RTÉ Investigates can reveal that a publicly funded non-profit housing charity purchased property and services for hundreds of thousands of euro from a private company owned by two of its own directors, one of whom is a former county councillor.
The transaction prompted regulators to raise questions, but nearly a decade on from the property deal, the two directors remain on the board of the charity.
Housing which was supposed to be developed by the private company following the transaction remains incomplete.
Cluainín Voluntary Housing Association (CVHA) was established in 2000 in Manorhamilton, Co Leitrim.
It is one of the hundreds of approved housing bodies that operate in Ireland. It is also a registered charity.
Leitrim County Council provided CVHA with €8.5m during the 2000s, which it used to successfully develop social housing units in the county. The charity later decided to look to neighbouring Sligo and a site in Calry, about three kilometres outside Sligo town centre.
The site had previously been given planning permission for 76 houses. By around 2006, 18 houses were partially completed before the property crash hit and halted development.
According to 2014 Land Registry records, a new private property development company called Blackmud Developments Ltd then acquired the entire site — comprising over six hectares — from the original owner.
Aodh Flynn, a long-serving county councillor for Fianna Fáil until 2009, and a quantity surveyor, Padraic McGowan, are owners and directors of Blackmud Developments Ltd.
They are also founding members and directors of the housing charity, CVHA.
Blackmud subsequently transferred parts of the estate — in total just under half a hectare — to CVHA.
It included two unfinished houses and a separate greenfield site, purchased by CVHA from Blackmud Developments for €72,000. A separate building agreement was entered into for works on the site, bringing the total cost to the housing charity to €492,500.
Company accounts noted that Blackmud had a "liability to Cluainín Voluntary Housing Association CLG regarding completion works on site and houses."
An independent consultant's report into the transaction, completed some years later, would state that CVHA had paid €443,000 of the purchase price by October 2014.
Out of this amount, Blackmud lodged a sum of €122,400 as a planning bond to Sligo County Council, to cover planning permission requirements.
Under the deal, the housing charity also owed a balance of close to €50,000 to Blackmud, withheld until the works were completed.
Those works remain incomplete, and no social housing has been developed on the site since the transaction was completed.
The Housing Agency’s Regulation Office found out about the transaction in 2017 and began a process of engagement with the housing charity, which included meetings with Mr Flynn and Mr McGowan, and two other CVHA directors, whom the Regulation Office referred to as "non-conflicted."
A report completed by the Regulation Office in 2018 and obtained by RTÉ Investigates concluded that a "significant financial transaction took place in 2013/14" which involved "the use of charitable monies by two directors for the purchase of land with a private, commercial entity."
It said that the two directors (Mr Flynn and Mr McGowan) were the key stakeholders in the private entity and that they therefore had a "considerable conflict of interest".
The Regulation Office noted that the "organisation's funds were used without the prior approval or knowledge of the full board and that the full board was only informed post transaction."
It also concluded that the two conflicted directors signed all the documentation involved in the transaction.
Under the system in place at the time, the Housing Agency’s Regulation Office operated a voluntary code of regulation and did not have the authority or power to take any further action in relation to this transaction.
It could, however, alert other public bodies.
In 2018, it wrote to the Charities Regulator, stating that "there is a lack of clarity over whether the assets of the charity have been appropriately managed" and that there "may have been a breach of duty by charity trustees."
The Regulation Office was disbanded in 2021 and the following year, a new regulator, the Approved Housing Bodies Regulatory Authority (AHBRA), became fully operational.
A spokesperson for AHBRA confirmed that it can only investigate matters that occurred after January 2022. It said that it is not investigating CVHA.
The Charities Regulator told RTÉ Investigates that it continues to have an "open concern" in relation to CVHA.
"The Charities Regulator is still engaging with the charity, and we cannot say when our engagement with them will conclude," it added.
When RTÉ Investigates pointed out that this "concern" was opened in 2018 and asked why, five years on, the matter remained unresolved, the Charities Regulator told us: "There has been ongoing engagement with the trustees of this organisation in relation to a number of different charity governance issues, which unfortunately has taken considerably longer than usual to bring to a resolution. This has been due to a combination of challenges around resourcing within the Charities Regulator, COVID, and the legislative framework within which the Charities Regulator operates."
RTÉ Investigates sent a series of questions to Mr Flynn and Mr McGowan about the transaction, including asking why CVHA has yet to receive any completed houses, despite the money it has paid their company, Blackmud Developments.
RTÉ Investigates also inquired about the overall cost of purchasing the entire estate in Calry and asked for a breakdown of how this purchase was financed, by each contributing party.
Last week, a solicitor acting on their behalf told RTÉ Investigates that "they have not been involved in any wrongdoing and they worked with all appropriate regulators".
The solicitor confirmed that the housing charity is currently engaging with AHBRA and the Charities Regulator, with a view to handing its part of the Calry site to a larger approved housing body.
"Accordingly, it is totally inappropriate for our clients to provide responses to the questions you have posed at this time," he added.
"It is imperative to note that any issues arising from an investigation carried out on foot of concerns raised by the Housing Agency Regulation Office were deemed to be not significant and it was left to the board of the CVHA to resolve the issues themselves."
However, RTÉ Investigates has further learnt that the Department of Housing was made aware by the Regulation Office of concerns regarding the corporate and financial governance of CVHA as far back as April 2018.
The Department wrote to all local authorities at the end of that month to inform them that CVHA was no longer eligible for new funding.
In a statement to RTÉ Investigates, the Department confirmed that "Cluainín Voluntary Housing Association remains no longer eligible for funding."
The solicitor said that CVHA had originally intended to draw down funding for the project from the HSE.
"However, in 2015, the criteria for this funding changed and the funding pool dried up. That was a huge factor in the delays," he added.
He also referred to "significant planning delays outside the control of CVHA," relating to the costs of constructing a public footpath.
Construction on the public footpath, the solicitor said, is due to be commenced by a Sligo County Council-appointed contractor this February, adding that this will allow "the potential in the overall site [and CVHA’s part of the site] to be exploited in full."
Watch the full report from Conn Corrigan and producer/director Doireann O’Hara on Prime Time at 9.35pm on RTÉ One and the RTÉ Player.
