Thursday 19 September 2019

'End of the old FAI' - threat of prosecution now hangs over directors and John Delaney

  • Entire board to step down amid fresh crisis
  • Former CEO John Delaney 'still on payroll'
Former FAI CEO John Delaney. Photo: David Conachy
Former FAI CEO John Delaney. Photo: David Conachy

Donal O’Donovan and Daniel McDonnell

The threat of prosecution hangs over FAI directors and John Delaney amid serious allegations of financial irregularities at the organisation.

The FAI is engulfed in the biggest crisis in its history with the entire board preparing to step down and the scope of the investigation widening.

Auditors Deloitte reported the company for failing to keep proper accounting records, which is potentially a criminal offence.

The entire board of the organisation will step down within months, in a massive clear-out following the controversy over the €100,000 loan from Mr Delaney.

But Mr Delaney, the former chief executive who this week "stepped aside" from his role as executive vice president, is said to be "still on the payroll".

There remains little clarity on his immediate future as a forensic audit of the association joined the growing list of investigations to be carried out.

The FAI’s corporate unravelling accelerated dramatically, with serious allegations made to the Companies Registration Office.

The FAI’s own auditors Deloitte were revealed to have informed authorities that soccer’s governing body had failed to keep proper accounting records. This move raised the prospect that directors or former directors could face prosecution over how the association was run.

Sport Ireland’s Kieran Mulvey and John Treacy at Leinster House. Inset: John Delaney. PHOTO: GARETH CHANEY/COLLINS
Sport Ireland’s Kieran Mulvey and John Treacy at Leinster House. Inset: John Delaney. PHOTO: GARETH CHANEY/COLLINS

The news came just ahead of Sport Ireland’s hearing at an Oireachtas committee which further highlighted the scale of the FAI’s turmoil.

Sports Minister Shane Ross described it as the "beginning of the end of the old FAI". Fine Gael TD Noel Rock has confirmed he is one of the people that has contacted the corporate watchdog, the ODCE, and said "other agencies are watching this developing situation with interest".

The specific filing in relation to the FAI said it had contravened Sections 281 and 282 of the Companies Act 2014 - the specific rules setting out how a company must maintain adequate accounting records.

It did not say when, or how the alleged breaches had happened or indicate what had happened to cause the auditors to make the move.

Failure to maintain proper books is regarded as a Category 2 offence under the Companies Act - and is potentially a criminal offence.

In extreme cases offences can result in fines of up to €50,000 and up to five years in prison.

Deloitte had signed off as auditors on the FAI's most recent accounts with nothing to indicate its accountants were unhappy or had reservations about the information supplies.

However, those filing make clear that auditors relied on information provided by the directors and that the directors themselves are responsible for the preparation of the financial statements.

A spokesperson for Deloitte said: "We take our audit process and our statutory obligations very seriously, and have acted accordingly; however we cannot comment on client matters."

Meanwhile, Sport Ireland chief John Treacy said a meeting with the FAI had suggested that Mr Delaney is "still on the payroll" at Abbotstown after his talks with its board on Monday around his position.

Kieran Mulvey, the chair of Sport Ireland, offered his opinion that Mr Delaney is on the equivalent of 'gardening leave' pending an ongoing investigation into the FAI's affairs. The FAI said he had voluntarily stepped aside.

The delegation confirmed that global auditors Mazars will be looking into credit card expenses and third-party payments as part of their work.

Sport Ireland has appointed Aidan Horan, of the Institute of Public Administration, to chair a review of governance of the FAI.

It has also agreed with the FAI that it will carry out a full audit but admitted it has yet to find a suitable auditor and the process is "complicated" by a possible overlap with the work of Mazars and the ODCE.

Whatever happens with the ongoing enquiries, the FAI has committed to change at the top level.

The organisation has suffered a tumultuous month dating back to the revelation that Mr Delaney provided a €100,000 loan in 2017.

The eight remaining members of the board have said they will stand down ahead of the next AGM in July, with an EGM likely to be staged before then.

Under questioning, it was outlined that Sport Ireland does not have the power to stop board members from standing for election again - but the Irish Independent understands that only a handful would consider doing so.

Oireachtas committee members and Sport Ireland are in favour of a complete revamp of the FAI Council structure that elects the FAI board.

They also want changes in how the board operates. Mr Treacy said that the FAI structure was "similar" to the old Olympic Council of Ireland (OCI) under the direction of Pat Hickey, stating that the impression he got was that "the FAI board were followers, not leaders".

The former Olympic silver medallist added that "the balance was wrong" in the relationship between the board and the CEO.

Both Mr Ross and Mr Treacy would like the board to be drawn from a wider range of society with independent representation.

Mr Ross envisages a "stakeholders forum", which would include ex-players - both male and female - and also supporter representation.

Meanwhile, Mr Treacy wants the FAI to prioritise finding individuals with experience of corporate governance.

Fine Gael's John O'Mahony used his time at the five-hour hearing to seek clarity on the consequences for large sports capital projects while a funding suspension remains in place.

Mr Ross said that the people behind plans, such as the centre of excellence in Glanmire, Co Cork, the renovation of Dalymount Park, Dublin, and stadiums for Finn Harps and Drogheda, can still apply ahead of today's deadline and funds could be allocated.

But they will not be able to draw down any money until the Government is happy that the sport has reformed to the extent that it is worthy of funding.

Irish Independent

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