Involving its external auditor – who is expected to maintain independence from the entity they are auditing – in such a commercial transaction constitutes inappropriate behaviour by the charity, corporate governance experts have told Prime Time.
Purchased in 2016, the house, located in Celbridge, cost €260,000.
As Prime Time has previously reported, based on internal McVerry Trust documents, the house was then rented under a 25-year lease to a friend of the former longtime McVerry Trust CEO, Pat Doyle.
The friend did not qualify under the charity's normal criteria for housing allocation. He was subsequently given a transport contract worth €200,000 per year by the charity.
The contract was not offered for public tender, in breach of the McVerry Trust’s obligations.
The friend was also later employed by the Trust, which meant that, for a number of years, he was simultaneously a tenant, contractor and employee of the Trust.
While the man himself did nothing wrong, the case raises serious governance issues for the McVerry Trust.
The external auditor, Dublin-based accountant Donal Ryan, purchased the Kildare property and then transferred it to the Trust on the same day. There is no suggestion that the auditor benefitted financially from the transaction.
The information regarding the motivation for involving the external auditor in the purchase was provided by the former CEO in an interview with Charities Regulator inspectors.
The draft report also states that Mr Doyle confirmed to them that the, "Board was not aware of this transaction at the time."
Prime Time understands that the Board only became aware of the transaction and subsequent letting in mid-2023 after Mr Doyle, who led the McVerry Trust for 18 years, retired from his position in May 2023.
According to the draft report, there were "Numerous material transactions relating to property purchases, transfers of funds, loans and takeovers... that were not known to, or approved by, the Board."
It wasn’t just the charity’s Board which was unaware of the Kildare house purchase, the McVerry Trust’s housing development team, which was typically central to assessing and processing property purchases for the charity, was also not made aware of the purchase.
Spectacular growth
The State’s largest non-governmental provider of emergency accommodation for homeless people, the Peter McVerry Trust had over 530 staff and housing units in all counties in 2022, aside from Sligo Leitrim, Donegal and Waterford. The charity has enjoyed spectacular growth in the last two decades.
In 2002, when the Trust was already 19 years old, it had fixed assets valued at just €16,000; 20 years later that figure had soared to €177m.In the same period, income jumped from €258,000 to nearly €62m, most of which was supplied by the state.
"They didn't put the management and governance in place to cope with that, and nobody made them, which I find really surprising," former Board member of the Charities Regulator Fergus Finlay said.
The Charities Regulator inspectors also highlighted the 2018 purchase by the Peter McVerry Trust of a group of nine apartments located in Birr, Co Offaly from its then external auditor, the same Donal Ryan. The apartments were sold at the market rate of €945,000, a transaction first reported by the Irish Times.
The Birr transaction differs significantly to the Kildare transaction because it was a property developed by Mr Ryan, who converted part of a large property in the centre of the town into apartments, before selling nine of them to the McVerry Trust.
The deal represented a "conflict of interest" for the auditor, according to the Charities Regulator’s draft report.
"I could not overstate how inappropriate it is, because in this day and age, an absolutely fundamental principle of external auditing is independence," Professor Niamh Brennan, Academic Director at UCD’s Centre for Corporate Governance, told Prime Time.
"So, the idea that the external auditor... would be transacting business with the company that they were auditing... is completely unacceptable," Prof Brennan said.
The Regulator’s report also says that the McVerry board were not made aware of the purchase of the Birr apartments until 2023, five years after the event.
It says, "The Inspectors note, however, that the deed of indenture relating to the purchase, dated 31 October 2018 was signed by the Secretary to the Board."
The Secretary of the McVerry Trust is Fr Peter McVerry.
"It’s a very onerous role, carrying very serious legal responsibilities," Prof Brennan said.
Fr Peter McVerry
One of the most revered figures in Ireland for his work on behalf of the homeless and those on the margins, especially young men, Fr McVerry has not been involved in the day-to-day running of the charity for almost two decades.
As company secretary for over 40 years, Fr McVerry’s duties include ensuring compliance with statutory and regulatory requirements, preparing for Board meetings and filing annual returns. He occupies an unusual position because he is a Board member for life or until he resigns.
Such unbroken longevity is criticised by the Charities Regulator in the draft report, which noted that "there is no evidence of adequate rotation of Board members during the Review Period [Jan 2021 to October 2023], including the Secretary who has been on the Board since 1983."
Another conflict of interest concerned a company called Rubycon Developments, which was paid millions of euro for work that was not advertised for public tender. It is owned by a brother of the external auditor.
As a publicly funded organisation, the Peter McVerry Trust is bound by regulations to offer for public tender contracts for goods and services worth over €50,000.
Another conflict highlighted by the draft report was the transfer of €350,000 from the McVerry Trust to a company called NDP Counselling in late 2022. The reason for the transfer of such a large amount of money is not clear – NDP Counselling did not provide services for the McVerry Trust.
But what was clear was that the then CEO Pat Doyle had previously been a director of the counselling company.
According to the draft report, Mr Doyle told the Charities Regulator that he had not informed his own Board of the conflict of interest regarding NDP.
The €350,000 came from a much larger donation by the Capuchin Day Centre for Homeless People charity. In September 2022 it gave the McVerry Trust €4.73m, specifically for the purposes of procuring accommodation for homeless people as well as young people fleeing the war in Ukraine.
The money comprises a so-called restricted donation, which means that it is fully repayable if the McVerry Trust does not use it for the purposes specified by the Capuchins in a detailed legal agreement.
Prime Time has previously reported that over 90% of the Capuchin donation was not used as intended, but the Charities Regulator’s draft report suggests that none of it was used as intended.
Prime Time asked the Capuchins what efforts they have made to secure the return of their money. They declined to comment, beyond stating that "the matter is with our solicitors."
The Charities Regulator draft report catalogues other failures in corporate governance. For example, former CEO Pat Doyle did not get board approval regarding the accumulation of a "liability of €8.3m" to the Revenue Commissioners.
"That's gross misconduct not to tell the board of a transaction of that kind," said former Charities Regulator Board member, Mr Finlay.
"If I was on that board it would be grounds for instant dismissal of the person concerned. Instant dismissal," Mr Finlay added.
"I was absolutely stunned," Prof Brennan said.
"They were not being told about huge transactions, millions of euros worth of transactions and that is extremely problematic for a board. But you then have to ask yourself, to what extent did the board flex its muscles and demand information?" Prof Brennan added.
In their draft report, the Charities Regulator Inspectors also highlighted apparent insufficient scrutiny by the board, stating that they, "did not note any references to financial controls or audit of controls in the board minutes" during the almost three-year period they looked at.
The Charities Regulator also noted that the board had insufficient financial experience on the board and audit committee and didn’t have accountants on its audit committee.
"An audit committee is expected to have a member who meets the definition of a financial expert. Somebody with a professional accounting qualification who can easily navigate their way around disclosures in the financial statements," Prof Brennan said.
'Implausible situation’
The draft report from the Charities Regulator suggests that key details seem to have escaped the attention of the board. It highlights that minutes of a board meeting in July 2023 stated that the "board [were] never apprised of the volume of creditors outstanding... even though they had signed the financial statements" two months earlier, "which contained current and non-current creditors of approximately €19.5m"
That's an implausible situation," David Hall CEO of the iCare Housing charity said.
"They sign off with a set of accounts that declares that between Revenue and trade creditors, they owed €19 million. They signed those accounts.
"They had them at the Board meeting, they entered them into the company's office and the Charities Regulatory Authority. They then say that they were ‘unaware,’ " Mr Hall added.
Several McVerry Trust creditors told Prime Time that they are having problems getting paid for work long completed because the charity is now demanding paperwork such as quotes or tenders, or written work requests before approving payment. Those creditors say that such paperwork often simply doesn’t exist because it was not a consistent part of the charity’s purchasing process.
Computer network and CCTV installer John Kinsella says he is owed over €200,000 by the charity.
"I never once saw a tender document," said Mr Kinsella, whose company is called AccurA Security Products.
He also said that he was rarely asked to give written estimates of costs before works were carried out.
"Probably about four times out of maybe 50 to 60 times, maybe."
The Charities Regulator draft report supports the contention that the charity had a loose approach to financial controls. It says that "weaknesses in PMVT’s purchasing process caused by the lack of a purchase order system" meant that in 2023 the charity thought it owed trade creditors €4m when it actually owed them €8m
Mr Kinsella says he has supplied detailed invoices and, in some cases, photos to prove his firm did the work, some of which was carried out over two years ago.
"We're meeting the brick wall, literally a brick wall," he said.
UCD’s Professor Brennan believes it is unfair to expect suppliers to now produce documentation if it didn’t exist when work was being commissioned.
"If the Trust did not follow its own procedures, I don't see how that is the responsibility of a supplier. That's the responsibility of the Trust, and I don't see how the Trust not following its own procedures is a justification for the supplier not to get paid," she said.
Pending publication of the regulators’ investigation reports, the McVerry Trust declined to put a representative forward for interview or address other issues raised in this article, but it did respond to a query about creditors. It said it is "vigilant in implementing robust standards that include the appropriate verification of proof-of-work requirements." It also said, "we are working towards discharging ongoing amounts owed to our creditors within payment terms where possible."
Last month, the numbers living in emergency accommodation in Ireland reached a record of 14,486. But, at a time when the need for its services is greatest, the Peter McVerry Trust is shrinking.
Staff numbers have fallen by 30 to 507 since 2022 and Prime Time understands that the charity has not tendered to renew its contract to provide Housing First services, which currently employ around 90 staff.
Former CEO Pat Doyle declined to do an interview prior to the conclusion of the regulators’ investigations, but he told Prime Time that he has "Engaged and cooperated fully" with those investigations and "set out a clear rationale for some of the decisions made within Peter McVerry Trust."
It is unclear what the future holds for a charity which, despite its current turmoil, continues to provide essential services to some of the most vulnerable on behalf of the state. As its reputation has taken a battering, so too has its fundraising, making it even more reliant on the state.
A recent report by the Comptroller and Auditor General noted that, "Prior to 2024, the Trust’s funding model was based on approximately 70% of its income from state funders and 30% from fundraising. The 2024 budget requested by the Trust is based on 100% cost recovery from the State."
Fr McVerry, who turned 80 earlier this year, also declined to comment pending the publication of the reports by the two regulators.
Though he hasn’t been involved in the day-to-day running of the charity for almost two decades he still commands enormous respect inside and outside the charity.
"I knew Peter McVerry years and years ago, and I have to tell you, he's one of my heroes. I think he's as honourable and decent as the day is long," Mr Finlay said. "I hope he hasn’t been damaged, but I’d say he is really hurting."
David Hall, said "I think it's very, very important, amongst all of this chaos, to remember the good work he did, the good work that the staff have done and the good work they continue to do."
A report by Paul Murphy and Sallyanne Godson on the Peter McVerry Trust is broadcast on the 10 October edition of Prime Time on RTÉ One and RTÉ Player at 9.35pm.