A DÁIL committee will decide today whether it has jurisdiction to consider sanctions against Independent TD Mick Wallace for deliberately underdeclaring by €1.4 million the VAT liability of his construction company MJ Wallace.
The Dáil Committee on Members’ Interests, chaired by Donegal independent Thomas Pringle, investigates alleged breaches of the Electoral Acts and failures in maintaining the standards of probity expected of Dáil deputies.
Wallace’s company was on the Revenue Commissioners list of defaulters last month. Its total liability came to €2.1 million, of which €700,000 was comprised of fines and penalties. Wallace was a director of the company but was not personally liable for a loan. He admitted that the money owed to Revenue would probably never be paid back.
In an interview with The Irish Times a few days earlier, Wallace told how he had come to make the false declaration. He said his construction company had run into difficulties in mid-2008 over a €7.5 million bank loan drawn down in April 2008.
As it completed its work on the Behan Square development near Croke Park in 2009, it was using deposit money paid by buyers to fund other work. The bank, he said, was taking the proceeds of the final sales. He said the company was not in a position to pay €1.4 million in VAT so he underdeclared. He said he feared that if he revealed the truth, the Revenue or the banks would move in on him.
The developer said that in late 2010, he approached the Revenue about the VAT underdeclaration that had been made in January 2009, beginning the process that culminated in the company being named on the defaulters’ list.
Since then, a number of questions have arisen around his account of what happened, which he has not yet answered in public.
A number of commentators said that given the Wexford TD’s account that he had gone to the Revenue of his own volition, they were surprised at the stiff €700,000 fine imposed on the company.
They said that such a level of fine seemed to tally more with an audit. Until now, Wallace has not responded publicly to this question as to whether the Revenue audited his firm.
A number of other issues arose in relation to the manner in which he managed his financial affairs, also about the payments made to directors.
The company made profits until 2007 (although they had fallen from almost €25 million in 2007 to about €400,000 two years later). During the same period, bank loans increased from €14.8 million to €34.2 million. In 2008, however, the company recorded a loss of €2.6 million.
Despite that, the salaries of the two listed directors, Wallace and his son Sasha, almost doubled from €148,141 in 2007 to €290,000 in 2008. Wallace later explained that his second son Fionn had also become a director, but his inclusion is not officially recorded until the following year.
The TD said he was relying mainly on his Dáil salary for income (and he volunteered half of it to go towards the Revenue debt when he made a personal statement late last month).
However, it was disclosed that he retained an apartment in the Italian city of Turin, and that ownership of his vineyard in Piedmont had been transferred to his brother Joseph in 2009, in lieu of money owed to his brother’s building supplies firm.
In essence, however, there was only one crucial question for Pringle’s committee to consider: did Wallace’s contact with Revenue occur in late 2010 as he stated or at a later date?
If that contact preceded his election as a TD in February 2011, the committee would have little choice but to conclude that it had no jurisdiction to inquire into the matter. However, if it occurred after that date, the committee could inquire into whether a breach had occurred and, if one had, recommend a motion of censure to the Dáil. In the event of that motion being passed, he could be suspended from the Dáil for up to 30 days.
In June, the committee put questions to Wallace about the dates of various actions and also asked him to authorise the Revenue Commissioners to correspond with the committee.
Over the course of a number of meetings, the committee stated it had not received adequate written material from Wallace. For his part, he maintained that he had supplied what was required.
Last night, Pringle said correspondence had been received that would allow the committee to make a final decision.
