A High Court judge has disqualified Independent TD Mick Wallace from involvement in companies for six years arising from his stewardship of the affairs of his construction company, M.J. Wallace.
Mr Justice Robert Haughton said Mr Wallace should be disqualified on grounds of unfitness but should also be given due credit for how he had addressed the primary matter leading to his disqualification, a €1.4m under-declaration of VAT over a two-year period between 2008-2010.
Taking all matters into account, the appropriate period of disqualification was six years and Mr Wallace should also pay €5,000 costs, plus VAT, of the application, he said.
The judge said the primary reason for disqualification was the underdeclaration of some €1.4m VAT by the company to the Revenue between 2008 and 2010 which was “deliberate and systemic” and amounted to a “fraud on the Revenue”.
He accepted the underdeclaration was for a limited period, was around the time of the worst recession during the history of the State and when some other companies experiencing similar difficulties also deferred tax payments in efforts to continue to trade.
He accepted an effort to remain in business was the motivation for the underdeclaration and, when the company later met with Revenue, full disclosure of underpayment was made, the matter was dealt with promptly and an agreement was reached.
The agreement with Revenue was the reason Mr Wallace got a tax clearance certificate in 2011 and 2012, he said. It was also to its credit the company repaid Revenue €10,000 monthly until it ceased to trade after being placed in receivership by ACC Bank in 2011.
Eariler, the judge said Mr Wallace had accepted the underdeclaration was an error of judgment and a mistake and had made a Dáil statement in 2012 to that effect, but had urged the court to see the underdeclaration in a context where his company was trying to survive through a crisis.
This was more than a misjudgment, it was “entirely lacking in commercial probity”, he said.
Commercial probity is about “doing the right thing legally and morally” and the underpayment breached that line, he said.
On the basis of the VAT issue alone, he was satisfied the jurisdiction to disqualify was triggered and was also satisfied the court should not exercise its discretion in favour of Mr Wallace. The loss to the Revenue and therefore the exchequer was “simply too great” in this case.
The judge said he was also concerned about the failure to produce to Michael Leydon, a liquidator appointed to the company in early 2016, all the books and records of the company. The liquidator had said he only got two lever arch files but Mr Wallace maintained he had provided all records within his possession or power of procurement.
The judge accepted the company’s trading was significantly diminished but said he did not consider two lever arch files were the extent of the records.
He dismissed arguments the failure to collect a €206,000 sum effectively gifted by the company to Wexford Youths Football Club justified a disqualification order.
The order, under Section 842.d of the Companies Act 2014, prevents Mr Wallace being involved in the running of any company on grounds of unfitness.
Mr Wallace had offered to consent to the lesser sanction of a restriction order under the Companies Act, which would prevent his involvement in a company for five years unless it met specified capital requirements.
That offer was not accepted by Mr Leydon, appointed liquidator over M.J. Wallace by Promontoria Aran, a subsidiary of US fund Cerberus, arising from a €2m judgment obtained by the fund against the company in relation to the Italian Quarter development in Dublin.
Arising from their stewardship as directors of the company prior to the liquidator’s appointment, Mr Leydon brought proceedings under the Companies Act against the TD and his son Sasha.
Mr Wallace, who previously raised questions over the Cerberus €1.6 billion purchase from NAMA of a group of Northern Ireland-linked loans, called Project Eagle, was earlier this month refused orders requiring the liquidator to discover documents concerning the motivation for the proceedings.
On Monday, Mr Leydon accepted an offer of a restriction order from Sasha Wallace, described as a “passive” non-executive director of the company, and the court made that order but pursued the disqualification order application against Mick Wallace.