Aer Lingus didn't lodge a claim under an insurance policy covering the airline against financial loss caused by an employee's dishonesty, the jury in the Aer Lingus Holidays fraud trial has been told.

The former Aer Lingus chief executive Mr Cathal Mullan agreed during renewed cross-examination that all major companies would have a "fidelity" insurance policy, but said he had no personal knowledge of it as it would be one of many insurance policies and was probably arranged at least 25 years ago.

Mr Mullan, who was chairman of the holidays subsidiary from 1983 until he became chief executive of Aer Lingus on December 1st, 1988, also agreed he had not sought nor perused Aer Lingus Holidays property files when he told gardai he couldn't find any reference in documents to the Los Hibiscos apartment block in Lanzarote which is at the centre of the case.

He told Dublin Circuit Criminal Court that when he told the jury last week he had found no such reference in documents, he was referring to Aer Lingus files containing board minutes and memorandums. He examined these on reading the 1990 Craig Gardner Report, to compare their contents with information into Aer Lingus Holidays losses of up to £10 million.

The information in the Craig Gardner Report was "a great surprise" to him.

"I certainly didn't seek out and examine every bit of paper in the Aer Lingus Holidays files, but only the files in my office. I am happy to qualify my previous reply that way," Mr Mullan told defence counsel Adrian Hardiman SC.

Mr Mullan told Mr Hardiman that he had not previously seen three Aer Lingus Holidays documents already introduced to the jury: a 1989 property costings paper; a statement of furnishing costs for Los Hibiscos; and a telex from a Spanish Aer Lingus Holidays employee about a client's complaint. He had no recollection of any reference to Los Hibiscos in the 1989 Aer Lingus Holidays brochure. He wouldn't have been dealing with these details and he wasn't in any way surprised at how poor his recollection was on various matters that arose during the hearing. There was little appreciation of how much documentation passed by his desk daily on an "unending supply of matters in such a large company".

Mr Mullan said he "totally rejected" Mr Hardiman's suggestion that he might have found it "helpful to forget" some things.

He was giving evidence on the 13th day of the trial of former Aer Lingus Holidays executive Mr Peter Keely, of Carrig Avenue, Dun Laoghaire, and solicitor Mr Desmond P. Flynn of Tritonville Avenue, Sandymount, who have pleaded not guilty to conspiracy to defraud.

Both men deny they conspired together and with Mr Peter Noone, former Aer Lingus Holidays financial controller, on dates from March 1987 to November 1988 to defraud Aer Lingus Holidays by misappropriating funds to purchase part of the Los Hibiscos apartment complex for their own use and benefit.

Mr Mullan said he was unaware until he read it in the Craig Gardner Report that Delmont Investments was one of the components used to "feed back" into Aer Lingus Holidays some £2.2 million borrowed through a property lease-purchase deal.

Aer Lingus at that time employed 12,000 people and had a large number of subsidiary companies running major ancillary businesses, Mr Mullan told Judge Kieran O'Connor.

The trial continues.