Bord Na Mona pays £240,000 tax bill on company perks

BORD Na Mona made a £240,000 tax settlement with the Revenue Commissioners last year, including a payment of £15,000 in respect of expenses paid to its chief executive, Dr Eddie O'Connor.

The settlement by the State owned company was in respect of the 1993/94 and 1994/95 tax years.

It has also emerged that the recently appointed chairman, Mr Pat Dineen, instructed that Bord na Mona dispose of an interest in a time share villa in Portugal which was used by senior executives. He also established new procedures for paying expenses to executives.

The board was told in December, shortly after Mr Dineen had taken over, that the company had negotiated with the Revenue Commissioners that the settlement not be published in the annual list of defaulters.

According to minutes of the meeting seen by The Irish Times, the board was told this had saved the company some embarrassment. The Revenue does not publish such settlements when the company makes a full disclosure ahead of an audit.

Dr O'Connor, who earns £65,000 a year, is also paid annual expenses of around £20,000. New procedures for the payment of expenses to Dr O'Connor and other senior management were introduced following the appointment of the new chairman.

Dr O'Connor's expenses are now approved directly by Mr Dineen. In addition, the expenses of all senior executives and board members are summarised annually by category and presented to the board, according to the board minutes.

Mr Dineen also ordered the disposal of the company's interest in the Portuguese time share apartment. The interest was acquired for £40,000 in 1988 without the knowledge of the full board.

It entitled Bord na Mona executives the use of a villa in Portugal for eight weeks a year.

The senior executives of the company used the villa in rotation. Dr O'Connor never availed of it.

Dr O'Connor said last night the time share holidays were a way of rewarding the senior management for their efforts, which helped turn around the loss making company.

Mr Dineen stopped the practice of the company purchasing wine in bulk for use at dinners after board meetings, and for corporate entertainment.

Bord na Mona spent £2,000 on wine for these purposes during the 1993/94 and 1994/95 tax years.

Mr Dineen ordered the disposal of the time share and an end to the wine purchases as he considered them inappropriate and not essential or desirable for the conduct of the business.

The new chairman also commissioned a report from the company's auditors, Price Water house, on Dr O'Connor's remuneration package.

The purpose was to tabulate the various elements of the package which had been agreed on an informal basis with the previous chairman, Mr Brendan Halligan, according to the company finance director, Mr John Hourican.

The report was completed by Price Waterhouse earlier this month and a copy forwarded to the secretary of the Department of Transport, Energy and Communications, Mr John Loughrey. Further clarification has been sought by Mr Loughrey, according to a statement issued by Mr Dineen yesterday.

The chairman said in the statement that he would make no further public comment on the report until he had had an opportunity to discuss it with the board of the company, which is due to meet this week. A spokesman for the Department said it was making no comment.

Mr O'Connor said last night that there was no question of him having to consider his position at Bord na Mona, in the light of the the commissioning of the report by Mr Dineen and the revelation of the tax settlement by the board for his expenses.

The bulk of the £240,000 settlement related to two issues. The company paid £90,000 in settlement of tax owed on relocation expenses paid to Bord na Mona employees when the company moved its corporate headquarters from Dublin to Newbridge. Senior executives did not get relocation expenses, according to Mr Hourican.

Bord na Mona paid another £100,000 in respect of tax owed as a result of the company paying a flat car allowance to some managerial level employees, instead of mileage.

The company had been aware of both these grey areas and had made provision for all but £40,000 of the the payment ahead of the revenue audit, according to Mr Hourican. The payments had to been seen in the context of the company's annual PAYE and PRSI tax bill of £35 million, he said.

The remaining £50,000 included the £15,000 payment for Dr O'Connor's expenses. There were also benefit in kind payments for golf club memberships for senior management, which were paid by the company.

The Revenue Commissioners also found that tax was due on "innovation payments" made to staff in recognition of achievements. The maximum innovation payment was £2,000, said Mr Hourican.