When a new chief executive and financial controller took over in Aer Lingus Holidays they found the company in a disastrous state, the jury in the fraud trial heard on the 24th day of the hearing.

Mr Patrick Walsh, who became chief executive designate in September 1989, also revealed he never got access to his predecessor's property files.

Before he moved into the new job, he had been briefed by the new ALH chairman, Mr Kyril Acton, that the company had "problems". Mr Acton also told him both the chief executive, Mr Malachi Faughnan, and financial controller, Mr Peter Noone, were "going".

Mr Walsh told prosecuting counsel, Mr George Birmingham BL, he was briefed in discussions with Mr Faughnan and Mr Noone that ALH had proprietorial interest in four apartment blocks: San Francisco Park, La Penita and Las Vegas in Lanzarote, and Ecudor in Malaga.

He asked Mr Faughnan for his property files but they could not be located.

There was a number of large files in the financial area dealing with property but they "were not easy to follow". He asked Mr Noone on a number of occasions to come to talk to him about these files but he never did.

Mr Walsh said he appointed Mr Tom O'Doherty as financial controller in October 1989. He agreed with defence counsel, Mr Michael Cush SC, that Mr Acton "certainly was not understating" the situation in ALH when he said there were "problems".

He did not fear going in to ALH but it was much worse than he expected. Management information was very poor.

Mr O'Doherty told prosecuting counsel, Mr Erwan Mill Arden SC, Mr Noone also failed to honour several appointments to sit down and give him detailed information about the financial side of ALH in the two to three weeks they were both in the company.

He would have expected Mr Noone to brief him on all aspects of the financial management of ALH but got only a one-and-a-half page hand-written document from him.

Mr O'Doherty said he never recalled speaking with Mr Noone about overseas properties but he came across three property files lying on top of a filing cabinet in the financial controller's office. "They were in considerable disarray and I spent time trying to categorise them."

It was the 24th day 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 to conspiracy to defraud.

Both men deny they conspired together and with Mr Noone, 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 in Lanzarote for their own use. Mr Walsh and Mr O'Doherty agreed with Mr Cush that his client, Mr Keely, was on sick leave from the ALH accounts department from October 1989. Mr Keely had a serious operation and retired from the company on health grounds the following April.

The jury in the case is now down to 10 members after Judge O'Connor discharged a man from further service following calls from his employer.