Dáil Éireann díospóireacht -
Tuesday, 1 Jun 1993

Vol. 431 No. 6

Written Answers. - Aer Lingus Holidays Collapse.

Ivor Callely

Ceist:

107 Mr. Callely asked the Minister for Transport, Energy and Communications the circumstances, if any, which led to the Aer Lingus Holidays collapse; the action, if any, which he has taken in relation to suspected fraudulent activities which led to the collapse; and if he will make a statement on the matter.

Minister for Transport, Energy and Communications (Mr. Cowan)

On 24 January, 1990 the then Chairman of Aer Lingus informed my predecesor that major losses has been incurred in Aer Lingus Holidays Limited. These losses, it was stated, had arisen mainly from unreported trading losses over a number of years of some £7 million.

The Chairman also informed my predecessor that, in addition, it had been deemed prudent to write down the value of the company's apartment properties by some £3 million.

An investigation into the reported discrepancies was carried out by a major chartered accountancy firm, Craig Gardner. The Garda Síochána were also contacted by Aer Lingus.

On 11 May, 1990 my predecessor received from Craig Gardner the report of their investigation into the affairs of Aer Lingus Holidays. The report confirmed that the company over a period of years incurred previously unreported trading losses of £7.3 million, of which £3.6 million was incurred in the year ended 31 October, 1989 and £3.7 million in earlier years. The report also revealed unreported property losses amounting to £2.1 million in the years 1988 and 1989 and unaccounted for property borrowings of some £700,000.

Having consulted the Attorney General, my predecessor referred the Craig Gardner report on 15 May, 1990 to the Commissioner of the Garda Síochána for further investigation.

My predecessor issued the following instructions to the Board of Aer Lingus:

(1) to furnish to him immediately a detailed report on the measures which had been taken to improve the internal system of financial control within the Aer Lingus Group;

(2) in particular, to satisfy him that there were now adequate controls in place to ensure that irregularities such as occurred in Aer Lingus Holidays could not be repeated anywhere in Aer Lingus or in any of its subsidiaries;

(3) to take disciplinary action, where appropriate, in the light of the Craig Gardner report and advise him in due course of the action taken;

(4) to take appropriate civil action, where necessary, and let him know the outcome; and

(5) to make arrangements for a phased and orderly withdrawal by Aer Lingus Holidays from the tour operating businesss at the end of the season.

I am advised that, following the submission of the original Garda report to the Director of Public Prosecutions, further investigations have been necessary and these are proceeding with a view as to a decision as to whether there should be criminal proceedings.

Besides the question of criminal proceedings, I am aware that Aer Lingus have brought two sets of civil proceedings arising from the affairs of Aer Lingus Holidays, one of them against the former auditors of that company.

I am advised that any further comment on my part would involve the risk of prejudicing not only any criminal proceedings which may be brought but also those civil proceedings.