A case in which publican Hugh O'Regan alleges that officials in Bank of Ireland changed the mandates on an account owned by one of his companies is up for mention in the High Court today.
The case centres on the sale to financier Paul Connolly of the Thomas Read Group, the pub and hotel chain that Mr O'Regan established in the 1990s.
Mr Connolly has already paid €15 million for 60 per cent of Sharmane, the company that runs the group.
However, the transfer of the remaining 40 per cent for €5 million was delayed because of what Mr O'Regan claimed were "irregularities" in the way that Bank of Ireland managed the company's accounts.
Mr O'Regan made an unsuccessful application to the High Court last Thursday for an order on Bank of Ireland to provide an indemnity for any adverse consequence arising from its alleged mismanagement of the accounts.
That action was followed by a public offer from Mr Connolly to assume the potential tax liabilities of the Thomas Read Group in order to settle his dispute with Mr O'Regan. However, Mr Connolly is demanding that Mr O'Regan leaves the group in return for this offer.
While there has been no public comment since then by Mr O'Regan, Mr Connolly or the bank, there may well be an update when the case comes up for mention today.
The alleged mismanagement by Bank of Ireland of the accounts emerged in March 2003, around the same time as a due diligence process was underway for the sale to Mr Connolly's company, Guerneville.
In his affidavit, Mr O'Regan said that he discovered "serious irregularities" in the bank's handling of accounts owned by Sharmane subsidiary Dale Associates.
"It transpired (amongst other things) that the bank knowingly altered banking mandates of the third named plaintiff company [ Dale] without its knowledge, consent or authorisation in an attempt to validate cheques paid against mandate; and that monies were "swept" without authority from the accounts of the third named company to the accounts of other group companies and former group companies which were no longer connected with the third named plaintiff company."
However, Bank of Ireland denied in court that it had any liability for the alleged alteration of mandates or any liability for the "sweeping" of money from the accounts of Dale. The bank also denied that there was ever an agreement on indemnity.
Its claims were contrary to the assertions in Mr O'Regan's affidavit, which said that the bank had admitted to mismanagement of the accounts. Mr O'Regan also alleged that Guerneville had concerns that Sharmane would face a tax bill as a result of the bank's alleged mismanagement of the Dale accounts.
"There was a concern that the unauthorised receipts by Sharmane of funds "swept" from Dale's accounts would give rise to a tax liability which none of the parties to the transaction had anticipated," he said.
"The transaction was significantly delayed by reason of further investigations which were necessitated by these issues," Mr O'Regan added.
