Judge orders acquittal in ALH fraud trial

The Aer Lingus Holidays fraud conspiracy trial has collapsed with the two accused men being found not guilty by direction of Judge Kieran O'Connor.

The multi-million pound trial ended suddenly at the start of the 35th day of the hearing at Dublin Circuit Criminal Court, when the prosecution indicated it was not offering any further evidence.

Judge O'Connor then discharged the two accused, solicitor Mr Desmond P. Flynn and accountant Mr Peter Kealy, and told the jury the defendants were entitled to leave the court with their reputations intact.

Mr Flynn, of Tritonville Road, Sandymount, and Mr Kealy, of Corrig Avenue, Dun Laoghaire, had pleaded not guilty of conspiring together and with Mr Peter No-one on dates from March, 1987, to November, 1988, to defraud Aer Lingus Holidays by using funds to buy property in Lanzarote, Canary Islands, for their own use and benefit.

Judge O'Connor told the jury the evidence offered in the case showed that Aer Lingus Holidays "was run in a most appalling manner with false accounting to hide the fact the company was in effect insolvent".

Aer Lingus plc had set up ALH as a subsidiary company by buying out four other companies and combining them in one with the intention of increasing the number of holiday-makers it carried. The true picture of the financial state of ALH was concealed from everyone by understatement of its liabilities and overstating its creditors through false accounting.

The Minister for Finance was the shareholder in Aer Lingus plc on behalf of the people of Ireland and the accountant he appointed to inspect the ALH books was also fooled by the false accounting. The evidence showed that even a date on a lease had been altered so that the transaction was moved from one financial year to the next.

The accountant had given very professional evidence in which he said he could not find out who was responsible for the false accounting.

Aer Lingus had issued what were called "letters of comfort" which were designed to show Aer Lingus was endorsing everything its subsidiary did. The question had arisen as to where were the borrowings carried out for property deals shown on the ALH books. The court was told they should have been indicated on the AL plc group balance sheet, at least.

Judge O'Connor recalled evidence that unquantified "millions of pounds" of losses had been suffered by Aer Lingus as a result of the "appalling manner" in which ALH had been run.

"The two accused men are entitled to walk out of this court free against the background of all the evidence adduced in the trial," said Judge O'Connor.

Judge O'Connor told the jury that the accused men had been charged with committing a very serious offence and were entitled to be granted a direction of not guilty. In other circumstances they would have been entitled to ask for a direction of not guilty and the presiding judge would have granted it, if he decided there not was sufficient evidence for a jury to convict.

Judge O'Connor said the position in this case was that the prosecution had decided it could not offer any more evidence so that the court had to direct the jury to find the accused not guilty.

He said the evidence which he had ruled on last week as being inadmissable was the first of a series of bank statements the prosecution had intended offering but when it was ruled inadmissable the State could not then bring further similar evidence as intended.

The end of the trial was signalled last week following a ruling by Judge O' Connor that the purported evidence in relation to movements of cash in an account in the Midland Bank in London was inadmissable.

At that stage, State counsel Erwan Mill Arden SC and Ken Mills SC (with George Birmingham BL) asked for further hearing to be adjourned so that they could take instructions from the Director of Public Prosecutions.

Judge O'Connor discharged the jury and told the members they would never again have to serve as jurors unless any of them wished to.

"You have been a wonderful jury. You were never late in even now at the start of your ninth week. You have been diligent and attentive and kept abreast of very complex details"