A cheque from Century Communications Ltd payable to another company owned by Century's co-founder, Mr Oliver Barry, was not logged correctly in Century's accounts, the Flood tribunal has been told.
Giving evidence, Mr James Stafford, a founding director of Century radio, said he understood the £26,250 cheque to Quality Artists Management Ltd (QAM), dated June 20th, 1989, and signed by Mr Barry, was to remunerate him for payments made on behalf of Century in December 1988.
Mr Stafford described the fact the payee of the £26,250 cheque was not marked in the cheque payments journal as "very strange and highly irregular and I wasn't aware of it".
He confirmed Mr Barry paid £21,250 to businessman and accountant Mr Pascal Taggart as a "contribution" towards the "Dublin 1" local radio franchise project which Mr Taggart was involved in. The second payment was made to Fianna Fail in the form of a £5,000 bank draft.
The cheque to QAM was later written off as a cost of setting up Century radio at the instruction of Mr Stafford. Mr Stafford said yesterday the £5,000 donation to Fianna Fail should not have been treated as a cost either. "I was incorrect in doing that."
He also recalled how Ms Noreen Hynes, the Century financial controller, and Mr Michael Laffan, the Century chief executive, later made inquiries about what the money had been used for.
Mr Patrick Hanratty, counsel for the tribunal, said the IRTC was never aware of Century's interest in the "Dublin One" franchise project and Mr Taggart, a minority equity partner, was used to conceal the payment by Century. Mr Stafford said he had never met or discussed the matter with Mr Taggart.
Mr Hanratty said there was nothing in Century's accounts to show it had made a "substantial" financial contribution to a local radio franchise bid in addition to its bid for a national licence. Mr Hanratty also showed a copy of a memorandum by Ms Hynes to Mr Laffan in January 1990 querying the £26,250 cheque payment to Mr Barry. "Were you aware of the payment in January 1990?" he asked.
Mr Stafford replied "no, not really", adding he believed the payment had gone through the proper accounting procedures.
A second memorandum from Mr Laffan to Mr Laurence Crowley, the Century chairman, said the matter had been brought to the attention of Mr Barry and Mr Stafford "who said they would deal with it".
Mr Stafford said he had no recollection of discussing the cheque but if Mr Crowley had asked him about the payment he would have told him. The first year of Century's accounts were audited in September 1990 by Mr Brian Gaffney, of Touche Ross, who raised further queries about the cheque and found it had been refunded by QAM.
"I am awaiting receipt from Oliver Barry of back-up documentation relating to an amount of £26,250 drawn by him from the company prior to December 31st, 1989, carried as a debtor at that date and refunded subsequently," he wrote in a memo to Mr Crowley. Mr Stafford yesterday said the subsequent payment of £26,250 to Century by QAM on January 8th, 1990, "doesn't make sense".