Two men who defrauded Ulster Bank of more than €1.27 million by lodging fictitious invoices with the bank to keep their label-manufacturing business afloat have escaped jail at Dublin Circuit Criminal Court.

Niall Clarkin (61), of Springfield Park, Foxrock, received a 12-month suspended sentence and Gerard Roche (68), of New Row Square, Dublin 8, received a one-month suspended sentence from Judge Frank O'Donnell.

Both pleaded guilty to carrying on a business with intent to defraud Ulster Bank between January 1st, 1996 and October 14th, 1998.

Clarkin, the managing director of the Label Centre, and Roche, its general secretary and financial controller, lodged the false invoices in the hope that the company would get out of financial difficulty and they could repay the money.

Det Sgt Kevin Gateley said Ulster Bank operated a system known as invoice discounting, whereby it loaned companies money on receipt of invoices and the company paid the bank 75 per cent of money owed to it.

When the company had been paid for its products and services, it repaid the bank and the bank took its fee from the payment. Ulster Bank Commercial Services Ltd had no reason to believe that the invoices it received from the Label Centre were fictitious.

Judge O'Donnell said he had to face the reality of the offence and the massive loss the bank still carried. "One might be tempted to feel sorry for the two defendants because there is no doubt that they've lost a lot," he said. "However, I have to face the reality of the situation and there is a substantial loss to a financial institution. Financial institutions are the bedrock of our society. If they collapsed, everything else would collapse," he added.

Det Sgt Gateley told Mr Shane Murphy SC, prosecuting, that Clarkin was one of the founding members of the Label Centre in 1981 and the business was very successful up until the mid-1990s.

Around 1996, sales figures were down and, in order to save the business, Clarkin concocted the scheme of defrauding Ulster Bank with the help of Roche. The company invested more than €1.27 million in new technology, described as an over-ambitious expansion project.

Roche had no stake in the company and his only motive for getting involved was loyalty. Both instructed the accounts staff on how to issue the invoices.

Det Sgt Gateley said Ulster Bank gave its customers 90 days to repay the money, at which stage the Label Centre issued a credit note, thereby cancelling the invoice.

On October 15th, Ulster Bank held a meeting at which a director of the Label Centre was present. Clarkin instructed him to admit to the scheme because the realisation had set in that there was no chance of repaying the money.

They estimated the figure outstanding was around €977,700 but Ulster Bank assessed its accounts and discovered it was actually at a loss of €1,404,483. The Garda Bureau of Fraud Investigation was called in to investigate and the company went into receivership.

Both men filed for bankruptcy. Clarkin reached a High Court settlement of €214,789 and Roche a settlement of €342,829. Both payments received the approval of their creditors. The two men had to sell their family homes as a result.

Ulster Bank received €563,764 repayment thanks to the settlements after another director paid the sum of €6,349. No charges were brought against him. The bank was still owed nearly €888,816.

During the period of the fraud, Clarkin was also forced to get substantial loans from family and friends to help him out and this brought him further into debt.

Mr Brendan Grehan BL, for Clarkin, said his client had to re-employ himself and was now back to where he was more than 20 years ago, on the road as a salesman. He never lived a lavish lifestyle and only persisted with the hope that "a sunny day" would arrive and the bank could be repaid.

Mr Patrick Marrinan SC, for Roche, said his client had now retired and stood to gain nothing, directly or indirectly, in the scheme. He should have been a man now enjoying his retirement with a nice nest egg but was not.