The Gazette 1985

JULY/AUGUST 1985

GAZETTE

implemented the directive. Laws relating to the protection of millions of pounds deposited in F.riendly Societies are still in the Victorian era and are "clearly in need of overhaul" the Registrar of Friendly Societies admitted recently on RTE's "Today Tonight" programme. The programme alleged that these "rogue bankers" had been registered with the former Registrar, Eamonn Carey, yet were allowed to take depositor's money and do exactly what they liked with it. In most cases they either lent that money to themselves or sent it abroad to a subsi- diary or sister companies. Such was the case with Colm Dunne and George Hand, who were involved in the Irish Commercial Society. Leinster Investment Society was one of the maze of companies in which they were involved. As a result of their speculation, £2 million worth of depositors money is missing, and probably gone. The Registrar said that he hadn't the resources to retrieve the £24 million owed by these fringe banks and also said that he was restricted by the 1978 Industrial and Provident Societies Act. The Act gave existing societies five years to dissolve or apply for a banking licence, but now, seven years later, there are still 1,600 friendly societies and other fringe banks registered. This is due to the startling fact that just over ten years ago anyone could set up a provident society for as little as £10 in capital. It is the ordinary depositors who ultimately lose out, paying the price for government laxity. One of these "rogue directors", George Finbar Ross of the failed Irish Investment Society, was a leading light in Irish polo circles and ordered his polo ponies specially from Argentina. He built a £400,000 solar mansion in Clonee, Walter Conan Ltd., Academic-Legal-Civil-Clerical Robemakers. Telephone - 971730 - 971887 r PHELAN - CONAN GROUP WOODLEIGH HOUSE, HOLLYBANK AVENUE, RANELAGH D.6

Co. Meath, but he now lives in Texas, where he has a company dealing in oil and gas exploration. He owes £7 million to depositors. The life savings of ordinary people in a lot of cases. Whatever legislation is introduced in the future, it must contain at least three major changes. Firstly, where VAT, income tax and social insurance contributions have been collected by an employer and not forwarded to the Revenue Commissioners, the directors of that company should be held personally liable for the payment of the outstanding taxes, in the event of a liquidation. The difficulty in tackling fraud has always been proving that directors committed fraud with intent. Directors can easily plead that they took risks that were misjudged or that they thought they could get out of their difficulties or that the bank would come up with the money. The onus of proof should be transferred to the directors. It should be up to them to show that they were neither negligent now knowingly or knowingly trading while insolvent. Finally, the Revenue Commissioners should be deprived of their preferential status as creditors in a receivership or liquidation. This would help them tighten up the way companies are run, knowing that they do not merit special treatment. Limited liability is a privilege, not an inalienable right. Thus, those who abuse that privilege should not be allowed to do so in the future. Company legislation must be enforced. It is no use whatsoever to have a model set of laws governing the behaviour of companies, if they are not policed. Otherwise, the Revenue Commissioners and ordinary depositors, shareholders and investors will continue to be ripped off by these "rogue directors". •

Liam Brady Special Investigation Bureau (Eire)

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