The former secretary of Aer Lingus Holidays told a fraud trial jury the company's board "never discussed let alone decided" to use funds borrowed to purchase property for any other purpose.
Mr Robert Lee also said it came as "a total surprise" to him when he read references in a 1990 report by accountants Craig Gardner to a property called Los Hibiscos and a company called Delmont Investments Ltd, trading as Harskin Properties.
He told Dublin Circuit Criminal Court he had attended all board meetings from the company's formation in 1983 to 1990 and had not come across any of these names.
Mr Lee said it was Aer Lingus policy that no subsidiary companies could be formed without the approval of the airline's parent board. If Aer Lingus Holidays formed a subsidiary company, it would have been handed over to him to process its registration. Mr Oisin O Siochru, who was secretary of Aer Lingus Group plc from 1988 until he retired in 1994, also told the jury he never heard the names Delmont nor Los Hibiscos until "they surfaced in connection with problems in Aer Lingus Holidays" towards the end of 1989 or early 1990.
"To my knowledge, permission was not given by Aer Lingus to ALH to purchase Los Hibiscos and permission was not given to use monies raised for purchasing property for any other purpose," said Mr O Siochru.
The witnesses were giving evidence on the 19th day of the trial at Dublin Circuit Criminal Court, of former ALH executive Mr Peter Keely, of Carrig Avenue, Dun Laoghaire and solicitor Mr Desmond P. Flynn of Tritonville Avenue, Sandymount, who have pleaded not guilty to conspiracy to defraud.
Both men deny they conspired together and with Mr Peter Noone, former financial controller of the company, on dates from March 1987 to November 1988 to defraud Aer Lingus Holidays by misappropriating funds to purchase part of the Los Hibiscos apartment complex for their own use and benefit.
Mr Lee told prosecuting counsel, Mr Kenneth Mills SC, he wrote all the board minutes and circulated them to the directors. The original copies were held under lock and key in the company's Dawson Street office. Two members of senior management - the chief executive Mr Malachi Faughnan and the general manager finance Mr Peter Noone - were expected to attend all board meetings. Other top management people attended as required.
Mr Lee identified his signature and that of ALH chairman Mr Cathal Mullen on a series of trial exhibits from the company's minutes. He noted that a resolution dated September 5th, 1988, related to three properties - Las Vegas and La Penita in Lanzarotte and Ecudor in Malaga. Witness told Mr Mills that the decision to authorise Mr Noone "and/or" a Spanish lawyer called Mr Jose de le Costa Rosa to act jointly or independently in this transaction was made at the suggestion of Mr Noone who said it was necessary to satisfy the Spanish authorities.
Mr Lee said six documents adopted at a board meeting on October 5th, 1988, dealing with contracts for leasing and purchase options, and including a "declaration of trust" from ALH to Capital Leasing Ltd, were presented by Mr Noone. Witness's job was to process them after affixing the company seal.
Mr Lee agreed with defence counsel Mr Peter Cush SC that Mr Keely never attended any board meeting and, therefore, would not have first-hand knowledge of board decisions. Mr Noone was responsible for all contracts.
Witness further agreed it was obvious at times there had been full discussions outside the board on issues which were then adopted by resolution. He would expect that because, in many cases, the previous board meeting had instructed that to be done and for expert advice to be sought.
Mr Lee also agreed with Mr Cush that what actually happened in the ALH lease-purchase of San Francisco Park bore no relationship to the board decision of July 16th, 1987. The property was leased by ALH from Cara Marketing, another Aer Lingus subsidiary, but this was not in the resolution.
Mr Lee agreed with Mr Hugh Hartnett SC (with Mr John Major BL) that it was his client, Mr Flynn, who handled the change of name of Warlog Travel Ltd to Aer Lingus Holidays (Holdings) Ltd and not himself as he at first thought. The original company was the former holding company for Cara Travel which had been subsumed into Aer Lingus Holidays.
Mr O Siochru agreed with Mr Hartnett he was unaware, until shown it in court, of a letter dated October 12th, 1988, sent by the then Aer Lingus assistant chief executive - finance, Mr Louis Sleator, to ABN Bank, Netherlands, approving the ALH arrangement with Capital Leasing in relation to lease-purchase of property.
He also agreed with Mr Hartnett that a previous letter from Mr Sleator to Capital Leasing dated June 18th, 1987 was put in terms that Aer Lingus was aware of the use of its non-trading subsidiary Cara Marketing in relation to an earlier lease-purchase deal.
