A County Cavan meat firm engaged in systematic fraud in order to avoid its PAYE and PRSI responsibilities under the Finance Act, Cavan Circuit Court was told yesterday.
Liffey Meats (Cavan) Ltd, based at Ballyjamesduff, was before the court for making incorrect returns in respect of income tax and PRSI for the years 1990, 1992 and 1994. Cheques totalling £3 million (€3.8 million) were issued under false names to provide cash for paying management and employees.
The company pleaded guilty to the summonses which Mr Alex Owens, for the Director of Public Prosecutions, stated had arisen as a result of an investigation carried out by the investigation branch of the Revenue Commissioners. Following receipt of confidential information, two officials of the Revenue Commissioners attended Liffey Meats to investigate.
After initial denials, Mr Frank Mallon, managing director of Liffey Meats Ltd, admitted that false declarations had been made in respect of PAYE and PRSI.
The investigation disclosed systematic fraud that involved the company writing cheques which appeared in the cheque stubs in false names. The cheques were drawn on a local branch of Ulster Bank and cashed. They were then returned to the company and destroyed.
Cheques totalling £3 million in false names were drawn by the company. The name mainly used was T Kinnane, to whom cheques totalling £2.8 million were written. The system was used to make under-the-counter payments to both ordinary employees and to members of the company's management.
The investigators found cheques drawn by the company that appeared to have been drawn and signed by Mr Eamon Hughes, a brother-in-law of Mr Mallon. Mr Hughes was described as the transport manager of the company, yet he didn't appear to be listed in the books as an employee of Liffey Meats.
Mr Owens further revealed that when the matter was disclosed, Mr Mallon then engaged his accountants and a sum of £1.4 million (€1.77 million) was paid by the company on account in respect of the underpayments and for penalties.
A dispute exists at present between the Revenue and the defendants as to what the final assessment should be. The company claims that the element of untaxed wages stood at £864,700, while the Revenue believes it was much higher. This matter would be resolved after the case before the court was dealt with.
According to Mr Owens, the Garda, while accepting that there was some degree of co-operation, also took the view that there was a marked reluctance by anyone in this particular company to make any statement in relation to the matter.
According to Sgt Gerry Mullins, the method of deception used was one in which cattle were purchased from farmers and then kept for a period on Mr Mallon's farm. They were then sold to Liffey Meats, with cheques being issued to T Kinnane and cashed by the company. The cheques were used to create cash to pay employees of the company.
Mr Sean Moylan, for the defendants, said he didn't dispute the facts. The matter was admitted at a very early stage and a sum of £1.4 million, made up of £860,000 for unpaid tax and £500,000 in respect of penalties and fines, had been paid over by his clients. The company had been heavily penalised already, he said. The money was basically going to employees and the practice was endemic in the industry at the time.
Mr Owens said the maximum fine in respect of a company was £10,000 on each summons, while individuals were liable to a maximum sentence of five years imprisonment.
Judge Matthew Deery said that the defendants had acknowledged their responsibility at an early stage and entered pleas of guilty. However, it appeared, according to Sgt Mullen, that it was difficult to get co-operation from any people involved in the company. It was the company which was before the court and the relevant penalties were limited in those circumstances to monetary ones. He fined the company £5,000 on each of the three counts.
