Accountant characterised as 'complete fraud' in court

FORMER EU commissioner Ray MacSharry has described as “a complete fraud” an accountant who allegedly sought to make secret profits from a deal involving the €11.5 million purchase of a development site in Co Sligo, the Commercial Court heard yesterday.

The purchase was made by a company, Foresthaze Developments, of which Mr MacSharry was chairman.

Three businessmen claim they suffered losses of more than €2.4 million because of allegedly fraudulent claims by accountant and tax specialist, Kenneth McMoreland, formerly of Gilroy Gannon accountants, and quantity surveyor Jack (Jackie) McMahon concerning the purchase by Foresthaze of the Saehan site at Hazelwood, Sligo, for a development of more than 300 houses.

They are claiming damages, including exemplary damages, against Mr McMoreland and Mr McMahon and also want both men to indemnify them against any claims made under guarantees in favour of Foresthaze provided by them to AIB Bank.

They also allege negligent misrepresentation and/or negligent misstatement against other accountants in the Gilroy Gannon firm.

The businessmen claim it was only in February 2009 they learned Mr McMoreland and Mr McMahon sought to make a secret profit from a sub-sale of the site for €9.85 million under an earlier contract of April 2006 with Saehan Media Ireland Ltd. It is claimed they then sought to sell on the site for €11.5 million in October 2006 in a deal between Mr McMoreland, Mr McMahon and Foresthaze.

The other accountant defendants in February last year said they were unaware of any issues concerning Foresthaze and had stopped doing bookkeeping for it after Mr McMoreland ceased in 2008 to be a partner in Gilroy Gannon, it was stated.

Mr MacSharry had described Mr McMoreland as “a complete fraud” at a meeting of shareholders of Foresthaze in February 2009, it is claimed. Mr MacSharry had asked Mr McMoreland to explain himself and Mr McMoreland offered various explanations, which the plaintiffs said they did not accept.

It is alleged Mr McMoreland and Mr McMahon made a secret profit of €1.52 million and, unknown to the plaintiffs, capital gains tax of €304,000 on that sum was paid by Foresthaze.

The case, brought by Arthur Grady, Kieran Grady, John Grady and their company, TJ Grady Ltd, was admitted to the Commercial Court yesterday by Mr Justice Peter Kelly. It is against Mr McMoreland, Mailcoach Road, Sligo and others practising as Gilroy Gannon, Stephen Street, Sligo – Joseph Gannon, Bryan Kilfeather, Alan J Palmer, Cathal O’Donnell, Paul Horan and Sinead McHugh; Jack (Jackie) McMahon, Creggconell, Rosses Point, Co Sligo; and Foresthaze, with registered offices at Millbrook, Riverside, Sligo.

Mr Justice Kelly noted the case involves serious claims of fraudulent misrepresentation, fraud and unjust enrichment and also noted “strong views” in relation to the alleged fraud had been expressed by Mr MacSharry.