Gallagher shared in payout of €860,000
He and partner paid themselves as company was losing money
Published 22/10/2011 | 05:00
PRESIDENTIAL candidate Sean Gallagher and his business partner paid themselves almost €860,000 from their company Smarthomes at the height of the property crash.
The payments were made in 2008 and 2009 when the firm, which installs wiring for sophisticated entertainment and broadband systems, was losing money.
At the time a group of small ordinary investors were left disgruntled after making losses on their investments in the firm.
The sums paid to Mr Gallagher, pictured, and his business partner over the two years amounted to more than the total funding the company received from state agencies after it was founded.
Records seen by the Irish Independent show Smarthomes benefited from grants totalling €830,000 from state agencies.
The revelations come as Mr Gallagher's track record as an entrepreneur has come under increasing scrutiny since he became the front runner in the race for the Aras.
The former Fianna Fail national executive member has emphasised his past experience in business as one of the key attributes he would bring to the presidency.
However, last night Mr Gallagher refused to discuss the large fees he took from Smarthomes. Instead, he referred all queries to Smarthomes.
The company defended the payments to Mr Gallagher and his business partner.
"The remuneration at the time for the directors was in line with the level of business the company was carrying out," a spokesman said.
The firm also dismissed suggestions that investors were unhappy with the payments to Mr Gallagher and Derek Roddy.
Despite losses at the time of those payments, the firm said a deal was done with those investors last year, where they agreed to transfer their investment into 15pc equity in the business.
Independent candidate Mr Gallagher, along with engineer Mr Roddy, set up their company in 2002. In 2006 it was announced that the firm planned to invest €10m and create 100 jobs.
However, by 2008, as the impact of the property slump was starting to bite, the company suffered significant losses.
But despite this, the firm's accounts for that year show that Mr Gallagher and Mr Roddy drew €542,500 from the company, which was equal to about 80pc of the €652,000 Smarthomes lost in 2008.
That year they also paid themselves €195,000, the highest salary since the company began trading in 2003.
Separately in 2009, the pair also drew down almost €316,000 in a year that the firm lost more than €540,000.
Both years the payments, which totalled almost €860,000, included rent owed to them by the company for the use of the premises and royalty payments for patents they held.
On these points the Smarthomes spokesman said: "The rent payable went to pay a mortgage on the building and was in line with rents in Co Louth. The patents payable are in line with legal advice."
The payments made to the directors have reportedly angered small investors who together put €750,000 into Smarthomes in 2005 through a Business Expansion Scheme (BES).
Mr Gallagher and Mr Roddy promised investors revenues would grow to €10m but the 2009 accounts show it was just €1m. Investments were badly hit at a time when the payments to the directors were made. Some claim this put further pressure on the Smarthomes business.
Meanwhile, over the course of seven years, Smarthomes was the recipient of more than €830,000 in funding from state agencies, including a 2007 grant of €41,970 from Intertrade Ireland -- which said this decision was taken before Mr Gallagher joined the agency's board later the same year.
A spokesman for Smarthomes said all of the BES investors had reached an agreement with the company and were "legally satisfied".