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:

http://www.independent.ie/national-news/campag-report-into-affairs-at-red-cross-inaccurate-2886889.html


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