Wexford accountant Alan Hynes acted in ‘self-interest’

Hynes failed to co-operate with liquidator and €3.1m in funds not fully accounted for

The Wexford accountant Alan Hynes failed to co-operate with the liquidator of Tuskar Asset Management plc (Tam) in relation to shares in a property company in Bulgaria held in the name of his wife, Noreen Hynes.

Tam's 2007 accounts said a Bulgarian company, Budjaka, worth €500,000, had been bought from Mrs Hynes and a Joe Kelly using Tam funds. The Tam liquidator, Neil Hughes, of Hughes Blake, said Mr Hynes refused to co-operate in relation to the transfer of the Bulgarian company's shares from their names to Tam.

The Chartered Accountants Ireland disciplinary tribunal, which ruled late last week on complaints against Mr Hynes, said it accepted Mr Hughes’s evidence. The tribunal made a series of damning findings against the former principal of Hynes & Co Chartered Accountants, Tuskar House, John’s Gate Street, Wexford. It ruled that Mr Hynes should be excluded from the institute.

“Self-interest” caused Mr Hynes to breach the institute’s rules on conflicts of interest when encouraging, and sometimes putting undue pressure on, investors to put millions of euro into a property scheme that he established in 2006. Some of the investors were clients of his accountancy firm and believed Mr Hynes was acting as their financial adviser.

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Mr Hynes encouraged people to invest in Tam without properly explaining to them his interest in the project and that he would earn fees from it.

Personal guarantees

Mr Hynes had an “absolute obligation” to ensure the investors got independent financial advice given that the project involved the investors giving Mr Hynes powers of attorney, which he used to give banks personal guarantees on behalf of his clients.

It was a "striking feature" that investors were not immediately given copies of personal guarantees executed on their behalf by Mr Hynes to Bank of Scotland Ireland and Ulster Bank, using the powers of attorney. Some investors learned of the guarantees only when the banks sought to rely on them.

The tribunal concluded that the failures of Mr Hynes to deal with the conflicts of interest “were to a large extent triggered by self-interest”.

Tam had raised €5 million by the end of 2006; it had been envisaged that it would have raised €25 million by this time. Yet it proceeded with a project on the Iceland site in Dún Laoghaire, Co Dublin, that required project finance of €37 million. The fact the project was now so highly leveraged was not adequately flagged to investors.

Unconscionable

The tribunal accepted the evidence of James Boggin, a client of Hynes & Co, who said he was told in December 2007 that 100 investors were putting €1 million each into Tam.

It was an “unconscionable act” to advise Mr Boggin to invest at a time when Tam had a funding shortfall. The tribunal determined Mr Hynes did so because he was “so desperate to secure funding given the perilous state of affairs of Tam” and was therefore “prepared to be less than transparent . . . in order to secure the investment”.

The tribunal decided Mr Hynes had put “undue pressure” on Mr Boggin, contrary to regulation. It accepted the evidence of Mr Hughes that the plc was insolvent by the time Mr Hynes, a director of Tam, was signing off on the company’s 2007 accounts in May 2008.

In September 2008 a Tam subsidiary made a €500,000 part payment on an option for the purchase of the Riverbank House Hotel, Wexford, using VAT due to Revenue. Also in September 2008, €294,000 in VAT due to the Revenue was used when spending €628,000 on land in Poland. Mr Hughes later sold the land for €20,000.

The tribunal accepted Mr Hughes’s evidence that €3.1 million in Tam investor funds were not properly accounted for.

Discredit

The tribunal said Mr Hynes brought discredit on the profession by failing to account for funds that were being managed on behalf of pension investors, elderly people and people putting their life savings into Tam.

The tribunal found that Mr Hynes was responsible for the diversion of €1.4 million in VAT that was paid to a Tam subsidiary as part of the development of the Bank of Ireland building in Wexford. The money was used to pay €500,000 to Richard Tierney as part-payment on the Riverbank House Hotel option, reducing Mr Hynes's exposure on a personal guarantee of €1.25 million that he had entered into in respect of the option to buy the hotel.

The tribunal also made negative findings against Mr Hynes in relation to other property ventures.

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent