One year after the financial ructions that led to a €15 million Government bailout for the Peter McVerry Trust, an inspectors’ report on Ireland’s largest housing charity delivers another crushing blow.
At the centre of the report’s criticisms is the failure of the trust’s board, chaired by solicitor Deirdre-Ann Barr, to exercise control over wayward spending and sloppy procedures.
The report is grim.
The trust entered a binding legal agreement to spend €4.3 million from a Capuchin order donation to acquire five specific properties for a particular purpose, but already owned four of the properties.
Without board oversight the trust transferred €2 million from a “sinking fund” reserved for maintaining property, using the money to pay contractors and leaving only €125 in the fund. It built up a €8.2 million tax liability without board approval – and accounts failed to set out money due from debtors, owed to creditors or the amount of debt financing.
There is more, but the picture is clear. Multiple failings are set out by the Charities Regulator investigators. They point to rampant misgovernance in a body that received €164.3 million from the State between 2018 and 2022 and €72.6 million in donations. This threatens the continuation of the trust and its board.
“It’s very difficult to see a future for them,” said a senior housing official.
So how did it come to this?
In a statement on Monday, the Charities Regulator said charity trustees must ensure donations, funds or grants given for a specific charitable purpose are used for that purpose alone. Trustees must also ensure they have the information needed to oversee all activities.
This did not happen. Investigators found “numerous key compliance and governance failures”.
Although charities are required by law to adhere to donor restrictions over funds, the regulator found a failure to observe donor intention.
“The inspectors identified numerous instances of inappropriate transfers and co-mingling of funds between restricted and unrestricted funds, as well as the unauthorised use of restricted funds for operational purposes.”
Donations in 2022 included €4.73 million from Capuchin Day Centre – €4.3 million to buy the five properties and the remaining €430,000 restricted to the sinking fund.
“[The trust] did not use the restricted donations for the purpose for which it was donated, and instead used it to make payments, mainly to creditors,” the report said.
The Capuchin Day Centre, part of the Capuchin Franciscan order, declined to comment on the report “as the matter is with our solicitors”.
Fr Peter McVerry established the charity in 1983. The Jesuit priest had opened his first hostel for homeless boys in 1979, five years after he began working with deprived people in Summerhill in central Dublin. This became a lifetime mission.
The trust provides housing, homeless prevention and drug treatment services for thousands. It owns freehold property that was valued at €162.3 million in 2022 and net assets valued at €49.5 million. Now serious failings have come to light in how the charity managed money and assets.
Fr McVerry, a lifetime member of the board and its secretary, declined to comment on the findings.
Then there is Pat Doyle, the 18-year chief executive who left in May 2023 as cash flow troubles and debt issues spiralled. He had been a director in a third-party company that received €350,000 of the Capuchin funds from the Peter McVerry Trust, authorising the December 2022 transfer “without declaring the conflict of interest to the board”. The money was repaid in 2023.
Doyle, who did not return a phone call from The Irish Times seeking comment, told investigators he acted as finance director for most of his tenure. Extraordinarily, investigators said no figures for cash flows, cash on hand, assets or liabilities were provided to the audit committee or the board until two months after Doyle left.
Did the board ever challenge him about this? If not, why not? The trust did not comment. It has blamed the financial difficulties on “unsustainable” growth and “insufficient investment in head office resources”.
Doyle’s successor, Francis Doherty, left last October after four months, saying “repeated and long-standing governance failings” had taken the charity to the brink of financial collapse. In his resignation letter, Doherty said Barr instructed him “not to issue any communications, correspondence or commentary to any regulator or other stakeholder” without board sign-off or her approval. Doherty saw this as an “unreasonable restriction”.
Barr herself holds a senior regulatory post elsewhere, being a member of the Central Bank regulatory decisions panel that enforces financial services law. She is board chairwoman of the Irish Blood Transfusion Service and a board director of State forestry company Coillte.
She joined the McVerry board in September 2020, becoming chairwoman in May 2022, the year before crisis struck. The questions now facing the board centre on how it failed to ensure effective stewardship of the charity’s affairs.
The investigators found “numerous material transactions relating to property purchases, transfers of funds, loans and takeovers during the review period that were not known to, or approved by, the board”. They also criticised the board for a “lack of financial oversight and consideration of donor intentions” on how restricted funds were used. In addition, there was “no sufficient evidence of adequate and appropriate financial controls” by board trustees.
Such findings suggest the trustees were in the dark about what was really going on, the opposite of what is supposed to happen.
Moreover, the report finds contradictions in board papers: “It is noted in the minutes of the board meeting dated July 11th, 2023 that the ‘board never apprised of the volume of creditors outstanding’ even though they had signed the [full-year 2022] financial statements on May 11th, 2023, which contained current and non-current creditors of approximately €19.5 million.”
Another report, by the Comptroller & Auditor General, suggests the dysfunction continues. As recently as June, the trust was “unable to provide all the information requested” by the Department of Housing when it asked about staff changes and numbers, cost-saving measures, cash flow and budget. Further information came in July but there were still “outstanding items” that the trust committed to work on.
Asked whether the board planned to stay in office and whether it could still command confidence, the trust did not answer. The trust simply said the board had nothing to add to a Monday statement that acknowledged “deficiencies” in financial controls and cited “extensive work” to rebuild the organisation.
Although the inspectors found the trust claimed title over €5 million property assets it did not own, the board declined to say whether it had taken any action to ascertain the ownership.
Barr herself did not reply to a question asking whether the inspectors’ report had implications for her work as chairwoman of the State blood board, itself a registered charity subject to Charities Regulator supervision.
There was no reply from Minister for Health Stephen Donnelly on whether he still had confidence in Barr in that role. Asked whether the Irish Blood Transfusion Service board had confidence in the chair, a spokeswoman said: “In respect of the role of chairperson of the IBTS, the board is fully supportive of Deirdre-Ann Barr as chairperson.”
The inspectors’ findings will soon be followed by the report of a parallel inquiry into the Peter McVerry Trust by the Approved Housing Bodies Regulatory Authority, another State watchdog whose job is to supervise not-for-profit housing providers. Given the Charities Regulator’s findings, more bad news seems inevitable.
The regulator has brought the inspectors’ report “to the attention of other bodies and relevant professional bodies”, so further action might follow.
The Association of Chartered Certified Accountants had no comment on the inspectors’ conclusions about the trust’s former auditor, Donal Ryan & Associates of Manor Street in Dublin 7, a chartered certified accountant. Inspectors said the auditor had “a conflict of interest” when selling nine properties in 2018 to the trust while auditor. Ryan did not return a call seeking comment.
The report is under review in the housing department, the question now being whether the State decides that the charity’s assets and services would be better managed elsewhere.
Minister for Housing Darragh O’Brien wants the Government to continue supporting the trust’s emergency services and frontline staff, it is understood. The housing assets may be carved out into a body with a new name and structure, but that is a question for another day.
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