Inquiry finds prima facie cases against ICAI parties

Prima facie cases against a number of parties have been identified by the Blayney inquiry into professional misconduct by members of the Institute of Chartered Accountants in Ireland (ICAI).

The committee, which was set up by the ICAI and sits in private, has sat for 50 days and has had 13 days of oral hearings. It is being funded by the institute and has cost £400,000 to date. Its findings will be published.

The ICAI chief executive, Mr Brian Walsh, yesterday welcomed the issuing of an interim statement by the committee where it outlined the work already completed and announced it would not be completing its report pending the hearing of all relevant evidence by the Moriarty tribunal.

"The statement indicates the extensive amount of work which has been carried out and that prima facie cases have been established," Mr Walsh said. The decision to await the hearing of all relevant evidence from the Moriarty tribunal was welcome as "the institute does not want an incomplete report", he said. The inquiry "must be a thorough inquiry in view of the serious reputations and businesses which are at stake".

Parties found to have breached the institute's rules could face sanctions up to and including exclusion from membership and withdrawal of practising rights.

An observer from the Department of enterprise, Trade and employment is present at the inquiry. The Tanaiste and Minister for Enterprise Trade and Employment, Ms Harney, has said she will introduce statutory regulation of the institute's members if she believes self-regulation is not working.

Mr Walsh said yesterday's statement "indicates that self-regulation does work and I think the final report will show that".

The inquiry was established in September 1997 to examine the professional conduct of ICAI members mentioned in the McCracken report into payments from Dunnes Stores. However, new evidence relevant to its inquiries has been heard by the Moriarty tribunal, which began its hearings in January of this year.

That tribunal is inquiring into the finances of the former Taoiseach, Mr Charles Haughey, and the former Fine Gael minister, Mr Michael Lowry. It is not expected to conclude its hearings until early next year.

Oliver Freaney and Co and Deloitte & Touche were joint auditors to Dunnes Stores and were represented before the McCracken tribunal. So too was Mr Noel Fox, a partner with Oliver Freaney & Co, who is also a Dunnes trustee and was an adviser to Mr Ben Dunne. Oliver Freaney & Co were also auditors to Garuda Ltd, the company owned by Mr Lowry.

Deloitte & Touche looked after Mr Haughey's financial affairs. Mr Haughey himself is an honorary member of the ICAI. The ICAI committee is chaired by the retired Supreme Court judge, Mr Justice John Blayney, and its other members are Mr Brian Duncan and Mr Paddy Shortall. In its statement, which was issued to explain why it had not yet completed its work, the committee said its first task had been to identify matters in the McCracken report "relating to possible breaches of the institute's ethical guidelines, auditing standards, and professional independence". Parties were then contacted and asked a series of questions.

In December 1997, the committee rejected a challenge to its procedures brought by Oliver Freaney & Co. The company is one of the parties whose actions are being examined. In March 1998, the committee instigated oral hearings. However, in May 1998 Oliver Freaney and Co and Mr Fox applied to the High Court for an order quashing the prima facie findings of the committee and prohibiting the committee from "taking any further steps to consider or determine the charges or complaints laid against the applicants". The case was struck out before it came to court, but delayed the inquiry for eight months.

When the Moriarty tribunal began its public hearings in January, Mr Fox and Oliver Freaney were mentioned in relation to two cheques from the Dunnes Stores group, for over £500,000, which were for the benefit of Mr Haughey. The Dunnes auditors, Oliver Freaney, were for years unable to identify where the funds had gone.

Mr Fox, who knew why the cheques were issued, did not tell his colleagues in Oliver Freaney when asked. Mr Fox is not an audit partner with the firm. Mr Fox and Mr Frank Bowen, of Deloitte & Touche and a Dunnes trustee, were also mentioned in relation to a practice whereby Mr Dunne made out cheques to "bearer" and distributed them among senior executives by way of bonuses.

Deliotte & Touche also gave evidence in relation to shareholdings held by a number of individuals in Celtic Helicopters, for which it would seem share certificates were never issued by the helicopter company.