Chairman defended expenses bill while seeking €5m lifeline
on 04/10/2012 00:00:00
Two months later, its chairman Chryss O'Reilly wrote a 10-page letter to the then minister of agriculture, Brendan Smith, to dismiss newspaper reports about the expense paid to her CEO.
She said the costs incurred by then chief executive, John Clarke, might appear "strange or unusual" to those unfamiliar with horse breeding.
Her letter was written in Sept 2009 after the company had unsuccessfully sought to discipline Mr Clarke for his treatment of a senior staff member with whom he had an affair.
Ms O'Reilly said Mr Clarke never flew first class but required business class as he could not be expected to work "without having some degree of comfort".
She also said that chauffeur services at race meetings, such as Royal Ascot, were necessary to help him "negotiate the confusing route to the racetrack".
Ms O'Reilly said the board agreed to pay for Mr Clarke's wife to join him on some overseas trips.
This was because he travelled "at no little cost to his personal life" and, Ms O'Reilly said, the decision to allow Mrs Clarke join him was "one of my better decisions as chairman".
The Irish Examiner has previously revealed that in 2008 Mr Clarke was responsible for 60% of the expenses bill for the entire company.
An audit found that in many cases the expenses were approved without the necessary receipts.
Ms O'Reilly's letter was among a series of documents that provide unprecedented insight into the finances of the struggling semi-state stud farm.
These were originally sought under the Freedom of Information Act in 2010 but the INS objected to their release. They were made public by the information commissioner.
The file also contains records of meetings between the company and department officials.
These highlighted concerns that the INS had not complied with corporate governance rules and it had spent more than €10m in property-related windfalls.
It also failed to repay a €2.4m mortgage in 2004 which it had told the department would be substantially cleared. At the meeting, the INS requested permission to borrow €5m to invest in its survival.
"It was clear from the INS that they regard the granting of the €5m borrowing approval as central to the company's survival, emphasising that all studs need to reinvest in quality bloodstock in order to compete and prosper," the meeting minutes said.
The meeting showed the INS had permission to run a €2m overdraft - at the end of 2008, this had hit €3.2m. The stud said this happened because it ran separate accounts for its stallion syndicates.
Department officials expressed doubt that allowing the semi-state to borrow more would "serve any useful purpose or will it just increase the debt burden".
"INS representatives stated that in the context of the current economic climate, it is impossible to predict when the INS will return to profit, led to the question - is the INS a viable entity in the long term?
"Will an investment in a stallion generate sufficient income to return the company around. DAFF [Department of Agriculture, Fisheries and Food] was told there are no guarantees, even if the INS succeeds in purchasing a share in a successful stallion, there is no guarantee that the progeny will be winners," it said.
A statement from the INS said: "We have authority to borrow up to €30,000,000 subject to ministerial approval. We have bank facilities for a total of up to €3,235,697, which includes overdraft of €1,000,000 which is used as needed."
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