Winthrop Engineering founder Barry English and Dan Murphy, a partner in a Co Cork accountancy firm, were knowing participants in an unlawful scheme designed to defraud Revenue by incorrectly claiming capital allowances for investment in fishing vessels, a High Court judge has found.
Mr English is one of the men who told the Mahon Tribunal some years ago that he had contributed towards a “dig-out” for the former Taoiseach, Bertie Ahern. He contributed £5,000 in cash, he said.
Mr Justice Michael Twomey ruled it would “contravene public policy” for the court to assist Mr English, “a willing participant in this unlawful scheme”, in pursuing his action alleging professional negligence by Mr Murphy concerning that scheme and the court would make no order in the case.
Had the scheme gone according to plan, the “only loser” would have been the Revenue, which would have incorrectly granted capital allowances of some IR£1.22 million, he said.
Mr English’s investment of IR£2.25 million would have meant a return equivalent to the Revenue “writing him a cheque for IR£798,000 approximately”.
Financial difficulties
That did not happen because Brendan McGrath, the fisherman in the scheme, ran into financial difficulties and Mr English ultimately got some €1.2 million for two trawlers and tonnage which had been valued at some €3.4 million, he said.
Mr English had alleged professional negligence by Dan Murphy, a partner in Gearoid O’Driscoll & Company Accountants and Registered Auditors, Bandon, Co Cork, in obtaining a vendors’ valuation of the two boats being purchased by his client, Mr English.
Mr English claimed the valuation was fraudulent because it ascribed a value to the boats some IR£1.227million greater than their market value. He alleged the investment scheme was "a sham and a fraud" because documents gave the impression he bought two boats and tonnage from a Norwegian company for use by Mr McGrath when the latter already owned one of the vessels, the MV Dun Eochalla, for 15 years and had entered a purchase agreement for the second, the Avro Hunter.
The evidence was the Norwegian company owned a “sweet shop” and had no connection to the fishing industry, the judge noted.
He ruled the claim for capital allowances was, on the balance of probabilities, based on “a sham and a fraud”. On the balance of probabilities, Mr Murphy knew there was a fraud at the heart of the claim for capital allowance and was actively involved in having the vessels valued at IR£1.9 million and not at an independent arms length value.
Knowing participant
He concluded Mr Murphy knew about the fraudulent boat valuations and was a knowing participant in helping Mr English in structuring an unlawful arrangement to enable Mr English defraud Revenue.
While Mr English, despite “overwhelming” evidence, persisted in saying he was not alleging Mr Murphy had any involvement in the fraud, he may not have wished to raise Mr Murphy’s degree of knowledge as it would have raised questions about Mr English’s own knowledge of that, the judge said.
The judge said he was making no order in favour either of Mr English or the three defendants in the case – Niall O’ Driscoll, Gearoid O’Driscoll and Dan Murphy, practising as Gearoid O’Driscoll & Company Accountants and Registered Auditors. Niall and Gearoid O’Driscoll were sued in their capacity as partners in the firm but Mr English’s “main complaint” was against the third partner, Mr Murphy, he said
The judge noted it was the court, rather than the parties, who raised the issue whether the scheme amounted to an attempt by Mr English, with the assistance of Mr Murphy, to incorrectly claim capital allowances from Revenue.
* July 8th,2019: On May 29th 2019, the Court of Appeal set aside The High Court's dismissal of the proceedings brought by Mr Barry English and remitted the case to the High Court for rehearing before a different judge.
