A conflict of evidence between two key accountancy witnesses emerged at the Flood inquiry yesterday when the financial controller of JMSE, Mr John Maher, flatly contradicted the recollections of auditor Mr John Bates in relation to the treatment in the company's books of the £30,000 paid to Mr Ray Burke.
Mr Bates had told the tribunal before the Christmas break that he had met Mr Maher on "numerous occasions" in relation to an "unvouched" expense for £30,000 when he was preparing the Grafton Construction [a Murphy landowning company] accounts for the year ending 1989. He had also spoken to two JMSE directors, Mr Frank Reynolds and Mr Joseph Murphy jnr.
"When the accounts were being audited and prepared by Mr Bates, did he ask you about items relating to expenditure that could not be backed up by documentation?" asked Mr Des O'Neill SC, for the tribunal.
Mr Maher said that he had not. Mr Bates had confided to him, after giving evidence, that he had felt "under pressure" while in the witness-box. Mr Maher rejected any suggestion that he discussed with Mr Bates the evidence he was going to give to the tribunal.
"Without you bringing up your evidence, he indicated to you during the course of an audit that he was under pressure while giving evidence?" asked Mr O'Neill.
"He was just nervous, that's all. He just said it."
Mr Bates had seemed somewhat vague in his answers, particularly when he came under pressure, Mr Maher said. He had disagreed with the auditor's evidence when he read the transcripts two or three days after he had appeared as a witness.
Mr O'Neill persisted: Mr Bates had never discussed that there was a £30,000 payment unaccounted for? "No," said Mr Maher. "Never, in the company of other directors - in particular, Mr Frank Reynolds and Mr Murphy jnr?"
"Exactly. He said he was at a meeting with the three of us. As far as I know, he only met Mr Murphy for the first time in 1995."
Mr Maher said earlier that he had not been aware of the audit working papers for the financial year to the end of May 1990, which referred to the £30,000 payment to Mr Burke as "enhancement expenditure', until the accounts were checked thoroughly in August 1997.
He did not know when he first became aware of this "enhancement expenditure" item, he told Mr O'Neill. "I was familiar with Mr John Bates and we talked about it. We knew in August 1997 that it was incorrectly charged when we checked."
Was there any reason why he had not mentioned this in his statement to the tribunal in September 1998, in which he had concluded that he "would not be in a position to make any useful contribution" because he had not joined the company until after the payment to Mr Burke? He had had no difficulty, Mr O'Neill reminded him, in recalling Mr James Gogarty as being "awkward", but his statement had not touched on the Burke payment.
He had not realised that the purpose of the statement included the disclosure of matters not discovered until 1997, Mr Maher replied.
He told the tribunal that he joined JMSE as financial controller in September 1989. He became aware that tension existed between Mr Frank Reynolds and Mr Gabriel Grehan, who were relatively new directors, and the financial director, Mr Roger Copsey, but he was not "au fait" with that. The two directors wrote to Mr Copsey to express concern that the banks would not allow the company's £500,000 overdraft facility to continue indefinitely and referred to "dubious happenings" in the holding company which could affect the security of a £1.7 million loan from JMSE to its British-based sister company, AGSE.
As far as he knew, these fears had been prompted by Mr James Gogarty, he said.
Mr O'Neill asked whether he recalled the "Revenue sheriff" calling on JMSE and, as a result, "interest being levied on the company". This had happened a number of times, said Mr Maher, where PAYE had not been paid on the exact date.
Had not Mr Copsey blamed Mr Maher for the Revenue sheriff incidents because monies had not been paid on time? And also for releasing cheques too soon?
He had understood where Mr Copsey was "coming from", given the tension between the directors, Mr Maher replied.