Northern Ireland

Taggart: Correspondence calls competence of ex-property into question

Michael Taggart
Image caption Michael Taggart and his brother, John, are suing the Ulster Bank for damages

Internal correspondence called into question the competence of a former property tycoon, a court has heard.

Michael Taggart is alleged to have asked about buying houses built by his firms with reduced deposits.

This made "a mockery" of attempts to improve corporate governance, counsel for the Ulster Bank said.

A fellow director claimed in an internal email his inquiries came when the construction business was in a "very precarious position".

Mr Taggart and his brother, John, are suing Ulster Bank for alleged negligence and improper conduct, which, they said, contributed to the fall of their house-building empire.

The Taggart group was decimated by the 2007 property crash. A year later it went into administration.

The brothers, from County Londonderry, claim they were kept in the dark about credit concerns within the bank.

Had they been warned, they contend, assets could have been sold to offset loans.

'Personal assistant'

In a counterclaim, Ulster Bank is seeking £5m and 4.3m euros it said the Taggarts owe in personal guarantees over land purchases in Kinsealy, County Dublin and in Northern Ireland.

On day 13 of the legal battle, a judge heard details of internal Taggart correspondence in August 2007.

In one e-mail, Mr Taggart's personal assistant asked Maurice McHugh, the firm's managing director and financial director, if he and his brother could buy houses built by the company with a maximum £15,000 deposit, the court heard.

Mr Taggart agreed in evidence this was about £10,000 less than required from outside purchasers.

A barrister for Ulster Bank claimed concerns had already been raised at board level the previous year about the "phenomenon" of directors buying houses in England and Ireland.

He set out how Mr McHugh reacted to the request by writing to the group's chairman: "This is making a complete mockery of any attempt to introduce proper corporate governance into the group at a time when it's in a very precarious position."

The barrister said it showed the brothers were trying to get a personal advantage.

Rejecting his claims, Mr Taggart said: "No, I don't believe it's John or myself trying to obtain any benefit having invested millions in the group."

With his PA's inquiry having also referred to an investor being due a £25,000 "finder's fee" discount on an apartment purchase, the businessman argued that the concerns were about setting a possible precedent.

Initial inquiry

The barrister pressed him by saying Mr McHugh was trying to protect his own professional reputation.

"He didn't want to be involved as the managing director or financial director of a group that was guilty of this sort of inappropriate corporate governance," he said.

Mr Taggart stressed the issue was resolved with the deposit being increased by £10,000 per unit.

The barrister put it to him that he was told his initial inquiry would not be allowed.

"Can you explain why it didn't occur to you that it was contrary to good corporate governance, to stop you asking that which you shouldn't ask?"

Mr Taggart said: "I have no idea. I asked the question at the time and Mr McHugh gave me the answer and I was satisfied."

He added that he had sold thousands of houses over the years where the bank accepted deposits of as low as £1,000.

It was suggested, however, that the issue "goes to the very heart of your competence as a director".

Disputing the assessment, Mr Taggart told the court: "I had over 80 companies and I don't recall any issues when the final reports were completed for the conduct of the directors in the companies."

The case continues.

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