoiseach Albert Reynolds and sportsmen such as rugby Shane Byrne to help publicise his projects, wanted to go a step beyond the banks, to equity funds, raising even more money. ‘The plan was then to sell that into a fund and we had discussions and negotiations extensively throughout the period February to July 2007.

‘Our plan was to sell the asset into the fund with the increased value. Giving a practical example I buy land at €100. You get it rezoned, it’s immediately worth €150 or €160. You get planning permissions on it, it’s worth €250 or €300 and then you sell forward apartments and suddenly you have this package deal that’s a secure investment for a fund to take on.

‘We had interest from three different funds, one an American fund. We had also discussed the possibility of floating through AIM [the stock market’s Alternative Investment Market] as a company and also we had interest from one Irish consortium fund group.’ He refuses, point blank, to reveal the names of the funds which were interested in investing. But he reveals that his plan was to effectively become a project manager for the fund’s property investments.

‘The division of the agreement we were putting forward was that this fund would come forward and buy this property and that they would employ Kendar to manage the build, the provision of the apartments for the end users and that we would receive a project management fee.’

Had it worked he insists everyone would have been repaid.

‘What was envisaged was that there would be a profit from that. And that all the loans Michael Lynn personally put into Kendar in Ireland, or in the companies abroad, would then be recouped and repaid to all of the individual banks.’

But it didn’t work – in a spectacular and by now infamous fashion. And while intent on rectifying the damage done, Lynn is clearly not prepared to accept all the responsibility.

‘The reason it didn’t work was because all of the banks collectively decided against me and because the Law Society intervened in my practice. But the Law Society didn’t just intervene in my practice. They also closed the accounts of the operating company, Kendar Holdings. I am very confident that if Kendar had been allowed to continue as an operating vehicle it would have worked.

‘Perhaps there would not have been confidence in Michael Lynn. I would have had no choice but to step down as a manager – but assets are assets and one thing that we can pride ourselves in is that we acquired good assets in good locations. We weren’t just borrowing money to buy sweets. I don’t believe the Law Society should have frozen Kendar’s accounts but that was the decision of the High Court. And the directors of Kendar, at the time, tried to get legal advice for Kendar and they were refused by 25 legal firms in Dublin. This left the investors in jeopardy, with absolutely no information and Kendar became somewhat a rudderless ship because staff not being paid began to walk.’

But even before that, wasn’t Michael Lynn Inc in trouble – having already received multiple mortgages against the same properties?

‘Well, let me put it like this. The scheme that was in place in relation to Michael Lynn’s borrowings would have paid them. In October I went to the Law Society and admitted that I owed the banks money. I never dealt with the issues of double and treble mortgaging. The key questions need to be asked of other individuals.

‘The difficulty arose in that key individuals who bore responsibility on behalf of Kendar to the investors did not honour their obligations and were happy to point the finger at myself using my own difficulties to remove their own moral or commercial responsibility. Many people ran like hell. People who were responsible individuals. They absolutely vanished, ran out the door.’

By his own admission, Lynn now owes some €13m to private investors – in addition to the millions due to banks.

‘Let me give it to you jurisdiction by jurisdiction,’ he says. ‘In Portugal, investors are [owed] approximately in or around €3.2m. In Bulgaria, €5m. Slovakia, €60,000. Budapest, €4.2m.’

And just how much does he actually owe the banks? ‘I don’t want to be flippant but I understand it’s €80m. That’s what I understand.’

Apparently determined to pay investors back, Lynn says he considered going into receivership before he left Ireland. But this, he claims, would have left ordinary investors left wanting, as the banks jumped to the top of the queue.

‘In one meeting, people consistently referred to the investors as the little people. I never remember any of the investors as being leprechauns. That’s one thing that I took grave offence at because I felt the establishment were telling me: “Listen Michael, you can f**k the small guys. Just pay something for the banks and it will be all grand.” ‘I was told by one adviser: “Michael if you help the banks out – even if you give then 10 cent, 20 cent in the euro – there will be no criminal charges against you.” I made it clear, in relation to any receiver, that there had to be a plan, a coherent plan, that could give me some satisfaction that the investors’ investment would be given due recognition alongside the banks.’ But the liquidation was abandoned, partly because it would have also proved expensive. ‘The advice at the time was that the Irish costs would be a minimum of E2m or E3m. Then you would have the costs for each country. All I saw was a jolly for the professionals.

‘It made absolutely no sense from a commercial point of view. It was about: “Get the money in.” But in reality, I was saying: “This requires time and you will get much more money in. You have the purchasers, you have the sales, honour those contracts and you get everyone out.” But the attitude of the advice I got was that I should just sell, sell, sell.’

So after coming close to being checked into a psychiatric hospital he left Ireland and now says he is steadily working to secure a return for his investors.

‘Regarding Budapest we have a situation where the assets have been preserved for the creditors. Presently they are trying to sell them. In relation to Budapest I want to make it clear… The investors must receive the money… Currently the assets have been preserved for the investors and the only issue that requires resolution is that the correct list of investors are looked after. I believe it is important that we ensure in Budapest that one group of investors is not preferred over another.’

In Bulgaria, where his assets have been sold to firms in Panama and the Seychelles, he says the interests of the 300-plus investors who bought apartments off plan in Bansko is secured..

‘There is a project management company which will be appointed in Bulgaria which has nothing to do with me. It’s an independent company in its own right. A decision will be taken by the company together with some of the investors in Ireland about whether to build out or sell the asset. In relation to the direct clients, one individual is being selected who will go to Ireland and meet them himself. From my point of view I want to make it clear that the contractual commitment these companies have is a real commitment to me to honour and recognise the legitimate interest of all of these investors in that land.

‘Firstly they must be given legal guarantees against that land and that’s a declaration which must be honoured. So it’s clear under Bulgarian law that the Irish investors must be protected.’ In Portugal’s Algarve, Lynn says the as-yet-unbuilt second phase of his Cabanas development will also be completed.’

The development was previously run through Lynn’s Kendar company but is now known as Vantea – a firm in which Lynn claims to have no stake.

‘In Portugal the intention is to finish the infrastructure and begin building on phase two. From Vantea’s point of view there are approximately 60 purchasers who will be honoured and there is no question regarding that. The plan is to build sufficient apartments to satisfy existing purchasers. Vantea have recognised that in the current global crisis there is no point in building 203 units when you have sold 60. You build enough apartments to fulfil the commitments to the people who have agreed to buy.’

All of this will be welcomed by those who must have thought their money was gone – if of course they believe it. Lynn is acutely aware that many will simply not believe his assurances.

But he insists he will come through, perhaps even returning to face his responsibilities in Ireland.

‘I do not intend to lie down until such time as I have ensured that I can retrieve as much of their money as I physically and humanly can or to provide them with adequate security in terms of providing the product they entered into a contract with Kendar to obtain.’

Time will tell..