Dispute over consultancy arose within a year of settlement of pension deal

Mr James Gogarty agreed to settle his legal claims against the Murphy group in June 1990, in return for the immediate operation of his pension entitlements, but was involved in disputes with the group less than a year later, the Flood tribunal was told yesterday.

Outlining the final agreement on his pension entitlements, Mr Gogarty told Mr John Gallagher SC, for the tribunal, that on June 7th, 1990, he had agreed to drop all pending litigation against the Murphy group. In return the group was to effect the pension as previously agreed on October 3rd, 1989.

The pension involved the payment of £215,000 less tax, being commission from a figure of £700,000 which Mr Gogarty had recouped on behalf of the Murphy group from the ESB; £284,000 to be paid into a pension fund, with another £15,000 less taxes to be paid directly to Mr Gogarty.

In addition there was to be a five-year consultancy contract at £23,500 per year for Mr Gogarty. He would be allowed to keep his company car and he would be refunded vouched expenses and his telephone account.

However, the consultancy agreement was not successful because of difficulties between Mr Roger Copsey, a financial controller and director of the Murphy group, and Mr Gogarty.

According to Mr Gogarty he and the JMSE managing director, Mr Frank Reynolds, lost confidence in Mr Copsey.

Within a short time Mr Gogarty was again in dispute with the Murphy group over the extent of his consultancy contract. Mr Gogarty maintained there were companies within Murphy control which he could bill separately for consultancy work, in addition to his salary as a consultant. Mr Gogarty also had difficulties over his expenses.

There were also difficulties in relation to the treatment of his payment of £215,000 out of which the Murphy group had stopped tax. Mr Gogarty told the tribunal that when he asked for a P60 he was given four separate P60s from four companies within the Murphy group.

He said he was also concerned that the payments related to different years and he argued that the difference could lead to his paying tax on the money twice.

In response, the Murphy group argued that in providing £515,000 for him it had been generous to Mr Gogarty. In a letter to Mr Gogarty, Mr Joe Murphy jnr said it was within the October 3rd, 1989, agreement to pay the money from any company or companies within the group and in the manner considered most tax-efficient. All taxes stopped had been forwarded to the Revenue Commissioners, he explained.

Following the disagreements Mr Gogarty was told in writing by JMSE that he was not to take on any expenses on behalf of the Murphy group without prior authorisation. He was told he would have to get prior approval for such expenses from Mr Murphy snr.

Mr Gogarty said he bore no malice towards the managing director of JMSE, Mr Frank Reynolds.

Mr Gogarty said that on December 18th, 1990, he wrote to Mr Murphy jnr and detailed his concerns about the tax treatment of his commission. He said that he would have to consult the Revenue Commissioners in relation to his position if he did not hear from the company by January 1st, 1991.

He repeated his concerns in a letter dated January 2nd, and added a new deadline of January 11th for observations from Mr Murphy jnr.

The tribunal continues hearing evidence tomorrow.