State’s driver theory test operator paid dividend in year it got Covid subsidies

A US multinational with the State contract to run the Republic’s driver licence theory tests last year paid a €1.25 million cash dividend to a company tax-resident in Malta, and from there on to Luxembourg. In the same period, it also claimed Irish taxpayer-funded Covid subsidies of more than €500,000.

After it paid the dividend, Prometric Ireland, which employs about 200 staff, continued to claim more taxpayer-funded Covid wage subsidies until the middle of 2021. This was despite it saying in its 2020 accounts that it had a “strong” financial performance and that it expected to make up any lost business from Covid at a later date.

News that a major company doing business with the State sent dividends from Ireland to offshore locations while also qualifying for State subsidies is likely to increase pressure on the Government to tighten the terms of the State’s flagship employment wage subsidy scheme (EWSS), which uses taxpayer cash to help pandemic-affected businesses pay wages.

The Department of Finance said on Wednesday it would look at changing the law to stop companies in the scheme paying shareholder dividends, after The Irish Times revealed that O'Flaherty Holdings, the family-owned group that sells Mercedes-Benz cars in Ireland, sent a €1.8 million dividend to the Isle of Man last year while also claiming a similar amount in Covid subsidies.

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Parent company

Prometric's accounts for the 12 months to the end of September 2020 state it paid a "dividend totalling €1.25 million to the immediate parent company, Ireland Test Center Delivery Limited (ITCD), domiciled in Ireland and a Maltese tax resident".

The cash payment is confirmed in its cash flow statement and referred to as a “dividend” repeatedly in the accounts.

Prometric’s sales fell by 10 per cent to €21.5 million, as its test centres were shut during the initial Covid lockdown. But it still managed to post a profit of almost €200,000 after it received State assistance of more than €507,000, including €474,000 in wage subsidies.

The directors gave an upbeat account of its financial prospects, highlighting that it expected any revenue lost during lockdown to be merely “deferred as opposed to lost” because of pent-up demand for theory tests.

Meanwhile, the accounts for ITCD, which received the €1.25 million payment, show it then sent a “cash dividend” of €4.44 million to its shareholder, Prometric Luxembourg. This is confirmed in its cash flow statement.

Difference of €1.25m

When asked if it was appropriate to pay cash dividends from Ireland to offshore locations while also claiming subsidies, Prometric’s head office in the US insisted it “did not pay dividends to stakeholders or outside investors”, despite it being described as a dividend in its accounts.

It said the cash was the distribution of proceeds of the sale of a 20 per cent stake in a UK business.

ITDC’s accounts do give details of the sale of the UK stake, and its proceeds of €3.19 million. However, the cash dividend paid to the shareholder in Luxembourg was €4.44 million, with the difference of €1.25 million equating exactly to the additional dividend originating from Prometric Ireland.

When it was suggested to Prometric that, given it claimed subsidies until mid-2021, the total of taxpayer cash it received must be close to €1.5 million, the company declined to confirm exactly how much it had received. It said it would be in its next set of accounts.

When asked if it would repay the taxpayers’ cash, given it had also paid dividends, it said the subsidies had been already paid to its staff. Prometric said it would continue to invest in its Irish operations.