Wednesday 19 September 2018

Wallace company is accused of 'systemic, planned and fraudulent' non-payment of €1.4m VAT

Independent TD Mick Wallace Picture: Steve Humphreys
Independent TD Mick Wallace Picture: Steve Humphreys

Tim Healy

The directors of a company once owned and operated by Independent TD Mick Wallace have been accused in the High Court of engaging in "systemic, planned, dishonest and fraudulent" non-payment of €1.4m of VAT over a two-year period.

The comment was made by a liquidator who has rejected Mr Wallace's offer to consent to a restriction order under the Companies Act over his conduct of the affairs of his company, MJ Wallace Ltd.

While prepared to accept a similar offer from the TD's son, Sasha, liquidator Michael Leydon said Mr Wallace should be subject to the more serious sanction of disqualification.

He said this was due to the "systemic, planned, dishonest and fraudulent" non-payment of some €1.4m VAT by the company over a two-year period up to 2010.

Stephen Brady BL, for Mr Leydon, said the liquidator's other concerns included lack of clarity about various debts; unreliable company accounts and various post-liquidation matters, including delay in providing a statement of affairs and the level of the Wallaces' co-operation with the liquidator.

The liquidator could not make "head nor tail" of the TD's claim of an alleged arrangement between a Wallace company and Ulster Bank for treatment of rental income from properties over which the bank had a charge, he said.

Mr Wallace and his son were in court for the opening yesterday of the hearing of the Companies Act application before Mr Justice Robert Haughton.

Mr Leydon was appointed liquidator over MJ Wallace by Promontoria Aran, a subsidiary of US fund Cerberus, arising from a €2m judgment obtained by the fund against the company in relation to the Italian Quarter development in Dublin.

Arising from their stewardship as directors of the company prior to the liquidator's appointment, Mr Leydon brought proceedings under the Companies Act against both the TD and his son.

Mr Wallace, who previously raised questions over the Cerberus €1.6bn purchase from Nama of a group of Northern Ireland-linked loans, called Project Eagle, was earlier this month refused orders requiring the liquidator to discover documents concerning the motivation for the proceedings.

Talks took place between the sides before the case. When it opened, the judge heard both Wallaces were prepared to consent to restriction orders but Mr Leydon would only accept a restriction order for Sasha Wallace.

A restriction order prevents a person being involved in a company for five years unless it meets certain capital requirements.

Mr Justice Haughton said he considered a restriction order in relation to Sasha Wallace "entirely appropriate" as it could not be said he had acted honestly and responsibly in relation to the conduct of the company's affairs.

Moving the disqualification application against Mick Wallace, Mr Brady said he had to establish Mr Wallace was unfit to be involved in managing a company's affairs.

That test had been made out, primarily because of the "extraordinary" VAT liability which was the "most important" issue in this matter, he argued.

Irish Independent

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