THE AUDITOR of a company used by the late accountant Des Traynor, for what the Supreme Court described as a “sophisticated and extensive scheme” of tax evasion by Charles Haughey and others, has been disqualified for two years from acting as an auditor or company director on grounds of unfitness.
A three-judge Supreme Court yesterday imposed the two-year disqualification term under section 160 of the Companies Act on Patrick McCann (52), a certified public accountant practising as McCann Associates, arising from its previous finding that the cumulative effects of his actions as auditor of Kentford Securities Ltd were “very grave”.
The Director of Corporate Enforcement (ODCE) sought the disqualification order over matters between 1988 and 1994 when Mr McCann was an accountant employed by Chartered Secretarial Company, which provided secretarial services to Kentford, and who also had his own accountancy firm.
While Mr McCann was auditor to Kentford, some £2.27 million passed through Kentford’s accounts as part of the Ansbacher secret deposits managed by Mr Traynor.
The High Court in 2006 upheld the director’s complaints about Mr McCann’s conduct but declined to disqualify him after finding the “irregular and improper conduct” he “was mixed up in . . . at the behest of his employer and Mr Traynor” was “a thing of the past”.
It also accepted Mr McCann’s evidence he only became aware Kentford had any connection to the Ansbacher accounts from the Moriarty tribunal, that he was not part of any scheme to defraud the Revenue and never intended to commit any wrongful act.
Last November, the Supreme Court unanimously allowed the ODCE appeal against the High Court decision after describing as “unduly indulgent” the refusal to disqualify on grounds Mr McCann was considered unlikely to repeat such conduct in the future.
The 1990 Companies Act considered past conduct “the key to disqualification” and intended disqualification orders to be partly penal, to deter such conduct and to improve corporate governance, Mr Justice Donal O’Donnell said when giving judgment.
The “most serious” matter against Mr McCann justifying disqualification occurred over a number of years when his business was well-established, Mr Traynor was long dead and it was publicly known Kentford was used by Mr Traynor for tax evasion, the judge said.
That matter was Mr McCann’s insistence to an ODCE authorised officer between 1999 and 2002 that a letter dated January 1990 from Mr Traynor claiming Kentford was a trust company was genuine when it was not. Such conduct in dealing with an official investigation was conduct “aggravating particular wrongdoing”.
The purpose of Mr McCann’s becoming a director of Kentford was to provide “the appearance of compliance” with the requirements of corporate governance, the judge added. Mr McCann maintained to the “very end” he was not a director between 1989 and 1992 when it was self-evident he acted as such. The case was adjourned to yesterday to decide on the length of a disqualification period.
After hearing submissions, Mr Justice Nial Fennelly, sitting with Mr Justice Joseph Finnegan and Mr Justice O’Donnell, said the court was taking into account several matters in its decision.
These included the adverse impact on Mr McCann and his practice of the proceedings, that the events happened more than 20 years ago and did not involve any identified personal suffering losses and that no complaints had been made against Mr McCann since.
In the “unusual circumstances” of this case, justice would be met by a two-year disqualification period, Mr Justice Fennelly added. The decision related to the particular facts of this case and should not be regarded as a precedent.
