The Director of Corporate Enforcement (ODCE) has asked the High Court for orders restraining developers Michael and Thomas Bailey from acting as directors or officers of any company because of alleged serious misconduct and fraud in the running of Bovale Developments.
In an affidavit, Peter Lacy of PricewaterhouseCoopers (PwC), who examined the company's books and records on behalf of the director, Paul Appleby, said that he had not come across a failure to maintain proper books of account "that compares with the extent and gravity of the failures in respect of Bovale for the two years ended June 30th, 1998", during his 35 years career in public accounting in Ireland.
A settlement of €22 million involving Bovale and the Bailey brothers was made with the Revenue Commissioners in June 2006 for understated income tax, corporation tax, VAT and PAYE/PRSI over a number of years, it was noted on behalf of the director in court documents.
It was also alleged that the brothers grossly misstated the net remuneration received from the company in 1997 and 1998.
They had received €3 million, 17 times more than was recorded in the company's books, it is alleged. Additional PAYE/PRSI liabilities were more than 19 times the recorded liabilities in 1997 and 1998, amounting to some €4 million, it is also alleged.
The court was told the action follows a four-year investigation into Bovale, of which both brothers are sole directors and shareholders. The activities of the firm were strongly criticised by the Flood tribunal.
In the proceedings, brought under Section 160 of the Companies Act, the director wants orders against Thomas Bailey, Coolcommon, Batterstown, Co Meath, and Michael Bailey, Killamonan House, The Ward, Co Meath, restraining them from acting as an officer of any company for such time as considered fit by the court.
The director claims both brothers are directly responsible for breaches of law and duty in the conduct of the affairs of Bovale.
The proceedings were briefly mentioned before Ms Justice Mary Finlay Geoghegan yesterday. She said she had read the documents in the case and she accepted there were potentially complex issues to be dealt with.
She would adjourn the matter to December 4th but directed that any papers in response to the application, whether a response to this case or a separate application, should be filed by November 22nd.
Earlier, Donal O'Donnell SC, for the Baileys, said the case related to "extremely serious and complex" matters of law and evidence and the legal papers served on his side were accompanied by boxes of supporting documents from PwC, which was appointed by the ODCE in August 2004 to carry out an investigation into Bovale arising from the Flood tribunal report of 2002.
The ODCE had been investigating the matter for four years.
