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GAZETTE
JULY/AUGUST 1985
implemented the directive.
Laws relating to the protection of millions of pounds
deposited in F.riendly Societies are still in the Victorian
era and are "clearly in need of overhaul" the Registrar of
Friendly Societies admitted recently on RTE's "Today
Tonight" programme.
The programme alleged that these "rogue bankers"
had been registered with the former Registrar, Eamonn
Carey, yet were allowed to take depositor's money and do
exactly what they liked with it. In most cases they either
lent that money to themselves or sent it abroad to a subsi-
diary or sister companies. Such was the case with Colm
Dunne and George Hand, who were involved in the Irish
Commercial Society. Leinster Investment Society was
one of the maze of companies in which they were
involved. As a result of their speculation, £2 million worth
of depositors money is missing, and probably gone.
The Registrar said that he hadn't the resources to
retrieve the £24 million owed by these fringe banks and
also said that he was restricted by the 1978 Industrial and
Provident Societies Act. The Act gave existing societies
five years to dissolve or apply for a banking licence, but
now, seven years later, there are still 1,600 friendly
societies and other fringe banks registered. This is due to
the startling fact that just over ten years ago anyone could
set up a provident society for as little as £10 in capital.
It is the ordinary depositors who ultimately lose out,
paying the price for government laxity. One of these
"rogue directors", George Finbar Ross of the failed Irish
Investment Society, was a leading light in Irish polo
circles and ordered his polo ponies specially from
Argentina. He built a £400,000 solar mansion in Clonee,
Co. Meath, but he now lives in Texas, where he has a
company dealing in oil and gas exploration. He owes £7
million to depositors. The life savings of ordinary people
in a lot of cases.
Whatever legislation is introduced in the future, it must
contain at least three major changes. Firstly, where VAT,
income tax and social insurance contributions have been
collected by an employer and not forwarded to the
Revenue Commissioners, the directors of that company
should be held personally liable for the payment of the
outstanding taxes, in the event of a liquidation.
The difficulty in tackling fraud has always been proving
that directors committed fraud with intent. Directors can
easily plead that they took risks that were misjudged or
that they thought they could get out of their difficulties or
that the bank would come up with the money. The onus of
proof should be transferred to the directors. It should be
up to them to show that they were neither negligent now
knowingly or knowingly trading while insolvent.
Finally, the Revenue Commissioners should be
deprived of their preferential status as creditors in a
receivership or liquidation. This would help them tighten
up the way companies are run, knowing that they do not
merit special treatment.
Limited liability is a privilege, not an inalienable right.
Thus, those who abuse that privilege should not be
allowed to do so in the future. Company legislation must
be enforced. It is no use whatsoever to have a model set of
laws governing the behaviour of companies, if they are
not policed. Otherwise, the Revenue Commissioners and
ordinary depositors, shareholders and investors will
continue to be ripped off by these "rogue directors".
•
Walter Conan Ltd.,
Academic-Legal-Civil-Clerical
Robemakers.
Telephone - 971730 - 971887
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