The former chief executive and management of Aer Lingus Holidays may have "misused" funds intended for property acquisition to hide the company's true financial position from the board and auditors, a jury has been told.

Mr Richard Creagh, formerly Aer Lingus Strategic Development Manager, said it looked like there was "a massive breach of trust" by the Aer Lingus Holidays financial controller, Mr Peter Noone, who had been given authority by the ALH board relating to the acquisition of specific property.

Mr Creagh, a former member of the ALH board who left Aer Lingus in 1993 and is now vice-president of Ukranian International Airlines, said he knew nothing of the deceit about the company's financial position and the misuse of monies to conceal it. He said the board "did not approve and would not have approved" of some £2.2 million being filtered into the accounts of Aer Lingus Holidays Northern Ireland as revealed by the Craig Gardner report in 1990. The report showed that monies were used for purposes not authorised by the board.

Mr Creagh said the board would not authorise or permit the "fiddling" of ALH Northern Ireland accounts under any circumstances. Aer Lingus had a strong set of values and ethics running through it.

He said he would regard the former Aer Lingus chief executive, Mr Cathal Mullan, as "trustworthy" and would be surprised if he had been involved in concealing the truth from the board or being a party in the deceit practised. Mr Creagh described the former chief executive of Aer Lingus Holidays, Mr Malachi Faughnan, as "inconsistent in his behaviour". He did not tell the ALH board the company was "in a desperate financial state" as he claimed in evidence. Mr Faughnan "showed many inconsistencies", in his opinion.

Mr Mullan, who was chairman of ALH from its formation in 1983 to 1988 when he was appointed Aer Lingus chief executive, and Mr Faughnan have already given evidence at the trial which is expected to run for many more weeks. Mr Creagh agreed with defence counsel Mr Adrian Hardiman SC that what happened to Aer Lingus Holidays was the "most dramatic event" in his business life. The case was unique for Aer Lingus and "damaged" the airline and everyone in it.

Witness told Mr Hardiman he did not know what effect it might have had on Mr Mullan's chances of becoming Aer Lingus chief executive in 1998 if the truth about the massive losses in the Holidays company had become known then but he suggested it "would not have had a positive effect". Mr Mullan had "a superb track record" in Aer Lingus.

Mr Creagh earlier told prosecuting counsel Mr Erwan Mill Arden SC that, while he was a member of the Aer Lingus Holidays board, no authority was given to acquire an apartment property in Lanzarotte known as Las Hibiscos and only heard about this property when asked to make a statement to gardai.

He also told Mr Mill Arden he knew "absolutely nothing" about a company called Delmont Investments when he was a member of the ALH board.

Mr Creagh was giving evidence on the 17th day of the trial at Dublin Circuit Criminal Court, of former ALH executive Mr Peter Keely, of Carrig Avenue, Dun Laoghaire and solicitor Mr Desmond P. Flynn, of Tritonville Avenue, Sandymount, who have pleaded not guilty to conspiracy to defraud.

Both men deny they conspired together and with Mr Peter Noone, 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 for their own use and benefit.

The trial continues before Judge Kieran O'Connor.