The INS suffered a hit of €1.1 million in 2010, after devaluing its investments. This followed combined losses of €7m since the bloodstock business collapsed in 2008.
Simultaneously the money made by what the INS has described as “certain directors” — by way of joint ventures and through selling services to the company they run — increased.
According to its annual accounts for 2010, the stud reported how “certain directors and the secretary” (John McStay) earned a total of €3.3m for their part in investor syndicates built around the breeding business of the stallions based at the Kildare farm. This rose from €2.06m in 2009.
The bulk of the pot would have been made by the INS itself with some directors and chairman Chryss O’Reilly, known to hold minority stakes in a number of horses.
According to the report of Lady O’Reilly, the stake held by at least one director and/or Mr McStay in one of the syndicates almost doubled from 2009.
Her report revealed that in 2010 the largest portion of a sire owned by either a director or the company secretary was 26%.
In 2009 the strongest stake held by one of these connected parties in the INS’s most valuable horses was 15%. Shares in these stallions entitled stakeholders to profits and breeding rights.
Last year it shipped criticism at an Oireachtas Committee meeting for the level of services it traditionally bought from members of its own boardroom without going to tender.
Despite this the INS did a record amount of business with its company secretary, Mr McStay, in 2010. During the year it paid Mr McStay’s accountancy company €155,485 for professional services. This was an increase from €24,300 in 2009 and brought to €667,925 the value of financial and professional advice the INS has bought off Mr McStay since 2000.
For a number of years the INS had used Mr McStay’s firm, McStay Luby, as its accountant at a cost of €12,100 per quarter but this ceased in 2009 when the INS hired a full time financial controller.
In a statement last night the INS said that around the same time it decided to beef up Mr McStay’s position as company secretary.
“The role of the company secretary was expanded in 2009 to encompass exceptional duties at short notice,” it said.
The INS’s accounts did not include any contingency for the high-profile legal actions its was involved in with former members of its management team — retired chief executive John Clarke and its former stallions nominations manager Julie Lynch.
Earlier this year it reached an out of court settlement with Ms Lynch after she took a case claiming she had been bullied after an affair with Mr Clarke ended.
Overall the INS made an operating profit of €309,000 in 2010 but it was forced to further write down the investments made during the boom.
The company also required a fresh loan to fund its day-to-day business plans during the year.