The possibility that Dunnes Stores Ireland could have been run with intent to defraud its shareholders is one of the reasons the Tanaiste, Ms Harney, decided to have an authorised officer appointed, it emerged yesterday.
Dunnes Stores Ireland is the "flagship" of the Dunnes Stores operation in this jurisdiction. The company is owned by the Dunnes Stores holding company, which in turn is owned by a trust. The main beneficiaries of the trust are Ms Margaret Heffernan, Mr Frank Dunne and the family of the late Ms Elizabeth McMahon.
In her judgment Miss Justice Laffoy outlined how on July 22nd last Ms Harney wrote to Ms Heffernan. She informed her of the legal basis for her decision to appoint an officer to Dunnes Stores Ireland and to Dunnes Stores (Ilac Centre) Ltd, referring her to the relevant parts of the Companies Act, 1990.
In relation to both companies, Ms Harney referred to sections which cover "circumstances suggesting" that the company may have been run with intent to defraud the creditors of another person; it was necessary to examine the company's books and documents to see if an inspector should be appointed under the Companies Acts; and that certain acts or omissions on behalf of the company may be unlawful. Creditors can include the Revenue Commissioners.
In relation to Dunnes Stores Ireland, Ms Harney referred to two other parts of the Act. These cover "circumstances suggesting" that the affairs of the company were run with intent to defraud its shareholders, and the affairs of the company were run in a manner which was unfairly prejudicial to some of its shareholders.
A demand for documentation made by the authorised officer on July 24th was found by Miss Justice Laffoy to have been "excessive and unreasonable". Among the documentation sought were financial statements, the Price Waterhouse report, all documentation concerning Dunnes accounts in the Bank of Ireland, Marino, and statutory returns.
The demand was not acted upon as legal proceedings were initiated by Dunnes. A fresh demand is unlikely before the new year. Counsel for Ms Harney agreed that no such application would be made until two weeks after Dunnes Stores was given the reasons Ms Harney came to the views she did in relation to the two Dunnes companies. Miss Justice Laffoy ordered that these reasons be conveyed to Dunnes by November 27th. The companies can then decide if they wish to seek a fresh judicial review of Ms Harney's decision.
Miss Justice Laffoy said she would not rule on whether the Price Waterhouse report was covered by legal and professional privilege. The report was prepared for the Dunnes Stores group in connection with legal proceedings initiated by Mr Ben Dunne and concerning the Dunnes group. The proceedings ended when an agreement was reached in November 1994.
Copies of the report have been supplied in the past two years by Dunnes Stores to Mr Justice Buchanan, the McCracken tribunal and the Moriarty tribunal. The company has said it does not wish to supply a copy of the report to the authorised officer. Mr Peter Fisher, the authorised officer inquiring into Garuda Ltd, sought the document in March of this year but was refused. The Tanaiste has welcomed yesterday's High Court decision and "in particular the fact that the appointment of the authorised officer to the Dunnes companies still stands".
