A former chief executive of Aer Lingus has denied to a jury that his role in the events leading to a fraud trial was "murky".

Mr Cathal Mullan said he couldn't accept the suggestion which was made by defence counsel Mr Adrian Hardiman SC in the case at Dublin Circuit Criminal Court of two men on conspiracy to defraud Aer Lingus Holidays, of which he was chairman from 1983 to 1988.

Mr Mullan agreed both he and Aer Lingus generally were embarrassed when it was revealed Aer Lingus Holidays ran up £6 million in losses which was not disclosed in the company's accounts.

He only learned of the £6 million deficit and of other matters in a report prepared for Aer Lingus by Craig Gardner in 1990. He and the Aer Lingus solicitors went to the Garda Siochana fraud squad with this report which also found there was a case against the company's then auditors, Stokes Kennedy Crowley (SKC).

Mr Mullan agreed he as chief executive took part in a press conference in 1990 when it was announced Aer Lingus was to sue SKC. That matter wasn't finished when he left Aer Lingus and he didn't know how it progressed but agreed it "emerged later" that SKC had been deceived and lied to by Aer Lingus Holidays.

He claimed, in reply to Mr Hardiman, that "in retrospect" he had come to the conclusion the former chief executive of Aer Lingus Holidays, Mr Malachi Faughnan, was "untruthful".

"It is obvious now there were things he should have told me and didn't and he told me lies. He didn't tell me that money borrowed for property purposes was used to keep the company going," he said.

Mr Mullan agreed with Mr Hardiman that the jury would have to accept either he or Mr Faughnan was guilty of perjury. He would not have been party to "fiddling" the books of the Aer Lingus Holidays Northern Ireland as claimed by Mr Faughnan. The former Aer Lingus chief executive was giving evidence on the 10th 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 to conspiracy to defraud.

Mr Keely and Mr Flynn 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.

Earlier, in his direct evidence, Mr Mullan told prosecuting counsel Mr Erwan Mill Arden SC, that before he read the Craig Gardner report, he had never heard of the Los Hibiscos property or of a company called Delmont Investments which had "Harskin Properties" as a trade name.

Mr Mullan outlined that Mr Faughnan presented a paper to the Aer Lingus Holidays board suggesting the company should purchase apartment blocks in Lanzarote and Malaga as a means of cutting down their costs. It was agreed to lease-purchase them through Capital Leasing with an option to buy them at 40 per cent of the original price after seven years.

Mr Mullan agreed with Mr Hardiman, (with Mr Michael Cush SC and Mr Gerard O'Brien BL) for Mr Keely, that he was a director of up to 20 Aer Lingus subsidiary companies at the time. He ceased to be chief executive when the then government appointed an executive chairman and was now a director of the Abbey Travel/Tower Hotel group which owned five hotels, of Malone Car Rental and of an addiction centre.

Pressed by Mr Hardiman who accused Mr Mullan of "lying" about his past and present business connections, witness agreed he was "a substantial shareholder" of Malone Car Rental. He was one of three shareholders and had a minority holding.

He agreed he was a director of Jurys Hotels when Aer Lingus had a share of that company but ceased to be when the Aer Lingus connection ended.

Mr Mullan said he couldn't recall any connection between Aer Lingus Holidays and Abbey Travel or its subsidiary Abbey Sun. Mr Hardiman recalled Mr Faughnan claimed to the court that Aer Lingus Holidays bought Abbey Sun but Mr Mullan said he was "certain" Abbey Sun was not owned by Aer Lingus Holidays. He had no recollection of Aer Lingus Holidays buying Abbey Sun, or of buying shares in either company. He was not a shareholder of Abbey Travel.

The trial continues before Judge Kieran O'Connor.