Defrauding investors was the purpose of WFS Forestry Ireland Limited, which has received at least €7.1 million from investors that it is unable to repay, a court-appointed inspector has said.
WFS Forestry promoted itself as being involved in growing and supplying Christmas trees, but crops referred to by the firm in communications with investors either did not exist or were on lands in which WFS Forestry had no interest, inspector Declan de Lacy reported to the High Court.
Mr Justice Michael Quinn referenced the findings in a judgment on Thursday in which he held that it was not appropriate, at this time, to make an order for the firm’s winding up.
He noted the inspector’s appointment has thus far cost the taxpayer €504,000, as the cost of the inspection is borne by the Minister for Justice.
Last July, he appointed Mr de Lacy, of PKF O’Connor, Leddy & Holmes, to investigate the company’s affairs on the basis of “prima facie evidence of wrongdoing, unlawfulness or other irregularity”.
The inspector’s appointment came following the first recorded application from a creditor, rather than the Corporate Enforcement Authority or the Minister for Justice, under section 747 of the Companies Act of 2014.
Investor John Kearney, of Ballyroe, Tralee, Co Kerry, and 17 other alleged investors supporting his application, claimed investments they made in WFS Forestry, structured variously as loans and other advances, were not repaid when due.
The Minister and the authority had submitted at that point that a liquidation, the costs of which are borne by creditors, would be more appropriate than appointing an inspector, where taxpayers foot the bill, unless there is potential to recoup costs.
Mr Justice Quinn said in his judgment on Thursday that, although no winding-up petition was presented, the court has jurisdiction to make one of its own.
The company and its director, Craig Hands, did not participate in the hearing but previously denied the claims against them.
Mr de Lacy, represented by barrister Brian Conroy, told the court WFS Forestry, with registered offices at Fitzwilliam Business Centre, 26/27 Pembroke Street, Dublin, and its sole director and shareholder, Mr Hands, have not co-operated with him and have not provided access to company records.
Mr Hands belatedly attended for a court-ordered formal examination with Mr de Lacy on February 16th, but he has otherwise defied the court’s order to provide access to records, the court was told.
The inspector said he has also encountered obstacles in trying to obtain information from Google related to the company.
Notwithstanding this, he has ascertained that substantially all of the investments received by WFS Forestry were used for purposes other than intended.
Of the €7.1 million invested, €1.2 million was transferred to Mr Hands and his wife, €1.5 million went to companies associated with Mr Hands, and €2.3 million was transferred to people Mr Hands said were salespeople, the inspector reported, adding that he has yet to learn what happened to the funds after these transfers.
There were further steps to be taken in the investigation before a final report can be provided, including obtaining the company’s email correspondence and other records, he submitted.
Mr de Lacy was in favour of a winding-up order, in principle, but further litigious steps are needed before a liquidator could seek to recover assets, said the judge.
The Minister did not advocate for or against a winding up. He said he has little or no prospect of recovering the €504,000 paid for the investigation and he has grave concerns about further costs.
There is sufficient evidence, the Minister submitted, for the matter to be referred to An Garda Síochána.
The authority confirmed it did not intend to exercise its power to present a winding-up petition on “public interest” grounds.
Mr Justice Quinn accepted the inspector’s submission that a winding up would be appropriate if a person was willing to act as liquidator. However, no interested parties have nominated a liquidator, so he concluded no winding-up order should be made at this time.
He sought a second interim inspection regarding future progress and likely costs of the investigation before deciding whether to make directions that would limit the actions to be pursued by the inspector.