A Former chief executive of Aer Lingus told a fraud jury trial he dropped a libel action against murdered journalist Veronica Guerin after he left the company in 1993.
Mr Cathal Mullan said he and Aer Lingus jointly and independently had initiated libel proceedings against the late Ms Guerin and the Sunday Business Post over an article published in November, 1991.
He said he took most offence to the trend of the article which suggested he knew about alleged financial irregularities in Aer Lingus Holidays and that he had abused his position. ALH was an Aer Lingus subsidiary of which he was chairman from 1983 to 1988. It crashed in 1990 with a £6 million deficit.
The jury at Dublin Circuit Criminal Court also heard Aer Lingus Holidays (ALH) used £2.2 million of £5.3 million borrowed in 1988 for property purchases to help fund the company.
Mr Mullan told defence counsel Mr Adrian Hardiman SC he didn't know about this until he read it in a 1990 report prepared by Craig Gardner for Aer Lingus. He was unaware until then the money wasn't used as intended. Judge Kieran O'Connor and the jury also heard that a company called Abbey Sun, which ALH acquired in 1989, was given back to its previous owner, Travel Plan Tour Operators Ltd, when its business was dispersed after the crash. The jury has heard the government ordered Aer Lingus to get out of the holiday business in 1990.
Mr Mullan agreed he became a director of Travel Plan Tour Operators Ltd, which traded as Abbey Travel and Tower Hotel Group, in 1993, six months after leaving Aer Lingus. This company's chairman was a former Aer Lingus colleague he knew for over 30 years. He held no shares in the company.
Earlier in his evidence, he said he only had "a vague recollection" of Abbey Sun and he couldn't recall ALH acquiring the business from Abbey Travel in late 1989 when he was chief executive of Aer Lingus. "I am certain Abbey Sun was not owned by ALH," he replied to Mr Hardiman, and added he didn't recollect what happened it after the ALH collapse.
Mr Mullan vehemently denied counsel's suggestion had had "lied to try to conceal" his present connection with Abbey Travel. He said he had made no such attempt as it was a matter of public record and it would be ludicrous to try to conceal it.
Mr Hardiman later quoted from the minutes of a meeting of the ALH board held on September 20, 1989, where the directors adopted a resolution to buy the Abbey Sun business and name from Abbey Travel. Another document showed Abbey Sun was returned to Abbey Travel after the fall of ALH. Witness said his earlier claim that there was no connection between ALH and Abbey Travel and Abbey Sun was due to a failure of recollection. He had no recollection of this ALH board resolution.
Mr Mullan was under continued cross-examination on the 11th day of the trial of Mr Peter Keely, of Carrig Avenue, Dun Laoghaire, and Mr Desmond P Flynn of Tritonville Avenue, Sandymount, who have pleaded not guilty to conspiracy to defraud.
Mr Keely and Mr Flynn deny they conspired together and with Mr Peter Noone, former financial controller of the company, on dates from March 1987 to November 1988 to defraud Aer Lingus Holidays by misappropriating funds to purchase part of the Los Hibiscos apartment complex in Lanzarote for their own use and benefit.
Witness rejected Mr Hardiman's repeated suggestion that ALH had "borrowed" £5.3 million to buy property. He said he signed papers as chairman of ALH on October 5th, 1988, for rentals and leasings through a finance company. He couldn't accept the suggestion made by Mr Hardiman that the board of Aer Lingus Holidays was unable to make major commercial decisions without the approval of the main Aer Lingus board. Only property decisions above a certain level had to be approved by the main board.
Mr Mullan agreed with Mr Hardiman (with Mr Michael Cush SC and Mr Gerard O'Brien BL), for Mr Keely, that ALH had not sought a valuation of the Spanish properties in question. He accepted it transpired in the Craig Gardner report that the actual purchase price in the Spanish legal document was £1.036 million and that £2.2 million of the £5.3 million was devoted to the funding of ALH. The report showed £912,000 of the £2.2 million was paid directly into ALH and the Northern Ireland Holidays company in three Midland Bank cheques. He had left ALH by then on becoming Aer Lingus chief executive but Mr Mullan rejected counsel's suggestion that he left because "the balloon was going up".
The first signs of false accounting in ALH came about in a report from accountants in mid 1989. He was unaware then that £2.2 million had been filtered into ALH which had been reporting it was trading profitably at the time.
Mr Mullan said former ALH chief executive Mr Malachi Faughnan had lied to him by not revealing the use of some of the property money to fund the company. Had he been told, he would have ordered such "a major transgression of financial trust" to be stopped. "I couldn't have concealed that from the main Aer Lingus board. Such a distortion of money is something that is completely contrary to my training," he said.
He agreed with Mr Hardiman's contention that the jury would have to accept either he or Mr Faughnan was guilty of perjury. Mr Mullan said he was unaware until revealed in the Craig Gardner report that an Aer Lingus non-trading company, Cara Marketing, had been used to take a lease of the San Francisco Park apartment block, the first one taken over by ALH in 1987. He didn't think Aer Lingus knew that was done.
"This was done without permission from the ALH board and it was part of the deception practised by some people," he said. He agreed he had later tried to sell Cara Marketing and had held long discussions with the late Mr Joe Walsh and with Ms Gillian Bowler of Budget Travel and believed figures produced were accurate. This turned out not to be so.
Mr Mullan said he didn't recall seeing a letter signed by Mr Louis Sleator, then chief financial officer of Aer Lingus, in which it was stated Cara Marketing had been given a leasehold interest in the San Francisco property.
Mr Mullan said both Aer Lingus itself and ALH wanted properties kept off-balance sheet and deals involving the La Penita, Los Vegas and Ecudor properties were structured so that could be done legally. They were advised by the Aer Lingus financial group and by Mr Laurence Crowley of Stokes Kennedy Crowley it was lawful through finance leasing.
"These people should be able to identify any problem with that idea and I was left in no doubt in my mind the idea was entirely proper," he said. Aer Lingus had aircraft both on- and off-balance sheet and many other large companies owning hotels often did it. Mr Mullan told Mr Hardiman he didn't recall SKC advising it in 1989 that the San Francisco Park block should be included in the Aer Lingus accounts and the other properties in the ALH balance-sheet but agreed there had been a legal tightening-up of these matters after the earlier deals.
Mr Hardiman read a hand-written memo from Mr Faughnan to Mr Mullan after witness said he was unaware of a scheme whereby a number of ALH executives were given loans of £10,000 and £12,000 and allowed claim fictional motor expenses to write off and cover their repayments. The memo noted the matter had to be handled with "secrecy" with "few people involved". It also noted that the bogus expenses claims should not be for the exact amounts of the purported repayments "in case of investigation".
Witness replied he didn't recognise the document which counsel said the defence had received from Aer Lingus only on Tuesday. The trial continues.
