DUBLIN BANK HANDLED FLORIDA DRUG CASH

A US drugs dealer, jailed in Florida, had cash laundered through the
Guinness and Mahon Bank, the Moriarty tribunal heard yesterday.

Fernardo Pruna, a Florida landowner, was charged and convicted after
an intensive investigation by the US Narcotics Bureau into the
secretive Cayman Island bank.

It was an investigation that caused great concern among the Irish
directors of the Dublin based bank, including the late Des Traynor.

They were worried that information concerning coded secret offshore
deposits might also be made available to revenue authorities.

In 1984, Guinness Mahon, Dublin, was particularly concerned about an
international convention between the American, British and Cayman
governments, intended to combat the international narcotics trade and
the money laundering involved in making drugs profits available to
criminal elements.

Mr John A. Collins, a co director of Cayman Trust with the late Des
Traynor, wrote to Mr Traynor concerning his fears.

He suspected that potential customers, eager to use the offshore
deposits for tax evasion, might be deterred.

The late Mr Traynor shared his fear. In a report to the Guinness and
Mahon board, he noted the decline of business activities and stated it
might be necessary to revise their forecast downwards for the coming
year because of a loss of confidence in the secrecy of the Cayman accounts.

These fears were further fuelled by American newspaper headlines,
claiming that Cayman banking secrecy had been smashed.

The investigation culminated in the smashing of an international drug
ring, based in Miami.

Between 1985 and 1988, Guinness and Mahon advanced loans exceeding one
million US dollars to Fernardo Pruna and his wife from Florida, on the
introduction of the Cayman Trust.

The couple owned land in Dade County, Florida, over which Guinness and
Mahon took security because it had difficulty in obtaining loan
interest payments.

An indictment was obtained against Fernardo Pruna as the organiser of
an major drugs smuggling operation from 1981 to 1988.

Pruna was convicted and jailed in the Florida State Penitentiary. Mr
Coughlan pointed out that the tribunal was not suggesting that any of
the Irish interests in Guinness and Mahon were involved.

But he added that it was "the irregular and unorthodox banking methods
used by them which facilitated this particular type of activity to
allow money to be effectively laundered".