Dublin businessman Mr Harry Crosbie appears to have benefited from at least two payments made from a "secret" First National Building Society account by the directors of a company alleged to have misappropriated significant amounts of money and to have debts to the Revenue Commissioners of up to £2.5 million, the High Court was told yesterday.
Mr Justice Peter Kelly ordered that Mr Crosbie, a former director of HJS Ltd, two directors of Eastland Warehousing Limited - Mr Joseph McNamara, Clonkeen Crescent, Kill Of The Grange, Dun Laoghaire, and Mr John McDonnell, Rathbeale Crescent, Swords, Co Dublin, and Mr Aidan O'Driscoll, a bookkeeper said to be responsible for maintaining the books and records of Eastland over the past number of years, attend before the Master of the High Court for examination upon oath relating to the trade, business activity, assets and other related matters concerning the company.
He also directed that Mr Crosbie and Mr O'Driscoll, of River Valley View, Swords, produce within four weeks all documents and records in their custody or power relating to the affairs of the company. The judge made the orders under Section 245 of the Companies Act following an application by Mr John Gleeson, for Mr Tom Kavanagh, one of the joint liquidators of Eastland.
The judge refused an application by Ms Deirdre Byrne, counsel for Mr Crosbie, for an adjournment of the application against her client. Ms Byrne said Mr Crosbie was willing to assist the liquidators but wanted time to file a replying affidavit in relation to information sought by the liquidators. Her client's solicitors had been under the illusion that the matter was resolved to some extent and that may have been the reason for the delay in responding.
There was no need for a court order regarding Mr Crosbie because he would co-operate, counsel added.
The judge said Mr Crosbie had said he would co-operate with the liquidators. There was therefore no necessity to adjourn the matter because, if he was willing to co-operate, the only way the matter could proceed was under court order because there was no mechanism for a person to voluntarily appear before the Master of the High Court.
Mr Crosbie was first written to by the liquidators in July 1998 and a further letter was sent on September 14th, 1998, seeking a reply within seven days. That letter also made clear that it was the liquidators' intention to seek an examination before the Master of the High Court and had stated a reply would be of help.
A further letter was sent on behalf of the liquidators on October 9th, 1998, which was acknowledged by solicitors acting for Mr Crosbie on October 12th. A further letter was sent to Mr Crosbie's solicitors on November 3rd, 1998.
In those circumstances, and given the express intention of Mr Crosbie to help the liquidators, there did not seem to be any necessity for further delay, the judge said. He would make the order sought by the liquidator in relation to Mr Crosbie.
In April 1998, Mr Justice Kelly granted orders to the liquidators against the two Eastland directors, and against HJS Limited, restraining them from reducing their assets in the jurisdiction below £2 million, and from reducing their shares in HJS below £2 million.
On that occasion, the court was told the joint liquidators were appointed following a meeting of creditors of Eastland in October 1997. The company operated a bonded warehouse at East Wall and, prior to its liquidation, had a significant turnover in storage under bond of wine and other alcoholic drinks.
In an affidavit read during the April hearing, Mr Kavanagh said the company appeared to have retained for its own use and/or to have misappropriated to itself or through its directors very significant amounts of money. He said the Customs and Excise indication of a revenue liability of more than £2 million could be contrasted with a statement of affairs of the directors showing £800,000 due. Last July, the High Court ordered the warehouse be sold and the benefits of the sale be lodged in court.
In an affidavit for yesterday's hearing, Mr Kavanagh said investigations were continuing into the affairs of Eastland and these had disclosed that the company's ultimate liability to the Revenue might exceed £2.5 million. That liability was largely accounted for by the failure of the company to pay excise duties and other taxation liabilities, he said.
He said that insofar as Mr Crosbie, of The Malt House, Hanover Quay, Dublin, is was concerned, he was a director and shareholder of HJS Ltd before his shares were purchased in 1995 by Mr McNamara and Mr McDonnell. He said the liquidators had sent letters to Mr Crosbie requesting information on a number of matters.
The liquidators were now contemplating further proceedings against the directors under the Companies Act "on the basis that there has been fraudulent and/or reckless trading by the directors of the company".
Mr Kavanagh said Eastland appeared to have retained for its own use substantial funds collected on behalf of the Revenue Commissioners in respect of excise duty and other taxation liabilities. It appeared the directors operated a secret account in the First National Building Society into and out of which large sums of money were channelled and, meanwhile, the revenue liabilities continued to accumulate over the years.
