€10m art house charity recorded no income for a decade - but received public donations
The company behind a €10m art house cinema in Galway recorded "no income" over 10 years although it was receiving public donations, a watchdog report has revealed.
The investigation by the Charities Regulator examined Solas - Galway Picture Palace Company CLG - which was the charity behind the Galway Picture Palace.
It received nearly €10m in public funds for the building which is now in control of a private company. But the report said it was transferred to Element Pictures without carrying out an independent valuation of the building.
The charity also did not have a competitive disposal process or source competitive bids within either the private or charitable sector for the building.
The inspectors found Solas received more than €7m from public sector bodies, together with the site for the cinema that Galway City Council purchased for €1.9m in 2007.
The freehold interest in the site is still owned by the council.
In July 2017 the charity went into voluntary liquidation.
In December 2016 an agreement was reached for the charity to transfer a substantial portion of its assets and liabilities to a private third-party operator.
As part of the agreement the third-party operator, through a newly incorporated company, was assigned a 30-year lease with Galway City Council for the site on which the partially constructed cinema stood, and a rent of €1 per annum for the first 25 years, with agreement to pay market rent for the final five years. The third party agreed to pay €881,000 to complete the project.
"The trustees' decision to enter into negotiations with one preferred operator effectively removed any potential opportunity for the asset to remain within the charitable sector, which may have been a motivation of public donation," the inspectors said.
The investigation found that from the start and over the subsequent years, the charity did not ensure it had the appropriate corporate governance structure in place.
Regulator John Farrelly said: "While there is now an art house cinema in Galway, the lack of oversight and sufficient competence to manage a capital project of this size evidenced in this case serves to undermine public trust and confidence in the management and administration of charities."