The business of the barter account: Inside the deals at the centre of the RTÉ crisis

There is an entry for December 2018 in the infamous RTÉ “barter account” for a meal in a Marco Pierre White restaurant in Dublin, where the cost is recorded as €987.15.

The entry does not say whether the restaurant was the outlet in Donnybrook, Dublin 4, adjacent to the RTÉ campus, or the one on Dawson Street in Dublin city centre. The meal was attended by Geraldine O’Leary, group head of commercial at RTÉ, another senior executive from the commercial side of the station, and an unnamed “agency”.

There are two other entries for 2018 where the same restaurant is mentioned; an “agency lunch” in August, where the recorded cost was €865.05, and another “agency lunch” two months later, where the recorded cost was €891.32.

The purpose of the barter account where the expenditure was recorded was to keep a running balance in relation to RTÉ’s dealings with the Astus Group, a global operation headquartered in London that facilitates media and other companies that want to trade their goods and services at discounted rates.

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But Tony Keogh, the chief executive of the Marco Pierre White restaurant business in Dublin, said he has never heard of Astus. When people from RTÉ come to his restaurants, he told The Irish Times, “they make a booking, and pay with a card on the day, or we send them an invoice and they pay that”. A quick search of the invoice recording system at the restaurant shows it has never issued an invoice to Astus, he said. “There is no company like that set up in our system.”

Leaving aside the issue of who sent invoices to whom, the question that arises for some executives with competitor media companies is why RTÉ involved the barter account in such payments in the first place

The Marco Pierre White meals are among hundreds of transactions listed in the barter account statements released this week by RTÉ. However, as with so much to do with RTÉ’s finances, how the payment of the restaurant bills was effected by the national broadcaster is unclear.

“The items listed were items that were purchased directly by RTÉ with the supplier,” a spokesman for the station told The Irish Times, referring to the barter statements. “The supplier then invoiced the barter company directly and were paid directly by them.”

Leaving aside the issue of who sent invoices to whom, the question that arises for some executives with competitor media companies is why RTÉ involved the barter account in such payments in the first place.

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‘Pick and choose’

“I’ve never seen a barter account used in that way, where you can pick and choose which restaurant you are going to, what stuff you are buying,” says an executive in a competitor broadcaster who did not wish to be named.

“The ones I’ve seen are very rigid, because [the bartering companies] have a set of partners and those partners are in certain categories. They have catalogues. I’ve never seen it, as has been outlined by RTÉ, as a kind of slush fund.”

The details released this week by RTÉ show the barter account being used for meals at Dublin restaurants – FX Buckley (€1,054), the Trocadero (€1,087), and the Winding Stair (€479) – tickets to sports events at home and abroad, hotel rooms at home and abroad, flights, concerts, parties, and golfing accessories. There were entries for Apache Pizza (€99) and Kielys, a now closed pub in Donnybrook (€1,181).

The massive controversy now rocking the State broadcaster has its origins in the fact that significant payments to Ryan Tubridy were not disclosed when the Government, the public, and staff at the station were being told cutbacks were being imposed on top earners at the station. But the scandal has now spread to the issue of financial controls in the station’s commercial division, and the operation of what was repeatedly described by politicians this week as “a slush fund”.

Two secret payments of €75,000 each were made to Tubridy during 2022 by way of the barter account. The invoices were raised by Tubridy’s agent, NK Management, sent to RTÉ, and sent by RTÉ to Astus for payment to NK Management. Astus was told the payments had been approved by the then director general of RTÉ, Dee Forbes. The invoices did not mention Tubridy.

According to the Astus website, it delivers “bespoke business solutions for our clients and media partners”. Astus clients come from the automotive, telecom, hotel, events, hospitality, entertainment, charity, and other sectors, according to the website, and it also works with agents and media companies.

Media bartering companies have a business model whereby media companies can sell advertising space through them and get goods and services, as well as cash, in return. Using the same system, non-media client companies can sell goods and services through the bartering company and get advertising space in return. The bartering companies also sell goods and services at discounted rates to third parties.

Trades made through bartering companies don’t have to be direct swaps. A car company can swap cars for advertising space from a media company that gets the use of hotel rooms, with all three trading by way of the bartering company and getting credit for what they sell.

The advantage for the media companies and the other clients is that they get money and credit in return for their advertising space, services, or manufactured products. This has the net effect that they get them at de facto discounted rates.

‘Soft currency’

The latest accounts for Astus Group Ltd in the UK show it had a turnover of £175 million (€204 million) in 2021 and made a profit before tax of £6.2 million. The company has offices around the world.

Among the services the company offers is the payment of invoices sent to it by media owners, the Astus Group CEO, David Jones, told The Irish Times, when asked about the Tubridy invoices.

“One element of our global business is to pay invoices for media owners and allow them to pay us in the soft currency of their own media space.”

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This is because, to get Astus to pay an invoice for €100, RTÉ has to transfer advertising space (soft currency) worth €150 to Astus, which it can then seek to sell to a client

“We are not always provided with the precise detail of the good or services supplied, that is for the media owner to ascertain and approve before instructing us to make payment on their behalf. We cannot therefore comment on the current RTÉ situation.”

Because of the way the business model operates, the settlement of invoices by RTÉ through the barter account involves a significantly higher value being recorded for the transactions than appears on the invoices.

This is because, to get Astus to pay an invoice for €100, RTÉ has to transfer advertising space (soft currency) worth €150 to Astus, which it can then seek to sell to a client. So when the station asked Astus to pay the two €75,000 Tubridy invoices, it was recorded in the barter account as costing the station €115,380 for each invoice.

Nevertheless, the forensic accountant from Grant Thornton, Paul Jacobs, who examined the Tubridy payments for the RTE board, decided the broadcaster did not incur a financial loss by using the barter account to settle the invoices.

He noted that when RTÉ “cashed out” credit accumulated in the barter account, it had to do so at a rate of 65 per cent. (The equivalent of the rate whereby, to get Astus to settle an invoice for €100, RTÉ has to transfer soft currency advertising space worth €150 to Astus.) Paying the Tubridy invoices directly, or though the barter account, would have led to the same eventual cost.

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Applying the same calculation to the entries involving Marco Pierre White, the amounts quoted above would appear to overstate the cost of the meals. The December 2018 invoice was for €641.64, not €987.15. Likewise, all the other transactions on the barter account that have featured so prominently this week.

‘Reduce visibility’

Nevertheless, the question remains as to why the bills were paid through the barter account in the first place. Hundreds of thousands of euro were being paid annually in this way, rather than being paid directly by RTÉ.

“Really it seems it is to hide it off the books or generally reduce visibility within the organisation [about] where cash is going,” said an executive with a rival broadcaster.

The great joy of the barter system is the commercial director can act commercially, as she is mandated to do, and yet very small amounts of cash are transacted

—  Willie O'Reilly, former group commercial director of RTÉ

The chief financial officer at RTÉ, Richard Collins, who took on the role in early 2020, told the Grant Thornton investigation that the barter account had been “off balance sheet” up to then, that he brought the transactions on to the balance sheet two years ago, but that the account still rested “outside the normal internal control system”.

“Swapping advertising space in return for certain types of goods is completely normal in the media sector,” according to Willie O’Reilly, who was group commercial director of RTÉ up to 2017, and has served in a number of roles in private radio.

“It is not the case that the TV licence money paid for 200 flip-flops,” he said, referring to a July 2016 entry on the barter account of €4,956 for 200 pairs of Haviannas flip-flops for a “summer party for agencies and clients”.

“That is the point of the barter system,” said O’Reilly. “The great joy of the barter system is the commercial director can act commercially, as she is mandated to do, and yet very small amounts of cash are transacted.”

Maximising the commercial revenue of RTÉ is something the commercial director is mandated to do by the broadcasting legislation, O’Reilly said. Expenditure on hospitality is about “taking the time to make the emotional connections that ultimately convert into money.”

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“We spend the money to thank them for the money we have received, and hope that they will spend more in the years to come.

“What it comes down to is what the barter account was used for, and governance questions.”

More oversight

The documents released this week showed that total expenditure through the barter system over the past decade was €1.6 million, with most of this going through the Astus account. (RTE also used two other bartering companies.) That expenditure on entertainment and hospitality has to be viewed against commercial income during the period of €1.6 billion.

The documents indicate that from 2020, the year Collins began to assert more oversight on the barter account, expenditure eased off considerably. In 2022, when the secret payments to Tubridy were made through the account, they accounted for 70 per cent of the total expenditure through Astus that year.

How much the reduction in the use of the account since 2020 was due to increased financial oversight, and how much due to the arrival of the Covid pandemic, has yet to be made clear.