Friday, September 23, 2011

Irish Government's financial watchdog confirms Irish Red Cross had 49 undisclosed bank accounts

Note: On 25th September 2011 the Sunday Independent, Ireland's largest selling newspaper, wrote an article on the Irish Red Cross and the Comptroller and Auditor General's report into malpractice and maladministration at the Society. The newspaper article can be found on the following link:

On 19th September 2011 the Irish Government’s financial watchdog, the Office of the Comptroller and Auditor General (C&AG) issued its 2010 annual report. The Report examines government waste, misuse of resources, tax evasion and social welfare fraud. The Report was covered extensively by the national media, TV and print, on the day of its publication.

In what must be regarded as one of the lowest points in the 72 year history of the Irish Red Cross, the C&AG’s Report designates a full chapter to the malpractice, maladministration and misgovernance within the Society.

Inclusion as chapter 32 of the C&AG report will be forever remembered as another very dark and sad episode in the lifetime of the Irish Red Cross. The fact that those responsible for the malpractice and maladministration have not yet been held to account and continue to serve on the board of the Society only worsens an already disgraceful situation. The Irish Red Cross has now found itself in a national document that reports on waste, abuse of funds, misuse of resources, evasion and fraud.

In recent years Ireland has been brought to its knees by cronyism, abuse of power, incompetence and corruption to the tune of millions and billions of Euros. The Comptroller and Auditor General reports comprehensively on these matters in his annual publication. In his latest report he felt it prudent and appropriate to designate a full chapter to the Irish Red Cross. Surely this must speak volumes about the rot at the heart of the Society and the failed leadership that has brought us to this dark and shameful place.

For those readers not familiar with the C&AG Office the Comptroller and Auditor General is an independent Constitutional Officer, appointed by the President of Ireland on the nomination of the Dáil, Ireland’s national parliament.

The C&AG's relationship with the Dáil is essentially a reporting one. All reports of the Comptroller and Auditor General are presented to Dáil Éireann and are examined on behalf of the Dáil by a committee known as the Committee of Public Accounts (PAC).

While there are close working relations between the PAC and the C&AG, the two are quite independent both in law and in practice. The C&AG or in his absence, a senior member of staff, attends the meetings of the PAC as a permanent witness.

The C&AG will consider all circumstances involving an abuse of public funds, brought to his attention. Whether a particular matter warrants investigation or examination as part of the normal financial audit will depend on the particular circumstances of the case, its materiality and the evidence available to substantiate the circumstances surrounding the alleged abuse of public funds.

Some interesting points from the C&AG Report:

Section 32.2 states “Under the Act, the Government has the power to make provisions for a range of matters relating to the organisation, operation and governance of the Society, including its finances and accounts”.

This confirms what the Blog has said on many occasions, that the Government has the right under law to intervene directly in the Irish Red Cross. Given the extent of the crisis it should do so immediately. Successive Ministers for Defence have incorrectly stated on public record that they cannot interfere in the Society’s affairs. The C&AG has now publicly confirmed that it can.

Section 32.7 states “Concerns regarding the capacity of the Society to manage its administration and finance were raised in letters from the Society’s external auditors in respect of the 2005 and 2006 audits. The auditors questioned the Society’s ability to prepare accounts for the organisation as a whole, due to the unreliability of its systems and the lack of financial information in respect of some of its branches. On foot of the 2005 and 2006 audits, the Society appointed two separate financial consultants to review the issues raised. They recommended changes be made to the Finance Department at its headquarters. The external auditors management letter of 2008 noted significant improvements in the finance and administration of the Finance Department but again commented negatively on the Society’s ability to prepare comprehensive financial statements”

Given such weaknesses it is not surprising that individuals including at least one senior board member felt confident in not reporting the existence of certain bank accounts or not submitting branch returns to head office. The weaker head office finance remained the easier for certain branches and their officers to act unilaterally and with impunity. A weak head office finance department was no accident.

Section 32.8 in quoting from the internal investigation into the undeclared Tipperary tsunami bank account states “The headquarters was not aware of the existence of the bank account until a trawl of all Bank of Ireland accounts in the name of the Society was undertaken in April 2008, at its request. This trawl led to the uncovering of 49 undisclosed accounts holding amounts that totaled €214,000, of which the Tipperary account (then standing at €162,960, including bank interest) was the most significant”.

As is public knowledge following extensive media coverage at the time the current national Vice Chairman was a signatory on the Tipperary account above.

What is most striking from the report is that the trawl of bank accounts was restricted to only those held by Bank of Ireland. Despite this limitation 49 undisclosed bank accounts were discovered with nearly a quarter of a million Euro sitting in them. The question remains how many undisclosed bank accounts would have been discovered had all banks been included, AIB, National Irish Bank, Ulster Bank etc?

If this trawl has not been extended to all other banks in the meantime then the question must be asked why not? If the trawl of one banking institution reveals €214,000 of undisclosed funds then there is no reason to believe a trawl of the other major banks would not reveal a similar amount of money hidden, undeclared and undisclosed. How many hundreds of thousands of Euros belonging to the Irish Red Cross and donated for humanitarian purposes is lying hidden in undisclosed bank accounts around Ireland? How many people are involved in concealing these bank accounts?

Another question that must be asked is have those individuals involved in keeping undisclosed and undeclared bank accounts been asked to sign statements that there is no additional hidden bank accounts in other banking institutions that they are aware of under their/Irish Red Cross name?

In light of the fact that 49 undisclosed bank accounts were discovered in one banking institution alone has the Irish Red Cross ever genuinely or seriously considered asking the Garda Bureau of Fraud Investigation to assist them in trawling all banking institutions in the country and to advise if any criminal activity has taken place?

The inclusion of the Irish Red Cross in the Comptroller and Auditor General’s annual report would in any normal well functioning and properly governed organisation result in the immediate removal of those individuals responsible for the malpractice and maladministration. This will unlikely happen in the Irish Red Cross. Enough said.

To know what is right and not to do it is the worst cowardice-Confucius

Tuesday, September 13, 2011

Irish Red Cross spends €140,000 on legal fees in 12 months

The Irish Red Cross 2010 audited accounts make for some interesting reading. The Blog has already covered the undeclared multi-million Euro Irish Red Cross property portfolio, which according to the external auditors, BDO, the Irish Red Cross is in breach of ‘Standard Accounting Practice for Charities’. BDO has explicitly stated this in the annual accounts every year for at least the last three years. The Irish Red Cross has, to date, failed to address the matter. It remains an ongoing scandal that properties donated to the Irish Red Cross by members of the public not only remain unaccounted for in its books but no-one appears to know what the properties are being used for and if they are generating income where the income is going and who is benefiting from it. Given the recent history of the Irish Red Cross and its undeclared bank account in Tipperary with tens of thousands of Euros discovered in it the property situation must be seen as hugely suspicious and deserving of an immediate independent investigation. Depending on the findings and recommendations of such an independent investigation a decision on whether or not to involve the Garda Fraud Investigation Bureau can be made.

But the Blog digresses! The purpose of today’s article is to report on the enormous waste of Irish Red Cross resources in 2010 on paying exorbitant legal fees. €140,000 to be precise! This is an extraordinary amount of money for a small charitable organisation to waste on legal bills. It is even more scandalous when one considers the reason for the expenditure, namely to silence the truth and protect a ruling cabal of leaders who have dominated the Irish Red Cross for years.

While the leaders remain in place the truth has been revealed and all attempts by the Irish Red Cross to silence dissent, conceal the facts and intimidate reformists have failed spectacularly. This failure cost the Society €140,000 in a 12 month period. Central to this cost was Irish Red Cross’s calamitous decision to sue Google International. The arrogance and folly of Irish Red Cross leaders is hard to fathom but it was nevertheless exposed for the world to see and gasp at. In taking on Google they learned a painful and costly lesson. Having failed in their endeavours Irish Red Cross leaders walked away with their tails between their legs while their solicitors smiled from ear to ear as they handed over their invoices.

The Irish Red Cross continues to incur legal costs in 2011. Unfortunately details on this will only be revealed in mid 2012 when the 2011 audited accounts will be published. As with the 2010 legal bills it will be too late by then to do anything about this waste. Even more disconcerting will be the legal bill the Irish Red Cross incurs in 2012 as case/s related to incidents that took place in 2010 finally come before the courts.

Sadly it will be 2013 before we know the true cost of all these legal battles. What we do know, however, is that the Irish Red Cross has a very long history of incurring enormous legal bills and 2010, 2011, 2012 will follow a long pattern of unacceptably high expenditure on the services of solicitors and barristers. This is, of course, entirely symptomatic of a dysfunctional and a woefully governed organisation. Scratch the surface and the common denominator behind these continuous legal battles over a twenty year period is a limitless obsession with power and an endless desire to remain king of the castle. In the meantime hundreds and hundreds of thousands of Euros of Irish Red Cross money has been squandered. For any solicitor firm the Irish Red Cross is a very lucrative and valued client.

What remains remarkable regarding the scandalous waste of donor money on legal fees in 2010 (€140,000) is that no-one has been held accountable. The Irish Red Cross Treasurer in 2010 was re-appointed in 2011 despite overseeing and presumably authorising this outrageous waste of money. If he didn’t authorise it specifically, through his silence and inaction he certainly permitted it to continue. His failure to prevent it is inexcusable. The Acting Chairman at the time is also complicit in this waste. He too did nothing to stop it and as head of the organisation at the time it must be assumed he sanctioned it. Combined with his central role in the Tipperary tsunami bank scandal surely his position is completely untenable.

Ultimately, however, the Executive Committee of the Irish Red Cross must take collective responsibility. Given the financial and governance scandals that have brought the Irish Red Cross to its knees in recent years the legal bill scandal is only one of a number that would justify the collective resignation of the entire Executive Committee.

In addition to an independent investigation into the hidden Tipperary tsunami bank account, the undeclared property portfolio, the Pakistan blankets, the beef consignment issue etc etc an independent examination of Irish Red Cross’s legal cases and expenses over the last 20 years would serve to expose the rot at the top of the organisation.

What must never be forgotten in all of this is that for every Euro spent on legal fees pursuing the personal agendas of board members there is one less Euro to spend on community services, first aid training, defibrillators, mountain and lake rescue, youth activities and overseas aid.

From which budget does Irish Red Cross take money to pay for its never ending legal costs? Does it come from general funds donated by the Irish public? Does it come from the Government’s grant in aid (tax payer money)? Does it come from Overseas Appeals such as Haiti, Pakistan? Does it come from its Reserves? Does it come from its Commercial activities such as the Shell Corrib account? The Audited accounts do not answer any of these critical questions as they only show the total legal expense incurred but not from which income source the money is taken from. The audited accounts are seriously flawed in this regard. Members of the public, corporate donors and the Government, who so generously donate their money to the Irish Red Cross for humanitarian activities, need to know if their donations are being misused on legal fees.

What can be determined with certainty is that €140,000 spent on humanitarian activity in say Somalia, instead of on legal bills, would save the lives of hundreds if not thousands of men, women and children. Instead the Irish Red Cross is content to line the pockets of Ireland’s legal profession.

The waste of money cures itself, for soon there is no more to waste-M.W Harrison