CONSOLE-THE AUDIT DETAILS

CONSOLE –THE AUDIT

RTé Investigates has seen extracts of a draft copy of the HSE audit into the finances and governance of the charity Console.

The audit reveals details of how Paul Kelly, his wife Patricia and their son Tim benefitted by almost €500,000 in salaries and cars between 2012 and 2014 with a further €500,000 spent during that period on Console credit cards for items including groceries, designer clothes and foreign trips. Between them Paul, Patricia and Tim Kelly used 11 credit cards over the three year period.

Among the items the cards were used for, were large cash withdrawals, trips to Australia, New Zealand, Singapore and other destinations, designer clothing in outlets such as Ralph Lauren and Hugo Boss, dining out, rugby world cup tickets and dental work.

On Thursday last, RTÉ Investigates revealed evidence of serious concerns around the handling of Console’s finances, inappropriate payments to directors, the use of multiple sets of accounts with alterations and deletions sent to different bodies, the use of differing dates of birth for the same person and with directors signing documents using married and maiden names.

The programme also revealed that a HSE internal Audit had taken place which has now completed a draft report. The report found evidence of large amounts of money being withdrawn or spent from Console accounts over a three year period from 2012 to 2014.

During this period, the charity’s total income was just short of €5m. Whilst the HSE audit doesn't reach a conclusion on what proportion of the spending it regards as questionable, we can now reveal details of how some of the money was used.

DIRECTORS SALARIES/BENEFITS

From 2012 to 2014 Paul Kelly and his wife Patricia Kelly received significant payments and benefits from Console.

Paul Kelly received Consultancy payments of €218,586, plus a 2009 Mercedes CLS costing €30,600 (fully expensed) and four credit cards.

Patricia Kelly received salary payments €67,149, plus a 2010 Audi Q5 costing €57,000 (fully expensed) and four credit cards.

There were no contracts or board approvals for the payments for the CEO or his wife.

Inconsistent and vague explanations were provided to the internal audit about Patricia Kelly’s car.

CONSOLE’S CREDIT CARDS

Between 2012 and 2014, €736,000 was spent of Console’s credit cards.

During that time there were 20 credit cards held by Console. Paul Kelly, Patricia Kelly and their son Tim Kelly held 11 of these 20 credit cards. Paul Kelly held two cards in his own name and two cards in the name of employee Y who had left the organisation over six years previously. Patricia Kelly held four cards and Tim Kelly held three cards.

The expenditure on these 11 cards was €464,777, representing 63% of total credit card expenditure.

Below is table detailing the spending on these cards.

CASH WITHDRAWALS

The largest expenditure item on these credit cards was cash withdrawals of €87,027. Of these Paul Kelly withdrew €66,296. There was no documentation to identify how these cash sums were used.

Between 2012 and 2014 the CEO and his wife made a total of 428 cash withdrawals totalling €83,484.

Paul Kelly used two credit cards assigned to a former employee who had left the organisation at least six years previously; expenditure of €128,169 was incurred on these credit cards between 2012 and 2014, including cash withdrawals of €28,785.

Inconsistent, vague and inaccurate information was provided to the audit about the identity of the person named as the credit card holder.

FOREIGN TRAVEL

€71,460 was spent on credit cards primarily by Paul Kelly on foreign travel to Australia, New Zealand, Hong Kong, Singapore, Madrid, Barcelona, Rome, Tenerife, Nice, Paris and London.

There were inaccurate records to identify the full extent of foreign travel expenditure.

The trips to Australia and the Far East occurred around Christmas and the New Year in 2012 and into 2013.

Large and frequent cash withdrawals by credit card were made on these foreign trips.

DINING/RESTAURANTS/GROCERIES

€32,900 was spent through credit cards on dining/restaurants between 2012 and 2014. Of this €24,960 (76%) was incurred by Paul Kelly (€14,389), Patricia Kelly (€1,453) and their son Tim (€9,119).

€24,659 was spent on credit cards to purchase groceries. Of this €20,013 was incurred by Paul Kelly (€13,895), Patricia Kelly (€4,784) and Tim Kelly (€1,334).

DESIGNER CLOTHING EXPENSES

Credit Cards were used to spend €8,377 on designer and other clothing. There were 58 transactions on clothing at 22 retailers. Tim Kelly incurred €3,099 of this expenditure.

Examples of the outlets where clothes were bought include Ralph Lauren, Hugo Boss, Moss Bros, Bershka, Coast, River Island and Top Shop.

There was no evidence that clothing expenditure was subject to Benefit in Kind.

During the audit different explanations were provided by Console for individual clothing transactions. For example expenditure in Moss of €358 was described by Console as being "clothing for poor family" and "Console fund raiser."

A clothing allowance policy was provided by Console during the audit to the audit team. It was dated 2010, however the electronic properties of the document identified that it had been created hours before it was emailed to the internal audit.

DENTAL EXPENSES/PHARMACY

€1,340 was spent on dental bills by Paul Kelly on the credit cards held in the name of the former employee Y. Different explanations were provided for the dental expenditure.

€2,253 was spent on credit cards held by Paul and Patricia Kelly on pharmacy purchases.

RUGBY WORLD CUP TICKETS/CINEMA/NETFLIX

€2,083 on 2015 Rugby World Cup Ticket was spent on Patricia Kelly’s credit cards. Console told the audit team that these tickets were raffled for fund raising purposes. Documentation was not provided by Console to support this.

Ticketmaster, Tower Records and HMV spending totalling €2,162 appear on credit cards held by Patricia Kelly and Paul Kelly, including the cards in the name of the former employee, Y.

Documentation was not available to support the purpose of this spending.

Cinema, Netflix and sightseeing credit card spending of €313 was incurred by the Paul and Tim Kelly.

MOBILE PHONE BILLS

The total cost of mobile phone bills for the three years, 2012 to 2014 came to €48,011 and was paid by Console.

Patricia Kelly’s bill amounted to €32,618 for the period. Paul Kelly’s bill, which was paid by the card credit in the name of the former employee Y, came to €11,977 and Tim Kelly’s bill for the same period came to €3,415.

The costs of mobile phones used by Paul and Patricia Kelly were invoiced to a company established by Mr. Kelly but which was dissolved in 2005.

OTHER FINANCIAL ISSUES

EXPENSE CLAIMS/PETTY CASH

Among other financial concerns raised in the audit was the issue of expense claims not being signed as approved, hand written receipts on scraps of paper were provided to support claims. Petty cash expenditure was not vouched, not balanced, not reconciled and was not signed off as correct.

CONTROL OF DONATIONS / FUNDRAISING NON EXISTENT

There was a lack of segregation of duties, For example, Paul Kelly controlled all the operations of the organisation including opening the post.

Controls around receipting donations and fundraising were lax and non-existent. Console did not maintain a receipts book, there was no record listing all amounts received and money received was not lodged intact into Console’s bank account.

CONSOLE HELPLINES

Between 2012 and 2014 Console reduced the number of Helplines from six to two. Console informed the audit team that the cost of running its two Helplines in 2014 was €346,560 of which the HSE provided €294,000. During the audit no documentation was provided to the audit team to support this costing.

SERIOUS GOVERNANCE CONCERNS

CONTROLLED & DOMINATED CONSOLE

The audit notes that there were inadequate governance structures during the period under audit. Console was controlled and dominated by Paul Kelly. He was responsible for the full running of the charity.

He continued to operate as a shadow director even after he resigned as a director in 2013.Auditors encountered significant difficulties obtaining information and explanations and explanations, when received inconsistent and vague.

DIFFERENT NAMES/DATES OF BIRTH

Paul Kelly and his wife Patricia were/are directors of at least 12 companies. Inconsistencies in names, signatures and dates of birth were identified by the audit on statutory documents with the CRO in relation to these 12 companies.

Information contained in some statutory declarations filed with the CRO was incorrect. For example the number of directorships held by the CEO’s wife.

Patricia Kelly also signed using her maiden name of Dowling when filing details of her directorships of some of the companies.

According to the draft report, Patricia Kelly was and is a director, company secretary, chairman and cheque signatory of Console. However, throughout the audit Mr. Kelly described his wife’s role as a volunteer and not employed by the organisation when in fact she was a key officer of the company.

CONSOLE UK CONCERNS

In May 2012 Paul Kelly and his wife Patricia established a separate company in England to operate Console UK. Its directors are Paul and Patricia Kelly and their son, Tim Kelly and another unrelated person. Tim Kelly also runs Console UK as Director of Services. He reports to Paul Kelly.

Significant issues were identified in relation to Console Ireland and Console UK. Console Ireland incurred expenditure of in excess of €140,000 in relation to

Console UK between 2012 and 2014. This was not disclosed in either Console Ireland’s audited financial statements or in Console UK’s accounts. In essence Irish funders and donors are funding a UK charity. As Director of Services, Tim Kelly is paid a salary of sterling £31,300. This is paid by Console Ireland directly to him at a rate of sterling £600 per week and it is not taxed.

REVENUE LIABILITY ISSUES

Significant taxation issues were identified through the audit for example salary payments made to Paul Kelly, his wife Patricia and his son Tim were not subjected to PAYE and PRSI payroll taxes by Console.

Potential Benefit in Kind implications arise from the use of company cars by the CEO and his wife. Potential taxation implications arise from the use of company credit cards held by these three people.

MULTIPLE SETS OF ACCOUNTS

The Internal audit identified different versions of the company’s financial statements and accounts for 2012 and 2013. The CEO approved the audited accounts for 2012 in July 2013 at a time when, according to the CRO, he was not a director as he had resigned as a director with effect from the 2^nd of January 2013.

There were differences in the various sets of accounts with directors’ salaries removed or edited.

AN OVERALL ANALYSIS BY RTE OF AUDIT FIGURES

RTE has compiled the following table based on the overall figures contained in the HSE’s audit.

Meanwhile, the two investigators appointed to look into the issues surrounding Console, Tom Murray and David Hall have drawn up an interim report which has been seen by the RTE Investigations Unit. A copy of the draft report has been sent to the Gardai, the Office of the Director of Corporate Enforcement, the HSE and the Charity Regulator.

The interim report raises concerns which include;

The apparent lack of management structures at Console.

The vulnerable nature of the clients to which the services are provided, the use of significant public donations and State funds and the impact on the overall charitable sector;

The existence of the HSE report and the serious issues raised in it

The level of oversight and reconciliation of donations and funds being received

The ability to pay vital service providers as the debts fall due and the impact it has on short to medium viability.

According to the draft report, files went missing from locked cabinets in the offices of Console last weekend.

A meeting between Mr Murray, Mr Hall and the three remaining Directors of Console took place on Sunday evening.

At that meeting it was established that none of the three knew that they were Directors of Console.

The RTÉ Investigations Unit has also learnt that David Hall and Tom Murray today met with the Charity Regulator and the Office of the Director of Corporate Enforcement.

The two investigators also met detectives from the Garda Bureau of Fraud Investigation.