Back in the Halcyon Days of the Celtic Tiger, I remember coming across a particularly complex (and not a little brilliant) version of the common practise of Cheque Kiting. Cheque Kiting, for those of you unfamiliar, is the practise where an individual has two (or more) accounts in different banks. He writes a cheque to himself (this first cheque is called the kite) from Bank A and lodges it into Bank B. The following day (taking advantage of Bank B’s lax clearing system) writes a cheque to himself from Bank B and lodges it to Bank A.
These artificial funds are then lodged; allowing the first cheque to clear. The cycle then repeats, typically escalating the amounts until he is either caught, cleans out the accounts and runs or lodges legitimate funds to cover the Kite.
The case I came across was based on the circular kite model, but due to the involvement of several individuals (over 10) and spread across every retail bank in the country at that time it was not easily discovered. The seemingly reasonable monies involved in the cheques, the various clearing cycles of the banks and the fact that there was several people involved made detection next to impossible for any one bank. It really was well constructed and went on for months.
When the fraud was eventually spotted (due to address irregularities) and the kites crashed to earth the Banks had been taken for several thousand euro. It really was a significant amount of money and I’m not sure any of the participants were ever brought to justice. I recall seeing the last transactions on one accounts involved; it was a Laser Card purchase in Dublin Airport. So long, farewell, auf Wiedersehen, adieu…
Anyway, we read today that Denis O’Brien is trying to sell a company (Newstalk, part of his Communicorp empire) to a Company (Independent News & Media) where he is the major shareholder. It is understood that the two parties cannot agree the price, with INM wanting to pay less than Communicorp are asking for.
It is also understood that should the higher price be achieved, then Denis O’Brien would stand to get a “significant payout”. I don’t want to go into the individuals involved and their links with Mr O’Brien, they are available here.
But I do wonder about company law, specifically the laws around conflicts of interest and the Fitness & Probity Standards. You have to ask yourself that if I wanted to sell something to myself, for more than it’s worth, in order to pay myself from the over-inflated price, would that be okay with the Companies Act? Even if it is legal, are the conflicts of interest not such that it would call into question individual’s fitness to operate public broadcasting licences? I don’t know. Nobody is really saying what did or did not nearly happen.
We know there was a falling out. We hear rumours of resignations. None of it looks good from a Corporate Responsibility viewpoint.
And what has Denis O’Brien trying to sell his company to his company got to do with Cheque Kiting? Nothing; it just makes you think, doesn’t it…
Tony Groves November 2016