An investment company at the centre of the £1.9 million (€2.4 million) fraud allegation against the directors of MMI Stockbrokers Ltd, at one stage owned Dana Petroleum shares worth £5.47 million.
The investment company's MMI client account has been linked to a Co Clare bookmaker and amusement arcade owner who has, however, told The Irish Times he knows nothing of the account or of MMI.
The bookmaker, Mr Adrian Lynch (43), of Kilkee, Co Clare, was identified in Central Bank documentation given to the MMI liquidator, Mr Tom Kavanagh, as the beneficial owner of a large client investment account held by MMI.
However, the size of the shareholding held in the account has not before been disclosed, nor the fact that it involved such a large number of Dana Petroleum shares. The Dana shareholding was so substantial it is likely to have affected the share price of the stock, such was the investor's demand for shares.
The Central Bank conducted two separate investigations into MMI in recent years and in both instances sought to establish the beneficial ownership of the client account now at the centre of the fraud allegations. However, the beneficial ownership of the account still remains unclear.
It is known that a Jersey-based investment company, Loki Investments Ltd, is associated with the account. According to a British database, Loki Investments had 19.05 million Dana shares on August 21st, 1997, or 3.26 of the then market capitalisation of the plc. The shareholding was equal to almost 30 per cent of the Dana shareholding known to have been held by MMI on behalf of clients at the height of the stockbroking firm's involvement with the share.
MMI, which was incorporated in March 1992, arranged "rollovers" for its clients, a mechanism whereby clients could repeatedly delay their settlement dates. Investors in Dana shares were heavily involved in rollovers, in some cases delaying payment for up to two years. When the London firms underwriting MMI decided to no longer support so much of this business, MMI had to sell millions of Dana shares, a move which led to the share price going through the floor, and MMI eventually going into liquidation.
LOKI Investments' relationship with MMI was at one remove. The Jersey-registered company appointed Cater Allen Nominees Ltd, also of Jersey, to hold all its shares and investments, and Cater Allen in turn gave MMI full discretion to manage its client investments on its behalf. Cater Allen is a subsidiary of the Abbey National group.
The Cater Allen account with MMI was opened on June 1st, 1997. The account was opened by transferring the balance from another MMI client account, this one in the name of IBI (Investment Bank of Ireland) Nominee Accounts. The transfer occurred at a time when MMI was being questioned about the IBI account by the Central Bank.
In a reply to the Central Bank in July 1997, MMI director Mr Oisin Fanning said the IBI account was owned by his father, Mr Enda Fanning. He also said it was "previously beneficially owned by Oisin Fanning, Paul Boucher and John Curran". Mr Boucher and Mr Curran are also MMI directors.
The Central Bank subsequently inquired into the ownership of the Cater Allen account, though when exactly this occurred is not yet clear. The bank was told the account was beneficially owned by Mr Adrian Lynch, of Kilkee, Co Clare. An MMI director, Mr Colm O'Reilly, told the Central Bank that Mr Lynch authorised payments from the account. Mr Kavanagh believes this suggestion is "not credible" because of the arrangement which Cater Allen had with MMI in relation to the management of the account.
The Central Bank documentation supplied to Mr Kavanagh includes a handwritten note, dated August 30th, 1996, "purporting to come from Mr Adrian Lynch", as Mr Kavanagh told the High Court. It is addressed to Mr Oisin Fanning and refers to a gift of £500,000 from Mr Lynch to Mr Fanning. No further details concerning the alleged gift have yet emerged.
Mr Lynch is the owner of an amusement arcade, Arcadia, located in a former cinema in Kilkee. The arcade opens onto the seaside town's main street, O'Curry Street, and backs onto the beach. It is open only during the summer season. Mr Lynch is the owner of a bookmakers, Adrian Lynch Turf Accountants, in Market Street, Ennis, Co Clare, and was formerly the owner of a bookmakers in Kilkee which is now understood to be closed.
The businesses are owned through Adrian Lynch Ltd, a £100 company owned by Mr Lynch and his wife Mrs Colette Lynch. The balance sheet included with the company's annual returns for 1998, indicates a profit for the year of less than £5,000. The accumulated profit for 1998 is £32,640, while the same amount for 1997 is given as £27,878.
The accounts show the company as having no overdraft or bank loans, and that the directors are owed £23,008 by the company. Cash at bank and on hand is given as £6,279, and the turnover, which is not disclosed, is given as representing receipts from two bookmaking outlets and an amusement arcade. Fixed assets are given as £60,212.
When contacted last week, Mr Lynch said he had never heard of Cater Allen, MMI, or any of the MMI directors. This week he did not return calls to his home or his Ennis bookmakers.
According to Mr Kavanagh's affidavit to the High Court, he believes £1.9 million was taken from the Cater Allen account and transferred to other accounts, including accounts in the name of, or linked to, Mr Fanning and Mr Curran. The net effect was to reduce the amounts owed on the accounts to which the money was transferred, but to switch Cater Allen from being a creditor to being a debtor.
Cater Allen has informed Mr Kavanagh it intends to sue to have its client's funds returned. If such an effort ends up in the courts it may shed further light on who was the beneficial owner of the account. The fraud case being taken by Mr Kavanagh against the seven former MMI directors may do the same.
