Committee Reports > List of Committees > Dáil > 1971 > Committee of Public Accounts > Final Report - Northern Ireland Relief Expenditure

MIONTUAIRISC NA FIANAISE

(Minutes of Evidence)

Dé Máirt, 26 Eanáir, 1971

Tuesday, 26th January, 1971

The Committee met at 12.25 p.m.

DEPUTY P. HOGAN in the chair.

ORDER OF DÁIL OF 1st DECEMBER, 1970.

Mr. E. F. Suttle (An tArd-Reachtaire Cuntas agus Ciste) was in attendance in an advisory capacity.

The Committee deliberated.

Examination of Anthony James Fagan continued.

Mr. Fagan.—Chairman, before we commence formal session I would like to make a correction, please. While I realise that the Minutes of Evidence are at this stage in unrevised form I would, with your permission, like to correct the report of my evidence on Thursday, 21st January, page 204, column two, seventh line from end of page. The month “May” should be “April”. The remark I made was:

Another thing I never knew until May was that he——

that is Captain Kelly——

——was ever away on the Continent or that he had ever been out of the country.

The correct thing would be:

Another thing I never knew until April was that he was ever away on the Continent or that he had ever been out of the country.

Thank you.

2819. Chairman.—The money which was sent into the Baggot Street bank was, I understand, intended for the Belfast Relief Committee?

—Yes.

2820. That was a specific, identifiable committee?

—Yes. Not to me at the time. You will recall that my first intimation of the existence of a committee was when the Minister for Finance, Deputy Haughey, gave me this document in connection with the Clones account, and the heading on that was Belfast Fund for the Relief of Distress, with the names F, G, H, on it. I understood from him at the time that these were representatives of a committee, so a committee did exist in Belfast.

2821. Then, may we take it that there would be other bona fide relief or aid committees who would not have got any moneys from this Dáil Vote?

—Oh, yes.

2822. Were you in complete ignorance of the instructions which you have now seen on the top of the bank ledger cards that all inquiries be sent to you?

—Absolutely.

2823. The statement on Miss O’Brien’s account “Introduced by A. J. Fagan”, is that an incorrect directive?

—Absolutely.

2824. It was without your knowledge?

—Completely without my knowledge or authority.

2825. Is the entry on the ledger card of the George Dixon account, “No correspondence whatsoever. All inquiries to A. J. Fagan”, without your knowledge or permission?

—Absolutely.

2826. Is the entry in relation to the White, Loughran and Murphy account, “Any two to sign, no correspondence to be sent out, all correspondence to Mr. A. J. Fagan”, was that without your knowledge or permission?

—Without either.

2827. Did you in fact receive at any time any bank statements, returned cheques or any information from the banks in regard to these accounts?

—Never.

2828. Did you consult or obtain permission from your Minister before you phoned Baggot Street, before the opening of the accounts or the introduction of Captain Kelly?

——No. My recollection is that I did not. You used the words “opened the account”. All I did in that connection was to perform an introductory service and recommend in a sense Captain Kelly to the bank as a man known to the Minister and myself. Other than that I had no other part in this and did not think it necessary at the time to go to the Minister and get his agreement on this because only three or four weeks before that the Minister had given me this document, indicating that it was this account, indicating the three people who were running the account. It seemed to me at the time of the Baggot Street transfer it was just a case of transferring an account from A to B, and I am sure had I gone to Mr. Haughey on this he might have had possibly some remarks to make for taking such a basically simple matter at that time to him for ministerial authority.

2829. Your evidence then is to the effect that you made one phone call to Baggot Street asking Mr. Walsh if their bank would take the account and that you were sending over somebody to them?

—That is correct.

2830. You mentioned Mr. Kelly by name at that stage?

—I mentioned Mr. Kelly at that stage by name.

2831. Mr. Walsh’s evidence was to the effect, I think, that you made two phone calls?

—Yes.

2832. Do you say that is incorrect?

—No, I mean it is incorrect. Thinking over it, it is possible that one or two calls did emanate in connection with the basic transfer. I cannot recall this at all but to say that I made a second call several days later about the setting up of subsidiary accounts is completely out of the question. My firm recollection is that Captain Kelly was in my room when I phoned Mr. Walsh and I have a mental picture of him leaving the room and going over to the bank on the first occasion, so that there was no necessity at all for a second call as I see it. But it is possible that during the course of the day when Captain Kelly got in touch with me about the £7,500 requirement from the fund that perhaps Mr. Walsh was in touch with me or perhaps I was in touch with him about how that money should go to the bank. There could be two calls in that context; I just do not remember that. There were certainly no two phone calls in the context of an account and subsidiary accounts.

2833. Mr. Walsh’s evidence, as I recall it, was to the effect that you made a second phone call in which you indicated that Mr. Kelly would call to make the necessary arrangements for the opening of two subsidiary accounts?

—Yes. This is completely out and I think, arising from Captain Kelly’s evidence in court that he has more or less said that himself. If I may say at this stage that in the discussions that the Secretary of the Department has had with another official with Captain Kelly—if it is in order to quote what was said to the Secretary—“Captain Kelly said that while he could not remember positively that he had or had not contacted Mr. Fagan prior to the opening of these accounts”—the subsidiary accounts— “he agreed there would have been no necessity for doing this and accepted when it was put to him that the logical thing would have been a direct approach in so far as he had already been introduced to the bank some days previously”. That is the end of that recollection of the Secretary and other officials’ discussion with Captain Kelly on that point. My own recollection from the court case is that he did accept that position, perhaps not as strongly as that, but he did indicate that the position would be as I have just indicated.

2834. In his evidence Mr. Deacon mentioned ringing you about an overdrawn Dixon account?

—Yes.

2835. He states that he mentioned, or that he must have mentioned—he was a bit ambiguous about it—in his call of February 12th in discussing his concern with the overdrawing of the account, the subsidiary account or the Dixon name.

—Yes.

2836. He emphasises particularly that he must have done this as the other two accounts were in credit at the time and, therefore, probably he would not have had any occasion to mention them. What do you say to that?

—If Mr. Deacon says that he did phone me on this occasion, I accept Mr. Deacon’s saying that. I do not have any recollection of his speaking to me on that specific occasion. I can recall speaking to Mr. Deacon on three specific occasions myself, generally about the account. The first time was just a casual remark some time at the end of 1969 when I met him in the bank. There was some reference to Captain Kelly and I made the remark that he was on official duties, or was an official. I did not indicate his Army title or that he was an officer of Army Intelligence. I think Mr. Deacon’s retort to that was “We had suspected that ourselves.” The second occasion I recall I had a specific talk with Mr. Deacon about the account when he phoned me, I think in the early part of the year. He asked me—this was something the bank did from time to time—“Was the money in the pipeline?” meaning was money coming via the Red Cross to the account. I was able to confirm or not to confirm at the time—it must have probably been confirmation—that it was coming because I recall Mr. Deacon saying to me “Does he want it in English notes as usual?” My answer to that was “Well, I do not know, whatever he normally does”. Of course, if Captain Kelly was drawing notes in English denominations that would not have struck me as being particularly odd because he would hardly be taking new Irish five pound notes up to Belfast. The third occasion—of which I gave details last Thursday—was the Brady cheque incident. I have given the Committee the account of that so there is no point in repeating it, but I do not recall specifically Mr. Deacon speaking to me in February of an overdrawn account but I did say on Thursday that my assistant was aware of a call from the bank which I had taken and she will, with the permission of the Committee, be able to give further detail on that and what subsequently happened.

2837. Mr. Walsh also appeared to think that he got the names White, Loughran and Murphy from you?

—Yes. This is not so. In fact the names White, Loughran and Murphy were so strange to me that when I first saw them on the bank account produced to me by officers of the Special Branch on the 26th June that when I got back to the Department I was preparing a report for the Secretary of the Department on my conversation with the Special Branch officers, I had actually to phone one of the officers concerned to say in fact: “What are those names?”, the surprise of seeing that they were not F, G and H as I imagined all along, that the actual names had not sunk in and I actually had to get back to them to say, to have the names reread to me to put into the official report which I gave the Secretary at the time which would be on the 27th June, so I had no knowledge whatsoever of these people and never heard of these names until that date in June.

2838. You understood from Captain Kelly that the names on the new account being opened in Baggot Street would be the same as in Clones, F, G and H?

—Yes, and they were mentioned fully by name by him at the time.

2839. Did Captain Kelly phone you from Vienna?

—He did.

2840. Did you know what he was doing there at that time?

—No, I did not. The sequence of that is that on Saturday, 18th April, I got a message from a customs officer to the effect that a cargo was due to arrive at either Shannon or Cork airport that night and the customs officer felt from whatever information he had that ministerial authority should be given to the guards to let this consignment through. I tried to contact Captain Kelly because he was the officer who some weeks before had been in with me seeking ministerial authority for this item being allowed through customs without examination and I could not get him. Later in the evening when I got in touch with Mr. Haughey, who was away, he was away from his home for the greater part of the evening, I told him of this, so he instructed me to get in touch with Chief Superintendent Fleming, head of the Special Branch, and say that from his point of view, that is, the Minister’s point of view, that it was all right to let this consignment through. The Minister said that if Chief Superintendent Fleming had a problem that he should phone him at home and he would explain the situation. I could not get the Chief Superintendent; he was away from his office, but a few minutes later the Minister phoned me again to say that he had thought it better to consult Mr. Berry, Secretary of the Department of Justice, and arising from what Mr. Berry said that this exercise, whatever it was, was called off. The following day I got this call from Vienna. It was a surprise to me to hear Captain Kelly in Vienna. You will recall I could not find him the day before, but he said that he was in Vienna and that he had had a message. He asked me to find out from the Minister what his instructions were. He gave me his telephone number in Vienna to phone him back and said that he had to leave Vienna before 12 noon next day and he would like his instructions before that. On Monday morning I saw the Minister and gave him Captain Kelly’s message, and he said that he had consulted Mr. Gibbons, the Minister for Defence, and they both agreed that this thing should be called off. I phoned Vienna and told Captain Kelly this and he said: “Message understood. Would you please tell my wife I will be home later today?”

2841. Can you recall what dates these were?

—I can. The call on the customs officer was on the Saturday, 18th April, at about 3 in the afternoon. The telephone conversation with the Minister was about halfpast six that evening, and Captain Kelly’s phone call to me from Vienna was about half-past three on Sunday, 19th April. My conversation with the Minister, Mr. Haughey was about 10 a.m. on Monday, 20th April.

2842. Did you associate Captain Kelly’s presence in Vienna at that time or at any subsequent period with the bank account in Baggot Street?

—No, I did not.

2843. When inquiries were being made as to the possible use of public money for the purchase of arms, did you associate the two things then?

—No, I did not, Chairman.

2844. I think Mr. Walsh also thought that he must have presented a mandate and cheque book of the first account in Baggot Street to you?

—Yes. This is not so.

2845. You have seen the instructions on the ledger cards?

—I have.

2846. Would you agree from the nature of these instructions that in the ordinary course of events no material in respect of these accounts would issue from the banks either by post or messenger?

—I would.

2847. Then such material from the banks would have to be collected by somebody? Would you agree with that?

—I would.

2848. And would you agree that any departure from that would be contrary to the instructions on the ledger?

—I would.

2849. Would you agree with the suggestion made by Mr. Moore that such material would have been or should have been given to you alone if the internal directions of the bank were adhered to?

—I would.

2850. But they were not?

—They were not.

2851. Deputy MacSharry.—To take up a couple of the last points made—when you were notified by the customs official about this shipment you said you tried to get in touch with Captain Kelly. Why would you try to get in touch with Captain Kelly?

—Because Captain Kelly was the officer who had come to me on March 19 seeking the agreement of the Minister for Finance to the import of something which he wanted the Minister’s permission or agreement to come in without customs examination. Arising from that abortive effort through the City of Dublin and talks about Dublin Airport, Cork and Shannon throughout that period which involved Captain Kelly being given names of customs officers, that when this customs officer, who is a man who would normally give me the name of the customs officer whom Captain Kelly should contact, mentioned this and said on the Saturday that Ministerial authority would be needed, not knowing anything about this whatsoever, coming out of the blue so to speak to me, before I went to speak to the Minister I had to find out what it was about so Captain Kelly would be the only contact I had in this and, obviously, was the only person who could have told me if, presumably, the Minister wanted additional information and say “What is this about?”

2852. Did the customs officer not tell you what was in the shipment?

—No.

2853. He just asked you to get Ministerial permission for a shipment without stating what was in the shipment?

—Yes. In fact, if I remember correctly, what he said was “A member of the Government”. He did not say specifically “Your Minister” but Government authority or authority of a member of the Government or words to that effect.

2854. And this particular official had been in association with Captain Kelly prior to ringing you?

—I cannot actually answer that. He was the man I knew who had been appointed by a Revenue Commissioner to deal with me in this matter but whether this officer was, as you put it, in association with Captain Kelly, I do not know. I do not know whether he ever even met Captain Kelly.

2855. In your opinion, why would it be necessary for the customs official to ring you?

—Obviously he had got information. I never met the man other than meeting him briefly in court. I never quizzed him about this but in my view it was that he had got, possibly through activity at the airport—the Special Branch were guarding it; to use the phrase used afterwards, the airport at the time was armed with a ring of steel—that it is possible that some contact had been made with him before Captain Kelly went to Vienna, whenever he did go there or go to the Continent or that he had a message. I would not know.

2856. It could have happened that Captain Kelly had been in touch with these officials on the say so that he was getting Ministerial authority for such shipment?

—It could well be.

2857. From what you said earlier, I assume the permission was not given by the Minister, that the thing was called off?

—Yes.

2858. You did say also in your evidence last Thursday that it was as a result of this phone call or message from the officer in the Revenue Commissioners that you and he decided to see the Taoiseach?

—Yes.

2859. According to your evidence this morning, you had more or less been in touch with your Minister on the Monday following that weekend?

—No. The sequence was——

2860. Yes but I will give you the sequence as I see it and you can correct me if I am wrong. In your evidence last week you said that the handing over of St. Enda’s——

—That was on 23rd April.

2861. What I wanted to get clear was that in actual fact the weekend you made up your mind to see the Taoiseach your Minister was not available?

—No, he had his accident on the Wednesday.

2862. This was not clear up to now. We were mixing up the two weekends.

—Sorry, Deputy. The weekend of what we call the “Vienna operation” and the events of the Taoiseach was the following weekend.

2863. To get back to the beginning of the Grant-in-Aid, the first instance you were handed a document by the Minister with the names in full of F, G and H with the instructions to open an account in Clones——

—No, the account had been opened in Clones, I understand subsequently, by the Minister asking the Irish Red Cross Society to pay £5,000 of their own money to an account in Clones which effectively opened the account. My instruction from the Minister, when he gave me this document, was to ask the Red Cross to repeat the operation but the account was obviously there, founded originally, on what date I would not know. But it was founded originally by the Red Cross with £5,000 from their own resources and where I came into it was to ask the Red Cross to repeat this and when the Red Cross found a difficulty there, I mentioned this to the Minister who then said “Pay £5,000 from our Northern Ireland fund to the Red Cross and get them to transfer it to Clones” so the account was there at that stage.

2864. The account was there but according to this document you understood that the committee had been established in Belfast?

—Yes.

2865. Did you understand at that time or at some time later that this was more or less the main source of outlet, in the Minister’s mind, for this Grant-in-Aid?

—The main but not the sole, yes I did.

2866. In so far as the approval sought from the Minister from then on, the written ones that we have anyway, they are “Kelly’s people would like £2,000 more, is this OK through the Red Cross, please”?

—Yes.

2867. This was the type of request that was made to the Minister?

—Yes.

2868. So that all of the requests would be made either orally or written in that way?

—Yes.

2869. You did state already that you did not make the Minister aware of the transfer of the account in Clones to Baggot Street. Therefore, the Minister may never have become aware of the transfer from Clones to Baggot Street in so far as your oral or written consent about the allocation of funds was concerned?

—It is possible.

2870. You never made him aware?

—Not to my recollection but I regard it as inconceivable that at some stage between November and April, that at some stage Baggot Street had to be mentioned in some form or another or a local bank, but I do not honestly recall ever going to the Minister and asking for the transfer from Clones to Baggot Street or having any occasion to say Baggot Street but particularly in regard to the 12,000 dollar lodgment round Christmas I feel that Baggot Street did emerge in that particular context and it is possible that on one or more occasions that Baggot Street might have come into our discussions but I do not specifically recall that.

2871. On the question of the dollars from America the Minister just said: “Lodge that to the Distress Fund”?

—To the Belfast Relief Distress Fund, yes.

2872. And to his knowledge that could have been in Clones at that time?

—Accepted.

2873. Could have been?

—Accepted.

2874. And, therefore, the instructions that were being given in so far as the expenditure of this fund was concerned particularly in relation to any approval given for Kelly’s people, as such, could have been given by the Minister on the undertaking that it was going through what was, to your knowledge and his, the established account in F, G, and H’s name in Clones?

—Yes.

2875. And he was not aware of any fictitious names either?

—No, not to my knowledge.

2876. As you were not?

—No.

2877. Your relationship with Captain Kelly at the time, Mr. Fagan?

—Yes.

2878. It was one of—how would you describe it?

—Well, Captain Kelly was on the scene, so to speak, for some months before I ever met him. I first heard of him from Colonel Hefferon, the Director of Military Intelligence, as one of his best officers, one of his finest men. In fact, I think he was the Colonel’s personal staff officer. I gathered that he was very much involved on the Northern Ireland scene and had a special relationship with the North via certain Ministers. In that connection I understood that this related to a sub committee of the Government or of the Cabinet set up to deal with Northern Ireland affairs and that Captain Kelly had a special role in that connection with these Ministers. I first met him physically in the Minister’s presence at the time of the—the first time I was aware of the Clones incident and I met him occasionally after that. As a man he struck me as a very upright, decent man. I never found him out in anything that one would be annoyed about. He was honest, he was direct but, as I indicated on Thursday, he kept his business to himself. He never discussed his affairs with me nor was I aware of them.

2879. So, your impressions of Captain Kelly, if I could just sum them up, would be that he was an officer of the Intelligence Branch of the Army?

—Yes.

2880. That he was the recognised go-between?

—Yes.

2881. Between this established committee for the expenditure of this fund and the Department of Finance? That would be the way you would take him?

—You mean the establishment of the fund, yes.

2882. No, not only the establishment but the expenditure involved as well?

—Oh yes.

2883. That he was the go-between, because most of the money was requisitioned on his “say-so” to you?

—Yes.

2884. With the Minister’s approval?

—Yes.

2885. You did, in your evidence on Thursday, mention not being aware of Captain Kelly’s dual role. What would have been his second role in so far as you would—at the early stages?

—Well, as I said perhaps rather loosely on Thursday, I did not imagine that he was basically a social welfare officer, that one would expect an officer belonging to Army Intelligence to not be engaged wholly and solely on that kind of work. I often wondered precisely what he was doing but my own thinking was that here was an officer of this particular unit of the Defence Forces in and out to Northern Ireland on his legitimate work and that he did this as a help out to these people as a sideline, that he could not have been spending all his time trekking backwards and forwards to Belfast, handing over money or coming down here looking for money, that there must have been something else in it. It was only until the Arms Trial I heard Colonel Hefferon’s evidence that in fact not only Captain Kelly but also all other Army intelligence officers had been forbidden to go into Northern Ireland from a very early date.

2886. Could I say from that that you, at an early stage, suspected some other thing in it?

—Yes, well——

2887. ——Other than the dishing out of the Grant-in-Aid?

—Yes.

2888. What specifically?

—Ordinary Army intelligence work.

2889. Related to Army intelligence?

—Yes, and, by the way, about my thinking that Captain Kelly did go in and out of Northern Ireland, which we know now is not a fact, but several occasions throughout the period when we wanted to communicate with people in the North and not necessarily the F, G and H people but the other housing people the Minister was always very insistent that there should be no communication either verbal, written or by telephone to Northern Ireland and his direction in letting people know or in asking for information was: “Get Kelly to do it” and Captain Kelly did take messages from me to people in Northern Ireland and did bring me replies pretty quickly. That is not to say or infer that he disobeyed his instructions, that obviously through contacts, in other words, that he did get the message in and a reply back through his own methods but he never said to me: “I cannot go to Belfast” or “I cannot go North” but I certainly felt that he was doing this himself.

2890. You did touch on it there, Mr. Fagan, in conversation with the Minister that at all times he stressed the security of this particular operation?

—Absolutely. In fact, I remember one specific occasion in an inadvertence, a simple letter of acknowledgment or thanks to somebody in the North for some report they had sent down, inadvertently got into the Minister and I remember his action was quite speedy. He called me in and said that everybody in the office should understand and appreciate that no communication should go north of the border which indicates that we are interested in helping out these people and I went round the office telling everybody that no letters should be prepared or no telephone calls should go through from us. I think it did relate to the fear that these people had of having any appearance of connection with officialdom south of the Border.

2891. Coming to the bank, the Chairman has already asked you and you have heard the evidence of the banks?

—Yes.

2892. And you stated categorically you had no knowledge of the fictitious names whatsoever?

—Yes.

2893. Or any of the dealings in the accounts?

—Yes.

2894. Whose duty would it have been in the Department of Finance, or would it have been anybody’s duty, to in any way check on this account?

—You mean the main account?

2895. Any account? It does not matter. Public funds?

—Nobody’s duty in the sense that the money was a Grant-in-Aid and went, to our knowledge at the time, to the three people who were trustees of the committee and, when it went into their control in their account, that was it. There was no——

2896. You just got the receipt from the Red Cross?

—We got the receipt from the Red Cross.

2897. And that satisfied you?

—That satisfied us; subject to the Comptroller and Auditor General, that satisfied the Department and the accounting procedure.

2898. You say you were contacted by Mr. Gleeson in relation to the overdrawn account?

—Yes.

2899. And you immediately went to look for Captain Kelly—you would get in touch with Captain Kelly?

—That is what I told Mr. Gleeson, yes.

2900. It did not occur to you at that time, like, to get in touch with the Minister?

—The Minister was in hospital. That was the 23rd that Mr. Gleeson was in touch with me. The Minister had his riding accident the day before. This was, as I recall it, the morning of the handing over of St. Enda’s. That is why I connect it with that date, the handing over of St. Enda’s to the State and the trustees; it was that morning, when I had very many things on my mind as I was the officer in charge of the arrangements.

2901. There is no point in going over it again, but Mr. Walsh in his evidence was quite strong in saying that he had never met Captain Kelly prior——?

——Yes.

2902. ——prior to the opening of the White, Loughran and Murphy accounts?

—Yes, yes.

2903. He had never met him?

—Yes.

2904. And the account in actual fact was in operation three days later when he did meet Captain Kelly?

—Yes.

2905. He had opened the subsidiary accounts at that time?

—Yes.

2906. You are certain of this?

—Absolutely. Captain Kelly’s counsel said this in court. I do not know—you have the court evidence there—whether you want me, or would like me, from the records— it is there, what Captain Kelly said, all this followed up by what he said to the Secretary of the Department of Finance.

2907. To come back to a point I was trying to get clear in my mind earlier, it was the question of the transfer from Clones to Baggot Street?

—Yes.

2908. This is the one thing that, while you had been sure that you had oral or written instructions in relation to any of the funds that left your Department on the Minister’s direction—?

—Yes.

2909. —You were not sure about telling the Minister of the transfer?

—Yes.

2910. But I think I made this point earlier, that there was no written reference about permission to lodge funds to Baggot Street specifically?

—Specifically, none, but there is written authority to lodge funds subsequent to the transfer, but not specifically to Baggot Street.

2911. Never to Baggot Street?

—Never to Baggot Street.

The Committee adjourned at 1.15 p.m. until 2.45 p.m.

2912. Deputy Nolan.—Mr. Fagan, you are employed in the Department of Finance generally in protocol and public relations?

—Yes, Deputy.

2913. In that connection normally if a Deputy or a member of the public rang you and wanted to see the Minister or to have discussions with him it is usual for you to ask such a man what business he has with the Minister and to get some details from him in order to brief the Minister on the particular subject?

—Precisely.

2914. In the case of Captain Kelly, when he would come to you and when he would say he wanted more money for the relief of distress in the North, would you ask him details of what the money was for?

—No, because initially he would always preface what he was saying by saying “Would I ask the Minister” and he would finish up by saying “If the Minister wants more information, I will see him or go to him”. It was against that background and having regard to the fact that he was an Army Intelligence Officer that I did not attempt to quiz him on any occasion as to precisely what he wanted.

2915. At all times you accepted that the money that he was receiving from the Department was for the relief of distress in the North?

—Yes, I did. As I mentioned before, while he would be waiting to see the Minister he would say that Mr. F would be coming in a day or two and he was anxious that whatever would be coming would be available for him and Mr. G would be mentioned from time to time. Throughout the period I personally had no doubt that this money he was getting was going to the bank account and was going straight to the North to these people.

2916. Bearing in mind the restriction we have on the use of names from outside the State, during your meetings with Captain Kelly and other people are there many people from inside the State whom you met with Captain Kelly and who interviewed the Minister who have not been mentioned in any of the documents we have so far?

—No. In all of this from start to finish, the only person I met outside the State, living outside the State was Mr. J. Colonel Hefferon, Captain Kelly and the Minister. I never had any discussion with anybody else either outside the State or within the State on that other than the people I have mentioned.

2917. You did mention on the 21st, the last day you were present, that as a result of a telephone call from a revenue commissioner in connection with what you referred to, I think, as the airport incident?

—Yes.

2918. You then went to the Taoiseach. You did not go to the Taoiseach in his capacity as Taoiseach; you went to him as acting, shall I say, Minister for Finance?

—Partly that and partly, I suppose, when I got this message from the revenue commissioner it was obvious that the revenue commissioner if he were going to be questioned by the Special Branch would say that he had got his instructions from me which would mean, in turn, that the Special Branch would come to me and I would obviously have to say I got the instruction from the Minister for Finance. Therefore, I felt that I, as a civil servant, could not get involved with the Special Branch on the actions of a Member of the Government without clearance of one kind or another and as the Taoiseach was in effect my acting Minister, having taken the Budget that week and the aftermath, I thought the Taoiseach was the appropriate person that I should speak to first.

2919. Had the Minister for Finance, Mr. Haughey, at that time not been injured and been in his office would you have consulted Mr. Haughey first?

—Oh, yes.

2920. You would have?

—Oh, yes.

2921. Coming back to this question of the Grant-in-Aid, from what you know now of the supervision of these moneys that when they went to the bank would you think that in future there should be more supervision or a better check on the disbursement of these moneys?

—Well, it is a very large question. In the normal way I should imagine that if a Grant-in-Aid is payable to a body, an organisation, a well-respected organisation for its own administration, for instance, the Irish Red Cross itself, if it were to lodge with them and they were given the task of administering the money, then I feel that there should not be any special additional steps or precautions taken. But, in this particular circumstance, this was an ad hoc arrangement to suit the circumstances of that time and the problem involved, and I cannot see that kind of problem arising any way again. I am sure that all precautions would be taken that such a situation or such a possibility would not arise in the future. But, at the time the yardstick applied, I suppose, was that three reputable people, known to the Minister, were set up as trustees to administer this and that, per se, would seem adequate precaution. To say that we should with Grants-in-Aid in future go further and have further examination of what happens the grant after it goes to the Grant-in-Aid, well, I think that is a matter completely outside my scope to comment upon. I should imagine that it is a matter for the Oireachtas to consider with the advice of the Comptroller and Auditor General and others, but I would not like to say specifically that this should be so. I feel, with respect, that it is outside my province to comment on.

2922. As far as I can recall, Mr. Fagan, there was one claim made to your Department directly for travelling expenses, I think it was to London, for some amount of money, and were there many further claims for travelling expenses, subsistence allowances, or anything like that, made directly to the Department, not through the account?

—No, no claim at all and, in fact, that particular one you refer to was not made directly to the Department. What happened in the case was that the former Minister in the very early days of the Northern Ireland situation arranged that a number of people should go to London over the week-end to contact Irish organisations and societies in London to organise relief or help for Northern Ireland. He did this from his home and got Mr. Murnane—I think we have a letter from him in the pink book—to arrange this. The account for the six, seven, eight people who travelled came to the Minister at home. He brought it into the office and it came out to me in the normal way. I asked him what was this about, was it something private or something official, so he told me what I have just said about how it started. I asked him then if these people had been engaged in collecting aid or organising aid would this be a matter for official payment and he said yes but not from the Department’s Vote direct but as it is concerned with Northern Ireland aid it should be paid from the Northern Ireland aid fund and as Mr. Murnane was the man, the friend of the Minister who had organised this, I paid it to him and got a receipt from him but no other account for travelling or other expenses came to the Department in any way.

2923. Well, coming to this £12,000, and there has been some conflict of evidence about this particular amount——?

—Yes.

2924. Actually the Belfast Fund for the Relief of Distress shows that on the 13th February this £12,000 was lodged from the Irish Red Cross to the Belfast Fund?

—Yes.

2925. On February 20th, as amended in the pink book, it was lodged to the George Dixon account?

—Yes.

2926. Now, in the submission we received from Mr. Deacon who was manager of the bank he states and I quote:

The £12,000 withdrawal was covered on the 20th February by a lodgment of that amount to the Dixon account. This amount came from the joint account in the names of John White, John Loughran and Roger Murphy, to which a lodgment of £12,000 had been previously made on the same day by the bankers to the Irish Red Cross.

In the submission from, I think it is Mr. Morrissey, yes, Mr. Morrissey, a somewhat similar statement is in it and Mr. Walsh, of course, had something to say on it too. Could you tell us what information you have on this £12,000?

—Yes. Well, initially about the £12,000 itself I think the Minister himself had gone into hospital some days before the 12th— into the Mater Nursing Home—and Captain Kelly had been in to see the Minister the previous week, in fact, according to my diary, on 2nd February, and he had requested a sum, I think it was a small sum, possibly of £3,000.

2927. Yes, on the 9th?

—On the 9th. The Minister agreed to it. Now, I think it was shortly after the Minister went into hospital I had a further request from Captain Kelly for £12,000 which was out and away beyond in value and size anything he had ever got before. So the Minister when he was in hospital continued his working arrangements. He did not go off duty. He had a special direct line installed in hospital and we would take up papers and files to him. I recall, on this occasion, ’phoning the Minister in hospital, on the direct line he had, and just saying that Kelly wanted £12,000. I did not comment on the size of it. It was a sizeable sum. The Minister just said “It is OK. Give him that.” So we went through the usual drill to the Red Cross. On the 12th, I directed the Accountant to transfer £12,000 to the Red Cross and did a letter, I think to the Red Cross directing them to put it into the Northern Ireland Aid Account. That happened, with effect, on the 13th. In your quotation from Mr. Deacon and your quotation from Mr. Morrissey’s account, you mention that the credit transfer from the account of the Red Cross was on the 20th February, the same date as the quotation, but that, as you can see from the original accounts and from the pink book, is incorrect. It went in from the Red Cross on the 13th of February. Take Mr. Morrissey’s statement “I recollect that in or about the month of February, 1970, a cheque for £12,000 drawn on the account of George Dixon in favour of cash was referred to me as there were insufficient funds in that particular account to meet it. Neither were there funds in the joint account in the names of John White, John Loughran and Rodger Murphy adequate to cover it.”

Therefore, I think we can take it from that statement of Mr. Morrissey that what he did when the £12,000 was withdrawn by cash from the Dixon account on 12th February is that he must have looked at the main account, the White, Loughran and Murphy account, because he said there were not funds adequate to cover it. It immediately throws up the fact—at least, it seems to me—that the bank regarded the Dixon account as a subsidiary account to the main account. Therefore, his ’phone call had to be made on the 12th February because, on the 13th of February, we know that £12,000 went into it from the Red Cross. So, if he was regarding it as one, and checking up one or the other, the position was secure from a bank point of view on the 13th. While I accept what Mr. Deacon said about a ’phone call at this time about this £12,000, I think he mentioned the possibility of three or four subsequent calls until the situation was remedied on the 20th February by the transfer from the White, Loughran and Murphy account to the Dixon account, by transfer, by somebody, but the situation is that there would not have been need for these three or four ’phone calls in the interim period, if we are to follow and accept what Mr. Morrissey is saying.

I do not remember these calls. I do not remember Mr. Deacon’s original call. I accept, if Mr. Deacon says so, that he did make such a call. I was out of the office from the afternoon of the 17th February to I think Tuesday, 24th February. In fact, the Minister was well back from hospital by the time I got back on duty and had been looking for me in the interim period but I was not there for the rest of that week. However, Miss Morrissey, who was my assistant at the time, can possibly throw more light on this situation because I have no recollection of it at all. I am just jointing out the facts as they appear to me.

2928. Who made the arrangements for the transfer of the £12,000 on the 20th February from the main account to the George Dixon account? Would you know that?

—No, I do not. I was not aware of an account other than the main account.

2929. The bank statement of 16th March and a further lot of statements and paid cheques apparently cannot be found. You have no knowledge of where they might be or who got them?

—None whatsoever.

2930. Deputy Tunney.—You mentioned that Colonel Hefferon gave you what might be considered a good reference as far as Captain Kelly was concerned. Did you seek this or was it offered to you?

—No. I did not seek it and it did not come at any one time. In the early days of the Northern Ireland crisis I met Colonel Hefferon fairly often. Generally he had messages to pass to the Minister of an intelligence nature about affairs in the North. Because the Government were particularly busy over that period, he could not always see the Minister personally so by way of verbal report and written report he saw me pretty often. It emerged over this period in connection with some of his verbal reports. As an instance of the reliability he would put into these reports he mentioned “his young man” type of thing, even though the “young man” had no name at the time but ultimately he turned out to be Captain Kelly. It emerged over a period that there was a man called Captain Kelly. My impression from Colonel Hefferon was that he was a first-class intelligence officer.

2931. Civil Servants have been accused of being over-concerned about writing matter on paper. Did you at any stage ever get an official minute indicating to you that Captain Kelly was the appointed officer to deal with this?

—No.

2932. You did not think that rather strange?

—No, not in the circumstances of the time. My first physical contact with him was in the Minister for Finance’s room and obviously accepted by the Minister as a person of standing as an Army Intelligence Officer. One does not——

2933. I would equate Captain Kelly, Civil Service-wise, with the rank of a Higher Executive Officer or thereabouts and Colonel Hefferon with the rank possibly of a Principal Officer. He was the man in charge. Is it not normal, in the matter of sort of advancing moneys, that the request should come from the Principal Officer rather than from the Higher Executive and would it not have seemed more appropriate that all of these funds that were issued should, in the first instance, have come from Colonel Hefferon rather than from a subordinate officer?

—The first request for moneys—other than the specific moneys we are talking about in regard to these bank accounts— came from Colonel Hefferon himself, not from Captain Kelly. I did not know Captain Kelly at the time. The sequence was that Colonel Hefferon ’phoned me one day to speak of the problem which involved the office in Monaghan. He said that at a luncheon some time earlier at which the Minister for Finance, the Minister for Defence, the Chief of Staff, the Quarter Master General and some other Army officers were present that he, Colonel Hefferon, was brought in after the meal to discuss Army intelligence with the Minister. The Minister in the presence of these other people said that the Government regarded Army intelligence in that situation as of a particular importance and that he would see that Army intelligence was not short of funds in this.

So, Colonel Hefferon’s first request on this arose from this undertaking of the Minister. I put this to the Minister and said Colonel Hefferon had mentioned this. It was the Minister himself who decided that £100 should be given to Colonel Hefferon, paid to him, for the purposes of this Monaghan office. In fact, it was the Minister himself who dictated the particular form of receipt that should operate in this receipt for Northern Ireland Aid Fund. The Minister told me, or confirmed to me, what Colonel Hefferon had said, that this had been discussed at top level in McKee Barracks. So that, if you wish, coloured the approach to this situation.

The second amount received by Colonel Hefferon was £500, was given to him to give to Captain Kelly for the Bailieboro meeting. I understood from the Minister that this was something that was arranged at the Minister’s home and Colonel Hefferon and Captain Kelly were present. The Minister did say that Colonel Hefferon should get the money and not Captain Kelly. We know from correspondence and what is in the pink book and letters from Colonel Hefferon and so on that Colonel Hefferon immediately transferred this money to Captain Kelly for this specific purpose. The third amount was paid direct to Colonel Hefferon himself, at Colonel Hefferon’s request, but cleared by me with the Minister. Now, on the occasion of the transfer over to Captain Kelly getting money, or not getting it, but requisitioning money, because he did not get money, but requisitioning money, I got the personal direction of the Minister to transfer, after the Red Cross had said they could not get or could not find £5,000 at that particular point in time, I got the Minister’s direction to pay £5,000 from the Northern Ireland Aid Account to the Red Cross and into the Clones account. Captain Kelly did not get this, he did the requisitioning, and on this specific occasion he was present with the Minister.

I referred to the Civil Service procedures of higher executive officers and principal officers and here was I, in the presence of the Minister for Finance, being directed to do this by, as far as I was concerned, the supreme authority in this, the Minister for Finance. In the situation that existed I do not think it would have been wise for me, even to think, that here was a typical office situation that forms should be filled out in triplicate with the situation that existed. I had the direction of the Minister to do this and I just carried it into effect.

2934. Mr. Murray in giving his evidence at page 4, question 19, in connection with Grants-in-Aid, said:

Well, the purpose for which the Grant-in-Aid is required must be approved. The body which receives the Grant-in-Aid cannot apply it for purposes other than those for which the Grant-in-Aid was intended.

I take that as indicating Departmental policy in the matter of a Grant-in-Aid?

—Yes.

2935. I fail to see any great evidence of what precautions the Department took in the matter of carrying it out in the fashion which Mr. Murray indicates there?

—Yes, this is so, but my reaction to it at the time was that this was done by the Minister to meet an extraordinary situation and that the normal rules and regulations regarding Grants-in-Aid and other matters had to be, or were required to be, put into temporary abeyance, having regard to the situation we had to deal with. It was an emergency situation, a grave emergency situation in the North, and an emergency situation here, and that, therefore, because of this, and bearing in mind the extraordinary wide powers the Government had conferred on the Minister, in the Government decision of the 16th August, that he was the person to decide the amount and the channel of the disbursement, that it delegated these powers to the Minister then, if the Minister decided this was the way it was going to be done, this was the way it should be done, then, as an obedient civil servant I carried out his direction.

2936. In answer to question 23 Mr. Murray said:

… we would wish to be assured, as a general understanding with the grantee, that they only ask for money when they require it. In other words, they would not ask for money when they had sufficient balance in hand to meet the commitments they are seeking the new instalment for.

While I appreciate that civil servants may take refuge in the fact that a Minister has indicated a certain line, but, on the other hand, surely there is an obligation on civil servants, as it were, to protect their Minister as well?

—Yes.

2937. As I see it there was very little evidence on the part of any official in the Department to take any interest in this. At any stage was a progressive total being kept of the moneys which had been issued on this Grant-in-Aid?

—Oh, yes.

2938. And at any stage that could have been produced?

—Oh, yes.

2939. As far as this sum of £12,000 is concerned——

—I would like to get back to that particular point about the progressive, sorry for interrupting——

2940. That is O.K., proceed.

—Towards the end of the payment period, which would be coming towards the end of March, I recall a specific conversation I had with the Minister on the totality of payments and I obtained from our Accounts Branch a list of the payments which had gone through the Red Cross which indicated that there was a balance of some £12,000 odd left in the Grant-in-Aid. I found out from the accountant, not being knowledgeable myself in Grants-in-Aid, that on 31st March, unless this amount was taken out of the Exchequer, it would fall to be surrendered. I went to the Minister on this and I said there was £12,000 left on the Northern Ireland Grant-in-Aid. I said we can just let it be surrendered or we can take it from the Northern Ireland Fund and give it to the Red Cross and ask them to transfer it to the Belfast Fund for the Relief of Distress. He discussed it with me and I told him then that Captain Kelly had been in or telephoned that day for a payment of £7,000. His attitude was this, and his direction, in fact was, that we take the £12,000 from the Grant-in-Aid and pass it to the Irish Red Cross and direct them to pay £7,000 from the Red Cross to the Belfast Fund for the Relief of Distress.

I suggested: “Would it not be better and quicker to let the Belfast fund have the whole lot at this stage, not to be putting this in and out type of thing?” He said: “No, just give the fund what Kelly wants or what Kelly has asked for. Leave the rest there with the Red Cross in case something else comes up or until Captain Kelly makes a further requisition because”—I think this is fairly important—“we do not want to repeat or have to get repeat money for Northern Ireland aid in the next financial year and this will finish it. Keep the £5,000 odd—the £5,700—unless anything else comes up. If Captain Kelly looks for more money he can get it and that finishes it.”

2941. I put this question to Mr. Murray and I put the same one to you: Bearing in mind the purpose for which the money would ultimately be voted and for which it was intended it did not strike you at any stage as being rather strange that as you moved away from the purpose for which it had been voted the amount being allocated seemed to be increasing?

—Yes, I think what Mr. Murray said to that was that those people, meaning the people in Belfast, would furnish this report, that they felt that the demand was there all the time, in fact a greater demand through people being out of work for a protracted period. It certainly, as a person, did strike me as strange. I must be fair and say that rather than going down it was going up. It obviously did strike the Minister as strange to an extent too because I have mentioned before his apparent reluctance to agree immediately to Captain Kelly’s requisition. I recall vividly the first occasion he said: “No” and said it very emphatically was the big payment of £10,000 at the end of December, I think it was 31st December. He just said flatly “No” to this because it was out and above anything else. I got back to Captain Kelly and said: “The Minister is not happy about this at all.” So Captain Kelly said: “It is terribly important that I see him.” He came along and went into the Minister and shortly afterwards the Minister said: “I have spoken to Kelly. That is all right. You can pay that.”

There were two other occasions and those were certainly in the spring of the year because they did not arise at all certainly before Christmas. In the spring of the year on two other occasions he seemed to have reluctance to agree to Captain Kelly’s request for payment. In one I recall him saying: “This cannot go on forever. Tell him to come in here.” On another occasion he just said: “Tell him to come in.” Obviously he was not satisfied. So, I would agree then it was rather odd and rather strange that as the situation eased in the North the graph, I think you called it before, of requests seemed to go up somewhat and this obviously struck the Minister. He had Captain Kelly along to obviously explain and spell out why it should be that amount of money.

2942. Together with that the fact that suspicions could have been held by people or they could have been wondering, and also together with the fact, Mr. Fagan, that subsequently you had knowledge that efforts were being made at getting in certain consignments in April——

—Yes, on 19th March to be precise.

2943. ——you would also have had knowledge that Captain Kelly had been in Vienna in March or April?

—Not until 19th April after all payments had ceased.

2944. Captain Kelly had been in Vienna, a man who was involved as actively as we know, and as you knew at the time, and in circumstances then where the Secretary of the Department on 14th May was required to brief the Taoiseach on this matter it seems strange to me that the Secretary could say that he was quite happy that not one penny out of this money had gone to the purchase of arms. I would suggest that there was sufficient evidence before him that he need not have been as emphatic as he was in the matter of denying. I think at this stage there was sufficient evidence to suggest to him that the possibility at least might be there. He had the case of the graph going the wrong way; he had evidence that Captain Kelly had been in Vienna, and one could be quite happy that it was not for music he had gone there, and I think he should have been more—I am not going to ask you but I will be asking you presently whether the Secretary of the Department contacted you for your views on it?

—I discussed with the Secretary of the Department the general situation following my discussion with the Taoiseach within a day or two, in fact possibly the following day, because I recall I saw the Taoiseach fairly late at night so it was possibly the next day. All our concern, all our thoughts, all our problems at that particular time— you know as Dáil Deputies that this thing was coming out piece by piece, piece by piece, until around 14th May and even later the jigsaw had almost fitted together. But, as at that last week in April the pieces were all around the place. I might have known about two or three of those pieces, the Special Branch knew about a few more and the Taoiseach knew about a few more. All those did not get together, interlock or correlate. What I told the Secretary was basically of the incidents which ultimately led up to the arms conspiracy trial, the customs thing in particular involving Army Intelligence, how I knew Captain Kelly, the Northern Ireland Aid Fund. It was very far from my thoughts and my thinking at that time.

As I said here last Thursday or again this morning I did not regard Captain Kelly’s job, his duties or what he was doing as being confined wholly and solely to Northern Ireland aid. I thought it was a peripheral thing, something he was doing almost in his spare time. When he came to me on March 19th to talk of this consignment coming in he gave me very strongly to understand that this was at the behest or at the request of Army Intelligence and in fact as confirmation of that at the Arms Trial Colonel Hefferon in evidence said it was he suggested to Captain Kelly that he would approach the Minister in regard to this matter of customs examination.

So, therefore, it did stem from there. I was not aware of it at the time other than Captain Kelly saying: “We in Army Intelligence want this.” In fact he did not come to see me at all. He came in to see the Minister. He was looking for the Minister. The Minister was at a Government meeting and he asked me to pass this message to him. At this particular week in April in my mind certainly those two things or anything Captain Kelly might require were very much divorced. I do not know how I could have tied up requests for aid or money for aid for distress in Northern Ireland to three well-known people to go into this fund as having any relationship at all with Vienna and with what happened there.

2945. My final question, Mr. Fagan, relates to the £12,000?

—Yes.

2946. I am accepting from the evidence before us, and from other evidence, that it was Captain Kelly who opened the Baggot Street account, that he opened, on his own admission, subsidiary accounts. Would you agree with me that he did it—I do not like using the word “operate”—that he was the man who was the administrator, in the main, of the three accounts?

—Yes. I have no evidence that would contradict that.

2947. There had been no arrangement made with the bank in the matter of an overdraft? There had never been any question of that—allowing anyone to have an overdraft with the bank?

—Absolutely not.

2948. In the circumstances here we would see Captain Kelly as being the man who would probably know what was in one account as against another. Would it be a fair deduction? And knowing that there was not permission for an overdraft, would it be a fair deduction that the gentleman who went to the bank looking for the £12,000 not knowing that there was not £12,000 in it, was not Captain Kelly?

—Yes. It cannot have been anybody else, in my view, but Captain Kelly.

2949. You would say it was?

—Yes.

2950. Should he, being the efficient and the intelligent man we know him to be, in circumstances where he knew he was not entitled to an overdraft, have known that there was not £12,000 in it?

—Yes, he should.

2951. Following that up, we have heard from Mr. Morrissey’s evidence that the date that cheque was presented . . .?

—Yes.

2952. Presumably the teller went to the manager and asked what he should do?

—Yes.

2953. And if Captain Kelly was the man, as I see it—this is only a hypothesis—I think perhaps the manager would not have been as reluctant as he was, maybe? I am trying to establish whether it was really he who went to collect the £12,000 and the evidence, as I see it, would suggest to me that it was somebody other than Captain Kelly who went to the bank for that £12,000?

—Well, I am not too sure on that. There was—I would certainly go, work out some figures, just for my own satisfaction, to give an overall balanced position, following each movement of cash out of either or any of these accounts; and you will always find that where there would be a request for Captain Kelly for a sum of money an identical sum had been moved either out of the Dixon account or into the Dixon account within a day or two either way. Captain Kelly came to us in the Department looking for precisely that sum of money. Captain Kelly either had knowledge of the movement in or out of the Dixon account or was in fact the person himself who took that money in or out of the Dixon account. Am I making it clear?

2954. Yes, it is clear now.

—For instance, just to take the February 12th one, the one we are talking about, on 12th February, cash, £12,000, from Dixon; on February 13th, Irish Red Cross, £12,000 into the main account; but the instruction to the Red Cross issued on the 12th, the same day. Captain Kelly contacted us on February 11th or February 12th and the same day precisely £12,000 was taken out of the Dixon account. The same thing happens later, on March 4th: £4,000 comes out of the Dixon account in cash; on March 5th £4,000 goes into the main account via the Red Cross, but a request from that came on March 4th, or perhaps a day earlier. In other words, if on your supposition that it was somebody else, there was collusion between Captain Kelly and this somebody else, or else it was Captain Kelly?

2955. On the contrary, I was trying to establish that, in view of the fact that Captain Kelly was handling the account, in view of the fact that he was not entitled to an overdraft, in those circumstances it was not likely he would have presented a cheque for £12,000 knowing that there was only something over £1,000 to meet it?

—Yes.

2956. And I was wondering if that would indicate that perhaps somebody else was the person who presented the cheque?

—Oh yes. Well, it could well be.

2957. Also, together with the fact that this was the one occasion on which Mr. Deacon was rather reluctant about passing the payment, he contacted the Department, looking for this money, on his own admission he was meeting Captain Kelly quite regularly and I thought perhaps it would have been, on this occasion, somebody other than Captain Kelly who had looked for the money?

—It could well be; and in fact we know that on a later occasion, on March 25th when the main account ran down to—I think it was one account ran down to a zero position—that Mr. F appeared at the bank to draw money, a sum of £4,000, and he took away from the £2,000 £1,000 each to the Dixon and O’Brien accounts. It could be that kind of situation where Mr. F appeared on the scene that caused Mr. Deacon to take the action. We just do not know, but it could well be.

2958. I think that is all I have to ask, thank you very much.

—Thank you.

2959. Deputy Barrett .—Mr. Fagan, you said that on the day Captain Kelly opened the Baggot Street account he phoned you later that day and said he forgot to mention that in order to get the account going he would require £7,500?

—Yes.

2960. I take it you had to get the Minister’s approval for that?

—I had indeed, because up to that it was the highest amount.

2961. Did the Minister agree later to make that payment or did he ask what it was for?

—In the first part of this, right up to Christmas, there were no problems involved with the Minister as you see from the documentation. Only seven or eight days before this I had got his written authority to transfer £5,000 to Clones and shortly afterwards got his written authority for another sum, followed by a third occasion somewhat later. So he never made any bones about these payments in the earlier part, right up to Christmas, or right up to 31st December, and I recall that the request for £10,000 was the first time that he indicated that he wanted to know more about it.

2962. Deputy Barrett.—He did not have to see Captain Kelly on that occasion?

—No, not to my knowledge. It could possibly be that Captain Kelly used to see the Minister outside of going via me. I was not the Private Secretary. The Private Secretary was in the room next to the Minister. Round about this occasion I just happened to feel that the Private Secretary knew Captain Kelly rather well and I just asked him: “Do you know this man?” And he made the remark: “He comes in and out here quite often.” So it is possible that Captain Kelly did in fact see the Minister outside me in connection with this, or that the Minister was in touch with Captain Kelly.

Incidentally, on this seeing Captain Kelly, Captain Kelly normally operated from the Red House G.H.Q. and used a direct line of which we had the number, so the Minister could speak to him on any occasion he wished, and vice versa.

2963. With regard to the three accounts in Baggot Street, there were balances left in each account. The Department has recovered those balances now?

—Yes.

2964. When recalling these balances, did the bank insist on having the original signatures to the cheques in order to withdraw these amounts?

—They did; the Clones account, yes, and the main Baggot Street account, yes. The Dixon account and the O’Brien account so far as I know are still in the bank.

2965. These moneys have not been recalled?

—Subject to correction. I can find out for the Deputy during the next break, but I do not think so. I do not think the balance of £200 in the Dixon account and the £49 13s 9d left in the O’Brien account have come along yet, because of legal difficulties. The main Baggot Street account of £2,482 17s 6d has been refunded to the Department.

2966. And you had no trouble getting signatures?

—No.

2967. Are the bank insisting on George Dixon and O’Brien signatures for these two balances?

—I am not too sure. There is a legal position involved and I cannot say that the bank is insisting, or whoever is, on George Dixon and O’Brien’s signatures. I think there is a situation there which as of now has not clarified itself. My difficulty here is that I do not know whether this point has been partially covered in private session and naturally I do not want to say anything at this stage which would upset anything that has been said. I do not want to say anything in public. If you wish, I will say what I know; there is no problem. But I do not want to upset——

Chairman.—I do not think it has been discussed in private session. Has it been recorded as having been discussed in private session?

Deputy Nolan.—It has been discussed in open session.

—I do not mind providing any information, but I do not want to upset——

Deputy H. Gibbons.—Perhaps we can just check up on that at the next break?

—I know the situation and can say it.

Chairman.—Very well, we will do that.

2968. Deputy Briscoe.—What date roughly, was the first knowledge you had of Captain Kelly being on the Continent?

—On 19th April.

2969. And this was only when he phoned you? Is this correct?

—When he phoned me, yes.

2970. Did you report this to Mr. Haughey?

—On Monday morning, yes. It was the weekend before the Budget and we were all pretty busy.

2971. Was he surprised at this?

—Yes indeed. In fact, when reading the court evidence he said he found it a problem remembering my saying this to him at all on the Monday morning. But I think later in his court evidence he did accept the position that it was as I said.

2972. Yes. You mentioned in your evidence this morning about certain Ministers with Kelly or close to him. These would be people he would see constantly, would it, that you knew about?

—What I was saying this morning was that there was a sub-committee of the Cabinet set up which comprised the then Minister for Finance, the then Minister for Agriculture and Fisheries, the present Minister for Labour and the present Minister for Education. They formed a Cabinet sub-committee to co-ordinate Northern Ireland affairs and to deal with the problems arising down here from the situation there. But whether Captain Kelly was officially regarded as the link man or liaison man between that committee in the South and the people in the North, that I have no knowledge of. I was aware subsequently that he was involved or dealing with Ministers here, but not necessarily that group as a group.

2973. I see. Was there a secretary appointed to that committee, a civil servant?

—Not to my knowledge. Generally, as far as I know, Cabinet sub-committees are usually two or three Ministers to deal with a specific problem on an ad hoc basis. It is not a regular Government meeting or a full Government meeting and as far as I know they did not have secretarial assistance.

2974. Do you know how many times this committee met?

—I heard subsequently that it was twice.

2975. Twice altogether?

—Yes, but I cannot be sure of this.

2976. Do you recollect approximately when a meeting was first held?

—I gathered from the evidence in the Central Criminal Court that it was in the very early days of the happenings in the North—in other words, August, in the August period, 1969.

2977. This lunch at McKee Barracks where various people you mentioned were present, this was during the time, was it, that the Clones account was being operated?

—No, I think it had to be prior to that.

2978. Prior to that?

—Prior to that. We know the Clones account opened round the seven days, October, 1969. My feeling is that this particular discussion with Ministers was in the late September period or mid-September. I cannot be sure.

2979. Had you any knowledge that your Minister then knew of the existence of the subsidiary accounts?

—None whatsoever.

2980. None whatsoever. You explained that you had a number of conversations with Colonel Hefferon?

—Yes.

2981. What were those conversations usually in relation to? Were they in relation to Ministers going into the account at all?

—No, they were nearly always in regard to intelligence matters in connection with the Northern Ireland situation.

2982. Deputy Briscoe.—I see. I do not think I have anything more to ask.

2983. Deputy R. Burke.—I have no questions which would materially assist the investigation at this point and pass on.

2984. Deputy E. Collins.—The Government’s statement in relation to this distress fund emphasised the words “aid” and “relief”?

—Yes.

2985. In the Government statement of the 16th—“to provide aid for the victims” and on 21st August—“for the relief of victims of disturbances”. When Captain Kelly came to you seeking customs clearance for a consignment of goods—

—Yes.

2986. —Did anything cross your mind that this might appear odd?

—No. Indeed, the thing that crossed my mind was terrific surprise that out of the blue here was a man I had been dealing with on the Northern Ireland thing and he comes in to talk about something on the high seas, which—this is the way he put it, that it was coming on, present in a consignment on the City of Dublin coming from the port of Antwerp and he wanted customs clearance for this. It took me completely by surprise because it was not in keeping with what I thought he was doing, but I thought of it in general terms, it was just another part of his existence, that he was not wholly and solely concerned with northern affairs and aid and so on and this was something else that had cropped up.

2987. Oh, you mean that, in relation to this consignment that the moneys were not coming from this particular distress fund?

—Oh, gosh, no.

2988. You thought it was completely unrelated?

—Absolutely.

2989. Yes, I see. Well, has a Minister for Finance authority to allow in a consignment of arms without Customs inspection?

—Well, I divide that two ways. The Minister for Finance has no right of allowing in arms at all. I think that is confined to two Ministers, the Minister for Justice and the Minister for Defence, separately and distinctly. And the Minister for Defence can only allow in arms if they are coming in for the use of the Defence Forces. I think that is the overriding thing in this, that arms cannot come into this country by law, I think under the 1963 Act, without a licence from either of those Ministers depending on what it is coming in for. But a Minister for Finance has power, as far as I know, I am subject to correction, but this is as I understood from a Revenue Commissioner, has power under some Order of 1923 to say that an item coming in need not go through Customs examination but I think the superior thing comes first—in other words if the Armed Forces are taking in arms in the normal way they get a licence from their own Minister. Now, I never recall, and I would not even know, that Customs people would, or anybody, would seek the waiving of a Customs examination. I am sure that if the Customs people were notified in the normal way from the Army people that guns or ammunition or something of that kind were coming in, then the Customs people would, as they have the authority to do, would just say, have a look at the thing, and let it go. But I would divide that into two, that the Minister for Finance could not waive Customs examination for arms as such.

2990. But he has power to waive inspection of goods?

—Yes.

2991. How far do you think Customs officials would be bound to respect a Ministers wishes, or is it a Minister’s order, is it?

—Well, I think it would be mandatory if, again subject to the legal people on this, that if an order, presumably made by the Government at the time, under whatever legislation, parent legislation was there, said that the Minister for Finance might, may do this, and the Minister for Finance directs this, I take it that if it is in accordance with the Order and the basic statute that it is mandatory.

2992. Would they, in fact, look at such a consignment, any consignment now?

—Well, this I would not know. I would imagine that it would depend on the direction passed down along following the ministerial order, the ministerial direction.

2993. Do you not think that this is a peculiar power to have, to waive Customs examination of any particular consignment if a Minister so wishes?

2994. Chairman.—I think, Deputy, that that question is not quite in order.

2995. Deputy E. Collins.—Well, why, Chairman?

2996. Chairman.—It is hardly a fair question to put to the witness.

2997. Deputy E. Collins.—Sorry. Sorry, Mr. Fagan, I do not wish to embarrass you.

Mr. Fagan.—It is all right, Deputy.

2998. Deputy E. Collins.—If we come to the opening of the account in Baggot Street?

—Yes.

2999. Surely one can transfer an account from one bank to another without much formality?

—Yes.

3000. I understand that all you do is to go into a bank and that they will practically arrange the whole thing for you?

—And in fact they do. I think what normally happens is that you go into bank A, say “I have an account in bank B and I wish to transfer it to A” and ask A to take up the running with bank B. It is taken from there on. You do not have to go through any particular, or any other detailed formalities with your original bank.

3001. In other words, Captain Kelly could have transferred the account without, in point of fact——?

—Yes, well——

3001(a). ——Asking you, advising you?

—Captain Kelly as I would understand it at the time, but the people in, who held the account in Clones, yes.

3002. They could have done so without informing you?

—Yes.

3003. And did you not feel it peculiar that he did come to you at all or was it——?

—No. No.

3004. In opening any—of course there is a bit of confusion here. Mr. Deacon, I think, claims that he was under the impression that this was an official Government account?

—Yes.

3005. And there is conflict of evidence, like, in so far as——

—Yes.

3006. The impression you gave him conflicts with the impression he gave in his evidence?

—Yes.

3007. Should he not have insisted, if he was under the impression that it was an official Government account that it should have been opened formally by the Accounting Officer?

—No. Well, of course, first of all it was Mr. Walsh that I dealt with and what I told Mr. Walsh was that an account existed in regard to Northern Ireland aid, that this account needed to be changed from Clones where it was, to a Dublin bank and that I had somebody with me who was, who knew about this and wanted to make the necessary arrangements, that it was a confidential matter, that the people concerned did not want to be terribly involved in this and that Mr. Kelly, who was with me, would go across and take it from there, that Mr. Kelly was known to the Minister and it was, and Captain Kelly went over and did take it from there. I did not indicate to Mr. Walsh that Government moneys were involved in any way. I did say that the money going into the account would come through the Red Cross.

3008. You said through the Irish Red Cross?

—Yes.

3009. Did you have any discussions with your Minister about the sub-committee appointed by the Government in relation to the Northern Ireland situation?

—No, but I was aware of its existence.

3010. On the subject of your instructions in regard to the customs people, you went to them to see if you had power to allow a consignment of goods?

—I asked the Revenue Commissioner on the customs side what was the position in regard to customs exemptions generally in regard to goods coming into the country. He briefed me on that and I said that Army Intelligence were involved in getting something in, which according to what Captain Kelly had told me that the contents of this consignment were not quite in accordance with the ship’s manifest, and if this consignment were opened there could be a problem. So I asked the Revenue Commissioner what was the situation, that this was obviously something I would have to go to the Minister about and before going to the Minister I should like his advice. He told me the Minister had power to waive customs examination. So when I did see the Minister later I was able specifically to tell him that I was informed by the Revenue Commissioner that he had this power, and the Minister said to tell the Revenue Commissioner that this was O.K.

3011. In the evidence given at the Arms Trial it came out that a number of Ministers requested payments from this fund. Is that correct?

—There are Ministers specifically and Ministers plural. At the time when I was asked that question—have you got the actual report?—it included Ministers, bodies and organisations. What I had in mind when I answered “yes” to that question was that in the initial situation Ministers were inundated with requests of all kinds for aid for Northern Ireland from bodies and organisations and I had in mind that the then Minister for Agriculture and Fisheries had specifically requested money for Mr. A on two occasions. That would be in August, 1969 and January, 1970. The then Minister for Agriculture and Fisheries had requested moneys for Mr. C and Mr. D. I was also aware that my own Minister had specific requests for payment to Mr. B and Mr. E and the Housing Committee in Belfast— three specific requests on behalf of organisations. I was also aware that Colonel Hefferon had requests for Army Intelligence purposes following discussions with the Minister for Finance in the presence of the then Minister for Defence. While Colonel Hefferon had specifically requested, it did not follow that his Minister definitely knew such was a possibility. So we have Ministers, collectively, looking for lots of things, Ministers, specific, looking for payments to Mr. A, Mr. C, Mr. D, and a Minister, specific, looking for payment to Mr. B and Mr. E and the Belfast Housing Committee. In that way I meant Ministers plural.

3012. There was a bit of confusion here in relation to one Minister or Ministers.

—Naturally you cannot just sit back.

3013. In your written direction to the Red Cross you did not specify the account?

—Do you mean in general?

3014. In relation to the Baggot Street account. On page 29 of the pink book you state in your letter:

The Minister would appreciate if you would transfer this sum to the Munster and Leinster Bank, Baggot Street, Dublin 2.

Would it not have been better to have given a specific direction rather than to leave it open?

—There is a simple explanation for this. It might look peculiar at this time, it might look as if there was some looseness in this. One gets a pile of letters in the morning, one calls a shorthand typist and one is dictating letters. My knowledge at the time was that there was only one Belfast Aid Fund and that would have been in my mind when dictating. Just thinking of it now proves the point that if I knew there were accounts plural in the bank I would not have sent that kind of letter.

The Committee adjourned at 4.20 p.m. and resumed at 4.55 p.m.

Examination of Anthony James Fagan continued.

3014(a). Chairman.—Deputy FitzGerald.

—Mr. Fagan.—Before Deputy FitzGerald speaks—I took the opportunity during the recess to get some information on the point raised by Deputy Barrett in regard to the refunding of the balances in the various bank accounts. I was correct in what I said about the Clones account and the main account in Baggot Street. When we first met the people from Belfast they promised to facilitate us in getting these balances back and they co-operated in this. But they said they could not help us in regard to the two subsidiary accounts, that they had no authority to operate these accounts. When subsequently the Secretary of the Department saw Captain Kelly, he put it to Captain Kelly who said he was prepared to have it considered; in other words, to consider in what way these balances in the Dixon and O’Brien accounts might be refunded. In a letter to Captain Kelly on 8th January, 1971, in the postscript—I think the Committee has a copy of this letter— it is asked “Have you been able to make any progress regarding the recovery of the balances in the Dixon and O’Brien accounts?” Recently when the Secretary saw Captain Kelly again in regard to this £500 this particular point of the balances in the Dixon and O’Brien accounts was touched on. Captain Kelly’s reply was that he had not yet been successful.

3015. Deputy FitzGerald.—You made a reference in the trial to your diary and I think, in fact, you have been referring to a desk diary in giving evidence?

—Yes.

3016. I take it that it contains entries which are assisting your memory?

—Yes. Not a whole lot, but partially.

3017. It could be helpful to us, especially in any case where there may be any conflict of evidence, to see the relevant entry or get a photostat of it, or something of that kind, because an entry made at the time would seem to me to be useful evidence. I do not know the best way to proceed with that? What do you feel yourself about it?

—I have no personal objection to it in any way, except that as a desk diary—an aide mémoire—at the time one puts in an appointment for somebody coming: they do not come, you might tick it off or knock it out; somebody comes out of the blue and you have not got it in your diary. As a piece of evidence per se it may not be useful but it did help in my recollection— of certain events.

3018. Could I put it this way, that if there are any points that we have been discussing where you think entries in the diary are relevant and helpful, in those cases if you like to give us a photostat of them or something it might be just useful for us to have that?

—I will be happy to do that.

3019. Reference was made earlier today by you to the ’phone calls to or from Vienna?

—Yes.

3020. And in particular, if I recall correctly, to the fact that on that Monday morning you recall speaking to your Minister and then subsequently making a ’phone call to Vienna to Captain Kelly?

—Yes.

3021. Have you anything that would indicate when that call was made? You did, I think, assert very strongly that it was in the morning and indeed I think Captain Kelly said it had to be made before noon?

—Yes.

3022. The reason I ask this is because the Minister’s evidence on this in the trial would appear to conflict. He said:

I have heard Mr. Fagan give evidence to the effect that this was on the Monday morning——

That is, a conversation between the Minister and Mr. Gibbons.

I did not see Mr. Gibbons until Monday evening, so that if that conversation which Mr. Fagan describes did take place it must have been after my meeting with Mr. Gibbons. I cannot see why such a conversation would have taken place on the Monday because I had already told Mr. Fagan on Saturday evening that the operation was to be called off.

It is a matter of some importance, because Mr. Haughey is clear he did not see Mr. Gibbons until Monday evening and I had an impression from the trial Mr. Gibbons also said this, and therefore it would have been difficult for him to have given you an instruction to ring Kelly arising out of a ’phone call, out of a discussion with Mr. Gibbons which had not taken place, so that, I mean, how clear is your recollection on this or can you authenticate it in any way?

—Yes, I can. First of all, my recollection is very clear on it, almost to the precise time it was made. It was about 11 o’clock. To substantiate that, my personal assistant, who I think, will be appearing can verify —this is something that just comes up now; I did not expect it, but I imagine she can verify that it was on the Monday morning, but I think one piece of possible evidence would be surely through the international exchange, whether a call from the Department of Finance were made to Vienna, I am sure, to have the records of the Department of Posts and Telegraphs.

3023. Well, we have heard the Department destroys its records with remarkable promptness, but I think it was said this morning that the records for April are still extant.

—Chairman.—Eight months, I think.

3024. Deputy FitzGerald.—I think perhaps the Secretary could follow that up and try to get the relevant record and make sure they do not destroy any more records at this stage?

—Yes.

3025. That would be useful certainly, and we can hear Miss Morrissey on this and try and see if we can get the information from the Post Office which would clarify that point. Now coming to the account itself, could you tell us exactly when the document opening the Clones account was cleared? Have you any idea of the date on which—because there is no date on it, I think——

—No.

3026. ——the date that document was brought in by Captain Kelly and cleared by the Minister?

—Yes. Of course, I cannot say, first of all, that it was brought in by Captain Kelly. The Minister handed it to me. Captain Kelly was present but——

3027. Oh, I see. Sorry.

——but I cannot assume that it was. I do know—this might be helpful—I think the Minister departed for a very short holiday on the 13th October, give or take a day either way.

3028. Sorry, 13th?

—13th I think so. May I refer to my diary?

3029. Yes. It is relevant that the account was in fact opened on the 16th, so that is a date we can work backwards from.

—Yes, he seems to have departed for a holiday on Monday, 13th October, 1969. Now I think the Miss Murphy meeting with him of the Red Cross took place on— there is nothing in my diary to indicate this, but just on the Tuesday, the 7th——

3030. Yes, that is her evidence.

—Yes. Now the Minister obviously spoke to me on this between Tuesday, March 7th, and Friday or, sorry, October 7th and Friday, 10th October or possibly Saturday/ Sunday, because we did not keep office hours in the Minister’s office. We worked most Saturdays, but certainly up to the 13th, and I have a feeling that it was the afternoon of the 13th that he left Dublin by air for New York, so that it is in between that period——

3031-2. Why do you say it must be within that period? Why could it not have been prior to the 7th?

—Because the Clones account did not open until the 16th.

3033. Yes, but the Red Cross lodged money to it on the 9th although the cheque was not issued until the 16th.

—The account opened with the Red Cross payment on the 9th. I feel that that follows Miss Murphy’s visit, that Miss Murphy came on the 7th.

3034. It could have been the other way round. This arrangement could have been made and then the Minister could have called in Miss Murphy?

—Yes. It would appear from the bank mandate, the one we have seen, that is the one the man from Clones had here the other day, with F, G and H spelled out on, it is obvious from that that this document could have been in train before Miss Murphy was called in. I do not know that.

3035. Have you no note in your diary that would indicate a visit by Captain Kelly that could have been the occasion of this?

—No I have not but conceivably—and this can be checked, apart from my diary which is my own desk diary, there would have been another diary—the Minister’s office diary which would have been in the possession of the Private Secretary.

3036. Perhaps you might check and get the precise date?

—Certainly, but I feel it must lie between these dates.

3037. In your discussion with Mr. Walsh about the opening of the account, do you recall saying anything about transferring an account? Your mind was clear that this was to be a transfer of an account, admittedly, a transfer to another bank and, therefore, in ringing up the bank you might not have used the word “transfer”?

—This is possible. I might have used the word “changed” but one cannot remember precisely. What was in my mind was this transfer whether it was a technical transfer within bank terminology but that was certainly my idea.

3038. Was Captain Kelly there when you spoke to Mr. Walsh?

—Not in my office. He normally would be in the waiting room attached to my office.

3039. The reason I ask this is because if in fact he were responsible for the false names—and we do not know this—but if the origin of them lay with Captain Kelly, he would have been more confident in producing these names if he had known that your conversation with the bank had not revealed any mention of names but had been confined to referring to opening an account for the relief of distreses?

—This is true but I am almost positive and possibly Miss Morrissey can bear this out because she was in my office but Captain Kelly was not and would not normally be.

3040. You heard the suggestion made by the bank witness, Mr. Walsh, as to how, on reflection, the mandate might have got names on to it without you having given them but what he did seem clear on was that the only person he could have sent the mandate to, with or without names, and the cheque book was to you. I gathered from something you said this morning and I gathered from Miss Morrissey’s statement that you have no recollection of receiving it and forwarding it to the relevant people in the North through Captain Kelly or otherwise.

—Absolutely not. I never got any mandate or any document whatsoever. I am quite unequivocal about that.

3041. So that the conflict here is quite extensive?

—Yes, absolutely and it is very basic.

3042. The theory which was put forward by Mr. Walsh as a possible explanation would go some way to explain how the names could have got on it but it still leaves the question as to whom did he send it, if not to you. There was no one else he could have sent it to until Captain Kelly arrived in but Captain Kelly does not appear from various pieces of evidence, to have come to the bank until a date several days later than the date of the mandate?

—I do not know——

3043. Am I wrong in this?

—I would think so. What I feel about it is that if this date were Friday—again, in my diary I have an entry “J. Kelly” for Friday the 7th but it is knocked out—and if Captain Kelly came Friday and went over to the bank, dealt with Mr. Walsh and took from him a bank mandate with the name “Belfast Fund for the Relief of Distress” and then over the week-end had it taken to Belfast and filled in then in Belfast, it could have been returned and obviously was returned by Mr. F. According to the noting at the left-hand side that was handed in by Mr. F. Of course, I am only theorising. I cannot say but what I am saying positively is that at no stage was there any question of my even knowing about the mandate. Basically, if one is transferring an account and if it is in the names of trustees, one would understand and appreciate that there is documentation of some kind, that if there was a trust fund administered by F, G and H at Clones and this was coming to Baggot Street by transfer or by change, basically, there must be some documentation. But, again, I can only assume that Captain Kelly must have received this mandate form into his hands and possibly, either of two things, (1) that he had these names himself and gave them to the bank who put them in, or I think, on reflection of what Mr. Walsh was saying in answering you, that he may have put them in afterwards when he got the signatures.

3044. The difficulty is that what Mr. Walsh is very clear on is that there were two telephone calls. I suppose there could be a defect of recollection on his part as to the content of the second in which he says that you told him to open the subsidiary accounts but he does say there were two phone calls. He was very specific that there was no reference to Captain Kelly in the first call and that it was only on the second call that you referred to Mr. Kelly who had introduced himself. If that was so, Captain Kelly could not have appeared in the bank during those couple of days. Yet, what I gathered from him was that the mandate was made out there and then and he sent it down to be sent off so that there was no Captain Kelly whom he could have sent it to; there was nobody he could have sent it to except you in those circumstances. So that complicates the thing further?

—You did say there, I think, that there was no Captain Kelly to give it to, but what Mr. Walsh said was that I had spoken to him on the telephone about subsidiary accounts.

3045. Yes, he also said that. If what you say is correct this would require that not alone was Mr. Walsh mistaken in thinking the reference to subsidiary accounts came in that phone call but would also be mistaken about not having heard of Captain Kelly until the second phone call?

—Yes.

3046. So that it just complicates the thing a little further?

—Yes, well I think the people in Belfast are saying, in effect, that these names were conjured up there and while they cannot specifically recall the mandate itself Mr. F does admit to handing in the mandate so how does it get into Mr. F’s possession? I never met Mr. F other than knowing his name on the Clones account.

3047. Yes. When the account was opened in Baggot Street the first communication to the Red Cross was a letter from you of 10th November. There was some discussion on this earlier today, I think. It is on page 22 of the pink book. This is a letter which makes no reference to the account, as such, but which you say you may have dictated hurriedly and without referring back to the actual name of the account. Well, how would the Red Cross know what to do with money in these circumstances? Somebody must have told them into what account to put the money, must have told them verbally, because all that you said in your letter was: “The Minister would appreciate if you would transfer a sum of £7,500 to the Munster and Leinster Bank, Baggot Street, Dublin, today if possible.” So. presumably this was not intended to simply increase the bank’s resources, it must have been intended to put it into somebody’s account and in the absence of any reference in the letter there must have been a verbal reference, some verbal communication, so that you knew when writing that, the bank would know into what account to put it. What verbal communications accompanied that letter either to the Red Cross or to the bank from you?

—I cannot specifically recall after this long period but I should imagine that I spoke to Miss Murphy of the Red Cross and told her of this change and indicated to her that this account was now with F, G and H this I cannot be positive of because I do not recall it—that the account was now being transferred to Baggot Street and that it was going to take some time to set up the account or have it transferred and, therefore, send the amount to Mr. William Walsh, the Deputy Manager, who knew about it following Captain Kelly’s call. Captain Kelly went across to establish this account, transfer it or change it to Baggot Street, the Belfast Fund for the Relief of Distress. It was obviously going to take some time to get it under way so we tell the Red Cross—I only surmise this as the logical thing. As you properly and rightly point out this letter in itself basically expresses nothing about the end product or where it is to go.

3048. Yes, but did Mr. Walsh know to expect lodgments from the Irish Red Cross?

—Oh, yes. I thought I made this clear.

3049. Oh, you mentioned that to him?

—Oh, yes I did. I think I made this clear, did I not, at the earlier session? Yes, I did and I think it is in my statement to the guards that I did. I think the question asked me was: “Did Mr. Walsh know or did the bank know that the money was coming from Government sources?” This I did not say but what I said was that it was being funded through the Irish Red Cross.

3050. I see?

—So he did know this.

3051. Yes. That explains how he knew where to put the money.

3052. Deputy E. Collins.—Yes, I am quite clear on that.

3053. Deputy FitzGerald.—All right. Just to recap on the various contacts with the bank about which there is either conflict of evidence or which raise questions to do with subsidiary accounts. First of all, your first phone call to Mr. Walsh sometime around 9th November probably. Then there is this second phone call. Now, do you have any recollection of any second phone call? I know you do not have a recollection of one saying the things which he says you said?

—I have not a recollection, first of all, to answer your question but the possibility was that there could have been two or three phone calls. For instance, Captain Kelly coming along later in the day to say: “Mr. Walsh has been very helpful.” It could have been that Captain Kelly was in Friday and that he came along Monday and said: “Mr. Walsh has been very helpful. I want £7,500 for the account in general. There is no point in getting it into Clones.” I recall that in some form or another from Captain Kelly and then by talking to Mr. Walsh to say: “Look, £7,500 is coming to this.” This is possible and maybe Mr. Walsh coming to me on this so that phone calls, plural, could be, but the point that I am most emphatic on is that there was no phone call involving the opening of subsidiary accounts in any form.

3054. Yes, I am clear on that, that that is your clear recollection. You have not any doubt about that?

—Yes.

3055. The next disputed contact was Mr. Walsh’s statement that he sent the mandate and cheque book to you or amended, perhaps, to that he must have sent it to you because there was nobody else he could have sent it to, which perhaps weakened the forcefulness of this?

—Other than Captain Kelly.

3056. Then there is the contact by Mr. Deacon with you almost certainly around 5th February relating to the first overdraft and I think both of you have referred in different ways to this. I think you referred to a contact at the end of January or early February and he referred in evidence to a contact relating to 5th February at several points so there was some phone conversation then which would not necessarily disclose anything about subsidiary accounts because the deficit was in the main account?

—Yes, may I say something on that, please? Looking at the account, it went into the red, that is the main account I am talking about, on the 5th but my letter to Miss Murphy went on the 4th saying that lodgment went out on the 2nd of February. I think it is in the documentation there and I also wrote to Mr. Deacon on the 3rd to say it was coming so, therefore, the logical construction or reconstruction of that is that Captain Kelly came along and from his contact with the bank knew that the fund was running low. My diary says Captain Kelly was in on February 2nd, my letter to Mr. Deacon goes on the 3rd to say money is coming and my letter to the Red Cross went on the 4th saying lodgment went on the 2nd. I think it is page 29 of the pink book. Therefore, it seems to me there was no need for Mr. Deacon to speak because the money was in train before the 5th and he knew that on the 3rd by letter from me. The rather odd thing in it is that it did not reach the bank until February the 9th and not having seen some of these bank giro things I wonder, Deputy, would it be the one that you referred to the other day that went round about via Dame Street or somewhere, I do not know, but that is the sequence of the events. So, therefore, Mr. Deacon knew on the 3rd, per copy of the letter you have saying it is coming, the thing is not going into the red. In other words, it seems to me that knowing that money was in the pipeline he allowed it then to go temporarily into an overdraft position, knowing there was money coming and there was no need, therefore, for him——

3057. Both of you seem to recall a phone call, although it must be said your recollection of it in your statement to the police was the phone call related to Captain Kelly’s requirement for money in English notes?

—I cannot say how frequent, but there were phone calls from time to time, to say is money coming, presumably from a request, Captain Kelly being over, or somebody being over, looking at the accounts, whether Mr. F, Captain Kelly, or somebody else, and finding the account very low at the time and the bank wanted to know, in fact, could they pay money on cheques if it was going to go into an overdraft position. That is what I presume; this is a check-up now and then. But this was one call. When I was in a position to tell Mr. Deacon obviously that money was in the pipeline he then said, and this ties in, does Mr. Kelly want it in English notes as usual. I said: “Well, probably he does.”

3058. I see. The next contact is the phone calls arising out of the overdraft position between the 12th and the 20th, first the main account and then the Dixon account?

—Yes.

3059. And, here, there seemed to be a number of calls?

—Yes.

3060. First of all, Mr. Deacon seems to remember three or four calls?

—Yes.

3061. There could have been three or four calls.

—Yes. It would be normal to——

3062. But there does seem to be some evidence of a number of calls?

—Yes.

3063. There is also a call from Mr. Morrissey to Miss Morrissey. I think it was mentioned in the same——?

—It was, reading Mr. Morrissey’s statement.

3064. ——to the possibility of a call from Mr. Gleeson to a lady, although that could relate to the Seamus Brady?

—It does.

3065. Because there was a communication to him although his evidence does not seem to relate to that?

—Yes. He does say he just does not recollect this but the only call I remember from Mr. Gleeson was this one on the Brady cheque for £1,000 and my recollection is that it had to be and was on April 23rd.

3066. This is the 12th to the 20th period and it is the period in respect of which, although you do not recall communications, Miss Morrissey recalls Mr. Deacon ringing as you were leaving?

—Not necessarily Mr. Deacon. The usual request I got was a call from the bank.

3067. I shall ask him in due course, but I was not clear from your account of her evidence as to whether in fact you spoke to the bank on that occasion. You were leaving when the call came through?

—Again, the thing is a complete blank in my mind. I think it is, or will be, Miss Morrissey’s recollection that, in fact, I did get speaking to the bank because I think in subsequent conversation she said Mr. Deacon must certainly have been under a misapprehension.

3068. About which account was involved?

—Yes, but I obviously took the message as meaning there is nothing in the account which was, of course, the main account and I asked Miss Morrissey to check with the Red Cross, knowing that money was coming, that money was in the pipeline, and they confirmed to her that it was in fact, and if I might here get back to the point to explain; obviously I did, in answer to your question, confirm the talk with the bank but, according to them, I misunderstood.

3069. To recapitulate then, although it is not possible to reconcile at this stage your recollection and Mr. Walsh’s recollection about the initial second phone call, leaving it on one side, the subsequent communications which, it is suggested, occurred with you or Miss Morrissey, related either on 5th February to the main account or on the 12th February, involving one conversation with you direct. You thought it was the main account and you subsequently discovered it was the subsidiary account?

—Yes.

3070. And the final one was the Seamus Brady when it became clear to you that, in fact, there was a subsidiary account involved?

—Yes. In my search between two and three, there is another possibility. It is only a possibility and one that I thought of as an explanation of persons calling Mr. Blank: on March 25th I think the main account ran down to zero position. Now you know from other documentation from the Department that Mr. F called that day and drew £4,000 from the main account and put in £1,000 to the Dixon account and £1,000 to the Anne O’Brien account. Now, if the bank had been on about that, to say that there was nothing in the main account, possibly —we do not know—I think this is during the go-slow period——

3071. Yes?

—We do not know what cheques might have been pending posting and they have had cheques waiting to be posted and, if they did get in touch with us on these, it might possibly explain when Miss Morrissey got back to the bank and said that she could not get Captain Kelly and they said to her: “Oh, that is all right. The problem has been solved. Mr. Blank has been in” and we know Mr. F had been in on that day, so that is a possibility in your recapitulation.

3072. It is a possibility, but I had thought that this conversation with Miss Morrissey more probably related to the 12th February than the 20th February?

—Oh, indeed, yes, but you were talking of the alternatives and I just wanted to put that in. I thought you were just giving all the permutations and combinations and I just wanted to add that as just a faint possibility if you were going to make an exhaustive recapitulation.

3073. I would take it that Miss Morrissey’s evidence related to the earlier period?

—Oh, indeed, yes. I would too.

3074. I should like to be clear, if it is possible to get clear on it, on the question of the discussion you had with the Taoiseach in relation to this matter?

—Yes.

3075. You see, originally the first information we had of this was in reply to my question in the Dáil on 18th November—I have not got the exact wording in front of me but I quoted it before and you were, perhaps, here at the time I was talking to Mr. Murray. The reply from the Minister for Finance was roughly to the effect that following an examination of the relevant documents in the Department and consultations with the official named in the question, who was in effect you, this assurance was given. This clearly implied that whoever drafted that reply intended to convey that discussions had taken place with you on the question of whether the money could have come from any source—in other words, bringing you into it at that point. From Mr. Murray we gathered that he had not in fact discussed this with you at the time because you were with the guards that day or, indeed, perhaps in the immediate period after that either. He said that, therefore, the reference in the reply might have been to discussions you had had privately with the Taoiseach, and that seemed a logical explanation. From what you said in your evidence the last day about your discussions with the Taoiseach which, I think, is on page 200, I got a contrary impression. You said on page 200, Volume 5, Question 2768:

The Taoiseach’s discussions with me were related solely to the incidents which ultimately led up to the arms conspiracy trial.

The implication which I took from that, as the whole question related to this issue of the financial side, is that he did not seek information from you as to whether the money could have come from any Government source. Is that correct?

—Well, adding to that that my discussions with the Taoiseach, or his discussions with me, were related solely to the incidents which ultimately led up to the arms conspiracy trial. There was no discussion whatsoever between the Taoiseach and myself on the possible ways in which the arms transactions could have been financed.

3076. Could you explain how this reference to the consultations with you as preceding the giving of the Taoiseach’s assurance could have crept into the reply of 18th November if Mr. Murray is correct in saying that he did not consult you, and if the Taoiseach did not consult you in this matter?

—In regard to Mr. Murray, both of us are clear on it. I think what he did say was on this specific day—the 14th—the Taoiseach asked him specifically, where he had a hurried look through the relevant file— I was not available—this was on the 14th when the Taoiseach gave his assurance—I think Mr. Murray did say that previous to this, after my talk with the Taoiseach, that he did say that I had generally put him in the picture—meaning again that this—my discussion with Mr. Murray related to telling him the incidents which led up to the Arms Trial, in other words the customs affairs, the involvement of the Army Intelligence, the Ministers, and so on. I think he did cover that somewhere in part of his evidence.

3077. I was trying to find the reference. I had a clear recollection that what Mr. Murray was conveying to us was that the statement in the reply of 18th November in so far as it related to consultations with you could not have referred to any discussions you had with him. I think he sought to convey that clearly to us. It could only have related to separate discussions between you and the Taoiseach.

—No, no, I think, subject to correction, I think what he did say was that I put him in the picture, meaning in regard to the basic background to the situation—meaning the arms situation—but that when you pressed him on it I think—as to discussions with me—that he did say then that he was aware that the Taoiseach had discussions with me and possibly that this thing was discussed between the Taoiseach and myself. I think that is the way he put it. But——

3078. I asked Mr. Murray—Question 489, Volume No. 3, page 61—the question and I quote: To the question:

So you were not able to get any assistance from the then Minister for Finance? Did you perhaps discuss the matter with Mr. Fagan?

The reply given was:

—Not in any detailed way and certainly not in regard to the question of the financing of the importation of arms.

I said:

You went on to say that your discussions with Mr. Fagan referred generally to the importation of arms, irrespective of the financing of them, covering such matters as the position of the Revenue Commissioners in regard to the alleged importation, in other words, non-financing aspects of it. It would appear from that that you did not consult Mr. Fagan on this question—it was a most explicit denial of consulting him on the question of financing of the arms. Yet, the Minister for Finance told the Dáil on the 18th November that the assurance given was following discussions with the official described. Can you say who had discussions with the official described in this matter, if you did not, and how you incorporated these indirect discussions with him into your assurance to the Taoiseach, as Mr. Colley has said?

Mr. Murray replied:

This is a matter I would suggest could be taken up with Mr. Fagan. However, perhaps I could give you this interim indication—Mr. Fagan had discussions with the Taoiseach at the Taoiseach’s request before 14th May.

I said:

I see. So the position is that the Taoiseach may have secured a direct assurance from Mr. Fagan on this matter that you did not know about?

He said:

I am not saying that.

I went on:

The point is we have here a reply by the Minister for Finance which, presumably, was based on information furnished to him by the Department which specifically says that discussions had taken place prior to this assurance. While I shall put a question to Mr. Fagan in due course, I would ask if you could furnish us in due course, when you have looked into the matter, with a statement as to the basis for this reply.

It carried on from there and at question 494 I said:

Yes. But we are clear that your categorical assurance provided to the Taoiseach did not follow any discussion with Mr. Fagan on this matter?

The reply was:

That is so.

I think Mr. Murray conveyed very clearly to us that when he gave this assurance it was not related to any discussion with you then or before that and that the only way in which the reply of 18th November— this was the implication; he did not say that— could be justified would be if, in fact, the Taoiseach had received information from you direct or discussed it with you. If you did not discuss it can you suggest any way in which the introduction into that reply of 18th November of consultations with you could be regarded as relevant or, indeed, other than possibly misleading?

—As I have said (1) there was no discussion between the Taoiseach and myself on the possible ways in which these arms transactions could have been financed through public moneys; (2) as you have quoted there that in my discussions with Mr. Murray again, it covered the area of the matters which led up to the arms conspiracy trial, and thirdly, I suppose I can say that at the time in November when you put down your question I was consulted by my superior as to the position before the or during the drafting of the Dáil reply in question. I told my superior more or less in the terms of what I have said now in regard to the position in regard to myself and the Taoiseach and my discussion with the Taoiseach. I think, subject to correction, that Mr. Murray was out of the country at this particular time in November in Paris in OECD. And I told my superior of the discussions I had with the Secretary, of what I said to him and the matter disappeared from my ken as from there. I was not involved in any way further. I said the position in regard to the Taoiseach; I gave the position in regard to the Secretary of the Department and that was it.

3079. It would appear that when you were asked at that time you told your superior who asked you about this that you had discussions with the Taoiseach which did not relate to this matter at all?

—Yes, the financing matter.

3080. Yes, secondly, presumably it emerged that you could not have had any discussion with Mr. Murray on 14th May when he was looking this matter up because of the fact that you were with the guards that day?

—Yes.

3081. Thirdly—and this is where there seems to be some area of doubt—did you make it clear or what did you convey as regards prior discussions with Mr. Murray? Could anything you have said have given rise to the belief, which Mr. Murray clearly does not himself share, that you had on some earlier occasion provided him with information that would justify this kind of assurance in relation to the source of funds?

—No. I can only say—it is the third occasion you are talking about, the discussion with my superior, is that not——

3082. Yes?

—That I gave, as I only could give, my recollection of the discussion with the Taoiseach, my recollection of my discussion with the Secretary of the Department and that was it.

3083. Yes, and nothing you said could have justified the suggestion that there had been discussions with you on the subject of financing, possible sources of finance of these arms on or prior to 14th May?

—Would you say that again Deputy?

3084. It is clear then that in the information you gave your superior there was not anything that could justify your superior from concluding, justify your superior in concluding that you had provided any information on or before 14th May that would justify the kind of assurances given, any information?

—Well, the possibility is—I mean I cannot answer, naturally, for the interpretation people take from things or when it goes up along the line, that a negative approach in other words in the sense that it was not discussed; therefore, this was the position that no moneys could have been used. I am not saying that this was the interpretation taken up along the line.

3085. I will just put it to you this way. I will read out my question and the relevant part of the answer and ask you whether anything you said to your superior could have justified this reply being given to this question. The question was——

—Well, it——

3086. ——If you regard the question as unfair, of course I would not——

—I do not consider it unfair, Deputy, at all, please. I do not consider it unfair but it seems to put me in the position of a criticism of my superior or anything like that because as I said quite clearly and unequivocably: this is what I said and the interpretation, as I see it, the people, my superiors put on it and go up along to the Minister with, at the various stages, to comment on the interpretation or the wording they put would appear coming from me to be a criticism of——

3087. I understand your difficulty but I really do not feel I have had an absolutely explicit answer to the question——

—Well, I am trying to be helpful.

3088. Oh, I know that. Indeed, in your evidence you have been extraordinarily clear and helpful throughout but this point—and it is of some importance as it is one of the occasions when the Dáil was intentionally or otherwise misled——

—If the Deputy wishes, with a view to being helpful, I am prepared to talk to my superior again, if you feel this, and say precisely: “What did you think I meant? Would that help?

3089. Yes, that kind of thing——

—I do not want to keep back any relevant information at all from the Committee. Please appreciate that.

3090. I do understand that. And I do not wish to put the question in any form that would be unfair or embarrassing to you. You see the question I put—I will just remand you of it: I asked the Minister for Finance whether the inquiries conducted by officials of the Department of Finance prior to 14th May last into the possible use of public funds for the illegal purchase of arms included an inquiry to the principal Private Secretary to the Minister who had control over the issue of sums. If so, what these inquiries elicited, and if not, how these officials were able to show the Taoiseach no public funds were used for arms purchases. My question relates solely to the question of discussions with you and whether in fact this information, this reply of 14th May was based on what you have said or not. And the reply given was: “The assurance given to the Taoiseach that no public funds had been used for arms purchases followed discussion with the officials described in the question.” The assurance given “to the Taoiseach”, not, mind you, “by the Taoiseach”, implying that whoever gave the assurance to the Taoiseach—who was Mr. Murray—had had discussions with you on this subject, on the question of public funds being used for arms purchases and the only—when I was given that reply —well, I mean, it seemed to me a conclusive statement that the assurance given was one based on what you said. I do not think I could have concluded anything else. Therefore, I am a bit bothered as to how that situation could have arisen on 18th November? Perhaps, you would look into it again?

—Perhaps, with the permission of the Chair, I could come back on that.

Chairman.—Yes. That is all right.

3091. Deputy FitzGerald.—In volume 5 of evidence, your evidence the last day, page 201, your evidence in reply to question 2775, you said there: about putting the Secretary in the picture “I am sure I told him of how I first met Captain Kelly but in regard to the possibility of this arms transaction that we know of now, because the thing was only starting to come out piece by piece, I certainly did not and could not have told him of any suspicions of mine of how these arms could have been financed because that thought did not strike me in any way because that would seem to me to possibly involve the knowledge or the agreement of the Minister for Finance and that would be the last thing I would have thought of or accepted or suspected.” Now, I would be interested to know why you feel that if the arms were financed from this fund that that would involve the knowledge—you did say possibly—but involve the knowledge or the agreement of the Minister for Finance. You seem to be suggesting there that at that time to you the Minister for Finance was above suspicion in this matter and that that being so, you did not think the money could have come from the fund because if it came from the fund this would in some way perhaps involve his knowledge. Why did you then think that money coming from the fund would have involved his knowledge so that, thinking that and having confidence in him at that time, you did not think it could possibly have come from that source?

—Of course, this is thinking back in the context of that week. We know, with the subsequent events that having regard to the Minister’s dismissal from the Government on the basis of suspicion of involvement in these matters, but at the time the very thought of thinking that the Minister for Finance would have been involved in anything of this kind—and when I say that, may I hasten to say that that does not assume that I am saying on record now that he was. You appreciate that?

3092. Quite. Yes, I do.

—But, in a negative kind of way to think that moneys were used, official moneys were used, not necessarily this fund, but that Government moneys were used in some way, might possibly or conceivably have the knowledge or involve the Minister—this was completely out.

3093. Although you used the word “possibly” there, what you seemed to be saying was—I mean the general purport of your remarks there was that you were explaining why you did not think at all that Government money could have been used, money from public funds, and you seemed to be saying that really if such money were used that would—you said possibly, but would possibly involve the knowledge or agreement of the Minister for Finance and as that seemed to be out of the question you ruled the whole thing out, but I am wondering why you immediately would connect the two because, in fact, the use of public funds as they were, in fact, used could, for all we know at this moment, not have involved the Minister for Finance at all?

—This is true. As I said, this is looking back having regard to all the circumstances as we know them now and, as you very rightly point out, the misappropriation, if there is a misappropriation and this is, I suppose, what this Committee is all about —I cannot, thinking of that week, that the involvement of the Minister, first of all he was under this cloud—this involves what I did discuss with the Taoiseach, I think.

3094. Involves what?

—It did involve what I discussed with the Taoiseach or what the Taoiseach did discuss with me. So there was this kind of cloud situation, shall we say, and naturally this upset me very much and it is very very, difficult to think back precisely as to this bad week. You point out that I used the word “possibly” involved.

3095. I may be reading too much into your phraseology here?

—Yes. I think you are, really.

3096. I accept that in the light of what you have said. There is one thing that puzzles me a little. In your police statement of 14th May you said: “I subsequently learned from the Minister’s private secretary that Captain Kelly had been a frequent caller on the Minister for some time prior to this?

—Yes.

3097. This appears to be the stage at which you got to know Captain James Kelly personally?

—Yes.

3098. And that must have been because of the Clones account at or prior to the period 7th to 9th October?

—Yes.

3099. So the implication of that is that for some time before the 7th to the 9th October, Captain Kelly had been a frequent caller on the Minister?

—Yes.

3100. But the other evidence we have suggests that his first—from him anyway and I think from the Minister—suggests that the first call on him was on 21st September which was only 16 to 18 days prior to that, whereas the impression you gave there was that you had gathered from Mr. Brendan O’Donnell that for quite a while before that——?

—Yes, well, it was more than an impression because on the first or second occasion that Captain Kelly arrived—and I am almost certain it was the first day I met him—but as I took Captain Kelly in to see the Minister so it seems to indicate that it was the second time he called around that period—I noticed when going through the ante-room to the Minister’s room that Mr. O’Donnell and Captain Kelly seemed to be on familiar terms and when I lodged Captain Kelly with the Minister, on my way, out of sheer curiosity I said to Mr. O’Donnell: “How do you know your man?” So he said: “He has been in and out there for the past few months”—that, in fact, was the actual wording. So this would seem to indicate that it could have been later than mid-October, but this was the phrase used. Now, it may have been used by Mr. O’Donnell in a rather loose context, “the past few months”, kind of thing being colloquial.

3101. Are you now suggesting that that conversation may not have been on the occasion of the first visit or the visits around 7th to 9th October but a good deal later?

—It was one of the very first times I knew Captain Kelly. I say I met him for the first time in the period we are discussing between the 7th and the 13th when the Minister went away. Well, now, it could have been on the second occasion shortly after the Minister came back because my first recollection of meeting Captain Kelly was physically in the Minister’s room. Now, it may have been that he was in the private waiting room, that he was in or out, or that I saw him there, or that I had taken him back to the Minister. These things of 15 months ago and longer are most difficult, but I do positively have this very firm recollection of what Brendan O’Donnell said. I was just interested in the fact that here was a man I was meeting for the first time and he seemed to me to be paying either an initial call to the Minister or a second call and Mr. O’Donnell could say: “He has been going in and out of there for a few months.”

3102. This must have occurred some time during October?

—This is a checkable thing with Mr. O’Donnell.

3103. Yes, but this conversation must have been some time in October anyway, probably at the beginning?

—Hardly the beginning.

3104. By the beginning I mean the 7th to the 13th, the first half probably. Certainly some time in October?

—Yes.

3105. Right. Well, now, I want just finally to go over with you the general and particular question of delegation which comes into this thing a lot. There is some confusion in the whole affair as to in what capacity the Minister was acting at certain times?

—Yes.

3106. And some conflict of evidence as to whether he or you were responsible for some decisions about the money and we have to try and sort this out. As regards the Minister himself, first of all, before coming to the question of his delegation to you which is in dispute, it seems he was acting in at least two roles: as Minister for Finance and as a member of the Northern Ireland committee?

—Yes.

3107. He claimed in the trial to be also acting at some periods in another capacity. He said and I quote: “I was always in close touch with the Taoiseach and if he were going away for holidays or for a week-end his secretary would let my secretary know and when the Taoiseach would be away he would expect me to cope with any emergencies or anything else that might arise in his absence”. Now, is the reference to “my secretary” there to you or to Mr. O’Donnell?

—Mr. O’Donnell.

3108. I see. So any question in relation to that should better be directed to him. You have no particular knowledge of it?

—None whatsoever. I did not deal with the day to day affairs of the Minister’s office.

3109. Yes. I understand that. Coming to the question of delegation by him to you, there are many statements of his in the trial which when taken together create a clear impression very different from the one you have given us and we have to try and sort out this conflict. We will, of course, be hearing him in due course?

—Yes.

3110. I would like to read you some of these so that you can get the overall picture and then ask you to comment. First of all, he said: “If we were satisfied that assistance was needed and that the people concerned were bona fide, then I would authorise Mr. Fagan to meet the request or to provide what money was required. Thereafter, as far as I was concerned, that was the end of it.” A question was put to him: “It would be important to check and be satisfied that it —the £100,000—was being properly administered and applied?” His reply was: “I have no doubt but that that would be done by the Department of Finance. Once I had taken the decision that aid should be given and the sort of people who were to get the aid, the payments would be a matter of mechanics for the Department of Finance.” Again, a question: “On all the occasions on which Captain Kelly came to see you that you have told us about whatever discussions there may have been in regard to the general situation in the North, was it part of Captain Kelly’s business on every occasion to get money for the defence committees?” “Certainly not” was the reply. And again: “Once the original decision was taken that this committee was to be established and used as a channel for the relief of distress, thereafter I would have nothing to do with the mechanics of the administration. They would be dealt with by Mr. Fagan and the Accountant of the Department of Finance.” Question: “On the occasions on which Captain Kelly came to see Mr. Fagan and did not see you either because you were not available or for some other reason, was there always a request for money for the defence committees?” “No, certainly not.” And then:

“In deciding day by day or week to week who would receive so much and so on, who did that?

Well, the decision would probably be taken by me, but once I would decide that a particular body or organisation was entitled to be helped, then, in most cases, I would leave the actual day to day decision, as to payment to them, to Mr. Fagan.

Well, as to amount, though, in, say, a second or third application from the same group?

—Yes. If I had approved of the organisation as a bona fide body engaged in charitable and humanitarian work in relieving distress inside the Six Counties. I would approve, in principle, unless there was a particularly large sum involved, it would be left to Mr. Fagan to decide.

To decide on the amount?

—To decide on the amount, yes.

Finally,

So that we may be quite clear, may I remind you that Mr. Fagan’s evidence has been that, in the disbursement of this money he exercised no personal discretion? He made lodgments and he arranged for the transfer of the money. He told us that in every case in which a transfer of money was made it was not at his discretion. It was on your authority. Is this so?

—Yes. It was certainly on my authority. Any money disbursed out of the Exchequer is on the authority of the Minister for Finance.

—which would appear to evade the question. The clear impression created, and I think, intended to be created there, was that he approved of certain funds and, thereafter, you decided the amounts. That seems very much in conflict with your evidence that every individual amount was cleared by him? Would you like to comment further?

—Briefly, with regret I say that this is not so. I stand over my statement that I did not pay one penny from this fund without the specific approval, written or oral, of the Minister. In fact, on two occasions to my knowledge—I think the last one was the £5,000 one, and, somewhere along the line, when he was not readily available, I put money in the pipeline in the sense of telling our Accounts people to prepare a payment but had it held until I could get from the Minister and, specifically, while he was also in hospital in the March period, I ’phoned him before such a payment was made—so that I say positively there was no delegation. I gave my reasons for this, in addition to what I have said now, on Thursday when I said that Captain Kelly’s requests always came in the form “Would I ask the Minister” and that he, Captain Kelly, would be ready to see the Minister.

Secondly, I had no criteria at all to apply to the request from Captain Kelly, whether it should be £5,000 or £10,000. Thirdly, the Minister’s apparent indecision at his level in agreeing readily to a request from Captain Kelly—what I referred to before the break—all added up in my mind to a situation in which I would not and could not pay these moneys without going to him. Furthermore, when he was going away, towards the end of October—the middle of October—when I was seeing him away at the airport, I specifically said to him: “If there is more money wanted by Captain Kelly to send to the Clones account what do I do when you are away?” He said, in reply to that: “Pay him any reasonable amount he wants or pay to the account any reasonable amount he wants”. In the event, Captain Kelly did not call on me during this period so I did not have to exercise the delegation I had for that period. Immediately after he came back, Captain Kelly was in looking for £5,000. I put that to the Minister in writing despite the fact that he said that “If this arises during my absence, you can do so”. He was back only a few days but I did put it in writing.

3111. That is very clear and supplements what you said previously. I thought it better to get it as straight as I could at this stage. Associated with that, however, both the Minister and Captain Kelly referred to you as the person who sorted out the bona fides of applicants. The Minister said, in reply to a question—page 48 of the transcript—“now, in regard to determining the bona fides of the applicants, had you checks, means of checking this?” His answer was:

Captain Kelly was one of the very important people, he had a very good knowledge of who was who inside the Six County area, and he would certainly be one of the people that Mr. Fagan would consult as to the bona fides.

According to the Irish Press of 15th October 1970, last column, Captain Kelly said he had come in contact with Mr. Fagan of the Department of Finance around October; he had not known him before that. He had become accepted as liaison officer between the Government here and the Defence Committees in Northern Ireland. The report reads:

He knew that the Defence Committees were getting some money from the Government here and he, more or less, vetted these people. He was asked ‘Who are these people?’ by Mr. Fagan. He would say he had been in contact with Mr. Fagan at irregular intervals, sometimes twice a week and then maybe not at all for a week. In addition there were telephone calls between them.

The relevant passage here which I am anxious to deal with specifically is that Captain Kelly had met Mr. Fagan in that he, Captain Kelly, had become accepted as liaison officer between the Government here and the Defence Committees in Northern Ireland. He, Captain Kelly, knew that the Defence Committees were getting some money from the Government here and he more or less vetted these people. He was asked by Mr. Fagan who these people were. He would say he had been in contact with Mr. Fagan at irregular intervals, sometimes twice a week and sometimes not at all for a week. In both these cases the reference is to you as the person checking the bona fides. Who’s bona fides did you check? I would like to go over all the recipients of money. The first was Mr. A.? What function did you perform in relation to them?

—I had no connection whatsoever in the initial payment to Mr. A in August, 1969 but I had in connection with the second payment of £1,000 in January, 1970.

3112. You were not responsible for checking his bona fides?

—Certainly not.

3113. They were vouched for by the then Minister for Agriculture and Fisheries, Deputy Blaney?

—Yes. If the Deputy wishes, I can give a little bit of background on each of these. In January, the Minister called me in and said that Mr. Blaney had been on to him about a Mr. A; that Mr. A apparently was out of pocket in regard to disbursement of moneys in his particular area, to talk to Mr. Blaney and see what Mr. Blaney wanted. I did speak to Mr. Blaney and he told me, he confirmed the fact, that Mr. Ray was something like £850 or £900, I forget the actual figure he used, out of pocket for a long time on this. He felt that we should agree to a payment of £1,000 to Mr. Ray. Mr. Ray had been in existence in the August period so the question of my knowing or approving—it was a name known to me through the newspapers but not otherwise. It was basically a recoupment, according to Mr. Blaney, of money this man was out of pocket.

3114. Perhaps I was distracted for a moment. This contact with Mr. Blaney does this relate to the first or second payment?

—The second payment.

3115. He had got a payment already. His bona fides had been established before you had ever heard of him?

—Absolutely, yes.

3116. Now, Mr. B?

—Mr. B. a clergyman living outside the jurisdiction, that payment of £5,000 was made before I had any involvement whatsoever with the fund.

3117. Mr. C and Mr. D?

—Again, I came into this peripherally. The Minister had given an instruction to a member of the office staff to make payments to C and D. This member of the office staff was not quiet clear as to what precisely the Minister wanted done. So, I went into the Minister and he said, “This is something Mr. Blaney wants done and if you are not too sure about bank accounts and all the rest of it, and where precisely it is to go, ask him.” I got the officer concerned to get in touch with Mr. Blaney’s office and Mr. Blaney gave more detail of C and D. These incidentally, it has been revealed already, are clergymen. As I say, I came into it peripherally following the event, but nothing since.

3118. Not checking on the bona fides?

—Not checking bona fides.

3119. The next person who received money was Colonel Hefferon. Presumably, you did not check his bona fides?

—No, I have already explained the circumstances in this.

3120. Mr. Murnane?

—Well, he was a friend of the Minister. He was the man the Minister said had organised this on his behalf. The Minister agreed that he get this sum to pay to Aer Lingus.

3121. Right. Mr. E?

—Mr. E was again a clergyman. I think, Deputy FitzGerald, some weeks back you made the remark yourself: Where did Mr. E come from? Did he come out of the blue? I think there was a strong connection between Mr. B the clergyman and Mr. E also a clergyman. I think it does not disclose anything to say they were members of the one religious order and that Mr. B was in a superior position clerical-wise to Mr. E. I think Mr. B’s letter, which is in the pink book, will indicate that. If the Deputy wishes I can make available the full letter——

3122. No, that is all right.

—There is this connection.

3123. You had no functions then in establishing the bona fides of Mr. E?

—No, I am certain it arose from Mr. B.

3124. Messrs. F, G and H. The first you heard of them was when the Minister handed you this piece of paper about opening the Clones account?

—Yes.

3125. Did he ask you to check on their bona fides?

—Indeed, no.

3126. Did you do so?

—No.

3127. The next person is Mr. I who drew from the Clones account. Do you know anything about him at all?

—No, not at all. I never met him or heard of him.

3128. Mr. J?

—Mr. J I met once to my knowledge.

3129. Did you know he was drawing money from the fund?

—No, I did not.

3130. You had no occasion to check on his bona fides?

—No, none.

3131. Therefore, the statements by Mr. Haughey and Captain Kelly that you checked on the bona fides of a number of people is, in fact, incorrect as you never had occasion to check on the bona fides of anyone?

—I never checked on the bona fides of anyone or had occasion to.

3132. I think it is important to establish that. The final thing I want to deal with is the disputed question of the frequency of Captain Kelly’s visits and who he was visiting. I should like to put to you certain evidence put at the trial by you and others. At the first trial you said that Captain Kelly was pretty frequently in Mr. Haughey’s office. In the second trial you said he was fairly often in Mr. Haughey’s office. He mainly came to see the Minister and on the odd occasion to see, the report says, “him” but this is in the third person, presumably to see “me” is what you said. I take it I am interpreting that correctly?

—Would you repeat that? Is this a question of policy?

3133. This is a newspaper report, you can check it in the transcript.

—Is it in my evidence?

3134. Your evidence, second trial. Actually, I am not sure it is in our part of the transcript. I think we only have part of the transcript—

—Dealing with funds.

3135. I had better take it from the newspaper report which is in the third person. I think it is perfectly clear from the context it does not make sense unless the “him” is the third person reference to you. I will read it again. “Mr. Fagan said that he had seen Captain Kelly fairly often in Mr. Haughey’s office. He mainly came to see the Minister and on the odd occasion to see him”— which must mean you?

—Yes.

3136. Mr. Haughey in his evidence thought that you had given two different versions of the number of times that Captain Kelly had called to see him, the Minister, at Government Buildings?

—Yes.

3137. His view would be—I am giving the two different versions, you may or may not regard them as different, but that is presumably what he is referring to—that he came to see Mr. Fagan fairly frequently and he thought that at some stage in his evidence Mr. Fagan had said that?

—Yes.

3138. The Minister was asked: “Did you see Captain Kelly very often in that period?” He replied: “I heard Captain Kelly give his evidence and I agree with exactly what he says. I did see him from time to time, not very often, three, four times perhaps.” Now there is Captain Kelly’s evidence. It is reported in the third person in the Irish Press of 15th October, 1970, last column: He, Captain Kelly, would say that he had been in contact with Mr. Fagan at irregular intervals, sometimes twice a week and then maybe not at all for a week. In addition, there were telephone calls between them. In his evidence on the following day he said after the initial introduction he had met Mr. Blaney frequently. He had met Mr. Haughey much less frequently. He went to Mr. Fagan’s office frequently enough. It was only a question of the Northern Ireland people saying they wanted money and he went to Mr. Fagan, told him and money was paid into these accounts.” These are all the statements I can track down about the frequency of visits. There would appear to be some conflict as to frequency and as to who in fact was being visited most of the time. Would you like to comment?

—How frequent is frequent?

3139. We will deal first with visits to the Minister.

—I have already given my account of the earlier period up to the time that I met Captain Kelly which, as I say, Mr. O’Donnell would be in a position to——

3140. We can check on that?

—All told there were, I think, only about 12 payments, give or take one or two occasions, for Captain Kelly to call, requisitioning money for the distress fund. I have mentioned already that there were three occasions in which the Minister said “No” in effect. So, Captain Kelly would call or he would see Captain Kelly. This leaves roughly nine occasions in which he would call to see me on my own. But as I think my assistant can verify, it was rarely he called. He did call occasionally. But out of those nine I should imagine that three or four were telephone calls from GHO which would bring down the physical calling—and I take it that is what we are dealing with, Deputy——

3141. —Yes?

——to four or five occasions. After that, the time he came on the customs matter and, possibly as a follow on to that, he may either by telephone or calling physically, have come in regard to customs clearance in the sense of coming in to say that this thing at Dublin that he had been speaking about was abortive and did not happen and would it be all right for Waterford. As I remember he was in touch with me but I seem to connect his reference to Waterford being on the telephone. All told, his physical appearances as far as I was concerned could be narrowed down to six or seven. I am not being terribly precise on that and cannot in the nature of it be. As against that you have this reference by Mr. O’Donnell to frequent visits up to the time I met Captain Kelly. I would say that in the Spring period, which would take us up to April, that I was not personally aware, other than the occasions the Minister would refuse to accept Captain Kelly’s request straight away, that he was in with the Minister on a particular number of occasions. That reminds me at this stage of something I should have possibly said earlier. I said somewhere that the requests from Captain Kelly for money mainly came to me or through me. There were occasions within those 12 where the Minister would buzz me on the intercom and say: “Captain Kelly wants . . . . .” There was at least one if not two occasions on which this did not initiate from Captain Kelly calling to me. In court there was a reference by Captain Kelly to a conversation he had with Mr. Haughey in the February period and there was some disputed evidence both ways that it was not on this specific day that Captain Kelly called. I think there was a reference to St. Valentine’s Day or something like that. That was the mnemonic somebody was using.

3142. I recall that.

—He saw the Minister on March 20th in connection with the customs clearance and how I recall that is that Captain Kelly called to me with Mr. J on the one and only occasion I think I met Mr. J I had a meeting in my room with some RTE people who were discussing a proposed programme on adult education in which Bruce Arnold joined me for the discussion and Captain Kelly and Mr. J appeared. Captain Kelly wanted to see the Minister and I got Mr. O’Donnell to see Captain Kelly into the Minister. There is that specific date but other than that general type of recollection and specific on points I cannot assist in saying precisely where the balance lay as between his calls to me and his calls on the Minister.

3143. That is very helpful because you have filled out in much more detail the rather general references in the trial which were a bit vague and perhaps a bit confusing. We have a clearer picture now.

The Committee adjourned at 6.35 p.m. until 7.30 p.m.

Captain James J. Kelly sworn and examined.

3144. Chairman.—Now, Captain Kelly, this Committee is investigating the expenditure of a Dáil Vote of £100,000 and we have adopted here a code system for certain names, particularly those outside the jurisdiction, who might be placed at risk by disclosure of their names and also to facilitate us in getting fuller co-operation and greater evidence. I trust that you will be agreeable to follow that code.

—Certainly.

3145. Captain Kelly, you were in the general Army, I take it, before you went into Intelligence?

—I was. I went into Intelligence in 1960. Before that I served 11 years in the Army.

3146. Can you recall or were you present at a meeting in McKee Barracks in September, 1969, in which the general question of northern affairs was under discussion?

—Which meeting would this be?

3147. A meeting at which Mr. Haughey and I think Colonel Hefferon were present?

—No, I was not at that meeting.

3148. When did you become associated with those northern affairs?

—I became associated with northern affairs when the Bogside started on 12th August and I was in Belfast the day afterwards, at the start of the problems there.

3149. You knew of the existence of the Clones bank account?

—I knew there was a bank account in Clones; yes.

3150. And you knew in whose names the account was held?

—Yes.

3151. Then you participated in the opening of the new account at Baggot Street?

—I do not know what you mean by participated in the opening of the new account at Baggot Street. I knew there was an account opened at Baggot Street.

3152. You were recommended to Baggot Street by Mr. Fagan, were you, or introduced?

—I approached Mr. Fagan because, for security reasons, the people in the North said it would be better if they had an account opened in Dublin.

3153. What happened then?

—The account was opened.

3154. Mr. Fagan introduced you?

—I do not think so. I do not know. I am sure the people concerned with the account opened the account.

3155. You called to the bank, then did you?

—I went to the bank later on but as far as I recall, as far as I know, the account was opened at that stage.

3156. Did the suggestion come from you, to open this account?

—Not a suggestion. People wanted to move the account to a bank in Dublin. It was just a question of having a bank available; tell them to go to the bank and open the account.

3157. Which people do you mean?

—Well, the people of Northern Ireland.

3158. You have code names in front of you?

—I do not think—I do not intend designating any of the Northern Ireland people.

3159. You see, Mr. Kelly, we have code initials there which give us——

—I should like to clarify one point first. This investigation is into an account of a Grant-in-Aid, paid to the people of Northern Ireland, and the people of Northern Ireland will account for this money?

3160. Pardon?

—Has this money not to be accounted for?——

3161. I ask the questions.

—It is just a point I wanted to clarify, because I was reading reports of the Committee meetings here and in the documents £74,000 was accounted for by people of Northern Ireland.

3162. Well, Captain Kelly …

—Who were the people who made the account?

3163. We will come to that later on. Can you tell us if the account at Baggot Street was opened with the consent of the account holders in Clones?

—The position as regards the account is, I was not very concerned with the mechanism of the account at all. I was acting as liaison officer appointed by the Government in between the northern representatives and the Government. In that capacity I assisted them. As regards the actual mechanics—

—I did not open it—

I was not at all worried, except that I knew it was opened by these northern people.

3164. There was a sub-committee established here, consisting of the former Minister for Finance, the former Minister for Agriculture, the present Minister for Labour and the present Minister for Education. Were you in any way formally or informally associated with that committee?

—I acted as liaison between various Ministers here and the people in the North, and if the people in the North wanted to get any business done they probably contacted me and I assisted them in every way I could, in my capacity as liaison officer. Actually another very important point also is this: I was concerned with intelligence work as such, that was my primary function.

3165. Well, then, instead of being in association with a specific sub-committee you were associated with different Ministers in a rather less formal fashion. Is that true?

—Yes.

3166. And as regards what we term the Belfast Relief Committee, you dealt with that?

—There was a Belfast Relief Committee with which I dealt and there were several other people and groups with which I dealt also.

3167. The evidence offered here so far— and you have probably read it—concerned the suggestion to open an account in Baggot Street and one of the reasons, in fact the only reason, for that was that they would find it more convenient. Is that true?

—No. I have given you the reason; it was for security reasons.

3168. Security reasons. Did you tell Mr. Fagan or give him to understand that the same people would be operating the account in Baggot Street as in Clones, the same account owners?

—I did, yes.

3169. Can you say who those people were?

—I think this would be a question for the Northern people to answer because Northern people are irretrievably involved in this and possibly have been brought into this in good faith by the Government down here, and I do not want to give an answer here that would complicate the situation for them.

3170. I can only repeat that we are using codes, no names?

—I do not see any necessity. I met a lot of people in Northern Ireland of various types, people of all sorts, numerous people, and I have no intention whatsoever of designating people by code or otherwise. This was an intelligence operation and when one is carrying out an intelligence operation one gets information in complete confidence and it is an accepted thing that this is not exposed. I think that, even if people are designated by code, reading the papers over the last few days and the evidence given here it would be possible for the general public to identify some of the people.

3171. As regards the main account in Baggot Street, you were aware that there were three accounts there?

—Yes.

3172. Were you aware of that from the beginning?

—I was aware of the accounts as soon as they were opened, or very shortly afterwards anyhow.

3173. Was none of these accounts opened by you?

—None of the accounts could have been opened by me because I was not responsible for signing any of the cheques. They were opened in the names of other people, so I did not operate any of these accounts.

3174. Was the mandate of the main account given to you?

—I did not hear anything about a mandate until I read the evidence here. It meant nothing to me.

3175. Well, you know what a mandate is, do you not?

—I am not too sure.

3176. It is a banker’s term. It is a document they hand out to you?

—Well, I did not realise what it was when I read about it.

3177. There is a stamp on it and the signatures of the people who operate the account are put on it. Were you given any such document with regard to the main account?

—No. I have no recollection whatsoever of getting any document of that sort.

3178. Well, there was such a document issued. You have no idea who returned the document to the bank?

—The point is, I had no function in opening these accounts at all except that in my capacity as liaison officer I assisted the people in Northern Ireland who wanted to open them.

3179. Were you given any cheque books?

—No, I do not think so. I have no recollection of it. I do not think I was.

3180. But you would remember the cheque books, would you not?

—It is possible that I collected a cheque book, but I do not think so.

3181. You have heard of the names White, Loughran and Murphy?

—Yes.

3182. Did you hear of them before this Committee established its investigations?

—I did, yes.

3183. How and where did you hear them?

—I have a recollection of, at one stage, asking one of my friends from Northern Ireland about it and he told me.

3184. That was the only way you came to, that was the only association you had with these names?

—Well, I have this recollection of inquiring and being told of these names.

3185. And you have no other recollection of them?

—No. The point is, as regards the accounts, as I explained earlier, I was acting as an intelligence officer and my function as regards the accounts was to assist as liaison officer and I had no—what is the word, I suppose primary function, in the running of these accounts at all.

3186. Have you heard of the name Dixon?

—I have, yes.

3187. George Dixon?

—Yes.

3188. And have you heard of the name Anne O’Brien?

—I have, yes.

3189. And when did you first hear of these names?

—I would have heard of them when the accounts were opened or very shortly afterwards—when the accounts were opened I would say.

3190. And did you get any form from the bank in respect of these accounts?

—That is with regards Dixon and O’Brien?

3191. Yes?

—I have an idea I did. I probably got the signatures for some of the accounts.

3192. And what did you do with them?

—I would have given them to the bank manager. I have no clear recollection of this but it is possible that I did so.

3193. Well, let us take the case of Dixon. You got a form for signature?

—I cannot make a categorical statement that I got a form for Dixon.

3194. And Anne O’Brien?

—Or Anne O’Brien, but I would imagine that if I was asked to hand in the names of three people I would have handed them in.

3195. But were you handed forms?

—I have no recollection of being handed forms as such but I have an idea that I had been at the bank one day with three names.

3196. Did you take forms away with you?

—Well, the signatures would have been signed away from the bank certainly. I do not recollect taking the forms away.

3197. But you do——?

—I feel, I have an idea, a hazy recollection, shall I put it that way, that I did go into Mr. Walsh at one stage with signatures.

3198. And where did you obtain these signatures?

—I got them from the people or they were obtained from the people who were running the account.

3199. Were these fictitous signatures?

—They were, yes.

3200. And were these the signatures that were used afterwards in drawing on these two sub-accounts?

—That is right, yes. As far as I am aware.

3201. You presented cheques, did you, at different times for the sub-accounts?

—I presented cheques in various times.

3202. Were any of these cheques signed by yourself, for instance?

—No, I did not sign any cheques for the—I was not running the accounts.

3203. Now, this signature, the signatures of the main account, you took that away for signature, did you?

—I do not think so. I think the main account was opened—I had nothing got to do with it.

3204. But you did find out in whose names it was?

—I found out later, yes.

3205. When did you find out?

—Oh, I could not give you a precise date. I was talking to a person and I asked him about it and he told me.

3206. You were talking to a person?

—Yes.

3207. And who was that person? You may use the code?

—Yes. He was a Northern Ireland person.

3208. You may use the code in front of you?

—I do not know whether there is any necessity to use the code at all or not. I object to using the code.

3209. Well, Mr. Kelly, lots of people object to using the code?

—Well, I will tell you why I object, and I object very strongly, is that these people here—I was doing an intelligence operation, working under the authority of this Government, of the Government of the Twenty-Six Counties; these people worked with me in good faith and now there is a danger that these people may be held up— public odium is not the word—they may actually be in danger themselves if by any chance their involvement in an operation concerning arms was exposed, so I do not feel that I should talk about any people in Northern Ireland who were fooled into this position.

3210. Well to come back to the accounts, Captain Kelly. Can you tell us who suggested the subsidiary accounts?

—I cannot tell you exactly who suggested the subsidiary accounts. As you will appreciate in a situation like this there are a lot of discussions, a lot of ideas put forward and someone, I am sure, got the brainwave of working in this fashion. I can go no further than that.

3211. Do you know him?

—I could not pinpoint any one individual. I met numerous people. Numerous ideas were put forward. There was numerous suggestions put forward. The whole thing, the operation was concerned with intelligence work primarily. People in Northern Ireland met me and they wanted the assistance of the Government down here and, as I said at the start of this thing, this question of the money which is now under inquiry was to a large extent secondary to the main operation which is these people who were looking for arms to defend themselves in Northern Ireland, these people had money to purchase arms and at one stage they wanted to bring these arms into the North. I suggested to them that they should come and operate through the Government here, which they did, and that is the situation. Out of that, this would only be a sidelight as to how they formed bank accounts or how they did not. It is only a question of security that they would have the money available to purchase the arms.

3212. Do you say that the suggestion, the actual putting into operation, the actual opening of subsidiary account, do you say that was not done by you?

—The subsidiary accounts. I do not want to go into any great detail on where this money or anything else came from for the subsidiary accounts. And I think it has possibly been explained already as regards where this money came from. My information is such, and maybe this evidence should be produced first.

3213. Well, what do you know about it?

—I know, as I said in my letter to this Committee, that these people had money from another source. I have no, what shall we say, detailed information of the source but I have various ideas and what it boiled down to was that people had money to purchase arms and they used these accounts as the agency through which to distribute this money.

3214. Well, we can come to that later. But you may know, perhaps you could tell us, have you any, did you get any bank statements yourself from the bank?

—I had a bank statement in my house at one stage, yes, which came from the bank.

3215. To which account did it refer?

—It referred to all accounts.

3216. The three accounts?

—Yes.

3217. Did you get that on one occasion only?

—On one occasion, yes.

3218. You are quite sure you did not get a second account?

—No, there is one. I am fairly, I am nearly certain of that—one occasion.

3219. And it set out the usual kind of bank——?

—The usual——

3220. The lodgments, the withdrawals and the balances?

—Yes.

3221. Did you get any returned cheques?

—There were some cheques.

3222. Were those posted to you?

—No. I think they were handed to me.

3223. Who handed them to you?

—By another man.

3224. Were they handed to you in the bank?

—I do not think so. I think there was another man there who got them.

3225. Could we be clear on this? There was another man present when you got them. Is that it?

—Yes.

3226. He probably asked for them?

—They were given to him.

3227. And he gave them to you?

—Yes. He did not want to bring them away with him.

3228. This occurred on the bank premises?

—On the premises or outside the door.

At that time I got them anyway.

3229. The other man asked for them in the bank?

—I do not recall him asking specially but I assume he did. They were handed out.

3230. Do you disclose the identity of that man?

—No. This came out in the Four Courts.

3231. Is that a person within the jurisdiction?

—No.

3232. You do not know which official in the bank gave these cheques?

—I have no idea.

3233. Which month was that?

—I cannot say exactly what month it was. I imagine the early part of the year.

3234. There were instructions you may have noticed at the head of each ledger form in each bank ledger, cautionary notes such as “No correspondence to go out, all contents to be available to Mr. Fagan”. You do not know anything about who secured that those instructions would be put on?

—I am afraid not.

3235. You do not know?

—I have no recollection of it.

3236. To get away from the bank for the moment, do you remember phoning Mr. Fagan from Vienna?

—That is correct, yes.

3237. Why did you phone him?

—This was discussed in the Four Courts.

3238. We can discuss it here again.

—I phoned him to ask him what the situation was.

3239. Can you tell us who sent you to Vienna?

—I think all this came out very clearly in the Four Courts that this was an operation under the auspices of the Irish Government, an intelligence operation to get arms and to bring them in, and the man responsible was Mr. Gibbons, Minister for Defence.

(Interruptions.)

3240. Deputy FitzGerald.—Steps should be taken not to have a repetition of that. This is not the Four Courts.

3241. Chairman.—I have to tell you at this stage that if there are any interruptions of that nature again the room will be cleared. Can you tell us why it was necessary to open a subsidiary account?

—I would say one of the reasons was accountancy. As I think of this I have a bit of a problem. As the public know, the money that was paid out from the Grant-in-Aid, £69,000 plus £5,000 from the Red Cross, was accounted for by a committee in Northern Ireland. There were other committees in Northern Ireland who were interested in the protection of people up there. They were the people with whom I was primarily dealing. What arrangements they had among themselves I am not clear about as regards the details but I know there was a switching back and forth and one of the reasons for the subsidiary account I would say was accountancy.

3242. Who knew about the subsidiary account apart from yourself and the account holders?

—I could not answer that. Very few.

3243. I mean apart from the staff?

—I do not think anybody would have detailed knowledge. Certainly I did not speak about it.

3244. Did you discuss it at any stage with Mr. Fagan?

—My main function with Mr. Fagan was in my liaison capacity and as the northern people wanted money they contacted me and I vetted the money. This happened with other accounts also.

3245. Did you keep substantial amounts of money from the bank drawings in your house?

—I had them for short periods of time.

3246. For what purpose?

—It was to facilitate the people in Northern Ireland who wanted money at certain stages. I was not operating any account.

3247. You withdrew money from the Baggot Street account?

—I withdrew various sums from time to time.

3248. Did you withdraw some money for the purchase of arms?

—Certainly some of the moneys from the subsidiary accounts were for the purchase of arms.

3249. About how much?

—The money was spent in various ways. I do not know whether it is my business to account for this at all but I will tell you what I know about it. All the money was not spent on the purchase of arms. Strictly speaking, I do not think I should go into it at all. This is the business of the people in Northern Ireland who had this money and who only came down here to operate and to purchase arms in this part of the country because they were getting the co-operation of the Government here. I do not think I should go and describe their operations as such, especially if this money is not money concerned with the Grant-in-Aid, if this Grant-in-Aid money has been accounted for by the committee in Belfast. This money in the subsidiary account is not the same money. It belonged to people outside the jurisdiction.

3250. You have already stated, I think, in court—correct me if the figures are wrong—that you drew between £20,000 and £30,000.

—I do not think I said that. I said I thought between £20,000 and £30,000 was actually expended on arms.

3251. Very good. You have mentioned the apparent reconciliation—you have come back to it a few times—between the total amount of money that was put into Baggot Street, or if you like to combine the two into Baggot Street and Clones, and the statement which was published or submitted to us by the Northern Ireland Relief Committee. Have you got this?

—I have not got it with me.

(Document handed to witness).

—This is the account itself?

3252. It is on page 56. The amount of money put into the banks can be brought towards a reasonable degree of reconcilability with that? If we accept this post hoc reconstructed statement as stated there and that corresponds with the amount of money put into the bank—that is your argument, is it not—your thesis?

—As a matter of fact, I did not know how much money was put into the bank until I read about it. Whether it was before this Committee started or shortly after it started, I did not know the exact amount put in. All I can say is this: as far as I know this is the Northern Relief Committee who have accounted for so much money and as far as I can make out it tallies with the money they got.

3253. But you say you do not know how much money was put into the bank?

—I was not clear on how much money was put in until I read the various accounts that are rendered here.

3254. There would be ten lodgments?

—I understand now, I know now.

3255. There were ten lodgments put into the Baggot Street bank and all these lodgments were, I understand, put in at your request. Is that correct?

—Well, I would say most of them at my request and possibly them all. I could not say definitely them all.

3256. Would you not have a rough idea of what went into it?

—I would have a rough idea but I did not know the figure.

—3257. In any event, if these two figures correspond, what thesis or hypothesis do you offer for the withdrawal of the money?

—The only hypothesis was that the people in Northern Ireland got this money for relief and they have accounted for it. That is one. The other thing is that there were people in Northern Ireland concerned with obtaining arms. These people had money which they got from various sources. I cannot explain how they worked out their agreement or the actual mechanics of the thing but there was a switching of money. The people who were concerned with arms felt they were secure down here—in using a bank down here. They had very good reason to feel they were secure on account of the support they had gained from the Government and that the Government said they would give them. That is the reason they were down here.

3258. Do I take it then that you are making the suggestion that money which was drawn from the Baggot Street account for the purchase of arms was made good to the Northern Relief Committee by other sources?

—This is it.

3259. I think you have stated already that you have destroyed all your documentary evidence?

—That is correct. When I was arrested under the Offences Against the State Act— wrongly I maintain—I went home and destroyed everything I had relating to it, burned them.

3260. This substitution operation—I suppose one could call it that—as regards the money, that is what you mean when you have always maintained when the money for arms was provided by Belfast committees?

—As I said in my letter there, it was reimbursed from another source. How actually this was done I did not inquire too deeply, but it was done. You see, the thing is, the whole operation cannot be divorced, as I said previously, from the intelligence operation. When people came down south looking for support, starting off with a meeting way back in October last when a group from Northern Ireland came down —whom I met, and had a long discussion with, which I reported to the relevant authority, the Director of Intelligence—this, in effect, was the genesis of the whole intelligence operation. These people were looking for weapon training, they were looking for various other things, and they were also looking for arms if they could get them. These people suggested that they had money to buy arms. This was reported to the relevant authority, it came to the notice of Mr. Gibbons and, as far as I know, it came to the notice of Taoiseach Lynch. It was denied in court but what I am saying is the truth.

3261. Deputy FitzGerald.—I am not clear here. What came to the notice of these people?

—I was speaking in Bailieboro’ with representatives of various groups in Northern Ireland. These were people who were concerned with getting weapons for defence and generally getting assistance in case they were attacked again. This was put to the Director of Intelligence.

3262. By you?

—By me, reported in the normal way in my official capacity. But about three weeks afterwards I got word that the Minister for Defence was worried about this meeting on foot of a report he had got from the Taoiseach concerning the same meeting, which I was informed was on foot of a report from the then Secretary of the Department of Justice. It came back to me in the normal way to check out, so I checked it and confirmed what had taken place and it went back. This was the genesis of my intelligence operation of the whole thing. This has been denied in the Four Courts but that is it.

3263. Deputy Briscoe.—When was this meeting?

—It was the weekend of the 4th and 5th October.

3264. Deputy FitzGerald.—I am still not quite clear as to what was reported to the Taoiseach. In his original reply to you, Captain Kelly interpolated a reference to arms but I was not clear whether he meant that reference to arms to be included in what was reported. I wonder if he could clarify precisely what was reported?

3265. Chairman.—Could you clarify it, Captain?

—It was a meeting, a general discussion with various people and actually these people were looking for assistance. For instance, this was the weekend when Colonel Hefferon stopped the training on the previous Friday—this is the training that was taking place in Fort Dunree. He stopped it once again—I happened to be in the office when it was stopped—on foot of a report that the Sunday newspapers were going to carry a report on it. He could not contact the Minister for Defence or the Chief of Staff and he stopped it of his own volition. I went to this meeting on the following Saturday. Half of the meeting was concerned with discussing this training and the general attitude of the Northern people was that the Government was letting them down again. This was the general attitude of these people and it took me about half the meeting to convince them of the actual reality of the situation. Then, the rest of the meeting was concerned more or less with if these people were attacked in the future would there be any guarantee of defence? They put forward that they wanted arms but they wanted training first, they said. This was reported in the normal way.

3266. Mr. Kelly, if you look at the accounts on page 10 and 11 you will see various payments made out there under the different accounts?

—Yes.

3267. Are you familiar with any of these payments?

—I see my own name there on one anyhow. That is in the main account?

3268. Yes—and one of the subsidiaries too—a lodgment by you?

—Yes. I do not know exactly. That lodgment must have come from the main account. Maybe it was a cheque or something. I do not know.

3269. It is a withdrawal of March, there is a withdrawal of £4,000 on March 13th?

—Yes, well, I say that is probably it.

3270. And there is a lodgment—

—Of £4,000 on March 25th.

3271. Yes.

3272. Deputy Nolan.—That should be March 13th.

3273. Chairman.—Yes, March 13th. That is incorrect.

3274. Deputy Nolan.—That was amended.

—Well, this is probably it so. A cheque possibly handed to me to lodge in the other account.

3275. Chairman.—I beg your pardon.

—This is possibly a cheque handed to me by the people who were running the main account to lodge in the other account, or maybe it was cash. I do not know.

3276. There are other transfers there. There is a—in fact there are five lodgments to the Dixon account?

—Yes.

3277. Have you any idea what was the purpose in opening the George Dixon account?

—This is what I said. This was the arms account and it was opened for accountancy purposes. That was one of the reasons, to keep it distinct from everything else so that people could check up afterwards how much was actually spent.

3278. Well, a number of different people participated in transferring money from the main account to the Dixon account. Is that correct?

—There are various people who came down and, couriers I suppose, and that sort of stuff.

3279. Used these couriers take back money with them?

—Some of them, sometimes, yes. I would say most of the time, as a matter of fact.

3280. Would they take back some or all of it?

—I could not answer for them. They took back money that I knew nothing about. They did not always come to me.

3281. Were open cheques sent down?

—I have no recollection of getting an cheques?

3282. And what names were on the cheques?

—How, on the cheques? The signatures?

3283. What signatures were on the cheques?

—As have been described already.

3284. Fictitious names?

—Yes, the name Loughran, White and so on.

3285. And Murphy?

—Yes.

3286. And Dixon?

—Yes.

3287. And O’Brien?

—That is right, yes.

3288. You know who all these people are?

—Yes.

3289. Can you tell us anything about any approximation—I know you are doing it from memory now in so far as you say you have destroyed the accounts——

—Yes.

3290. Would all the money that would have been taken out for the purchase of arms, was it all taken out by you or could other people take it out?

—No, I would not say it was all taken out by me.

3291. Others could have taken out some as well?

—Yes.

3292. Or you could not even give an estimate of what was taken out for that purpose? You could not give an estimate for what you did yourself?

—I could not give an estimate, no, but I know, for instance, that people were in England and spent money there.

3293. Pardon?

—I know there were people in England and people in America, but as I said early on, this is the business of the people themselves.

3294. Well, you see, this is a sub-Committee of the Dáil. The money was voted by the Dáil——

—But I still do not get this straight. The money in question that we are trying to account for is, I gather, £69,000 plus £5,000? Is that correct? Plus £20,000 plus another £11,000?

3295. Well, what we are concerned with is the £100,000 that was voted in the Dáil here plus any other moneys that may have been lodged into the bank accounts in which that was lodged?

—But there is the Northern one. Supposing now there is no switch. Northern money, say, is lodged in the bank. Does this come under the terms of reference?

3296. Northern money? No, we are concerned with the money voted here in the Dáil; we are concerned to know how it was spent?

—This is my point. If you have two subsidiary accounts and the money in those is not money that is voted here in the Dáil?

3297. The subsidiary accounts, if you look at your book, page 10 and 11——

—I appreciate this point, but the point I am making is this, that this money was reimbursed. This was used by people for their own purposes. They thought it was a good idea for security that the money that they would possibly use for arms should be down here. This money was re-imbursed to the Northern Relief Committee. Therefore, in effect, it is not Dáil Éireann money.

3298. Deputy FitzGerald.—In effect.

3299. Chairman.—In effect I do not know that reimbursement would be an adequate answer to the problem. If it was reimbursed, we are trying to find out what happened, nothing more.

—The point is this, you see, this was an intelligence security operation which one cannot get away from, and I hark back to this probably ad nauseam. But the important point that arises is this, that this money question arises out of an intelligence operation which—and I do not think there are any people in doubt and the court case proved it—had the backing of the Government and that these arms were being brought here, under the authority of the Minister for Defence for the use of the Defence Forces, which was the kernel of the case that was held in the Four Courts. They were brought in against a possible contingency that they could be distributed in Northern Ireland as to wit, directive, February 6th, issued by the Minister for Defence on behalf of the Government to the Army. These people came down here in good faith and I do not think it is correct for any authority down here to start inquiring and put these people in possible danger.

3300. Mr. Kelly, we are taking every step we possibly could——

—But the point is this, these people, the way they feel is that they took this Government here on trust. They were let down. There is absolutely no necessity for any investigation if the Government had lived up to its obligations.

3301. Captain Kelly, this investigation arose by virtue of a statement made by you in the Four Courts to the effect that money was withdrawn from Baggot Street for the purchase of guns?

—This was part of the court case.

3302. And this Committee has been set up. Money was voted for relief purposes and relief purposes solely. That apparently was the interpretation of the Dáil when they voted the money.

—But the Northern fellows——

3303. That is why this investigation is being held.

—But this money is accounted for, as I see it.

3304. Restitution does not account, is not proper accountability.

—Then can you put people at risk?

3305. We are putting nobody at risk.

3306. We have given you codes there, letters.

—This code does not affect it at all. How can I name anyone who came down here, looking for assistance from this Government, got a guarantee of assistance and in the final analysis found that the Government was turning its back on them? I, for one, am not going to go into any details as regards names or otherwise, of these people.

3307. Deputy FitzGerald.—Would it help to put to Captain Kelly, which he may not fully understand, that even if the hypothesis which he puts forward were true in all respects, it would have been improper for money to have been withdrawn from this account with the full authority of the Government, to buy arms? He may not appreciate that? We are concerned as to whether this money was withdrawn from this account.

3308. Chairman.—Yes and the question of restitution is not relevant.

Captain Kelly.—I appreciate this point. I would put it to you that it is probably a technical point and that if these people got £74,000 as a Grant-in-Aid and if they account for £74,000, that is it.

3309. But the point is, have the funds in Baggot Street been used for a purpose other than was the intention of Dáil Éireann which voted the money?

3310. Deputy FitzGerald.—For relief?

—No, because these people in Northern Ireland—you cannot divorce this from this Intelligence operation—saw this as a secure method of conveying money for arms and they used it as a secure method for this particular purpose. I do not know but I suppose that, technically, it could be argued that that might be wrong but the point is that if £74,000 was given for relief and if £74,000 was spent on relief, then, where do you go from there?

3311. No, restitution of the money, if we can accept that that is so. This is based on a reconstructed statement submitted afterwards and also it does not explain away how much was removed—we do not know how far the fund was used for the purchase of arms. We do not know the amount that was removed but we do know that the fund was voted for the purpose of relief and that that fund was tampered with, if I may express it in that fashion.

—You may use this expression if you like but this was a very abnormal situation and these people were operating in abnormal circumstances. You cannot divorce it— certainly I cannot divorce it in my mind— from what was the primary operation, an exercise to assist these people if they ever came under attack. As a matter of fact, to put it shortly, to put into effect Government contingency plans. I do not know whether the method can be objected to but that is it.

3312. You took substantial quantities of money to the Continent. Is that correct?

—I took £10,000.

3313. And you spent that?

—I spent it—I gave it into an account for an arms dealer.

3314. You got a receipt for it?

—I have no receipts anyhow at this stage. I probably did.

3315. That is the kind of thing you would remember. I never got a receipt for £10,000 but if I did get one I would remember it.

—I got a receipt from the bank, I am quite sure.

3316. It was lodged into a bank account?

—The point is this—this is not a normal operation by any means. There is an element of trust in this and anyhow if the £10,000 was not paid, the principals would soon know it was not. It is as simple as that.

3317. Whom did you pay it to?

—This seems to be taken out of perspective completely—asking question as to whether I got a receipt. That is a ridiculous question. I am sorry, perhaps I should not have said that but in the situation——

3318. In view of the general way that things are developing, we shall have to adjourn for private deliberation.

The Committee adjourned at 8.35 p.m. and resumed at 8.50 p.m.

3319. Chairman.—Captain Kelly, the Committee is not satisfied with your general attitude to examination. I must ask you at this point to reaffirm that you recognise the authority of this Committee?

Captain Kelly.—I certainly recognise the authority of the Committee but the point is this—

3320. Mr. Kelly, we do not want speeches at all. We just want simple answers?

—I beg your pardon—

3321. No, no. You must not indulge in speeches?

—Please, I must be allowed to explain.

3322. You must not indulge in speeches.

—No, but I would like to explain.

3323. We cannot allow you to make speeches?

—Well I want to make an explanation.

3324. You are under examination on oath?

—I am telling the whole truth here and I want to tell it correctly.

3325. But you must not make speeches?

—And I am being held up to public odium since the 1st of May last.

3326. You are not allowed to make speeches here?

—It is not a speech. I just want to explain.

3327. You are endeavouring to make speeches since you came in?

—I am telling the truth.

3328. We will have to get on with the examination?

—Well the examination on this matter cannot be divorced from my Intelligence exercise.

3329. If you continue in this vein we will have to exclude the public?

—Sorry. I missed that.

3330. Do you refuse to tell us who gave you the bank statements?

—I answered that question already.

3331. Will you answer it again please?

—I am not naming any people in Northern Ireland who have been brought down here and have been brought by this Government and told they were getting assistance from this Government and naming them and putting them in danger in the North.

3332. The person who gave you the statements from Baggot Street—was that person an account holder in Baggot Street?

—No, he was not.

3333. Was he F, G or H?

—I am not naming any Northern individual to this Committee.

3334. I am not naming them either. Was he F, G or H?

—No. I am not naming him.

3335. You refuse to answer?

—I said no. I am not naming him.

3336. Was he J or K?

—No. I am no naming him.

3337. You mean you will not answer?

—What I want to do is to get this thing straight.

3338. Are you refusing to answer, Mr. Kelly?

—I would like to explain first.

3339. We do not want explanations at all, Mr. Kelly.

—I am entitled to give explanations, I think.

3340. Mr. Kelly, you are entitled to answer the questions put to you.

I agree I am here to give evidence but I am also here to put my own point of view.

3341. Chairman.—I want the public excluded, please.

Public excluded accordingly.

The following evidence was taken in private. The witness concurring, the Committee decided to publish this evidence.

3341(a). Chairman.—Mr. Kelly, do you persist in refusing to tell us or to communicate from the code who gave you the statements in Baggot Street?

—The point is this—these Northern people accounted for this money.

3341(b). Mr. Kelly, I am tired of hearing about these Northern people.

—I refuse—yes, I refuse.

3341(c). You refuse?

—Yes.

3341(d). And you have told us he was not an account holder?

—I have answered the question already —he is not an account holder.

3341(e). Is he within the jurisdiction?

—I said he was not earlier on.

3341(f). Deputy FitzGerald.—You said he was not. I was not clear at the time whether you were saying he is not now or he was not then, or both?

—I said he is not.

3341(g). At this time?

—Yes.

3341(h). Chairman.—Was he at that time?

—He is in Northern Ireland since.

3341(j). Do you know Messrs White, Loughran and Murphy?

—I do, yes.

3341(k). Are they within or without the jurisdiction?

—They are outside the jurisdiction.

3341(l). Are they on your code?

—They are outside the jurisdiction and I am not going to give any indication one way or the other.

3341(m). You refuse?

—I refuse to identify anyone by code or anything else.

3341(n). Do you know the identity of the person passing as Mr. George Dixon?

—I do, yes.

3341(o). Is that person within or without the jurisdiction?

—I refuse to give any information on George Dixon.

3341(p). Do you recognise him on your code?

I refuse to give any information on George Dixon.

3341.(q). Deputy FitzGerald.—My recollection is that Captain Kelly told the court he was a citizen of Northern Ireland. I wonder could Captain Kelly say if my recollection is correct or not?

—Yes. There were various questions asked in the court and you are probably correct in what you say. I just cannot definitely say. But I refuse to give any information is my answer at this stage on George Dixon.

3342. If you have given it to the court in public you are refusing to give it to us in private?

—I refuse to give any information on George Dixon.

3343. Chairman.—Do you know the identity of Anne O’Brien? Is that particular person within or without the jurisdiction?

—I refuse to give any information on Anne O’Brien.

3344. Deputy FitzGerald.—He told the court she was within the jurisdiction.

3345. Chairman.—You have already stated she was within the jurisdiction. Do you deny that?

—I refuse to give any information.

3346. Deputy Briscoe.—May I ask a question? Captain Kelly, is it your intention not to answer any questions put to you by the Committee?

—I will answer the questions. I am answering the questions.

3347. Is it our intention to answer them in the manner in which you are, in other words by refusing to answer them?

—I will answer questions I think I should answer and will not put anyone in danger, security-wise or otherwise, because I believe, and I am repeating this and I am sorry I have to repeat it, that these people were drawn into this business in good faith by the Government of this country.

3348. Deputy MacSharry.—What Government?

—You were at the Four Courts.

3349. Some days, yes. Did you hear about the directive of 6th February?

3350. Deputy FitzGerald.—The cross-questioning must stop.

3351. Chairman.—Mr. Kelly, you are not to ask questions here.

3352. Deputy MacSharry.—In relation to this continued statement of yours about “on the instructions of the Government”——

—Yes.

3353. Whom within the Government?

—The Minister for Defence issued the directive on the 6th February to the Chief of Staff of the Irish Army.

3354. Is that document to be produced? Or can it be produced?

—I will tell you what happened in the Four Courts if you read it.

3355. I did not ask you what happened in the Four Courts.

—You asked the question.

3356. I asked you what about the directive you say was issued to the Chief of Staff?

3357. Chairman.—Do you realise you are putting yourself in contempt?

—This man is making an accusation.

3358. Chairman.—He is a Deputy.

3359. Deputy MacSharry.—I am asking a question. We are on this Committee set up by Dáil Éireann with full authority to do the job we are about to do. None of us might like it but nevertheless we have got to do it. We expect to get co-operation——

—You are getting my co-operation.

3360. —of all concerned. I might point out that anybody that has come before this Committee, including people who have not come, the very people you are trying now in your own way to protect, have been more co-operative than you have been to date.

—I was not responsible for any accounts and those people were responsible for the accounts. I know they have been cooperative. You have the evidence from them.

3361. You continuously said tonight that it was on a Government direction. This direction, if it is so, must be produced or referred to by codes.

—Would you allow me to explain.

3362. Answer the question.

—I have to explain about the directive. The reason why the directive was not produced at the first trial was given by the prosecuting counsel who said that despite quite a detailed search it could not be found. It turned out that this directive was in Army Headquarters. No more official place could be found. It was not produced despite the judge on this occasion saying it was the best and only evidence, if it was available, and it was not produced by the prosecution.

3363. Deputy Briscoe.—Would you say the Chief of Staff knows of the existence of this document?

—I would suggest if you are going to go into what happened in the court that you produce the documentation of the court and all the evidence is there.

3364. Deputy MacSharry.—Would you answer the question, please, Captain Kelly?

—It was given to the Chief of Staff by the Minister for Defence on the 6th February.

3365. Deputy FitzGerald.—Could I ask Captain Kelly as he told the court in connection with this arms affair that the first financial transaction was in December, what relevance has that to a directive of the 6th February?

—I explained that to the court.

3366. Explain it to us then.

—The point was as an Intelligence operation Northern people were coming down here regularly. In the beginning these people wanted to bring arms into the North.

3367. You must answer the question I asked you.

—This is leading up to it very closely. These people wanted to bring arms into the North. All the time I was working with these people I advised them to change. All that time they were negotiating where they could get arms and buy arms. This is why people went to America and England and to various places. I found out then that in December they were negotiating in Germany and that they had put a deposit. I became aware of this.

3368. All right. Excuse me, let us take it from there. That was happening in December and the money was coming from this account. Can you tell us how that was authorised by any contingency directive of 6th February?

—This was an intelligence exercise as such.

3369. The 6th February directive is therefore irrelevant? We can now abandon that, Mr. Chairman, and proceed from there.

—Irrelevant to the £3,500?

3370. Irrelevant to the questions we are asking you about the transactions through this account. The transactions through this account according to your evidence in court on oath preceded the directive.

—I did not get involved in this exercise until after 6th February. I said I became aware that there was £3,500 went to Germany.

3371. What steps did you take with this information?

—Everything was reported as it took place.

3372. Deputy Nolan.—Captain Kelly, you were aware that £100,000 was voted by Dáil Éireann for the relief of distress in Northern Ireland?

—Yes.

3373. You are aware from your own statement in the court that approximately £15,000 of this money from the account in Baggot Street was taken to the Continent for the purchase of arms?

—Yes.

3374. Well, now, you are also aware that the Dáil asked this Public Accounts Committee to find out was there any of this money misappropriated and there is a public concern that some of this money was misappropriated if it was used for the purchase of arms?

—Yes.

3375. Therefore you understand why we, as a Committee, have to inquire into this.

—I appreciate this point completely and I accept this point that you have to inquire into it but I think it cannot be divorced from what I was doing as an intelligence officer and as regards the money—and I say this now—it was secondary.

3376. Deputy FitzGerald.—You appreciate that the question of whether it could be divorced or not is not a matter for you but for this Committee to decide?

—I am afraid Dr. FitzGerald I must, to be fair to myself, it cannot be divorced from the operation because once the intelligence operation was authorised the money transactions were authorised.

3377. Deputy FitzGerald.—You appreciate that this is the——

3378. Deputy H. Gibbons.—How do you define——

3379. Deputy MacSharry.—What have you to fear if the intelligence operation was authorised?

—I have nothing to fear whatsoever.

3380. Fair enough. We will carry on from there.

—But I had nothing to fear on the first of—excuse me; let me finish. I had nothing to fear on the 1st May.

3381. Deputy MacSharry.—I will ask the questions, Mr. Kelly, please.

3382. Chairman.—Mr. Kelly, restrain yourself.

3383. Deputy H. Gibbons.—Mr. Chairman, may I ask one question? Would Captain Kelly define what he means by intelligence operation in the sense that he is using the words?

—I went to Northern Ireland and I met various people in Northern Ireland up and including to September 1969, numerous people. These people generally were looking for assistance and were looking for arms and a lot of them felt that they should bring in arms into Northern Ireland to protect the minority population. All along I disagreed with this and my argument with these people was that they should come down here to the Twenty-six County Government or to the Government of this area and ask them for their support and get their co-operation for protection. And this was what was going on for months until eventually in January 1970 these people agreed to this in principle.

3384. Deputy H. Gibbons.—Mr. Chairman, I can agree with this as being the definition of an operation but I want to know how you reconcile where the question of intelligence comes in in this. I can accept that you labelled this the operation or an operation but I am at a loss to see where this becomes an intelligence operation in connection with your duty as an intelligence officer of this State.

3385. Deputy FitzGerald. —— of getting information.

3386. Deputy H. Gibbons.—This is where I am completely frustrated in the case you are trying to make here. Again, this is an operation. I cannot see how it is an intelligence operation when it was not related to your duties as an intelligence officer working on behalf of this State. You are making the case that you were working on behalf of the people of the North. I would like if you would in detail——

—I was not working on behalf of the people of the North.

3387. Deputy H. Gibbons.—I would like in detail if you would define the use of intelligence in this context.

3388. Deputy FitzGerald.—And could you say on whose behalf you made this proposal that they should come down and look for arms here? Who instructed you to do that? What authority had you for doing that?

—My attitude with these people was: I found that these people were looking for arms——

3389. Deputy H. Gibbons.—To get back to my question, I want you to define the meaning of intelligence in relation to this phrase of yours “intelligence operation”. If you are not in a position to do this I am finished questioning you at this stage. And I do not want an irrelevant answer to my question?

—Well, intelligence covers a broad field and I do not say this to cover, to give any irrelevant answer. The point is this: I was sent up to Northern Ireland to find out what the situation was. I found out what the situation was and you do not find that out overnight; it takes a period, and actually I come back to the first major meeting I had with citizens of Northern Ireland when I got a large group of them together was on 4th and 5th October. I reported what these people wanted from the Government here, what the requested. I reported this in the normal way and at this stage some people in Northern Ireland, I gathered, wanted to bring arms into the North and my advice to them was that they should come down and talk to the Government here themselves.

3390. Deputy FitzGerald.—Who authorised you to give advice to them as distinct from collecting information? On whose authority did you do that?

—At the early stage I do not think there was any authority. I advised them to come to the Government then.

3391. And you regarded it as part of your functions as an intelligence officer seeking information to advise people outside the jurisdiction as to how they should pursue the acquiring of arms for people in their own area?

—Well, there were people from the North coming down here meeting members of the Government at the same time.

3392. And you thought it was your function to advise them as to how to act and that that was part of your function on behalf of this State?

—I advised them that they would be much better off not to bring arms into Northern Ireland, to see what assistance they could get from the South.

3993. And you had no authority whatever to do that from anybody here?

—I had my authority as an intelligence officer as such.

3394. Authority to do that?

—I would report it in the normal way and I reported all my conversations.

3395. But you have no authority to do that? You told us that already.

—Well—what is authority in this case?

3396. That is that somebody authorised you or proposed this to you or agreed with you that you should do this down here before you did it, somebody in authority over you?

—But this is—you are talking to people. You go up and you meet people in Northern Ireland or you meet them down here south of the Border—

3397. Seeking information?

—There is more than seeking information to it——

3398. Ah——

—There is military intelligence.

3399. Good. Explain to us what more there is.

—Intelligence also would be concerned and——

3400. Answer Deputy Gibbons’ question.

3401. Deputy H. Gibbons.—I am still not satisfied that you have defined the meaning of intelligence in this phrase “an intelligence operation”?

—I find this difficult to define but——

3402. If you define an intelligence operation I take it that on behalf of the Government of this State you hoped to get information to bring back to them as an intelligence officer, to my mind you would be going in there unknown as far as possible to anybody and you would bring back this information to the Government.

—This is true.

3403. Now this is not what happened according to what you tell us yourself so that I, again, make the point that you are using the word “intelligence” in application to an operation which is not necessary; it is a tautology?

—I do not think so. I do not agree with you at all.

3404. Would you define it for me?

—I will. I will bring you back—I will give you examples, which is probably better.

3404(a). Define it for me.

—For instance, you take the training that was given to the people in Bogside. This was part of an intelligence operation in case that at some future stage it was found necessary that these people should have to use arms for their own defence; it was thought down here and considered down here by the relevant authorities that these people should get training.

3405. Deputy FitzGerald.—And that was authorised by the authorities here?

—That was authorised by the authorities here. Yes.

3406. Deputy H. Gibbons.—I want Captain Kelly to explain to me how this is intelligence, how he can define this as intelligence?

—Everything that is related to the military situation is intelligence and also——

3407. The military situation where?

—In the Six—I was sent up to the Six Counties by the Government.

3408. Wait now. The military situation where? You were a member of the Irish Army here?

—It is in case the Irish Army might become involved in the situation we must know what the situation is and there must be contingency plans made.

3409. But this is not the question——

—And you prepare for these contingency plans by getting information and by finding out what the people in the area of potential operations intend doing, what they are doing, what they will do and so on and this is what I did.

3410. But this is not what you did.

—No?

3411. Chairman.—You were acting in an advisory capacity?

—You are acting in the capacity that you go up, you discuss and talk and reason with people. For instance, there were various ideas put forward to me. People even suggested to me that they would pay me money and I would get them arms and all this kind of stuff. You had numerous things put forward. But the thing is you must work out some logical form out of it, get them to agree to some logical proposition as such. The Government here wanted to find out what the people of the North thought, so I bring it back to them.

3412. Deputy FitzGerald.—Why is it your function to get them to agree to a logical proposition as distinct from finding out what propositions, logical or illogical, they are engaged in?

—Well it would be terrible, I think, if, for instance, these people had gone ahead and had succeeded in bringing in arms.

3413. Deputy Nolan.—Just one question: why was it that this defence committee in the North had some funds available to them? They had funds of their own which they intended to use for the importation of arms into the North until they met you and had a discussion with you. Why is it that they did not bring down their money here and lodge it here in a subsidiary account and have nothing at all to do with the Relief of Distress Fund?

—The money they had in the North as far as I know—and once again I am only talking from hearsay—but, however, the money they had in the North was used for relief of distress, so if there was any investigation into it in the North this is what it was used for. It was security.

3414. Deputy Nolan.—Was this prior to the opening of the bank account?

—Yes, any money in the North.

3415. Deputy FitzGerald.—Sorry, may I make a point that it was not, because, in fact, as far as the Northern Committee was concerned all the money they got came from the South and, had inquiries been made in the North as to where the money came from, they could not have shown by the nature and virtue of the operation that any money had come from the North except £2,000?

—No. There was other moneys in the North.

3416. Yes. I appreciate that.

—You see, and the proposition was put to me by one person, not for any grave reason, not that I asked, only just in conversation, that the money up there was used for welfare if there was any investigation into it, whereas if they had money down in the South it was safe, secure. This is the way they felt.

3417. Deputy FitzGerald.—Could you explain?

3418. Deputy Briscoe.—I would like to ask did the then Minister for Finance know of this arrangement?

—The then Minister for Finance?

3419. Mr. Haughey. Did he know of this arrangement?

—He did not. He gave evidence in court.

3420. He did not? In other words this went on behind his back?

—There was no question of anything going on behind anyone’s back.

3421. May I ask you this question, Captain Kelly? Who authorised you to embark on your intelligence work?

—The Director of Intelligence.

3422. The Director of Intelligence. Well, were you asked at any stage when you were being interviewed by the Special Branch about your activities to divulge certain information and that you, in fact, refused because you would break the oath secrecy?

—That is not correct.

3423. It is not correct?

—The reason why I refused to make a statement to the Special Branch was because I claimed privilege and I told them to get the Minister for Defence, Mr. Gibbons, down who would answer all the questions.

3424. He authorised you, did he not, to answer all the questions?

—Mr. Gibbons came down, who knew all about the operation, and he said to me that I should answer all the questions and we had a long discussion in Chief Superintendent Fleming’s office and I said to Mr. Gibbons something like: “You realise the implications involved” and so on, and also I had suspicions of Mr. Gibbons from the 23rd of April from a meeting in Mr. Blaney’s office where he indicated to me that he was going to put me on the hot seat and that he was backing out of his responsibilities as Minister for Defence. Let me finish. You asked me the question.

3425. I asked you the question and I am asking you for the answer now?

—I am giving you the answer. I am leading to it. As he was leaving Chief Superintendent Fleming’s office—and this is what made me not give a statement—he turned to Chief Superintendent Fleming and says he: “Be easy on Captain Kelly. He is a good officer. He has been caught up in a change of Director of Intelligence, in a change of policy.”

3426. Deputy FitzGerald.—Who said this?

—The Minister for Defence and once I heard this——

3427. Deputy Briscoe.—He said this in the presence of Superintendent Fleming?

—Yes. Once I heard this I said, I made up my mind there and then I would not make a statement and then what happened with the Special Branch was I refused to make a statement to Chief Superintendent Fleming and Chief Superintendent Fleming turned to me and he said: “Would you talk to the Taoiseach?” and I said: “Yes” and I was brought to the Taoiseach and I arrived at the Taoiseach’s office and the Taoiseach put forward a proposition to me that I had asked to talk to the Taoiseach and that if the Taoiseach saw me I would make a statement. I told him this was not true. We had a slight argument about it and eventually, he being Taoiseach and I being an Army captain at that time said: “Well, it is not worth arguing about” and I let it go, to afterwards see in Dáil Éireann a suggestion put forth on the wrong lines.

3428. Deputy MacSharry.—Could you reconcile——

3429. Deputy FitzGerald.—I did not hear the last part.

3430. Deputy MacSharry.—Could you reconcile, Captain Kelly, the statement you made there that purported to be made by the Minister for Defence of you being caught up in a change of policy?

—It is a long story if you want me to go into it.

3431. I just want you to answer a simple question. The questions is that all that changed was the Director of Intelligence. The Minister did not change?

—The Minister changed.

3432. Deputy MacSharry.—The Minister did not change.

3433. Dr. FitzGerald.—Not at that point of time.

3434. Deputy MacSharry.—The Minister for Defence was still the same man?

—He did not change. Sorry. The Minister for Defence did not change.

3435. The Minister for Defence was the same man. Yet you say that he said in front of Superintendent Fleming that you were caught up in the change of policy because of the change of the Director of Intelligence?

—That is right.

3436. Deputy MacSharry.—Do I take it from that that the Director of Intelligence was making his own policy?

3437. Deputy FitzGerald.—And the Minister was subordinate to it?

—Well, the Minister said it. What the Minister said was——

3438. Deputy MacSharry.—It was you that said it. We will find out what the Minister said?

—I am just explaining.

3439. We can find out what the Minister said. We just want to know what you said?

—You can find out what the Minister said?

3440. We will find out what the Minister said?

—How will you find out?

3441. That is our business.

—Well, I doubt it very much with all due respects.

3442. Deputy MacSharry.—We will find out.

3443. Deputy H. Gibbons.—You said you had a long discussion in the presence of Superintendent Fleming. Now, was it a long or a short discussion?

—Was it a long or short discussion? It was a comparatively long discussion. I would say 15 to 20 minutes. That is an estimate.

3444. Now, you said you went to the Taoiseach?

Yes.

3445. With the intention of making a statement but you did not explain why you did not?

—No, I had no intention of making a statement going to the Taoiseach. This is the point at issue.

3446. What was your purpose in going to the Taoiseach?

—Because I was asked would I talk to him.

3447. Deputy FitzGerald.—What did you say?

—I said, yes.

3448. Deputy H. Gibbons.—By whom?

—By Chief Superintendent Fleming.

3449. Deputy FitzGerald.—Why did you not?

—Talk to him? I talked to him but I was not going to make a formal statement which he wanted.

3450. Deputy H. Gibbons.—Why not?

—Because first of all Mr. Gibbons knew all about it who was a Minister of the Government of which the Taoiseach was head. Furthermore, the Taoiseach had arrested me that morning under the Offences Against the State Act for no good reason.

3451. Chairman.—Captain Kelly, you know, you have refused to give some points of evidence here and I think it is only fair I should point out this to you. This Committee has decided that evidence may be taken in private where national security matters are concerned, where publication of evidence would be prejudicial to further inquiries, and where witnesses from outside the jurisdiction would be put at risk if their identity could be established on their evidence. That is a formal decision taken by this Committee. On the face of that, do you still refuse to answer some of the questions that have been put to you?

—I will put it to the Committee this way. There is no necessity for me to answer concerning various members that are mentioned there because they are already known.

3452. Chairman.—You can answer the questions simply. Do you still refuse to give evidence?

3453. Deputy H. Gibbons.—If they are already known does it not make our work easier and you are not divulging anything by answering and making the work of the Committee easier.

3454. Deputy MacSharry.—Might I also remind you at this stage through the Chair, Captain Kelly, that you are not on trial here. You are just here to assist the Committee in its investigation. No other reasons. There is no necessity for you in any way to bite back at anyone of us that ask you a question. We are just asking you simple questions and we want you in a calm, cool, collected way to tell us the truth and give us the answers. We know you know them.

—Excuse me.

3455. We have given this secret key names to you as we have and, as you have already said, all of them are known, you knew who the three fictitious names in the main account were and the two fictitious names in the two subsidiary accounts. All we want to assist us in our investigation is to get the actual people involved. We want to know how the money was spent, Captain Kelly. We have been given this job to do. We have no alternative but to do it. We have been given all the power in the State that is necessary to carry it out and we expect the co-operation of all concerned and that, as I say, I must remind you at this stage. There is no necessity for you to act in the manner that you have been acting here all evening. None of us want in any way to embarrass you or in any way to put you on a spot. All we want you to do is tell us in a calm, cool, collected way what you know. As simple as that?

—This sounds very simple, and it is very nice to talk about speaking in a calm, cool and collected way. What has happened in this State over the past nine months is that I—it is part and parcel of it.

3456. We are not concerned?

—Oh, well.

3457. We may know as much about what was happening in the State as anyone else?

—Well, if you know what was happening in the State prior to 1st May, you would know what happened.

3458. Deputy MacSharry.—I would like to put to you——

3459. Chairman.—Deputy Tunney.

3460. Deputy Tunney.—Captain Kelly, again as Deputy MacSharry said, be assured from me that I am as concerned about your character in this as the character of anybody else. In so far as I see upon myself responsibility to search out the true position, there will be certain questions that I will put to you. I will take certain guidance from what you would say. Now, to date, I will explain to you how I should have to treat what you say in so far as earlier on in the public session—and actually I would prefer that this were being done in public——

3461. Deputy Keating.—Hear, hear.

3462. Deputy Tunney.—But earlier on you said that—this is in connection with the bringing in of arms—you said that the move had been made above and that you suggested that they should come and operate here. You said that and you will see that in your evidence?

—That I said who should come and operate here?

3463. The people in the North?

—That the people in the North should come down to the Government down here.

3464. I am only guided by what you said.

3465. I made a note. They told you their problem about the arms. You said you suggested they should come and operate down here?

—I do not think I said that. If I said it, it is wrong. I intended to say that these people came here to look for assistance from the Government concerning arms.

3466. You will see the transcript and from it you will see you said you suggested it?

—I suggested it but I did not suggest they operate down here.

3467. You will see the transcript of the evidence. Subsequently you said you were working under authority which came to you as and from 6th February. In your evidence in court, in answer to a question “Does that answer mean that, before Christmas of last year, 1969, when the downpayment of around £3,000 was made for this cargo, you informed your superior officer, Colonel Hefferon, of the fact that this was done?” you replied you did. That would suggest that already, prior to February 6th, you were aware of what was going on?

—I am afraid this is a wrong interpretation. As regards working under authority, my authority was the Director of Intelligence to whom I reported everything of this operation at all times. When the Minister for Defence came into it was at a stage when the thing became crucial. When it became obvious that arms were going to be moved in here, I made it my business to make certain sure he was quite positive of what was going on. That was on 4th March, the day after he met a delegation from Northern Ireland to whom he promised assistance.

3468. At this stage, we know that the operation was very much in being?

—No one knew there were arms at this stage positively.

3469. Deputy Briscoe.—Three-fifths of Europe?

—I went to the Continent on 19th February to find out and I saw no arms.

3470. Deputy H. Gibbons.—Why did you find it necessary to go to the Minister for Defence on 3rd March and not in December?

—I would not approach the Minister for Defence in normal circumstances but the operation was becoming abnormal after Christmas.

3471. Were the ordinary channels of Intelligence not open to you, the Director of Intelligence and the Chief of Staff? Were these channels of communication in the Army not available to you?

—The Director of Intelligence has direct access to the Minister for Defence. It may have been abnormal that I went to see the Minister for Defence but the fact is that I did so and put it in front of him on 4th March.

3472. Why did you consider the circumstances abnormal on the 4th March and that you did not find them abnormal in December and that you did not go back to the Director of Intelligence and ask him? I presume that, in the ordinary course of organisation, the information would go from the Director of Intelligence to the Chief of Staff to the Minister for Defence. Why did this situation arise in a matter of three months?

—The Director of Intelligence is in a peculiar situation and he has direct access to the Minister.

3473. Is this not all the more reason why you should go to him?

—I was going to him every second day, every day. He was glad I went to see the Minister.

3474. Did you feel at that stage that the Director of Intelligence was not conveying the information to the Minister for Defence and so you——

—I would not say that.

3475. As an outsider, I take it you have made the case that the Director of Intelligence had direct access to the Minister for Defence. In the ordinary routine of your reporting, you reported to the Director of Intelligence. What circumstances arose at this point of time that you did not go to the Director of Intelligence and let him report to the Minister for Defence? The only two circumstances I could understand happening here are (1) that you were reporting to the Director of Intelligence and that you felt he was failing in his duty or (2) that you felt that you could not trust the Director of Intelligence and that you went direct to the Minister yourself. If there is a third reason, I should like you to elaborate on it?

—There is no question of not trusting the Director of Intelligence but this was a very unusual operation on which I was embarking as the principal character. I wanted to make sure that the relevant authority was fully in the picture. I knew that the Director of Intelligence was reporting to him but I wanted to satisfy myself. I made arrangements to see him and I saw him. Then I could go with confidence into an operation that was developing and carry it out.

3476. Why did you not do this in December?

—The thing developed over a period of months. My first trip to the Continent was on 19th February which was reported by the Director of Intelligence to the Minister for Defence. The Minister for Defence attempted to deny this. I would ask you one question.

3477. Do not ask me any question. I have asked you why you did not do this in December?

—May I put a proposition? The Minister for Defence attempted to deny this on the grounds that I was going to visit my sister in Frankfurt. Who ever heard of an Army officer going to visit his sister in Frankfurt or in San Francisco being referred to the Minister for Defence?

3478. Why did you not go to the Minister on that occasion?

—Because I was working through the Director of Intelligence.

3479. This was your first trip to the Continent?

—Yes.

3480. This must have been a very unusual happening with you as an Intelligence Officer?

—It was the first time I did this.

3481. This was a very important link in the chain of events. You did not think it necessary to go to the Minister for Defence on 19th February but you did find it necessary to do so on 4th March. What were the different circumstances that prompted you to do this?

—I was working under the Director of Intelligence. I had found out from the Northern people what was going on. I go to him and we discuss this question. It was decided I would go to the Continent on 19th February to see what is happening.

3482. Deputy Briscoe.—Who are “we”?

—The Director of Intelligence. I discussed it with him.

3483. Deputy FitzGerald.—You say you told the Director of Intelligence and you discussed it with somebody else?

3484. Deputy Briscoe.—You said “we discuss this question”.

3485. Deputy Nolan.—Had you somebody else with you when you went to the Continent on any occasion. You were alone always?

—Not always. The third time I went to the Continent I brought an interpreter.

3486. Deputy Tunney.—You were an Army Captain. Some people would say Army Captains are not overpaid. At that stage you were going on what you would tell us was an official Army trip. Is that correct?

—It was authorised by the Minister for Defence.

3487. In which circumstances you, as a not overpaid Captain, would be entitled to claim your travelling expenses?

—I got my travelling expenses.

3488. Did you get them from the Department of Defence?

—I did not. It came out of the Northern Fund.

3489. Was that not rather strange on your part?

—Maybe it is strange but this is the fact of the case.

3490. I am not satisfied with the truth of what you are saying?

—I am telling the truth. I am under oath here.

3491. You will appreciate my difficulty. Supposing, on a trip here at home, you had occasion to travel to Kerry or to Cork——

—The facts are as I stated them in the court that these people paid for me.

3492. If this was an official government job which you were at, why, as in the normal way, would you not claim your travelling expenses from your Department?

—Ask the Minister for Defence.

3493. Deputy Tunney.—Why should I ask him?

3494. Deputy FitzGerald.—Does the Minister for Defence authorise the expenses to be paid for the North? Is that what you mean?

—The Minister for Defence authorised the operation.

3495. And your expenses to be paid from the North?

—No. I did not say that.

3496. Then your remark about him is irrelevant. Who authorised you to get expenses from outside this State, for an intelligence mission here, for an official intelligence mission?

—I do not think there was any question of authorisation.

3496(a). You considered it proper for you on an official intelligence mission to get finance from outside this State from which your loyalty lies?

—I went to the Minister for Defence, at least through the Director of Intelligence it was put to him, that Captain Kelly was going to Germany to investigate if any arms in fact existed, to vet arms I think was the term used by both the Minister and Colonel Hefferon. This was put to the Minister and they knew, Colonel Hefferon knew, I assume, where the money was coming from, because I got the money from the people who were importing the arms.

3497. Nobody authorised that?

—It was not asked, it did not arise.

3498. Deputy H. Gibbons.—Captain Kelly, did you think it reasonable that you would draw on funds from the North of Ireland people, funds which were voted for the distress of people in the North of Ireland, for your expedition to Frankfurt whereas travelling as you say officially on behalf of the Department of Defence you could have recovered your expenses from the Department of Defence? Everybody’s anxiety seems to be in the interests of the distress of the people in the North. To my mind if what you say happened the people of Northern Ireland were deprived of a certain sum of money which could easily have been made available from the Department of Defence if things were as you say?

—The question was, and I think this will probably illustrate the point, that when Colonel Hefferon went to the Minister for Defence concerning my trip to the Continent——

3499. Deputy H. Gibbons.—Excuse me, you are making statements of which you were not a witness to.

3500. Deputy FitzGerald.—Yes.

3501. Deputy H. Gibbons.—What we want here is evidence. Colonel Hefferon will be back here.

—He can be asked this.

3502. We can put those question to him.

—And the Minister.

3503. Deputy H. Gibbons.—You will get your opportunity to come back if you are not satisfied. Mr. Chairman, I do not think the witness is entitled to quote here what he thinks happened in conversation between two particular people when he was not a witness to this particular conversation. I am asking you how you justify claiming expenses from this distress fund which was needed very, very badly in the North, no doubt, when you make the point that this could have been recovered from the Department of Defence as you were on official Department of Defence duty?

3504. Chairman.—Captain Kelly, why did you not lodge your claim with the Department of Defence?

—At this stage this was supposed to be an undercover operation. This was the reason why my cover story was put forward to the Minister of my sister and it was explained to him that it was a cover story as such. I would imagine if I put in my claim it would disclose my cover. I would reiterate again that the question did not arise.

3505. Deputy H. Gibbons.—You have made a statement that this was an undercover activity but it was known to the Minister of Defence and authorised by him?

—Exactly.

3506. Deputy H. Gibbons.—Why should it be necessary that they would not pay your journey?

3507. Deputy MacSharry.—Who was it undercover from in the Department of Defence?

—An operation like this, I am sure you probably have read something about intelligence work, is kept to a minimum number of people. One of the rules is that the only people who should know are the people who have to know for the carrying out of the operation. The people working in the office with me did not know. The only people who knew were Colonel Hefferon and the Minister for Defence to whom he had reported.

3508. Deputy Barrett.—If you had made a normal claim for expenses through Colonel Hefferon would you have expected to get it?

—I would imagine so if it was not an undercover operation, but it was undercover and the claim did not arise.

3509. Are you aware that Colonel Hefferon said in the arms trial that he would have rejected such a claim?

—I am quite aware he said this.

3510. Deputy H. Gibbons.—Why do you think he said this?

—I do not know.

3511. Deputy Briscoe.—Do I understand you to have said that you arranged a cover story with Colonel Hefferon which Colonel Hefferon relayed to the Minister? The cover story was that you had a sister in Frankfurt, and Colonel Hefferon went to the Minister and said what you were going to the Continent for and the cover story you had arranged was that you had a sick sister in Frankfurt? Is this what you are telling us?

—What I am telling you is that I was going to the Continent to get arms. Colonel Hefferon considered I should have a cover story because he did not want anyone to know why I was going to the Continent as such, including people who were even working in our office. It turned out that I had a sister in Germany, not in Frankfurt, and it was put forward and suggested that this would be a good cover story.

3512. Deputy FitzGerald.—Who suggested it?

—I think Colonel Hefferon suggested it. I mentioned my sister myself so it was between the two of us anyhow that it arose. He went to the Minister for Defence to put it to the Minister for Defence. At that stage if the Minister for Defence did not want me to go all he had to do was say, “Do not go”.

3513. Deputy H. Gibbons.—How do you know he went to the Minister?

—You are working in an Army through the Director of Intelligence and you must accept what he brings back to you.

3513(a). Beyond you saying this, what evidence have you on this occasion that Colonel Hefferon went to the Minister for Defence? Did Colonel Hefferon say this to you?

—Yes, this came out in the courts long ago. It is all there.

3514. Did he give evidence of this in court?

—He did.

3515. Deputy FitzGerald.—Evidence that the Minister had authorised you to go and inspect arms for Northern Ireland using this cover story?

—To vet arms.

3516. And this would be financed from Northern Ireland?

—I would not say the financing came into it.

3517. Deputy MacSharry.—You did not make the Minister aware at all of the financing?

—I cannot be very clear what I said to the Minister but I certainly remember at one stage discussing finance with the Minister and the Minister more or less treated it as a joke, laughed at it.

3518. As the Minister for Defence knew you were going on a cover up story to Frankfurt to vet arms surely you would have to tell him where the money was coming from and how these accounts were being operated?

—He was a member of a Government and any questions he wanted to ask would have been answered and were answered.

3519. No member of the Government knew of the type of operation in this case?

—How can you explain to me something: If you go back to our directive that you are talking about on the 6th February, which no one has denied was issued, how can you explain the Government not knowing——

3520. Deputy FitzGerald.—This was a contingency plan to prepare for an eventuality but it involved no directions to take any action in regard to Northern Ireland.

—It was to prepare for incursions into Northern Ireland.

3521. It did not involve a decision of any kind to purchase arms or take any particular action of that kind; it was a drawing of plans—is that right?

—You must prepare.

3522. A drawing of plans—that is what was involved?

—The wording of the thing was, “to prepare for incursions into Northern Ireland”.

3523. Are you suggesting that the Chief of Staff or the appropriate Army authority decided to purchase arms?

—The Army authorities as such were not aware of this operation because it was between the Director of Intelligence and the Minister.

3524. It was nothing to do with the contingency plans the Chief of Staff was busy implementing?

—These were the backing for it.

3525. Deputy FitzGerald.—You did this under the cover of a contingency plan which was to make preparations for certain contingencies?

3526. Chairman.—Captain Kelly, may I ask you one question? You lodged £10,000 to an account in Germany?

—That is right.

3527. For guns, for arms?

—Yes.

3528. What did you get?

—What arms did we get?

3529. What did you get in return?

—The arms never arrived.

3530. Did you get back the £10,000?

—No money came back. I did nothing about this thing since the case broke on the 1st May. I lost touch with it.

3531. Deputy Nolan.—Would that not be £13,000 or £15,000?

—I did not lodge £15,000.

3532. Deputy Nolan.—I thought you paid a deposit in December of £3,000?

3533. Chairman.—To whose account was it paid into in the bank on the Continent?

—A bank.

3534. Deputy Briscoe.—It would be helpful if you told us the name of the bank.

3535. Deputy Nolan.—And the date?

—The date—I am not sure whether it was on my first or second visit to the Continent that it took place.

3536. Deputy MacSharry.—What was the date of the first visit?

—The date of my first visit was 19th February.

3537. And the second visit?

—The date of my second visit was around the 10th March.

3538. Judging by the accounts here as we have them and the arms account being described by yourself, as the George Dixon account, there were no withdrawals after March 4th to the extent of £10,000 that you mention, so that in actual fact you had all of the money paid into this account in Frankfurt, Germany, before you even went to get this so-called clearance from the Minister for Defence.

—I had all the money?

3539. It was gone anyway out of the account.

—I did not leave Ireland until the 19th February and I have my passport to prove it, which was issued on the 18th.

3540. This is not the point. You are missing the point. You went to see the Minister to get the complete OK for this operation?

—The Minister was briefed before I went to the Continent.

3541. Yet you stated yourself in evidence here on oath that you were getting this full clearance because of the unusual type of operation you were embarking on and on March 4th you went to the Minister. At no time after March 4th was there anything more than £4,000 drawn out of the George Dixon account. The sum of £12,000 was drawn on February 12th which was probably the sum you did bring with you, or a portion of it, on February 19th. I am suggesting to you that this operation was actually completed before you actually informed the Minister on March 14th?

—Why in the name of heavens should I go to the Continent on the 19th February to see if arms were in existence or to vet arms if it was completed?

3542. Deputy FitzGerald.—It was a financial operation.

—No. I do not think so. It was not.

3543. Chairman.—Will you tell us the bank you lodged the money into in Germany?

—I cannot tell you the name of it.

3544. Chairman.—What city was it in?

—In Dortmund.

3545. What is the name of the street?

—I do not know.

3546. Deputy Briscoe.—You must know the name of it.

—I do not. I do not really know the name of it.

3547. You lodged it yourself?

—You lodged it yourself.

3548. Chairman.—Did you get any receipt for it?

—I got a lodgment docket of course.

3549. Have you got that?

—No.

3550. You destroyed that?

—I destroyed it. I have not got it anyhow.

3551. To whom was the money made payable?

—The money as far as I am aware was going to Herr Schleuter.

3552. Was it lodged to his account?

—It was lodged to Herr Schleuter’s account.

3553. Have you communicated with him since?

—I have not been in communication with Herr Schleuter since I met him last on the occasion of my Vienna trip.

3554. The arms were not delivered?

—No.

3555. Did they leave Germany at all?

—They did not leave Vienna. The only place I saw any arms was in Vienna and these arms did not leave as far as I know. They probably have left at this stage.

3556. Can you give us any indication that would guide us to this bank? Who directed you to this bank?

—As you will realise there had been people from Northern Ireland out there. As a matter of fact the reason I went on that occasion was because there was one of the Northern people who could not keep this appointment so I took the opportunity and decided to go to try to find out what was going on for myself or for the Intelligence Section. This was the proposition that I go and try to find out what was going on.

3557. Did you lodge the money in English ten pound notes?

—It was English ten pound notes as far as I remember.

3558. Was it a big bank or a small bank?

—It was a normal bank along the side of the street.

3559. Did you get an introduction to the bank?

—Yes, a man met me there.

3560. Could you give us the name of that man?

—No.

3561. Why?

—This man does not come into it.

3562. We are asking you the question.

—He is only operating as a contact man for the Northern people. This is it.

3563. Will you not give us the name of the contact man?

—I am caught in a funny position here because the situation is this—and I do not care what people think—it cannot be divorced from the operation that was underway which was an operation which a lot of Northern people agreed with and a lot of responsible people in Northern Ireland were very happy to see put into effect that arms they were purchasing were kept under responsible control down here and were not in hands of possible irresponsibles in Northern Ireland. This was the basis of the whole operation as such and all this was related to it and I do not think the names of people concerned with this which was a legitimate operation at the time should be brought in to what has now become an illegitimate operation.

3564. Was the contact man English, Irish, German?

—I am not mentioning the contact man. This would be criminal.

3565. How would that be criminal?

—If his name gets out.

3566. Can you tell me his nationality?

—No. Supposing he is held up in his own country?

3567. Deputy FitzGerald.—Your idea of something criminal is that the criminal is caught apparently?

—I beg your pardon.

3568. Would you tell us what is criminal here?

—I feel an obligation to a person like this who is caught up in something like this.

3569. Do you feel any obligation to this State and its Parliament?

—There is no necessity for him to be dragged into it.

3570. Chairman.—Would you give us his name on a piece of paper?

—No. because he has nothing to do with it.

3571. You will not disclose his nationality?

—No.

3572. We wish to find out the identity of that bank and you are not able to help us. You will not give us the contact man who took you there?

—No.

3573. Where did you meet him?

—I met him at the Airport in Dusseldorf.

3574. Who arranged that?

—There were people from Northern Ireland out there before me. The whole thing was organised. I went out to investigate it.

3575. Deputy Tunney.—In the court you said that on those occasions when you went to the Continent you met Herr Schleuter and I understood you to say earlier on that the arms were being purchased from him?

—That is correct.

3576. Would it not have been a normal thing for you then in view of the fact that he was the man who was supplying them to give the money to him?

—This did not happen.

3577. I accept that. If I could take you back a little bit. You have used two words. A second ago you used the word “legitimate”, that this was a legitimate operation?

—Yes.

3578. In your evidence in court you said you went to the Minister for Defence on the 3rd March.

—Yes, the 4th March.

3579. The 4th March, for the sake of getting full approval to get self-protection for an unorthodox intelligence operation?

—Of course it is unorthodox.

3580. If it is legitimate on one hand how can it be unorthodox on another?

—I think so.

3581. Deputy Tunney.—The two words are diametrically opposed.

3582. Deputy FitzGerald.—What do you mean by a legitimate operation?

—That is an official operation.

3583. Deputy Tunney.—How can it be unorthodox so?

—Of course it can be unorthodox, an unorthodox official. If you want to start playing on words the thing is it was an official operation and I was an unusual official.

3584. Again, in circumstances where you would have me maybe believe that you were the offended party in the whole operation——

—Of course.

3585. Right. In circumstances then where you would have me believe that you could stand over everything you did why did you feel obliged on the 1st May to destroy all the evidence that might convince me as to the correctness of what you were doing?

—I think this is very obvious to anyone who has read what has taken place. I gave evidence in court about this. I was forced out of the Army because I suspected the machinations of the Minister for Defence. I resigned and made him sign my resignation. On the following day I was arrested on the orders of An Taoiseach, mark you, under the Offences Against the State Act. What did the Taoiseach want me for? I will tell you what he wanted me for.

3586. Deputy H. Gibbons.—This is hearsay again.

3587. Deputy Nolan.—In December I think it was you paid a deposit of £3,000?

—I did not.

3588. You mentioned it at the Arms Trial?

—I said I was aware there was a deposit paid.

3589. Of £3,000?

—Yes.

3590. And a further £12,000?

——I said as far as I knew there was a figure of £20,000 to £30,000 paid altogether.

3591. Of that you were aware that approximately £15,000 was paid out of the fund here?

—It was all paid out of the fund. That is my conception.

3592. The whole £30,000?

——Of course.

3593. Chairman.—Can you give us a breakdown?

—I will say those figures there that you see indicated. There is the £3,500.

3594. Deputy Nolan.—What figures are they?

—On the George Dixon account.

3595. December 22nd, £3,500?

—Yes. Then you have two £6,000 there. That would be its purpose. I did not handle it.

3596. The £12,000?

—The £12,000 of the 12th February. I would say that is it also. I am not sure about the £4,000.

3597. How do we get up to the £30,000 from the figures shown here?

—We are fairly close to it.

3598. Deputy H. Gibbons.—You said a North of Ireland man was to go to Frankfurt, or Germany, but as he could not go you took the opportunity to go?

—Yes.

3599. I would like you to explain to me how in this official alleged operation a Northern Ireland man would be involved in this on behalf of the Department of Defence down here?

—The point is those people were trying to bring in arms into Northern Ireland. Those were the people who initiated the thing. I suggested or it was suggested to them—I have been picked up on this before when I said I suggested it. In the course of conversation to avoid them bringing arms into Northern Ireland it was put to them that they should try to get the co-operation of the Government down here. They came down here and I think it was in January or February—Colonel Hefferon gave evidence about this—it was in January, in fact, I put the proposition of the Northern people to Colonel Hefferon. He suggested to me would I assist them. I said I would assist them certainly in this operation. He said that I could not do so and he gave various reasons, that it would be embarrassing to the Government if it was found out, that there were various set procedures and so on and that this was an unorthodox operation and would be better maybe if it was out of the Army. He got a tentative resignation from me based on the understanding he would bring it to the Minister for Defence, which he did.

3600. This is not what I am asking. Excuse me a moment. I am asking a question. Now, if this was the legitimate operation on behalf of the Department of Defence that you allege it to be, that five North of Ireland men would have to go to Frankfurt to buy arms for the Department of Defence here—at one stage in your last statement you said Colonel Hefferon suggested to you that you would assist these people there and about two phrases afterwards——

—I corrected that.

3601. You said that Coloney Hefferon pointed out to you that you could not do this. First, would you reconcile for me why a North of Ireland person should have to go to Germany to buy arms for the Department of Defence, and also clear up what Colonel Hefferon said to you on this particular occasion?

—The whole thing was concerned with Northern Ireland. It was an Intelligence operation in Northern Ireland. Certain things came to the forefront. One gained certain knowledge. Certain things were going to happen.

3602. Mr. Chairman, I would prefer it if Captain Kelly would answer my question rather than use it for handling something which is irrelevant. I would much prefer him to say, “I am sorry, I cannot answer”, or “I am answering to the best of my ability”, but please do not state something which is irrelevant to my question.

—O.K. I will try to answer in this way. You asked why a North of Ireland fellow was going? This was initiated in the North. They wanted arms in the North. These people had been searching everywhere. I was aware of that. I found it out in my normal duties. I discussed with these people what they were doing and what they were not doing, and found out exactly what they intended to do. As a result of my conversation with them they ended up by suggesting that they would like to operate with the assistance of paid assistance of the Government of the South. I came down and put this proposition to the Director of Intelligence, who put it to the Minister for Defence.

3603. Deputy FitzGerald.—When did you do that?

—In January. And actually the tentative resignation I made out was made out for the 13th February. This would give me 21 years’ service in the Army, and a few extra pounds; at the time I made that out, 13th February, he went to the Minister to tell him. He briefed the Minister. That was the point.

3604. Deputy H. Gibbons.—You are being irrelevant again. You are making an asumption again, which I am trying to stop. You said the Government authorised this and the only difference that you get is that Colonel Hefferon said to the Minister for Defence, and you do not even go so far as saying the Minister for Defence informed the Government. You are certainly making one assumption, or ignoring it altogether, that the Minister for Defence either did or did not inform the Government, and making the assumption that Colonel Hefferon informed the Minister for Defence on this particular matter. I put this to Captain Kelly: that Colonel Hefferon on numerous occasions must have to inform the Minister for Defence of legitimate things happening in this State, and of interest to the State, and I put it to Captain Kelly that on numerous occasions he had to go to Colonel Hefferon and inform him of the legitimate work he was doing as a member of the Intelligence staff of the Army, but it appears that there was other work you were doing which was not part of the duty of an Intelligence officer in the Army, which was outside it, and this is the thing. Did you tell Colonel Hefferon of this?

—I reported everything to Colonel Hefferon.

3605. Whether it was part of your Army duties or not?

—Of course it was part of my Intelligence duties.

3605(a) I am talking of the part that was not.

—There was nothing that was not part of it.

3606. Deputy FitzGerald.—Anything you decide?

—Not that I decide. That is wrong also. The point is we were keeping in touch with a developing situation.

3607. Deputy MacSharry.—You expect us to believe——

—I expect you to believe what I say.

3608. Let me put the question, please— that you were carrying out a legitimate official operation, and that to do so you were prepared to resign your 21-year-old job?

—I put in a tentative resignation.

3609. The reason for that?

—I will explain exactly the reason why. The reason was Colonel Hefferon decided that this was such a secret operation—one might classify it as top secret—that I should be removed from the normal routine of the Army, where I would not be detailed for duty or subject to the authority of officers of senior rank and the normal administration of the Army would not apply to me; and the idea was I would get another job in State service that would cover this. I was not going to lose in any way, and I would imagine when the operation was over I would be brought back into the Army.

3610. Would that not—the fact that you had resigned—immediately suggest that the very people you were trying to keep this from would be asking questions?

—They would think I was going to a civilian job, which is very normal for an Army officer.

3611. Chairman.—I take it you would like to establish the fact that you actually took money out and spent money for guns?

—Yes.

3612. You appreciate that people might think otherwise?

—I appreciate that.

3613. Tell us, when you went to Dortmund, how did you go? Did you fly?

—I flew, by plane.

3614. Were you alone?

—I was alone, yes.

3615. You stayed in a hotel, I presume?

—I stayed in a hotel.

3616. What is the name of the hotel?

—The Kaiser Hotel.

3617. How long did you stay there?

—I stayed a day or two, maybe three, because I think I met Herr Schleuter—or maybe it was the second time.

3618. Did you register in your own name there?

—I did, yes.

3619. On what day did you go to the bank there?

—I went to the bank the day I arrived, as far as I remember.

3620. What day would that be, about?

—That would be about the 19th.

3621. You went in what month?

—February.

3622. Chairman.—The 19th February.

3623. Deputy Briscoe.—I think you have already said, Captain Kelly, but I should like this strictly for the record, that your trips to the Continent, you categorically stated, were authorised by the Director of Intelligence?

—They were authorised by the Director of Intelligence and my very first trip was authorised by the Minister for Defence. I categorically state that also.

3624. That was the one on 19th February?

—That was 19th February.

3625. Chairman.—Was the bank in Dortmund near the hotel?

—It was not too far away.

3626. How far away?

—Anything from a quarter to half a mile, along the side of the street.

3627. You appreciate that it would redound to your own credibility if you could help us in identifying that actual payment was made?

—The money was paid to Herr Schleuter, because I saw Herr Schleuter afterwards, on 1st to 4th April. I went to meet Herr Schleuter, having been informed by telephone of the movement of 500 rifles, and so on, to Dundalk and having been recalled by the Director of Intelligence and having it checked out I found it was not necessary to go home. I asked if he had been paid.

3628. Can you help us any further in establishing the fact? I am sure you would wish us to establish the fact that you actually lodged that money in a German bank?

—It was lodged in a German bank and it got to Herr Schleuter.

3629. Is there anything you can help us with?

—I cannot help you.

3630. In any way?

—No.

3631. Any names of anybody?

—No.

3632. The names of anybody at the bank? Do you know the name of the bank? Was it the Kaiser Bank?

—No, it was not the Kaiser. That is the hotel.

3633. You do not know the name of the bank at all?

—It could be. I do not know the name of the bank. It could be the Kaiser.

3634. Did you see the manager, or hand the money over the counter?

—I do not speak German.

3635. Did your companion speak German?

—Yes.

3636. He did the talking for you, did he?

—Yes.

3637. Did you hand the money over the counter?

—The money was handed over the counter. Counted out and checked.

3638. To some teller?

—That is right.

3639. Did you see the manager?

—There was a gentleman there who I think was the manager.

3640. Do you know his name? Do you remember?

—No. I did not get his name.

3641. You got nobody’s name in the bank?

—No, I got nobody’s name in the bank.

3642. Who was the interpreter?

—This man I told you about who was working for the Northern people, an employee of the Northern people. I think he should be left out. I do not see that it is relevant.

3643. It would help to verify the fact that you did actually pay money into that bank?

—I think Herr Schleuter will probably verify what money he got.

3644. Deputy FitzGerald.—That remains to be seen.

3645. Chairman.—Why can you not help at this stage?

3646. Deputy MacSharry.—Did he get back any of it?

—I do not know.

3647. Deputy Tunney.—But you would be concerned that this money which was earmarked, whether it was the money that was collected above or the money that was voted here, has been spent, and it was money that belonged to the Irish people? Would you not be concerned as an Irishman that that money should be brought back?

—I do not like this sort of thing about money belonging to the Irish people, and so on, because I do not know whether it does or not. It does not belong, for instance, to the Government here.

3648. But you would appreciate that £10,000 would do a lot of good to the people in the North at the moment?

—The people in the North wanted to buy arms. I have explained this ad nauseam. They entered into an agreement with this Government here.

3649. Are you sure it bought arms?

—Yes.

3650. And the arms were delivered here?

—No, they were not. I have said that previously.

3651. Then there must be £10,000 worth of arms lying somewhere?

—No.

3652. Do you not think that we should be concerned about getting that money back and do you not think that you should cooperate with us?

—Who is going to get it back? Look, for doing my intelligence work I have been hauled through the High Courts of this country.

3653. Can you not assist in the recovery of that £30,000? I am concerned that there may be £30,000 worth of arms lying somewhere?

—Who owns them—the arms?

3654. These moneys were paid for them. You have told us that?

—Yes, they paid for these arms.

3655. Would you not feel, in view of your involvement with and concern for the Northern people, that we might help towards the recovery of this £30,000?

—The Northern Ireland people are afraid of their lives to be associated with arms. They would be afraid that if their names got out they would be arrested.

3656. Deputy Barrett.—Who gave you the £10,000?

—The fellow at the bank.

3657. You got it by cheque?

—Yes. It is possible I got cash, possibly I got a cheque. It would be George Dixon in this case.

3658. George Dixon handed you the cheque?

—I imagine he did. He could have sent it by someone else.

3659. Deputy MacSharry.—But, Captain, you stated earlier that you were the one we offended in all this. Why do you continue to offend yourself here?

—Because I have been held up to ransom by the Government of this country, and by the Taoiseach.

3360. Chairman.—I want to assure you——

—I do not like the line of questioning of Deputy MacSharry. I object strongly. I have made statements here that I have been held to ransom and I feel very aggrieved.

3661. There is no animosity towards you here.

—I appreciate this. I may be a bit aggressive but the point is this: I feel very aggrieved and have ever since 1st May last year, and particularly since 8th May, when Mr. Gibbons made a disgraceful statement about me——

3662. Deputy FitzGerald.—Who are you aggrieved by?

3663. Deputy MacSharry.—Captain Kelly has taken exception to my line of questions. My two questions were these. He said he was the offended person and I asked why he was continuing to offend himself. I do not see how anyone could take exception to that.

—This position cannot be solved and regularised until we have a government in the country——

3664. Deputy MacSharry.—This is completely irrelevant.

3665. Deputy FitzGerald.—We are here to examine where the money went. We are not here to examine this aspect.

—I would not be here before this Committee today if I had not carried out an intelligence duty on which the Government turned its back.

3666. This is a Committee of the Dáil. We do not represent the Government. It is not our function to cover up anything done to anybody and there are around this table people who would not agree to cover up anything. This is an all-Parliamentary Committee. It is not the Government; it is not Dáil Éireann; it represents the Opposition Parties as well as the Government; it represents different points of view in the Government party. All that is irrelevant to us and I put it to you that you should cooperate with this Committee of the Dáil, which has no interest in harming you in any way. In fact, if you could establish your innocence it would be more than willing to affirm this. You think there are 12 persons sent here by Mr. Gibbons to persecute you and I think it is time you got the idea out of your head and co-operated with this Committee, whose authority you have said you recognise. Can we proceed from there?

—Yes. O.K., that is fine, but I think this cannot be held in isolation and cannot be divorced from other questions.

3667. We will decide that in due course. You may be right for all I know but it is for this Committee to decide what is to be divorced from what. I have listened with interest to all you have said. You are attempting to put forward a thesis which, in your view, would exonerate you, but there are gaps in it. It is in your interest to fill them. Will you help us? You said you reported everything at all times to the Director of Intelligence?

—That is correct.

3668. Let me take your evidence in court —page 24 of the transcript. You were asked a question about the withdrawal of £3,000 which you said was just before Christmas, and in respect of that you said:

I knew what the money was for. I think I have explained that. I was quite well aware what the money was for.

Q. For the purchase of arms?

A. For the purchase of arms, but in my discussions with these people they were not even sure, they were going to make an attempt to see, an initial attempt, this was it.

You were very clear on that. You withdrew money from that bank and knew what the money was for. Did you report that transaction at any time to Colonel Hefferon?

—I certainly did.

3669. This series of financial transactions starting then, were they from the beginning and at the time they took place reported to Colonel Hefferon in accordance with your statement to us?

—I would say that is correct. Why I say this is that I reported to Colonel Hefferon regularly and certainly I have no recollection of holding anything back from him.

3670. You know Colonel Hefferon’s evidence given on oath and you regard him as an honourable officer, a truthful man?

—I would say so.

3671. You recall his saying that:

… he regarded Captain James Kelly, his personal assistant while he was Director of Army Intelligence, as a direct link between the Government and the Northern Defence Committee. He said he was not giving orders to Captain Kelly, who was reporting directly to Messrs. Haughey, Blaney and Gibbons, the Ministers concerned with Northern affairs. Captain Kelly, he said, told him he was acting on behalf of the Government, and he believed him.

Colonel Hefferon said that around last October Captain Kelly told him he had been instructed to act on behalf of the Government by Messrs. Haughey and Blaney.

It is clear, therefore, that this evidence from an honourable and truthful man speaking on oath made it quite clear that as far as he was concerned from October onwards you were not under his orders and your orders came from these Ministers.

—The point is this. I was the liaison officer to this committee that was appointed and the only members of the committee I met were Messrs. Haughey and Blaney and I was working in my capacity as Intelligence Officer, getting whatever information they might have and this was reported to Colonel Hefferon. So I would put it to you that whether I was working under his orders—I do not think it was a question of not working under his orders, shall I put it that way, I was reporting to him.

3672. But what you reported to him was, according to him, that you were operating directly to Messrs. Haughey, Blaney and Gibbons from October onwards?

—I was, no——

3673. And that he——

—No, I did not meet Gibbons until 4th March. I would say it is an error there.

3674. No, from October onwards Messrs. Haughey and Blaney?

—Yes.

3675. And he referred later on to Mr. Gibbons then?

—Yes. I had met those Ministers and I discussed various aspects of the North with them, what was taking place, and I reported it back to the Director of Intelligence.

3676. Yes. The Director of Intelligence ——?

—To fill out the picture of what was taking place.

3677. The Director of Intelligence says that you told him that you were reporting directly to these people and that he was not giving orders to you from October onwards ——?

—I do not know.

3678. In respect of this matter?

—I mean, the thing is this, I am reporting to my Director and I report to him. Certainly I do not give him orders and I work under his authority.

3679. Well, this is a very complex and important operation?

—Yes.

3680. He was under somebody’s orders. Colonel Hefferon says it was not under his orders, that he was not giving you orders in respect of this. He says you told him you were acting under the orders of Haughey, Blaney and, at a later stage, Gibbons. Now, I want to know in respect of the transactions taking place from December onwards when you withdrew money from an account——?

—Yes.

3681. All lodgments to which had come from the main account?

—Yes.

3682. All but one lodgments of which— in December—all lodgments to which had come from the Government account?

—Yes.

3683. Now, in respect of that operation I want to know whose orders you were under at that time and who instructed you to proceed and to whom you reported?

—This was Northern people who——

3684. No, I am talking about—you are ——

—As regards the money?

3685. —an Army Intelligence Officer and you are carrying out an Army Intelligence function?

—Yes.

3686. You tell us that this was legitimate and official, this operation, including the financing?

—Yes.

3687. Legitimate and official. Right. You told Colonel Hefferon that you were operating under the orders of Messrs. Haughey and Blaney from October onwards. Now I want to know was it under the orders of these Ministers that this financial transaction was carried out or if not under whose orders?

—It was not under their orders. I think—

3688. It was not therefore a legitimate and official transaction in this State?

—It was concerned with——

3689. In December?

—It was Northern people who were doing this and I was keeping in touch with them. I knew it was going on. I reported to them.

3690. You withdrew money from this account in December. You knew it was for arms? Right?

—I knew the money was for arms, that these people were bringing the money for arms, yes.

3691. This account is one into which all the moneys had been lodged from the Loughran, White and Murphy account, the main account, right? At that time? All the moneys in the main account had been provided by the Government under the Northern Ireland Relief of Distress Vote?

—That is right, yes.

3692. Right?

—Yes.

3693. You withdrew the money from this account therefore? Money that had been——

—From which account?

3694. From the Dixon account?

—Yes.

3695. Which had been fed exclusively from an account which was fed exclusively from this fund?

—Yes.

3696. You knew where that money came from?

—This money, as I think I explained earlier, there was—the Northern people, had money of their own for arms and they decided to use——

3697. Sorry, I am not interested in that.

—Sorry.

3698. There may have been all kinds of transactions in Northern Ireland, outside our jurisdiction——

—But they are related to this——

3699. That is entirely irrelevant. Look, the people can do anything they like in Northern Ireland financially; I am concerned with the fact that you are an officer of the Irish Army. You took money from an account into which the money had been lodged from an account and which money was lodged for a particular purpose of relief in Northern Ireland by the Irish Government through the Red Cross. You knew that the money in the George Dixon account had come into it in that way?

—Yes.

3700. There were no lodgements from Northern Ireland in that account at that time?

—No.

3701. Right?

—There were never lodgments from Northern Ireland in the account.

3702. Right, so we can forget about Northern Ireland therefore?

—No, you cannot.

3703. I am sorry. I am concerned here with the fact that you took money out of this account for the purpose of buying arms and I want to know under whose orders you were acting in doing that?

—I think I explained this fully in the court and I think I explained it here also, that this was an intelligence operation which involved finding——

3704. Under whose orders?

—I was working under the orders of the Director of Intelligence.

3705. The Director of Intelligence says that you were not under his orders from October and that because you had told him you were acting directly to Messrs. Haughey and Blaney?

—Well, I think——

3706. Did he lie?

—I would not say—he is not lying.

3707. Right. He imagined this?

—It is not imagination, it is just a question of how you phrase it really, I would say.

3708. How you phrase it?

—Yes.

3709. On the question of under whose orders an Army officer is acting is a matter of how you phrase it?

—An Army officer—

3710. Is that the way you were brought up in the Army?

—I beg your pardon? The way I look at it is this. I am doing an intelligence exercise. I get information from numerous and very many sources because the Government here appointed me as a liaison officer to the Northern Defence——

3711. To get in information for the Government?

—Committee, which was more or less secondary to my intelligence duties, or was in conjunction with them. I was doing this, so Colonel Hefferon may say I was getting orders in this sense but what I was doing was getting information from them that they may have got from the North, from their contacts. I was reporting the whole lot back to Colonel Hefferon, building up a picture, an intelligence picture and this is my duty.

3712. But you were doing more than reporting, you were taking money out of this account into which the money had come from this fund——?

—I am not sure whether I took——

3713. And you were taking it out for the purchase of arms?

—I am not sure whether I took the money out anyway.

3714. Well, I am sorry, you said in the court you did. Your statement was that you had in fact withdrawn this money?

—I do not know. Maybe I did. I am not sure about this.

3715. Chairman.—May we interrupt for a moment? Can you cast your mind back Captain Kelly, to a cheque drawn on the Munster and Leinster Bank, and presented at Crumlin Cross West, for £300?

—Yes.

3716. Dated the 15th April?

—Yes.

3717. You drew £300 there, did you?

—I drew that.

3718. For what purpose?

—For expenses and to give to the Northern people generally.

3719. Deputy FitzGerald.—For expenses?

—It is a George Dixon cheque, is it?

3720-21. Chairman.—It is an Anne O’Brien cheque.

—An Anne O’Brien cheque, whatever it is. I drew it for these people. I was acting as liaison. I had no authority for the account.

3722. Deputy FitzGerald.—You had no authority, period.

—If these people wanted money I——

3723-24. Chairman.—Captain Kelly, do you know that that cheque was returned——

Captain Kelly.—I beg your pardon, Deputy FitzGerald? I had no authority period?

3725-26. Deputy FitzGerald.—Yes.

Captain Kelly.—All my operations were done under authority.

3727-28. Deputy FitzGerald.—Now I asked——

3729. Chairman.—Captain Kelly—one moment——

Captain Kelly.—If that is the attitude I will stop answering questions here.

3730-31. Deputy FitzGerald.—I asked you and you gave me your answer as regard authority. You had no authority for your action in December.

3732. Chairman.—Captain Kelly, do you know that this cheque was returned RD?

—So I gathered from the evidence.

3733. Do you know anything about a cheque to Wellux Limited?

—I do, yes.

3734. For £8,500?

—Yes.

3735. Who put that cheque through?

—This is a cheque, an Anne O’Brien cheque, that was given to Mr. Wellux by me—to Mr. Luykx by me.

3736. For what, Mr. Kelly?

—I will explain it to you exactly. It was on the 1st April when I brought him as interpreter to the Continent because on my previous visits I was at a disadvantage and I brought him as an interpreter. I went out to the Continent to find out what exactly was happening about the arms again because no one had come to the idea and there was actually, some of us felt, I felt myself that possibly there were none at all. I went out to investigate and when I was out there and having a meal in a hotel I got a phone call from Ireland to return immediately, that there were, that 500 rifles had been moved to the North. I was not told the figure but I was told rifles had been moved to the North and there was trouble likely to break out in Northern Ireland and that I was required home to distribute these rifles. This was an order from the Director of Intelligence given, through my wife, on the phone. I went back and I had, I talked to Mr. Luykx about it, the only one I could talk to out there and I had—I do not think I even finished my meal and I came back and I think I got on to my wife again and I inquired was it possible to find out if it was really necessary to go back, that it might be more important to continue on with the job I was doing in view of this movement of arms. Eventually I got on to Mr. Blaney and I asked him what was his appreciation of the situation, was it going to get worse or better and he said that it had improved and he did not think there was any necessity for the distribution of arms. So on foot of that I told him to get on to Colonel Hefferon, tell Colonel Hefferon that I would not be returning, that I would carry on with my job. He did this and I went along, went up to see Schlueter in Hamburg, took a taxi, as a matter of fact, because I thought there was some urgency about it at this stage, and we arrived up there. Schlueter was talking and the situation was such, I remember I asked Schlueter what was it like in Northern Ireland and he said something about two British soldiers being killed, was on the German radio. Between the talking and chatting generally he ended up by saying he had 400 weapons available, readily available, submachine guns and some extra ammunition, and they were at a reasonable price. I said of course it might be as well to take them. Of course he would not part without money. Of course, when Mr. Luykx gave his own cheque for £8,500 he believed it was a Government operation. He was convinced by the sequence of events. He gave it to me on condition I would repay him the day I returned. I think it was on the day, or the second day, I had arranged to get the cheque for £8,500, which I did.

3737. The arms were bought on that occasion. Where are they?

—They are still there. They are paid for there. The £8,500 would be out of pocket.

3738. Deputy Barrett.—You bought the arms on your own initiative?

—Yes, at that stage.

3739. Deputy Tunney.—We will say here what we feel ourselves. I am rather conscious of the fact that what we have been saying here has been said in private. Personally, I would prefer it had been said in public and I had been hoping that you would feel the same way about it.

—I would be quite happy to have it in public.

3740. I am conscious your wife is outside —I am not trying to be sentimental about this—that your children are there, and I would have preferred that the fact of our hearing this in private suggests something that is wrong about the whole operation. There will be people who may say, “Kelly would say something in private that he would not say in public”. My genuine concern would be—and again I am conscious of the fact that you have been sitting here for quite a time—that in circumstances where we were ordinarily going to continue tomorrow that we would do that and that we would continue in public. There may be some rehashing of the questions that have been put to you already, but I would ask you and would be hoping in the matter of the business we have on hand that you would be as co-operative as you have been during the past hour. I should like to hear any comments you may have on that.

—I have no comments. I am willing to co-operate. If I had no interest in anything else only covering myself I could name numerous people who might be dragged into this thing. It would be wrong to do so. In effect I am putting myself at a disadvantage.

3741. You may take our assurance on that point that in regard to anything you might say all secrecy would be guaranteed by me and the other members.

—I find it hard—I do not know whether I should say this or not. I have heard stuff spoken in public outside this Committee, I admit before the Committee sat. It had been reported back to me and it has disconcerted me very much.

3742. I would be hoping that you would not prejudge me because I am not prejudging you.

—I am not prejudging anyone. I am making a statement of what was told to me by a very sane, sensible person about comments that were made as regards what was going to happen.

3743. Deputy H. Gibbons.—That is what the Committee are here to clear up.

3744. Deputy Nolan.—Could you develop that?

3745. Deputy MacSharry.—By whom?

—By a member of the Committee prior to the Committee sittings. I found it very disconcerting.

3746. Chairman.—The Committee are proceeding on the basis of evidence heard here and not on the basis of hearsay or comments made outside. In case you do not know this, it is only fair to tell you that if any person, being in attendance as a witness before the Committee, refuses to take an oath or to make an affirmation when legally required by the Committee to do so, or to produce any document in his power or control legally required by the Committee to be produced by him or to answer any question to which the Committee may legally require an answer, or fails or refuses to send to the Committee any document in his power or control legally required by the Committee to be sent to them by the person, or does anything which would, if the Committee were a court of justice having power to commit for contempt of court, be contempt of such court, the Committee may certify the offence of that person under the hand of the Chairman of the Committee to the High Court and the High Court may, after such inquiry as it thinks proper to make, punish or take steps for the punishment of that person in like manner as if he had been guilty of contempt of the High Court. It is only fair to point that out to you.

—I appreciate that.

3747. Deputy FitzGerald.—Could I ask the witness a question which I think is a test of the good faith of the witness? I understand the motivation that lies behind your reluctance to name people in Northern Ireland but I would put it to you that you should reconsider the position. Everybody on this Committee is concerned to protect anybody in Northern Ireland who might suffer as a result of exposure. However, we are concerned to find out what happened to the money, not to prejudice people in Northern Ireland, and if you feel that there are any steps that we have not taken and could take that would facilitate that—if, for example, you feel that some person on that list already is identified by using that initial —I think we would consider any representations you might make in that matter to enable us to proceed. While you are considering that, perhaps overnight, there is one question I want to put to you because it would establish, I think, whether in fact you are in good faith in what you say about protecting people in Northern Ireland. That is as regards the identity of Anne O’Brien. You told the court on oath that Anne O’Brien is a resident of this State?

—Yes.

3748. There is therefore no reason why in that case you should fail to tell us her identity. I would ask you now to do so.

—I refuse to name Anne O’Brien and there is no reason why I should give her identity.

3749. I beg your pardon. You have given as your grounds for failing to name people that you would prejudice people in Northern Ireland. She is not in Northern Ireland.

—Sorry, the Anne O’Brien account, as far as I am aware the greatest bulk of that was paid to the Voice of the North.

3750. That is for us to establish. I am asking you a question.

—If the money is traced it does not matter who signed the account. The person who signed the account signed it on the undertaking that they were working on a Government exercise and this is the snag we are involved in.

3751. We are working on an exercise even more important than a Government exercise. We are acting for Dáil Éireann on behalf of the Irish people. I am putting a question to you. The point about not prejudicing the people of Northern Ireland is one with which I have sympathy and we are doing everything we can to facilitate you in that. I have asked you to consider that overnight. You are being asked by this Committee, with the authority of the Dáil behind them, to give information that would help us in tracing what happened to the money and I am asking you now, in those circumstances, to tell us who Anne O’Brien is?

—The people who can give you the information have given the information.

3752. It is a matter for this Committee to decide. Would you please excuse me? It is for this Committee to decide what information they need.

—If those people are willing to expose themselves they are quite entitled to do so.

3753. It is for this Committee to decide what information they need. Your obligation is to answer the questions they put to you. We appreciate your desire not to prejudice people in Northern Ireland, but I ask you a question as a member of this Committee, with the authority of Dáil Éireann behind us, and you, as a loyal citizen who has sworn an oath of allegiance to this State, are obliged to co-operate in these circumstances. I would now invite you to do so and to show your good faith in regard to Northern Ireland, and that you are not just trying to cover up this whole operation.

—This is too simple an explanation. The point is that you talk about Dáil Éireann and the full authority of Dáil Éireann. I had the full authority of the Government, as I thought, for all the work I did up until 31st April.

3754. That has nothing to do with this. We speak on behalf of Dáil Éireann and not the Government and I have asked you to forget about any spleen you have against the Government or any members of it.

—I have no spleen. I have been held up to ransom already.

3755. None of us has. We are trying to assist you and to get at the truth. Would you answer that question now?

—You can never get to the full truth of this matter because people were involved in this who believed they were involved in what was an official operation and I am not going to name these people to anyone.

3756. Therefore, your reference to people in Northern Ireland is not in good faith?

—I am naming no one——

3757. I see.

——who I brought in in good faith into what I felt was an official operation. These people are not entitled to be named.

3758. Deputy Briscoe.—On your own admission, you said that the Government knew everything about this operation. When I asked you before if the then Minister for Finance, Mr. Haughey, knew what the funds that had been allocated to Baggot Street were being used for, you said “No”. Did Mr. Blaney know what they were being used for?

—I do not believe he did.

3759. You do not believe he did. In other words, the Government then did not know that these moneys were being used? That is what you are saying?

—Th point is this: I did my detailed reporting officially through my lawful authority who was the Director of Intelligence, and I eventually ended up by reporting personally and directly to the Minister for Defence who was the lawful statutory authority for the importation of arms.

3760. Your Director of Intelligence has already stated in evidence at the Four Courts that he did not have this knowledge.

—I will tell you something else. The Director of Intelligence made a second statement to the police when he was quizzed on this and he ended up his second statement when he was asked the question, “Do you think was Mr. Gibbons fully aware of all Captain Kelly did?” and he answered “Yes”. That has never appeared in public.

3761. Deputy H. Gibbons.—You can produce this statement?

—I can produce it.

3762. When Colonel Hefferon was in court he was on oath, when he was making statements to the police he was not on oath.

—He said this in court also, I think. It was all checked.

3763. Captain Kelly is inclined to say “I think” very frequently. He is inclined to state what Government authority he had.

—I know.

3764. But when Deputy Briscoe brings him back to this we reach the broken chain of the Director of Intelligence; sometimes he gets to the Minister of Defence, but here the chain, even at the best, is broken and I feel we will have another day.

—Can I not trust the Minister for Defence?

3765. Deputy H. Gibbons.—That is not the point.

3766. Deputy Briscoe.—The only time your recollection is clear is whenever you are trying to incriminate the Minister for Defence.

—I am not trying to incriminate the Minister for Defence. I reported to my lawful authority.

3767. You are absolutely clear on everything to do with him but on nothing else.

—Naturally I am clear on that because this is the important aspect of the case and there is documentation to back it up, what is more.

3768. This is what we find so inconsistent about your evidence.

—There is nothing inconsistent about the evidence. Will this be published?

3769. No.

—Well, I would prefer it to be published.

3770. Deputy Keating.—It is for the Committee to decide.

3771. Deputy Tunney.—This will be my last question. I take your point about what you say about Anne O’Brien. On the other hand, you will have to take mine—that I am here with the responsibility of finding out where the money went. Would you take this as being a fair proposition? If you can show to me where it went to my satisfaction I will accept it, but if at a later stage there is a gap in your evidence and the total expenditure of the £7,000 odd which was in that account, at that stage would you indicate then who Anne O’Brien was?

—No, because I see no necessity to indicate Anne O’Brien. There will be no gap.

3772. You will be able to explain how all the money in that account was spent?

—I will.

3773. Deputy Tunney.—Then at this stage I would not press for the name of Anne O’Brien.

3774. Deputy FitzGerald.—I reserve my position on that but let us get the information first.

3775. Deputy Tunney.—I think we would be more concerned about where the money went rather than who the people were.

3776. Chairman.—Would you make that statement in the morning, Captain Kelly, to show where all the money went?

—I cannot show where all the money went that was under Northern control as such.

3777. Deputy H. Gibbons.—The Anne O’Brien account?

—The Anne O’Brien account—offhand I would say over £5,000 of that went to the Voice of the North for a start.

3778. Chairman.—And the Dixon account?

—The Dixon account was used for arms. Various people brought this money.

3779. Deputy Briscoe.—Was this used exclusively for arms?

—I told you there were people went to England, went to America, early on. I found this out and I used this money to finance them.

3780. This is the George Dixon account?

—Yes.

3781. Deputy Barrett.—Did you open the subsidiary accounts?

—I do not think I opened them.

3782. In court in reply to a question by counsel you said you did. Your answer was “If you mean did I go to the Manager and suggest it, yes, that was the Dixon account”. Down further on the same day, that is 14th November, “Was there at your instigation another account opened in that bank in the name of a woman?” and your answer was “That is correct”.

—This must be correct. I, as far as I know, whether I opened the account—I did not open the accounts as such, I could not open the accounts——

3783. Then your evidence is not correct?

—Well, the point is, I think I got the signatures for the accounts but as regards putting in the money and this sort of thing——

3784. We have evidence that on the day Mr. Fagan recommended you to the bank you rang him later that day and stated you needed £7,500 to start off this account, or words to that effect. Is that correct?

—It is possible. I do not know. Once again, if that happened this money would not have been lodged by me, it would have come from the main account. So in that way——

3785. I agree the £7,500——

—The point I want to make is that the money would have come from the main account and would have gone into the subsidiary account. I would have assisted certainly if I was asked. I have no recollection of ringing Mr. Fagan but it is possible I did.

3786. It is very important because there has been a conflict of evidence between bankers and Mr. Fagan as to who opened these accounts.

—As regards the mechanics of the account I was not over-concerned. If I was asked to assist these people I did so and if at any stage I was asked to ring Mr. Fagan I would do so certainly, I would have no hesitation.

3787. It is possible that they asked you to go to the bank, having seen Mr. Fagan, or to see him first and to go to the bank and open these subsidiary accounts. Is it?

—If you mean to the extent I do not think I had anything to do with the money.

3788. No. To start making the arrangements to initiate these accounts at the bank, it is possible they asked you to do this.

—It is possible certainly I went in because I knew the man there, Mr. Walsh, so it is possible I would go in and talk to him about it. I think I got the names from the Northern people for the subsidiaries.

3789. Dixon and O’Brien?

—Yes.

3790. Deputy FitzGerald.—Pseudonyms or the names of the actual people they represent?

—Pseudonyms.

3791. Yes, but the names of the actual people they represent? How did they come into the picture?

—This is what I am not talking about.

3792. Deputy Barrett.—Did you ever discuss these names with Mr. Fagan—subsidiary accounts or the main account?

—I could not say definitely.

3793. There was no discussion between you on them?

—I do not think so.

3794. Deputy Briscoe.—There is just one final question for tonight. I understand you notified the Committee that you would not hand over the manuscript of your book and I think you expressed the fear that it would be published. The Committee is only concerned with anything that would be relevant to the money; it would not be concerned with publishing your books for you, and I do not think you need have any fears on that account. I think in your own interest, unless you have something to hide specifically——

—I have nothing to hide. The book is not relevant.

3795. I think this is something we feel we should have the right to determine.

—But how? This is a private document. This is my interpretation of events. I have not published it as yet. How could it be relevant, apart from its content?

3796. If it is not relevant we can decide that.

—I do not think so. I refused to give the book and that is it.

3797. Deputy MacSharry.—Do you understand that in your refusal to either give the book or to name the fictitious names, you are treating this Committee with contempt?

—That is up to the Committee to decide.

3798. Do you appreciate yourself that——

—I do. I appreciate it.

3799. Deputy Briscoe.—Do you agree that the Committee has a right to determine something, then?

—I accept that.

3800. Deputy FitzGerald.—You are clear about this because it is important? The public reason which purports to have been given by you for not giving us the book is fear that you would lose financially by this. You are quite clear that there is no question of this: that if the book were given to us we would read it, we would see if there was anything in it that was relevant to this and we might put questions to you arising out of anything you said relevant to this particular financial matter and that except in so far as putting questions to you would involve quoting a couple of passages, we would not otherwise publish the book? Therefore there can be no question of any financial loss. I would like to be sure that you are clear about this.

—I appreciate this.

3801. So that the reason which you are alleged to have given for not giving us the book is, in fact, no longer valid and if you refuse to give it to us in these circumstances you must have some other reason for withholding it.

—I have no reason for withholding it except that I think I have some rights and that I am entitled to write what is still a private document and I am entitled to retain it and I do not see any reason why I should have to hand it up to any public committee.

3802. You will appreciate it is not for you to decide if there is a reason. It is for us to decide.

—But it is a private document. Has an individual not some rights in this thing?

3803. In this matter, the document you have written which could be useful to this Committee, is something which we are entitled to have and which you are required, as a loyal citizen of this State, to give to us, if loyalty to the State means anything.

—I am quite loyal to the State: that has been my unfortunate outlook.

3804. Chairman.—Mr. Kelly, may I read the relevant paragraph to you? This is the Committee of Public Accounts of Dáil Éireann Privilege and Procedure Act, 1970. Have you read it?

—I have read it, yes.

3805. You will see there in paragraph 3 (c):

May require any such witness to produce to the Committee or require any person by letter delivered to him personally or by registered post to send to the Committee any document in his power or control.

Any document.

—I appreciate this but I still think it is wrong and I am not producing it.

3806. Public or private?

—It does not matter.

3807. You will appreciate that you are deliberately setting at defiance the wish of the Committee?

—My reaction to this—I do not know, you may think it is wrong—my reaction simply is that since a change in Government policy at the end of April last I have been caught up in this.

3808. Deputy H. Gibbons.—Mr. Chairman, I object to this statement.

—I think it is very relevant.

3809. I object to this statement. There is no proof of this.

—I think there is.

3810. I refute it.

—I think there is.

3811. Deputy FitzGerald.—True or false, it is irrelevant.

—With all due respect, I do not think it is irrelevant.

3812. Deputy H. Gibbons.—Mr. Chairman, this is what I am putting to the witness on a few occasions, that he is stating here what he thinks but in fact what we want is evidence vouched for by documents or statements of people concerned.

—I have no documents.

3813. Well, then I do not think you are entitled to make statements of what you think and put it up as Government policy.

—I do not think——

3814. You said: “I think”. Mr. Chairman I am entitled to finish. There is another question I would like to ask. In your manuscript have you made any reference to the events of 1970 or to the Arms Trial or any facets of this?

—I have made my personal interpretation of events from the 1st May up until 3rd November, taking into account what was said in Dáil Éireann and what was said in the Arms Trial, and I have come to certain conclusions which are purely personal at this stage and which if I was going to publish I would have to get checked out by lawyers, would have to be rewritten so on and so forth.

3815. Deputy FitzGerald.—You appreciate in giving it to us you have privilege and there will be no question of any libel or anything accruing from submitting the document to this Committee.

—There are various other factors arising——

3816. Which are so important that——

—No, it is not that it is important. I do not see why I should have to.

3817. That is not the point.

3818. Deputy MacSharry.—Do you not appreciate our position in it, Captain Kelly, at all?

—As far as I am concerned, my position is very simple. It may be a bit too simple. The people who were running this Grant-in-Aid have given evidence here on the Grant-in-Aid. Furthermore, I understand, and I think this is very strange to me that there has been an investigation in Northern Ireland into this other committee, and I think these are the principals in the case and if they give evidence accounting for this money there is no necessity for I to add anything to it. They are the principals.

3819. Deputy FitzGerald.—They may give evidence perhaps about financial transactions in Northern Ireland, but we are concerned with the financial transactions on this account.

—The financial transactions in Northern Ireland are associated with the financial transactions down here because for the simple reason of security that their moneys in Northern Ireland whenever they were associated with weapons they used moneys down here. That is it.

Captain Kelly withdrew.

The Committee deliberated.