An English authority on fraud will testify that money was taken from several Master Meat Packers companies as part of a fraud which had a degree of sophistication never seen before by the expert, the High Court has been told.

Mr Paul Gallagher SC was continuing his opening submissions on behalf of 12 Master Meat Packers firms, which have taken proceedings for £15 million (€19 million) damages against founder Mr Paschal Phelan and Master Cut Foods. Mr Larry Goodman has admitted for the purpose of legal proceedings he owned and controlled Master Meats since 1988.

The action is one of several involving Mr Phelan, Mr Goodman, the Master Meat firms and others, all being heard by Mr Justice Murphy.

In the action by the Master Meat firms, they allege that between 1985 and September 1988, when Mr Phelan sold his shareholding in Master Meats, there was falsification of accounts of the companies which involved defrauding the firms, Government agencies, the Revenue and farmers of substantial sums of money.

Yesterday, Mr Gallagher said an English forensic accountant had analysed Master Meat transactions and would give evidence of how the firms' books were falsified and incorrect entries made to disguise the transactions' nature. The expert would say he was looking for "misposting" - transactions posted to accounts they ought not to have been posted to. This had put the expert on the alert.

Mr Justice Murphy asked was this not the task of auditors? Mr Gallagher said auditors had been described as "watchdogs". They were not "bloodhounds".

The expert would say there were degrees of sophistication he had not seen before. If an auditor was directed to something that aroused suspicion, he would check and look for explanations but, unless there was some signpost, he could not make a discovery.

On the cattle throughput of a plant of 2,000 to 3,000 a month, it was not possible to say which 20 or 30 cattle were fictitious and had not been purchased, counsel said. This was a misposting to the extent that something was put in the records as a cattle purchase when it was not so.

Mr Gallagher said the expert would tell the court that the degree of sophistication in carrying out these transactions was designed to hide the true nature of the transactions.

The court would also hear from the financial controllers and people who made these entries, counsel added. The expert would claim many of the entries in the companies' books did not reflect any commercial transaction. One of the techniques was to write a sterling cheque out to a bank so that the payee was the bank and the company's records did not identify the beneficiary. That had appeared on many occasions.

An alternative was to camouflage by making book entries before the money was paid out. The book entries would create a false credit in Mr Phelan's director's loan account so that the later writing of a cheque to Mr Phelan appeared to be a routine payment of money previously owed, Mr Gallagher said.

Another technique was to separate the misappropriation from the bookkeeping which concealed it, he added. Once a false entry had been created it could be left there and later used to conceal a misappropriation.

Mr Gallagher said there was falsification of the accounts of the Omagh and Bandon Master Meat plants and monies were initially taken from Omagh to fill the gap in the Bandon accounts. This was generated through the creation of a fictitious sale of cattle by Bandon which was purportedly paid for by Omagh.

The case continues today.