On the morning of December 15th, 1983, two well-dressed men and a woman boarded the Belfast train at Connolly station in Dublin. Finbarr Ross and his companions, the Dublin auctioneer Mr Frank Murray and their assistant Ms Patricia Kidney were travelling north to meet the cream of Northern Ireland's investment community. They made their way to the Stormont Hotel outside Belfast.
A suntanned Ross had travelled from Houston for the meeting. It was an important event. His company, International Investment Limited had carved out a lucrative niche for itself amongst canny farmers and well-to-do professionals in Northern Ireland. It had grown out of a business that Ross had established in the Republic in the early 1970s called the Irish Investment Society, which operated under the same Friendly Society legislation that governed co-operatives. Changes in the law making it necessary to disclose the identity of investors led Ross to transfer his activities to a new company, IIL, based in Gibraltar for tax purposes but managed from Dublin. Exchange controls prevented most residents of the Republic from investing with IIL but Ross soon built a client base in Northern Ireland. The key to IIL's success was to offer higher than average rates of return to depositors apparently generated by astute investments in property and art.
The mood of the Stormont meeting was upbeat. Ross confined his involvement to introducing Mr Murray, who addressed the investors, and then circulating amongst the brokers and a few key clients. Dr John Lowe and Mr Peter Traynor were so impressed with what they heard that that between them they decided to invest almost £55,000 with IIL.
Yesterday, a jury in Belfast Crown Court found Ross guilty of dishonestly deceiving Dr Lowe and Mr Traynor about the financial position of IIL. He was also convicted of attempting to deceive the other investors present.
The trial followed Ross's extradition from the US last May almost 15 years after IIL finally went bust. Some 36 charges of false accounting were thrown out earlier in the week.
The picture of IIL painted at the December meeting was at best an optimistic one. The company was at that moment in difficult negotiations with the authorities in Gibraltar about the renewal of its banking licence and within months it was gripped by a cash-flow crisis. By the middle of the year it had gone into liquidation owing £7.33 million.
The problems at IIL were apparent to people involved in the company, including Ross, for months if not years, John Creaney QC, counsel for the prosecution told the trial. In 1982 Spicer & Pegler, the company's auditors in Gibraltar, resigned after futile attempts to carry out an audit. Mr Michael Morris, a partner with Spicer and Pegler who was a director of IIL, subsequently stepped down.
Ross replaced Mr Morris with another sleeping partner, Mr Ronnie Vincent, an Isle of Man-based financial adviser who was in the process of recovering from a heart attack. Mr Vincent and his wife became directors, but had no real role in running the company. Ross was the key figure until the company collapsed, maintained the prosecution. Although not a director Ross was listed as the company's controller in documentation lodged in Gibraltar in April 1983. This information was crucial to the Crown's case that, despite his claims to the contrary, Ross was running the company in 1983 and must have been aware of IIL's financial predicament at the December meeting.
Things began to fall apart within weeks of the Stormont seminar. At the end of December Mr Vincent got a call from Mr Murray telling him IIL had substantial payments to investors falling due and did not have the resources to meet them. This was just weeks after the Stormont meeting. "Uncomfortably close," according to trial Judge, Lord Justice McCollum.
Some of the northern brokers started to become suspicious. One, Mr Jim Quinn, sent an employee to Dublin to demand receipts for money deposited with IIL. At the IIL's offices, Mr Murray confronted him with the awful reality that it was running out of money.
An ad hoc committee made up of Mr Vincent, Mr Murray and some of the larger brokers was set up to try and rescue IIL. When Ross failed to show for a Dublin meeting, they went to find him. Mr Vincent told the trial he was so concerned that he flew to Houston "in the clothes I was standing up in". Ross was living in the US looking after ILL's investments there.
Within weeks Ross signed over his share in the business to Mr Vincent, along with power of attorney. The brokers looked at injecting further cash into it, or getting clients to take shares in stead of money.
Mr Vincent quickly formed the view that IIL was beyond saving and called in Gibraltar-based accountant Mr Timothy Revill as liquidator. Then in the words of the trial Judge began "the sorry tale of the company's winding up".
Mr Revill prepared an approximate statement of affairs, which concluded that unless there had been a "financial earthquake" immediately preceding his appointment, IIL must have been insolvent at the time of the Stormont meeting. Mr Revill concluded the company owed £7.33 million but only had assets of £1.86 million.
The liquidator's first move was to try and freeze any company assets he could. This included taking an injunction out against Mr Murray, who held property on behalf of the company. To his surprise Mr Murray hired Mr Colm Allen, a senior counsel who had the injunction overturned in the High Court on the basis of a sworn affidavit from Mr Murray that he had no involvement in running IIL. "It was a lie," the court was told by Mr Arthur Harvey QC, Ross's counsel.
Mr Allen then began to act on behalf of the creditors of the company, at the request of Mr Murray. In August that year he succeeded in having Mr Revill removed as liquidator with the support of voting rights signed over to him by clients of the Northern Irish brokers. Mr Revill was replaced by Gibraltar-based accountant, Mr James Galliano. Mr Allen was made chairman of a committee of supervisors set up by the Gibraltar authorities to oversee the liquidation. At Mr Allen's suggestion Mr Galliano hired Mr Declan Collins of Stokes Kennedy Crowley (now KPMG) as his Irish agent, the court was told.
Mr Allen's involvement in the liquidation and removal of Mr Revill was very significant according to Mr Harvey. He queried how Mr Allen could be chairman of a committee charged with looking after shareholder's interest when he had acted for Mr Murray in his attempts to evade responsibility.
"Why did the brokers want Mr Allen," asked Mr Harvey. The answer, he claimed, was that they wanted to control the liquidation, which was - he alleged - subsequently plundered of many of its assets. A key element of their motivation was to string the process out in order to discourage any of their clients from suing them, he said.
Mr Harvey claimed that the company's assets were sold at knock down prices to individuals connected with Mr Murray and the brokers before the liquidation was effectively abandoned in 1991, again through the use of the proxy votes of the broker's clients.
He pointed out that an audit of the company in 1982 by Dublin accountant Mr George Balmer valued the company's assets at £5.45 million compared with £1.86 million found by Mr Revill in 1984, and £900,000 ultimately realised in the winding up. The trial judge, however, raised serious queries about Mr Balmer's valuation.
Amongst the allegations made by Mr Harvey was that more than 100 sites valued at £5,000 each in Balbriggan were sold for just over £1,000 each, some to Mr Murray's brother while a property on Auengier Street in Dublin that was worth £400,000 was sold to the former Irish Press solicitor, Mr Elio Malocco for £60,000. He sold it on the next day for a profit of £225,000, the court was told.
Ross's counsel also mentioned Clondalkin Shopping Centre, which was valued at £480,000, but sold for £82,000. Other property on Baggot Street, Cope Street and Leeson Street yielded nothing, said Mr Harvey. Many of the auctions were conducted by Mr Murray, the court was told. One auction, of Ross's home in Clonee, Co Meath, was disrupted by Mr Collins who claimed there was a problem with the title. The £260,000 house realised only £33,000 and in total the liquidation made only £900,000, all of which went on fees; two-thirds of them to Mr Collins and Stokes Kennedy Crowley.
Also lost to the liquidation was £2 million in loans that were administered by Mr Oliver Conlon, a Dublin lawyer connected with Ross, who was not pursued by Mr Galliano or his agent Mr Collins. Mr Conlon, and another Dublin solicitor, Mr Paul Smithwick, held assets on behalf of the company, said Mr Harvey. The company's art collection failed to raise any significant sums and some went missing, according to Ross's counsel.
The prosecution countered that the properties were heavily indebted and there were problems with the legal title to many of them. The prosecution's argument was weakened by the absence of documentation and the refusal of Mr Collins, who effectively ran the liquidation, to travel to Belfast to give evidence.
The premise that millions of pounds worth of assets went "missing" or were squandered in the liquidation was central to Ross's defence, which argued that if they were taken into account it would have been plausible for Ross to claim that in December 1983 he believed that IIL was solvent and thus he did not deceive the investors at the meeting. Yesterday, a Belfast jury of five women and four men concluded that he was not telling the truth.
