Developer brothers Tom and Michael Bailey, whose €22.17 million tax settlement last year is the largest on record, are making plans to retain management control over their business empire if they are disqualified as company directors. Arthur Beesleyand Mary Carolanreport.
The multimillionaire brothers won a partial victory yesterday when the High Court narrowed the grounds on which Paul Appleby, the Director of Corporate Enforcement, can seek to have them barred from managing their firm Bovale Developments.
The company is one of the largest landowners in the State but it is unlimited, so recent information on its financial performance is not available.
Mr Appleby will not be able to rely on the reports of the planning tribunal, which made serious findings against both brothers, or on certain Revenue documents, or on the memos of an accountant who found that they did not keep proper books of account.
However, the director will be able to use a report by accounting firm PricewaterhouseCoopers (PwC), which found that "large sums" were paid to both brothers as salaries but were not recorded in Bovale's books.
The PwC report alleges the brothers received payments of some €3 million over a two-year period in 1997 and 1998 - more than 17 times the amounts recorded in the books of the company.
While Mr Appleby is free to pursue his disqualification action on narrower terms, the brothers are understood to be examining various means of keeping operational control over Bovale's activities if the case goes against them.
The options under consideration include the possibility of moving Bovale into a partnership structure, taking it outside Irish and EU jurisdictions, or retiring as directors and nominating other individuals to run the business on their behalf. The brothers are not favourably disposed at the moment to moving the business offshore, it is understood.
Tom Bailey declined to comment last night on yesterday's ruling by Ms Justice Mary Irvine, or on any plans to circumvent an order to disqualify him or his brother.
The court ruling yesterday followed an application by the brothers to exclude certain documents from forthcoming disqualification proceedings.
Mr Appleby wants the brothers disqualified from the management of any company on grounds of alleged serious misconduct and fraud in Bovale's affairs.
Mr Appleby's original claim, which suggested alleged wrongdoing in the period from 1988 until 2000, was based on much of the material now excluded by the judge. The ruling yesterday will have the effect of restricting the period under examination to the fiscal years ending in June 1997 and June 1998.
Ms Justice Mary Irvine said it was not open to Mr Appleby to use the reports of the planning tribunal as a "weapon of attack".
Mr Justice Feargus Flood found in September 2002 that Michael Bailey had made a corrupt payment to former Fianna Fáil minister Ray Burke, and found that he obstructed and hindered the tribunal on eight grounds.
Tom Bailey was found to have obstructed the tribunal on four grounds.
In another report, published in January 2004, the tribunal found that Michael Bailey made three corrupt payments to the former planning official George Redmond, and hindered and obstructed the tribunal on five grounds.
