Bailey brothers case raises concerns about prosecution of white collar crime
Tom and Michael Bailey were once seen as insiders, close to Fianna Fáil, but it was this aspect of their activities that in the end led to their affairs being investigated
Bovale brothers: Michael and Tom Bailey – Ms Justice Finlay Geoghegan ruled earlier this week that the brothers were “guilty of fraud in relation to Bovale and a creditor, namely, the Revenue Commissioners, by reason of the systematic scheme of false accounting”
The ongoing dealings between the State and brothers Thomas and Michael Bailey, of Bovale Developments, bring into sharp focus the concerns that have long existed about the appetite for punishing Irish white collar crime.
The brothers, aged 52 and 60, have been operating one of Ireland’s largest and most profitable house and commercial building operations for more than half a century.
They are still in business today courtesy of the State-financed National Asset Management Agency.
For most of their career, they were insiders, close to Fianna Fáil. But it was this aspect of their activities that in the end led to their affairs being investigated, and eventual public opprobrium.
The planning tribunal was established in October 1997 to examine allegations of corruption and, as part of its work, looked into the affairs of Bovale – despite legal objections from the brothers and what the tribunal later described as hindrance and obstruction by them.
The two brothers, and Caroline Bailey, Bovale’s book-keeper and wife of Thomas, told the tribunal that the company’s records, from its inception in 1983 to 1996, had been stored in a container on a building site in Finglas. But, according to Mrs Bailey, the records had been destroyed in a fire in July 1997.
In fact, as the tribunal’s subsequent report noted, the fire had occurred in July 1998, at a time when orders by the tribunal for the discovery of the documents were being contested and the Supreme Court was about to give its ruling to an appeal brought by the Baileys.
The tribunal went to Bovale’s then auditor, Joe O’Toole, of McGrath & Co, to get copies of his working papers, only to be told that they had been dumped after a flood in the auditor’s office in 1991.
Nevertheless, the tribunal, working with later documents and the Baileys’ personal bank accounts, established that Michael, Thomas and Caroline Bailey were “systematically engaged in siphoning off substantial company funds for their own purposes”.
Cheques were recorded in a cheques payment journal as being issued to creditors when, in fact, they were being cashed by the Baileys. In the three years to June 1991, the tribunal decided, the amount siphoned off was £578,842.
Using the draft accounts for 1996 to 1998, and the cheque journals, the tribunal established that payments totalling £735,000 were falsely recorded in the cheques journal by Caroline Bailey. The trio conceded this fact in evidence to the tribunal. Payments to politicians recorded in the cheque journals were also disguised as payments to creditors.
A wire-bound pocket notebook that was examined by the tribunal was given the sobriquet, the Kitten Notebook.
Michael Bailey produced it in an effort to support evidence he was giving to the tribunal.
The notebook had records of payments made in 1990 and included relatively minor weekly cash payments, mostly to employees, which were not going through the company books.
The tribunal concluded that other notebooks no doubt recorded the much larger payments that were going to the Baileys. These were never produced.
It also concluded that Mrs Bailey was “adept at falsifying documents and producing falsified documents when required to do so”.