Bank ‘frustrates’ €4m fraud probe

Bank of Scotland has been frustrating the efforts of a liquidator to uncover a €4m fraud perpetrated against the bank by the Whelan Group, it has been alleged.

Two weeks ago the courts adjourned a hearing in the examiner’s court for a year. In a report issued to the credit committee, the liquidator, Carl Dillon, said that he needs the co-operation of the bank to properly investigate the fraud.

“To date, despite numerous efforts by me to obtain copies of reports or, indeed any relevant information, I have been unsuccessful in my efforts to get co-operation from the bank and their advisers,” he said.

In court documents seen by the Irish Examiner, an independent report into the operations of the Whelan Group by Grant Thornton found that as a result of fraud the group had benef-ited to the tune of €4m.

Despite extensive efforts nobody from the Whelan Group, a supplier of cement products, could be contacted to comment.

The Grant Thornton report states: “As a result of fraud the company benefited from an invoice discounting facility of approximately €4m over a three-year period.”

After Bank of Scotland Ireland had uncovered the fraud it insisted on the removal of the managing director of the Whelan Group on Nov 23, 2010.

The Grant Thornton report notes it is inconceivable that a fraud of this scale could have been carried out and over such a long period of time by a single director.

Yet despite this a mere three days later, on Nov 26, 2010, a letter from the director of the Whelan Group, Enda Whelan, stated that Bank of Scotland Ireland was willing to make the invoice facility at the centre of the fraud available to the company as it applied for court protection under the examinership process.

The Whelan Group had used what is described as “serious accounting fraud and falsification of records” which had allowed it to draw down money through a practice of invoice discounting.

Invoice discounting allows a company to receive payment for up to 80% of an order from the bank before the bill has been paid by the customer.

The group’s application for examinership was rejected by the courts after Nama objected to it.

According to court documents Nama took over loans that Anglo Irish Bank had given to the Whelan Group to the total value of €50m.

Other creditors included Irish Cement Ltd, owed €4m of a total €10m due to unsecured creditors, and Lagan Cement, owed €383,000, while The Revenue Commissioners was owed 641,000.