A former Aer Lingus assistant chief executive told a fraud trial jury that nine months after he became concerned about the finances of a subsidiary company its board removed the chief executive and financial controller.

Mr Louis Sleator told Dublin Circuit Criminal Court he spent the final five years of 42 years with Aer Lingus as assistant chief executive, finance, and was also on the board of Aer Lingus Holidays from 1983 to October 1989, three months after he retired from the airline.

Mr Sleator said there had been a delay in the ALH audit in January 1989 and "there were other things beginning to happen" in the company. He had been looking for cashflow figures and quarterly balance sheets from ALH management for some time and was not getting them. When he eventually got figures, he found were not real cashflow figures and he wrote to the ALH chief executive, Mr Malachi Faughnan, and the recently appointed chairman expressing his concern. Mr Faughnan wrote back claiming there was no problem and that everything was under control.

Mr Sleator told prosecuting counsel, Mr Kenneth Mills SC, that Mr Mark Dobbyn, a partner in the Aer Lingus auditors, Stoke Kennedy Crowley, also expressed concern about the ALH accounts and expressed the belief that information provided by the management was not accurate.

He asked Mr Dobbyn in June 1989 to carry out certain investigations and Mr Dobbyn reported back in August 1989. Mr Faughnan and Mr Noone were removed from their posts and replaced by the board as a result of that report at a meeting attended by witness in September. Mr Sleator said he had already retired from Aer Lingus at this time but was attending at his office voluntarily as his successor had not been appointed. He left the ALH board on October 31st, 1989, but remained for a further year on the board of another Aer Lingus subsidiary, Airmotive, where he was chairman of the company's finance committee. He was also a trustee of the Aer Lingus pension fund until 1991.

It was the Day-22 of the trial of Mr Peter Keely, of Carrig Avenue, Dun Laoghaire, and Mr Desmond P. Flynn, of Tritonville Avenue, Sandymount, who have pleaded not guilty of conspiracy to defraud.

Both men deny they conspired together, and with Mr Peter Noone, former financial controller of the company, 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 Sleator told Mr Mills (with Mr Erwan Mill Arden SC, and Mr George Birmingham BL) there never was a proposal from ALH management to acquire the Los Hibiscos property and he never heard of it or an Isle of man company called Delmot Investments until after his retirement. Neither were they ever mentioned at the board in his time there.

He said nobody was authorised by the ALH board or by the main airline board to use funds negotiated for the lease-purchase of the San Francisco, La Penita, Los Vegas and Ecudor apartment blocks for any other purpose. He knew nothing about the unauthorised use of these funds until articles began appearing in the media and he was interviewed by Gardai in 1991.

Mr Sleator said it was at Mr Noone's request that he signed a "letter of awareness" for a bank stating that a dormant Aer Lingus company called Cara Marketing was to be used in the lease-purchase deal concerning the San Francisco block. Mr Noone and the Aer Lingus a Spanish lawyer, Mr Jose de la Rosa Costa, had been authorised by the ALH board to execute the deal.

The board resolution indicated that another subsidiary called Durnin Insurances was to be used but Mr Noone told him he had arranged with the Aer Lingus ancilliary activities division to use Cara Marketing instead. He accepted Mr Noone's word in good faith. He also signed a similar letter in relation to the second property transaction which again came to him from Mr Noone through the Aer Lingus treasury department where amendments were made to them. "These letters came back to haunt me in later years," Mr Sleator added.

He claimed it was Mr Noone who told him when he queried it that another company called Dame Street Property Trust was to be used in the later ALH leasepurchase deal for the Ecudor block in Malaga.

Mr Sleator said ALH had also made deals to cushion any risk which could arise if the company did not sell all the apartments to holidaymakers.

Mr Sleator told Michael Cush SC (for Mr Keely) he regarded himself as an "airline professional in the financial field", though he had no academic qualifications. He had spent all of his 42 years with Aer Lingus in that area apart from two he spent in staff development.

The hearing continues before Judge Kieran O'Connor.