Senior management in Aer Lingus Holidays misled the board with inaccurate information and concealed the true state of the company's condition, a fraud trial jury has been told.
Mr Louis Sleator, former Aer Lingus assistant chief executive-Finance, told Dublin Circuit Criminal Court the actions of Aer Lingus Holidays (ALH) management were "a financial disaster" which had "devastated" his life for the past eight years. He said Aer Lingus handled the ALH problem "all wrong".
Mr Sleator said the "whole scale of the real situation in Aer Lingus Holidays" was only revealed after the ALH board removed Mr Malachi Faughnan, the chief executive, and Mr Peter Noone, the financial controller.
Mr Sleator, who was under continued cross-examination by defence counsel Michael Cush SC, said he and other Aer Lingus executives who were directors of ALH, took their responsibilities seriously. They queried ALH management on aspects of the proposals they made in documents for the board before adopting resolutions.
"We were non-executive directors and the great problem for you is what to do if the management is not giving you correct information," he said.
Mr Sleator told Mr Cush he didn't want people to think the members of the ALH board were incompetent. "We were misled and you can say we were naive but that is the situation that led to this extraordinary debacle."
In further reply, Mr Sleator recalled already telling the court he began to be concerned about ALH in January, 1989, and eventually wrote to Mr Faughnan about cash flow figures and other details he was seeking and not getting. Mr Faughnan wrote back claiming there was no problem.
He agreed with Mr Cush he regretted accepting Mr Faughnan's word on the matter but denied counsel's suggestion that the ALH board "abdicated" its duties in any way. Mr Sleator agreed it was "an error" he regretted that the ALH board had not sought a valuation of the La Penita-Los Vegas properties in 1988. If they had the ALH management could not have drawn down £5.3 million and misused some of it by filtering it back into the company.
Mr Sleator told Mr Cush he had no idea of what was done with the balance of the £5.3 million after £2.5 million was paid out for the La Penita-Las Vegas apartments except for what he read in the media reports of the trial.
It was the 23rd day of the trial of Mr Peter Keely, of Carrig Avenue, Dun Laoghaire and Mr Desmond P Flynn, of Tritonville Avenue, Sandymount who have pleaded not guilty of conspiracy to defraud.
Both men deny they conspired together and with Mr 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 in Lanzarotte for their own use and benefit.
Mr Sleator said he had been told by Mr Noone that the use of Cara Marketing had been sanctioned by the relevant section in Aer Lingus and it was Mr Noone also who got him to sign a paper in relation to the use of a company called Dame Street Property Trust for a lease-purchase deal for the Ecudor apartment block in Malaga.
Mr Sleator agreed with Mr Cush it would "amaze him" to learn as he did from counsel that no written contract existed for the lease of Ecudor or with the lending bank. He was unaware also that the Spanish legal document called the `escritura' had a lower figure than the price actually paid.
The hearing continues.
