A liquidator of Eastland Warehousing claimed yesterday that "very significant sums" had been misappropriated and used for personal payments to its directors and to HJS Ltd, a company which owned the warehouse premises.
In an affidavit read to the High Court, liquidator Mr Tom Kavanagh, a Dublin accountant, said his inquiry disclosed that money Eastland should have used to pay VAT and other tax liabilities had instead been used for personal payments to its directors and to HJS.
Eastland operated a bonded warehouse at East Road, East Wall, Dublin, and went into liquidation in 1997 with alleged debts of £2 million to the Revenue Commissioners.
Yesterday, Mr Justice McCracken was told by Mr James Connolly SC, for the liquidator, that the warehouse premises had been sold recently for £2.4 million and the money lodged in court. Mr Kavanagh said the directors and shareholders of HJS and Eastland were Mr Joseph McNamara (since deceased) of Clonkeen Crescent, Kill-o-the-Grange, Dun Laoghaire, Co Dublin, and Mr John McDonnell, of Rathbeale Crescent, Swords, Co Dublin.
The directors had acknowledged that Eastland was entitled to the proceeds of the sale of the East Road premises and that it should be applied for the benefit of creditors in Eastland's liquidation.
Mr Kavanagh said the premises was bought in 1993. When the directors were initially asked what the purchase price was and who had funded it, they said it was was £465,000 and was funded by an Irish Permanent mortgage.
He said the directors had later sworn the purchase by HJS cost £590,000 and it was financed, in addition to the Irish Permanent loan, by a "loan from Eastland Warehousing" for £125,000.
It appeared from the initial proposal in 1992 to buy new premises that the premises would be acquired: 50 per cent by Dublin businessman Mr Harry Crosbie, then a director of HJS, and 50 per cent by Mr McNamara and Mr McDonnell.
He said Eastland made payments of about £125,000 in 1992 to Mr Crosbie. It appeared the company received no consideration for this payment, Mr Kavanagh added. Mr Kavanagh also said that Mr McNamara and Mr McDonnell had, in 1995, bought Mr Crosbie's HJS shares for £85,000.
The liquidator said that sum appeared, even for 1995 values, to have been a very low valuation of shares which represented 50 per cent of the value of the premises. Repayments of the Irish Permanent mortgage had been made by HJS, exclusively from money received from Eastland, he said.
In July last year the High Court permitted HJS to sell its interest in the warehouse premises and at an April 1988 hearing, the court restrained the Eastland directors together with HJS from disposing of assets below £2 million.
Mr Kavanagh, with another Dublin accountant, Mr Paul Wyse, were appointed liquidators of Eastland Warehousing in October 1997. The company operated a bonded warehouse and before its liquidation had a significant turnover in storage under bond of wine and other alcoholic drinks.
