Friday 19 April 2019

Ewan MacKenna: Why the FAI's predictable silence can't be considered either an answer or good enough

Former chief executive of the Football Association of Ireland John Delaney (Niall Carson/PA)
Former chief executive of the Football Association of Ireland John Delaney (Niall Carson/PA)
Ewan MacKenna

Ewan MacKenna

Back in the nascent years of John Delaney's leadership and guidance of the Football Association of Ireland, certain ties were cut with the past, allowing him to start on a sure footing.

There had been no evidence of impropriety on the part of his predecessor, Bernard O'Byrne, when the board ordered a full review of all of his company credit card transactions. But the findings saw a sub-committee allege some irregularities.

It was the sword that O'Byrne would finally fall on.

Do unto others as you would have them do unto you is always a good way to exist. And since there's a clear and definite precedent, and given what has already emerged around Delaney in recent weeks, now is the time to surely repeat such a review. Delaney, as much as anybody, should welcome the opportunity to rebuild some trust and confidence.

Of course that he's still in a boardroom (he's not on the board but will attend meetings) that likely won't be calling for such a repeat of history remains as unorthodox and as baffling as it is downright troublesome. Indeed, all of this has the hum of the worst vestiges of Celtic Tiger politics. Zero accountability allied with complete arrogance, as what's both right and what's best for football here have been bypassed due to his ego.

On Monday, I emailed Rea Walsh. She hadn't even started her role as chief operations officer and already there's a promotion to the very top, at least on an acting basis. There were four questions.

1. Has the CEO's salary has remained the same with Delaney gone and, if not, why not?

2. If she'd be asking board members, as well as Delaney, to go?

3. Though audited by Deloitte, given the revelations that have come out since, if she'd be ordering another full audit of all FAI accounts and will be making the results public?

4. If she'd order that review of all Delaney's credit card transactions?

There was no reply and that's an unsurprising theme here.

Other queries around this were put to the board. President Donal Conway, vice-president Noel Fitzroy, honourary secretary Michael Cody, honourary treasurer Eddie Murray, women's football representative Niamh O'Donoghue, former president Tony Fitzgerald, and FAI finance director Eamon Breen, were all reached out to. Fitzgerald said he'd no comment, Breen directed me to their press office who had said they are only commenting via statements for now. The rest didn't have a word between them. That is damning.

In those cases around the finance committee, all we wanted to get confirmation on was if they knew about the €100,000 bridging loan and, if so, why they chose not to place it in the annual financial report?

With a company that receives close to €3m a year from government, the taxpayer has a right to that truth. This since those prepared statements didn't make an iota of sense, as if this was simply a matter of generosity, why not put it in the minutes and declare it? Besides, when you're the FAI there are always cash-flow issues and that's what bank overdrafts are there for.

With Delaney on the ropes, it is so attractive to go for him swinging and this rightly gains much attention, yet that doesn't give an exemption to others as there's enough blame to go around. That's because this all played out in one of two ways. Either Delaney's financial dealings and the €100,000 happened outside of the board's knowledge, or they knew but didn't ask the right questions. There is no third option. Both cases are bad.

If the latter is true, then many need to remove themselves from roles they are clearly not fit for. If the former is the case, then they needed to take a stand. In that sense they could have learned from Delaney's own past, as on the board of the Olympic Council of Ireland while Pat Hickey was in jail, he organised a walk-out during an incoming call from South America. Such an act in this scenario would've allowed Rea to stamp her mark and distance herself but, having already met, we are told that sadly didn't happen.

Before kick-off in Gibraltar on Saturday, you may have noticed a man in a green tie acting as a concierge as he escorted Delaney from the ground's gate and, during the game, was passing him messages. That was Breen. As director of finance, he's a key cog in this, so what does he know?

Some are holding out hope that the Dáil sports committee, which Delaney will attend, might get to the bottom of it.

If they bring him in too early, before Sport Ireland release their own report, his answer to all queries about irregularities will be that they are still investigating it. And if they wait, there are too many who will simply relish the spotlight on them, as they did the last time Delaney was before them.

With the ticking of time and settling of so much dust, we're told Delaney's hope is this will blow over. Once all is calm again, then he might act from his new viceroy role and, notoriously litigious, come after those that dared shine a light on what he's done. We've seen that play before but it cannot be allowed happen again. For it's not just the bridging loan but the idea of his rent being paid.

How much of that inadvertently came from taxpayers?

For sure there are major companies out there where CEOs get such frills, but they are successful and profitable - two words that most certainly don't apply to the FAI. Worse, this was happening at a time when he was cutting salaries and has continued to cut football investment. One well-placed person tells us this year the biggest trimmings will be for emerging talent, with €140,000 gone from boys and €40,000 from girls, and that from a low base. With fundraising and income below what was expected too, they'll be far from the only budgets set to suffer.

Yet this is a company that could hand €3,000 in monthly rent to a CEO on a €360,000 salary?

From a moral perspective, it's odious.

But from a corporate governance perspective, there are major issues as well.

* * *

In April of 2017, John Delaney says he loaned his employer €100,000. The way this works in bookkeeping is the FAI would debit their bank account as they received money, and they credit a loan account for money they owe to that person or institution. As the Sunday Times reported, an invoice was then received and a remittance issued in July of 2017. However when someone produces an invoice, that's not a loan, and the double entry in that case is you debit an expense and credit a creditor's ledger account. At that point he's now owed €200,000.

If you are lost, it's okay. One expert that has studied the accounts tells us, "In layman's terms, the books say they paid him back €100,000 and that means he's still owed another €100,000, or there was a further payment of €100,000 to him to clear whichever was outstanding, be that the loan or the creditor's ledger entry. Either that or them saying the invoice that was produced was a mistake."

It's a warning light that needs a closer look but by now the whole dashboard is flashing.

Delaney for example, as an employee of the FAI, cannot actually even bill them and get a remittance for services. Under law, all payments from an employer to an employee have to go through PAYE. It means a receptionist, for instance, cannot go to their boss and ask for their wages, while billing for overtime done. This is basically because revenue don't like self-employed people and want everyone to be an employee so they've clear-cut rules. It's true Delaney can do self-employed work for other organisations and bill them for consultancy, but that's because he doesn't work for them. With employers, you're an employee and you cannot ride both horses. Thus even his own claims raises questions.

And still the problems for Delaney and the FAI in all of this don't even stop there. It goes on...

Next, when it comes to his rent being paid, whether you believe in coincidence or not, it was timely that on Monday the revenue issued guidance on benefit-in-kind in relation to the provision of accommodation to employees. It said that where an employer provides a dwelling by way of rent, it must deduct benefit-in-kind on it. In other words the payment has to go through the payroll and be taxed as income. It's understood that Delaney accounted for benefit-in-kind in his tax return, but that's not how it's supposed to happen. It needs to be within the PAYE system.

And on...

Over the last four years, the FAI's payments to accountancy firm Deloitte have not just totalled close to half a million, but that number is due to the increasing scale,  going from €82,000 per annum, to €102,000 to €107,000, to €135,000 as of last year. Yet in a section marked related party transactions, it reads each time, "The total remuneration for Key Management Personnel for the period totalled €430,000. (Prior Year €430,000)." This may not be wrong in any way, as in the instances above, but it is unusual without further details. That's because this section of accounts basically goes into the stated transactions involving related parties who are defined as a  company or subsidiary of a company controlled directly or indirectly by a director of another company, but also relates to the relatives of those that control a company.

With directors emoluments in the documents at €360,000 and officers emoluments were €70,000, this would mean that the other 10 members of the board of management and other 58 members of the national council received €1,029 per person in 2017. Maybe that's simply the case but think about the amount of work and travel these individuals would do on behalf of the association. We reached out to both Deloitte and the FAI on this matter but again received no reply at the time of going to press, although clarification around the confusion on that particular issue may still be forthcoming.

For now though it's just one more question to add to the ever-growing folder.

Considering how serious it all is, this time the predictable silence can't be considered either an answer or good enough.

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