Former Chief Executive of the Northern Ireland Events Company agrees to disqualification
The Department of Enterprise, Trade and Investment (the Department) has accepted a disqualification undertaking for 14 years from Janice McAleese of Elvanfoot, Biggar, Lanarkshire in respect of her conduct as a director of the Northern Ireland Events Company Limited (“the Company”).
The Company was set up in 1997 to organise, support, encourage, facilitate or promote the holding or staging in Northern Ireland of events of a cultural, sporting, recreational, leisure or commercial nature. On 19 September 2007, the Department of Culture Arts and Leisure (“DCAL”) was first notified of the Company’s financial deficit, which was estimated to be £1.2 million as at 31 March 2007.
On 22 November 2007, the Northern Ireland Executive agreed that DCAL would meet the Company’s outstanding liabilities with a view to winding up the company at the earliest opportunity.
Since the disclosure of the deficit to DCAL on 19 September 2007, approximately £1.6 million in funding has been provided by DCAL to the Company in order to meet creditor liabilities and to wind down the business.
On 17 November 2008 the Department appointed Inspectors to investigate the affairs of the Company pursuant to Article 425 of the Companies (Northern Ireland) Order 1986. The Department received the Report of the Company Inspectors into the affairs of the Company in March 2014.
The Department accepted the disqualification undertaking from Janice McAleese on 8 February 2016, based on the following misconduct, which solely for the purposes of the disqualification procedure was not disputed:
1. Causing and permitting the Company to fail to maintain accurate accounting records;
2. Making personal loans to the Company in order to ease cash flow difficulties and to disguise the financial deficit in the company from the scrutiny of the Company Board and DCAL;
3. Causing and permitting the Company to make payments and enter into financial commitments without the formal approval of the Board or DCAL, in particular:
· Authorising, causing and permitting payments by the Company of £100,000 and €100,000 to third parties;
· Failure to obtain Board Approval for expenditure in the sum of £2,094,790 in excess of the approved expenditure level across ten events (The Board approved expenditure of £458,250 across the ten events, the total cost of which to the Company was in fact £2,553,039);
4. Authorising, causing and permitting the Company to change its strategic direction from that of funding body to underwriting events and taking on financial risks without Board approval or authority e.g. causing the Company to guarantee up to £650,000 of promoters’ potential liabilities in respect of two events, committing the Company to expenditure above and beyond the delegated limit of £200,000 as set out in the financial memoranda;
5. Failure to exercise proper financial control over the Company;
6. Failure to put in place adequate accounting systems within the Company, in particular:
· Failure to adhere to the correct procedure in purchasing goods and services;
· Making payments totalling £486,042 without any or adequate supporting documentation;
· Failure to have in place adequate controls in respect of credit card payments;
· Failure to provide an annual Statement of Internal Control;
· Failure to produce an annual report;
7. Providing the Board with limited and inaccurate financial information, in particular overstating income and understating expenditure thereby masking the Company’s increasing financial deficit;
8. Failure to formally inform the Board of the company’s financial difficulties;
9. Failure to advise the Board of the Company’s performance compared with its aims and objectives and failure to submit business and corporate plans to DCAL;
10. Causing and permitting the Company to incur expenditure in excess of the Company’s delegated authority without the approval of the Board in respect of five events between 2005 and 2007 where grant funding totalled £2,321,410, an overspend of £1,321,410;
11. Supplying a financial report to DCAL which differed from that supplied to the Board and which disguised the amount of Company borrowings;
12. Setting up and authorising a second overdraft facility for and on behalf of the Company without the knowledge, approval or authority of the Board;
13. Failure to inform the Board or DCAL of overspends which she assessed to be in the region of £400,000;
14. Causing and permitting the Company to make payments totalling £45,612 on behalf of other companies to creditors to whom the Company had no liability and where no benefit accrued to the Company or its creditors;
15. Causing and permitting the Company to construct a new motocross track costing £225,842 without the authority of the Board and causing and permitting the Company to fail to adhere to procurement procedures in relation thereto;
16. Failure to disclose a conflict of interest in causing and permitting the Company to provide funding to a person with whom she was in a personal relationship;
17. Causing and permitting the Company to fail to follow procurement procedures with five suppliers and failing thereby to ensure that the Company achieved best value for money through competitive tendering processes;
18. Causing and permitting the Company to engage one of her relatives to provide consultancy work without the approval of the Board and without disclosing the said relationship;
19. Falsifying accounting records;
20. Authorising, causing and permitting the Company to make a redundancy payment without Board approval or authority;
21. Authorising settlement of a claim on behalf of the Company without Board approval or authority;
22. Causing and permitting the Company to drawdown funds of £169,715 and using those funds for a purpose other than that stated in supporting documentation;
23. Applying for a drawdown of £317,842 based on false and incomplete information;
24. Causing and permitting the Company to maintain records on a cash basis whilst failing to maintain a purchase ledger; causing and permitting the Company to fail to ring-fence monies; producing information retrospectively;
25. Failure to ensure adequate accounting systems and controls were in place in respect of handling cash income from events and causing and permitting the Company to fail to account for sales revenue from gate receipts, ticket sales, trade stands, corporate hospitality and public funding;
26. Causing and permitting the Company to promote loss-making events;
27. Failure and/or causing and permitting the Company to fail to carry out financial appraisals and evaluations in respect of events and failure to seek Board approval.
The Department has accepted 20 Disqualification Undertakings and the Court has made 8 orders disqualifying directors in the financial year commencing 1 April 2015.