Court hears of Tony Blair's role in friend's hotels bid

Patrick McKillen at the high court. Photograph: Ian Nicholson/PA

Tony Blair brokered a funding agreement between the Qatari royal family and an Irish property investor in a deal to buy three of London's most prestigious hotels, a court has heard.

The former prime minister gave free advice to friend and businessman Patrick McKillen, who was trying to buy a majority stake in the capital's famous Claridge's, Berkeley and Connaught hotels.

In 2010 Blair also asked the then City minister, Lord Myners, to lobby on behalf of McKillen in a bid to avoid the company's £660m debt falling into the Irish government's toxic debt pile.

Blair personally persuaded the Qatari emir, Sheikh Hamad, to contact McKillen, who was seeking £70m to buy a controlling stake in Maybourne Hotel Group, from billionaires David and Frederick Barclay.

Emails between McKillen's staff and Tony Blair Associates reveal the ex-prime minister's firm was willing to approach leaders in Abu Dhabi, Qatar, Kuwait and Oman in the search for finance.

Blair's former chief of staff, Jonathan Powell, was also willing to offer his help, according to documents.

It led to a close relationship between Blair's firm and McKillen, with the businessman and former PM's representatives meeting nearly every week.

The high court in London heard that the colourful Belfast-born businessman met Sheikh Hamad's son Sheikh Jassim in the lobby of Claridge's to discuss a possible investment.

He said: "During the meeting Sheik Jassim said that Tony Blair and his father [Sheikh Hamed] had been doing business in Doha and the issue of Maybourne came up. Tony Blair had suggested that they should make contact with Paddy McKillen."

He denied the Qatari deal was done by Blair acting as his agent.

He said: "No, it came purely from a discussion in Doha between an ex head of state and head of state. I'm not sure what business they were doing but the two gentlemen are very close."

But McKillen and the Qataris fell out over the deal – the businessman called the Middle Eastern leaders "scum" – and accused them of changing the terms of their agreement. Blair then acted as an "honest broker" between the two to rekindle the deal, the court heard.

McKillen and Blair first met at the economic forum in Davos in 2006 and reconnected in 2010 through the PR guru Matthew Freud.

The hotel group was in trouble and faced the prospect of being taken over by the Irish government's toxic debt accounts. Blair was worried that this could lead to the British landmarks being sold too cheaply, leaving Irish taxpayers covering the debts.

He then suggested Lord Myners could be used to lobby for the debts to not be taken on by Ireland and help McKillen raise the necessary funds to finance the deal.

It led to the court revelation that McKillen had approached 19 investors. These included detailed discussions with the billionaire Hong Kong property tycoon Walter Kwok, recently arrested as part of a bribery investigation in the country.

Blackstone, Och-Ziff Capital Management, Morgan Stanley Real Estate Funds, Avington Financial and Global Asset Capital Europe, were among others McKillen approached.

McKillen, who owns 36% of Maybourne Hotel Group, is suing the Barclay brothers, alleging they used illegal means to seize control of the company. He claims they conspired to side-step his legal right, under a first-refusal agreement, to increase his stake to more than 50%.

He is trying to buy a 20% stake from the third owner Derek Quinlan, a former Dublin tax inspector.

The Barclays claim McKillen was not entitled to the pre-emption agreement because he did not have enough funds for the purchase.

He has been accused of having to approach "non-traditional" lenders because normal banks "wouldn't have touched a proposal like this with a bargepole".

The case continues.