Witness tells hearing ESB's £700,000 left with his solicitors

Mr James Gogarty lodged a £700,000 payment from the ESB with his solicitor instead of passing it on to the Murphy group of companies because he feared he would not be paid his commission out of it, the tribunal was told yesterday.

Mr Gogarty was also concerned that an agreement on his pension payments had not been implemented, he said.

Giving evidence on his worsening relations with the Murphy group in late 1989, Mr Gogarty said he had agreed to negotiate with the ESB, on behalf of the Murphy companies, for monies due on foot of work carried out on the Moneypoint ESB plant in Co Clare.

Under the agreement, Mr Gogarty was to be allowed to keep half of all money recouped from the ESB over £130,000, which the Murphy group said was already promised, nett of costs.

Mr Gogarty eventually reached agreement with the ESB on a figure of £700,000 including VAT, but instead of handing it over to the Murphy group, he asked for it to be sent to his solicitor, Mr Gerard Sheedy of McCann Fitzgerald, who deposited it in his company's account with Banque Nationale de Paris.

The reason given by Mr Gogarty for this course of action was, he said, a warning from Mr Frank Reynolds that Mr Joe Murphy snr had never intended to pay him more than £10,000 commission on the ESB arrangement.

Mr Gogarty said he had "a concern and some relief" over the affair. His concern related to his agreement, signed on October 3rd, which had not been paid, while "my relief was that maybe for the first time, I had something. I had a cheque for £700,000, I had something after all the years."

Asked by counsel for the tribunal, Mr John Gallagher SC, if he felt he was entitled to treat the money as his, Mr Gogarty replied: "Well, if you look at it this way, by my hard efforts, I had got £700,000 from the ESB by hard negotiations, based on contractual claims.

"This was in favour of Joe Murphy's, who didn't record it as a debt even and who originally can't deny that the ESB's chief civil engineer had identified only £42,000 [outstanding]. They broke my heart and forced me to go up to £130,000 [from £42,000]."

Mr Gogarty added that while the money was intended for the Murphy group, his securing of it meant his pension, car and consultancy fees did not cost the Murphy group anything.

"When you look at it as far as I am concerned, that £560,000 [£700,000 less VAT] was money for Murphy but my pension, my car, my consultancy, the whole bloody lot didn't cost Murphy a penny. It was my hard-earned effort, the £560,000, and I defy contradiction."

But Mr Gogarty added: "It was begrudged me and alleged that I defrauded them out of it. It will turn up eventually where the fraud was."

With increasing frequency throughout October and early November 1989, Mr Gogarty's solicitors corresponded with the Murphy group directly and the Murphy group's solicitors on the subjects of Mr Gogarty's pension and the return of the £700,000.

The letters were read into the record by counsel for the tribunal, Mr John Gallagher, yesterday.

The basis of the pension was an agreement between Mr Gogarty and Joe Murphy Structural Engineering signed on October 3rd, 1989.

Under this agreement JMSE undertook to pay £300,000 into a pension for Mr Gogarty, would transfer to him his Ford Scorpio company car, and give him a consultancy agreement for five years at his then salary as well as paying telephone and vouched expenses.

But after ongoing correspondence, Mr Roger Copsey, a financial controller of JMSE, wrote to Mr Sheedy on October 19th to the effect Mr Joe Muprhy had not given authority to pay the pension.

The question of whether or not the pension needed the authority of Mr Joe Murphy occupied a further exchange of solicitors' letters.

In one communication Mr Gogarty's solicitor said he understood the Murphy group was restructuring and his client was concerned the group did not undertake any action which would prejudice Mr Gogarty's position as a creditor of the company.

On October 31st, Mr Sheedy wrote again to Mr Copsey saying the pension was not subject to Mr Murphy's approval.

He also said the ESB had forwarded the £700,000 cheque, which he had placed on deposit.

Following that letter, a director of JMSE, Mr Christopher Oakley, replied on November 3rd to say he was "led to believe that Mr Murphy has now approved the terms of the settlement". Mr Oakley asked that the £700,000 cheque be forwarded to Mr Copsey "as soon as possible".

But Mr Oakley added he had received notice from the Revenue that both Mr Gogarty's pension and commission should be subject to tax under the PAYE system.

In a follow-up letter on November 6th, from Mr Copsey to Mr Sheedy, Mr Copsey suggests his book-keeper pick up the cheque the following morning.

On November 8th Mr Oakley faxed Mr Sheedy calling for the forwarding of the money payable to JMSE, "accordingly unless the balance of £700,000 is paid to JMSE by close of banking business today I am instructed to institute proceedings against your firm for the recovery of the same without further warning."

On November 9th, Mr Sheedy responded: "How these issues are resolved is now entirely a matter for your clients; either by the purchase of a pension for Mr & Mrs Gogarty and the calculations of the deductions from the commission due to Mr Gogarty; or alternatively by bringing the long and unhappy saga before the court for adjudication by it."