Numerous transactions relating to property purchases, fund transfers, loans and takeovers involving the Peter McVerry Trust homeless charity took place without the knowledge or approval of its board.
In one transaction, an external auditor was used to purchase a property for the charity so its involvement in the deal would not become public.
Funds donated to the charity for specific purposes were used for other reasons – including paying creditors.
The findings were made in a damning report published today following a year-long investigation by inspectors appointed by the charities regulator.
They point to failures in board oversight of the management and administration of the State’s largest non-governmental provider of emergency accommodation for homeless people.
The charity, originally known as the Arrupe Society, was founded by Fr Peter McVerry in 1983, but he had not been involved in its day-to-day running for almost two decades.
Storm clouds have loomed over the embattled trust for some time.
It was on the brink of collapse last year and needed a €15m bailout from the Government so it could continue to provide services.
Inspectors Thomas Mulholland and Deirdre Carwood were appointed by the Charities Regulation Authority in October last year amid concern over governance and financial issues.
In their report, the inspectors highlighted instances of a lack of adequate and appropriate financial controls with which the charity’s board could exercise control over the affairs of the charity.
Among transactions highlighted was the purchase of a property in Co Kildare in October 2016.
This was purchased by the charity’s external auditor, who on the same day transferred the property into the ownership of the charity. Although not named in the report, the auditor is known to be Dublin-based accountant Donal Ryan.
A former chief executive of the charity, not named in the report but known to be Pat Doyle, told the inspectors the purchase was made in this way so the fact the trust was buying the property would not be known.
According to the report, he claimed the sale may not have completed if it was known the trust was the buyer. The ex-CEO said the board was not aware of the transaction at the time.
Mr Ryan said he did not benefit from the transaction.
The trust also purchased nine properties in October 2018 from the auditor for €945,000, in what the inspectors found to be a conflict of interest.
Mr Ryan told the inspectors the properties had been independently valued and insisted the transaction did not impact on his independence as an auditor or give rise to a conflict of interest.
Fr McVerry and the then chair of the board said they only became aware of the transaction in 2023, although the inspectors noted that a deed of indenture related to the purchase was signed by Fr McVerry.
The inspectors also identified a failure to adhere to donor intention in how restricted funds were used. Restricted funds are donations given for a specific purpose.
Some €4.3m was provided by a religious organisation for the purchase of five specific properties. The organisation was not named in the report but is known to be the Capuchin Day Centre for Homeless People.
But €1.5m of the funds was transferred to another charity related to the trust and was used to pay creditors of the trust. The report documented other transactions involving some of the funds.
The inspectors said they were not shown any evidence that the trust had permission to transfer the funds from restricted to unrestricted status.
After a draft copy of their report was circulated, the inspectors were informed four out of the five properties were controlled by the trust, as they were owned by a related charity.
The inspectors said it was not clear why the trust entered into the funding agreement with the religious organisation to purchase properties they now say were already under the trust’s control.
Further findings in the report related to the process by which the trust took over other charities and whether the board considered whether the charitable purpose of charities being taken over aligned with the trust’s own charitable purpose.
The inspectors cite one case where the charitable purpose of the charity being taken over was the advancement of religion, which is not one of Peter McVerry Trust’s charitable purposes.
Other critical findings include that there material inaccuracies in the recording of the assets of the charity and inadequate management accounts which did not report the level of debtors, creditors or debt financing.
The inspectors also found there was a failure to adhere to competitive tendering procedures for services and contracts to ensure value for money, and no evidence that conflicts of interest were actively managed.
Charities Regulatory Authority chief executive Madeleine Delaney said the report underlined the importance of a charity’s board of trustees exercising proper control over its operations.
“Where the charity has employees, as in this case, the charity trustees must set the parameters within which the employees must operate,” she said.
“Charity trustees have a duty to make sure that donations, funds or grants given for a specific charitable purpose are used for that purpose alone, and are used appropriately and responsibly.”