Some documents from the Murphy group which Mr James Gogarty gave to a chartered accountant in May 1988 established a case of mismanagement at best and fraud at worst, the tribunal was told.
Mr John Lane, an accountant who later became company secretary of some of the Murphy companies, said the documentary evidence he was given, if correct, suggested that everything was not in order.
Mr Lane said he first met Mr Gogarty in April or May 1988 as a result of a request by some acquaintance or member of his family. Mr Gogarty was a director of JMSE at that time.
Mr Lane said Mr Gogarty came to see him by prior arrangement and asked him if he would examine certain documentary evidence which Mr Gogarty said had suggested that the Murphy group was being incorrectly run and he was very worried about it and also about his pension.
Mr Gogarty had told him that he had known Mr Joseph Murphy snr for many years and he was a loyal employee and they were old colleagues. They trusted each other and had a close personal relationship. Mr Lane said Mr Gogarty also told him that Mr Murphy resided in the Channel Islands for non-residency benefits, he believed, for tax benefits. Mr Gogarty discussed with him several contracts that had taken place.
"He had costing sheets and other documents which led him to believe that, for the want of a better word, the accounts were being incorrectly prepared and that the results showing on those accounts were incorrect," said Mr Lane.
Mr Gogarty asked him to have a look at these documents and to form a view from these various contracts which he did. "Having done that, I told him that I quite agreed with him. The documentary evidence that he provided me with suggested that everything was not in order and on the basis of those documents and only on those documents, I should say, if they represented the truth, there would be a case to answer," Mr Lane said.
He felt that if those documents were correct, and correctly represented what they purported to represent, he certainly would not certify those accounts. Indeed, he would be very worried.
Mr John Gallagher SC, for the tribunal, asked if he formed the view that these documents if correct established a prima-facie case on paper of mismanagement at best and fraud at worst. "Yes, I would agree with that," Mr Lane said.
Asked if it was his view that there should be a detailed audit to establish what really happened, he said it was. Mr Gallagher asked if he drafted a letter of May 10th, 1988, for Mr Gogarty to send to Mr Murphy. Mr Lane said he did. He read the letter: "I am enclosing for your confidential and urgent attention ammunition to assist you in your present difficulties.
"There is a very strong case indicating that your businesses are at best being conducted in such a careless, negligent and reckless manner as to indicate that in a very short time, the entire organisation will come crashing down." The letter continued to say that if the organisation collapsed for any reason, the trust would also collapse.
Mr Gogarty in the letter said he believed that together he and Mr Murphy could rescue the situation but return the organisation to profitability. They would aim to take the organisation on to the stock market and envisaged the overall timing to be two years.
Mr Lane said that he helped him draft the contents which were mainly his, apart from the personal comments. It was his suggestion that the company should be taken to the stock exchange.