“Let’s see now Sean,” Kennedy said to Kavanagh, “what we want is a business plan together with the product description, and a market report. I suggest you give me the outline for the financial part which I’ll have my staff complete and then you look after the marketing and product part.”
“Is there some kind of time table?”
“Yesh, first we take an off the shelf company as a vehicle for the project. That’s easy, it costs I£100. That company will present the business plan, say for the end of next week, just in time for the next submission date. The whole procedure takes a couple of months.”
He then went on to explain that once the business plan had been finalised it was then submitted to the NIB for appraisal. If it passed that step it was then presented with any modifications necessary to the Investment Committee that met every first Thursday of the month. If the committee approved the project it could be under way almost at once with the assistance of the bank that would open accounts and advance the funds.
“It’s very bureaucratic, but it works and not only do I know all the ropes, but all of the lads,” he winked and laughed.
The company was bought from one of his cronies who had a string of ready-formed limited companies for sale. Kennedy changed the name, at the Register of Companies in Dublin, to Investec Ltd.
They prepared the business plan, which was approved without any difficulties. Jim Carmichael and Phil Moftan providing the product and market reports.
Just about two months later Kennedy and Kavanagh sat in the offices of the Irish Union Bank in Limerick with Paddy O’Brien, the regional manager, to open accounts.
At that point Sean Kavanagh had not advanced a single Irish penny. They needed I£250,000 for the first year in addition to the grants that would be provided by the NIB.
“Okay!” said Paddy, “First I’ll open a new personal account for Sean here, then we’ll advance a loan of I£250,000 paid into his new account. Right!
“Okay,” replied Kennedy whilst Kavanagh tried to follow.
O’Brien called his secretary and just a few moments after Sean had put his signature on the forms the account was opened, credited with I£250,000.
A chequebook was produced and Kavanagh wrote out a cheque of I£250,000 from his new account to Investec Ltd., which was deposited in the company’s new account at the bank.
The secretary then drew up a certificate of deposit in the name of Investec for I£250,000, which O’Brien slide over to Pat.
Pat as a director of the company then wrote a cheque out from the new Investec checkbook to Kavanagh for the same sum, which Kavanagh deposited into his newly opened personal account. The loan was then repaid to the bank, and “Hey presto!” the transaction was terminated.
A certificate of deposit for 250,000 virtual Irish pounds had been created.
“Now lads when you have the grants and everything else tied up with the NIB, we can look into loans for a similar sum to the grants.”
They had in effect half-a-million Irish Punts to start the business rolling. Kavanagh felt elated, there was a lot of work ahead, but he was firmly back on the road again.
What Kavanagh had not realised was that he had personally received a payment from the new company of I£250,000 - a transaction which would come back to haunt him.
The certificate of deposit was the last piece of paperwork necessary for the formal approval of the NIB.