Application to bar Bovale directors resumes

THE Director of Corporate Enforcement is to resume his application to disqualify Michael and Thomas Bailey from acting as company directors on grounds of alleged misconduct and fraud in the affairs of their company, Bovale Developments.

The Director initiated the disqualification proceedings in 2006 but they were delayed after the Baileys challenged the admissibility of material on which the Director wanted to rely in his proceedings.

The five-judge Supreme Court last July rejected the Baileys’ bid to overturn a 2007 High Court decision permitting a report by accountancy firm PriceWaterhouseCoopers (PWC) to be used in the disqualification proceedings.

The court also dismissed a cross-appeal by the Director against the High Court finding that he could not use reports from the planning tribunal as additional evidence of wrongdoing by the brothers, or evidence of alleged wrongdoing over a 12-year period from 1988 to 2000.

Yesterday, Denis McDonald SC, for the director, sought clarification that the disqualification application, brought under Section 160 of the Companies Act, could resume.

Chief Justice Ms Justice Susan Denham said the matter now goes back to the High Court.

The Supreme Court ruling means the Director can rely on the PWC report, which is confined to the affairs of Bovale for the years to end June 1997 and end June 1998. The Director alleged wrongdoing from 1988 to 2000, basing that claim on material excluded by the court.

The Director has claimed the reports from PWC and the planning tribunal, in addition to a €22 million settlement by Bovale with the Revenue Commissioners, made clear the alleged misconduct was very serious.

The PWC report arose after the Director asked the accountancy firm in 2004 to investigate the books and records of Bovale over a two-year period to end June 1998. Two reports from PWC in 2006 concluded that Bovale’s accounts were prepared in a way that materially mis-stated the transactions of Bovale and grossly understated the remuneration paid to the Bailey brothers, the Supreme Court noted.

The court also noted the Director wanted to put in evidence material from reports of the tribunal, including a statement that Michael Bailey provided a benefit or payment to former minister Ray Burke and made three cash payments to former Dublin assistant city and county manager George Redmond in the 18 months prior to July 1989.

The Supreme Court noted the law clearly provides that decisions of tribunals are “sterile of legal effect” and devoid of legal consequences, meaning extracts from the tribunal report could not be admitted in evidence by the Director.