James Gogarty
From Mahon Tribunal
Contents |
[edit] Early life
Mr. James Martin Gogarty was born in 1917 in Kells, Co. Meath where his father was a small building contractor. He attended National School and Secondary School before being apprenticed as a bricklayer/plasterer. At the outbreak of the Second World War he joined an auxiliary force of an Garda Síochána. He subsequently joined an Garda Síochána and was stationed at Clontarf. While a member of an Garda Síochána he pursued night studies and matriculated to the National University of Ireland where he studied for a degree in engineering while still serving as a member of an Garda Síochána. He found that he could not successfully combine both activities and took leave from U.C.D. prior to the date of the second year engineering examinations. He subsequently returned to U.C.D. years later to complete his engineering studies and obtained a degree in engineering.
After graduation he was employed in the architect’s firm of Higginbotham and Stafford, which at that time was engaged in the design of housing estates in the emerging Dublin suburbs. In the course of this work he came to know Mr. Batt O’Shea and Mr. Tom Shanahan who were the principal directors of the firm of O’Shea and Shanahan Limited. This firm had commenced operations as shop fitters and had moved to being house builders in North Dublin and elsewhere. Mr. Batt O’Shea was born in Kerry. He was a friend and contemporary of Mr. Joseph Murphy Snr., who was born in Caherciveen, Co. Kerry. Mr. Joseph Murphy Snr. became a director and a one third owner of the shareholding of O’Shea and Shanahan Limited although the operations were managed on a day-to-day basis by the other directors. Mr. O’Shea advised Mr. Murphy from time to time in relation to land purchases in Ireland, and in due course O’Shea and Shanahan Ltd came to build on lands owned by Mr. Murphy’s wholly owned land-owning companies.
[edit] Mr Gogarty's involvement with JMSE
[edit] 1968-1982
In 1968 Mr. Murphy acquired an interest in an ailing steel company based in Santry then known as George Milner and Sons Limited. He sought to appoint a joint managing director to this company to protect his interests. Mr. O’Shea recommended Mr. Gogarty for the position and Mr. Gogarty was duly appointed. In 1969 Mr. Murphy acquired the entire shareholding of George Milner and Sons Limited and renamed it Joseph Murphy Structural Engineers Limited (JMSE) whereupon Mr. Gogarty was appointed its sole managing director. Mr. Gogarty held this position until 1982. During the period of his stewardship the company was turned around from being virtually insolvent to being a major player in the steel contracting business in Ireland, concentrating on semi-state companies’ projects. During this period Mr. Gogarty worked closely with Mr. Joseph Murphy Snr. and both parties had a mutual respect for each other’s abilities. Mr. Gogarty was 51 years of age at the time of his appointment, and in 1982 he reached the age of 65, whereupon, at Mr. Murphy Snr.’s request, he retired from the position of Managing Director, and remained on as non-executive Chairman of the company.
[edit] 1982 – 1988
In 1982 Mr. Murphy Snr. had decided to appoint Mr. Liam Conroy, a member of the firm of Dublin architects, Conroy Manahan, as the Acting Chief Executive of his Companies, both in Ireland and England. Mr. Murphy was 65 years of age, and wished to play a lesser role in the management of his Companies. In this transition Mr. Gogarty was invited to resign as Managing Director and to be appointed as Chairman of JMSE.
Mr. Gogarty’s evidence was that he had been asked by Mr. Murphy Snr. to serve as Chairman for the next two years or so, and was promised that he would be provided with a capital sum to be used to purchase a pension for himself and his wife on his retirement at the conclusion of this period. In the interim he was to continue to receive his salary. Mr. Gogarty said that he agreed to Mr. Murphy’s proposal but that the anticipated retirement did not take place as intended two years later. Upon being appointed chief executive of the Murphy companies Mr. Conroy replaced the existing management with his own nominees and moved to London where he exercised overall control of the Murphy companies, both in Ireland and in England. Mr. Gogarty had a limited role in the affairs of JMSE once Mr. Conroy was appointed, and did not enjoy a cordial relationship with either Mr. Conroy, or the new directors. Mr. Murphy Snr. was initially satisfied with Mr. Conroy’s performance, but relationships between Mr. Conroy and his executives, and Mr. Gogarty were strained from the start. The promised pension did not materialise after two years.
In 1987 Mr. Gogarty was still acting as chairman of JMSE, and Mr. Joseph Murphy Snr. began to have concerns about the manner in which Mr. Conroy was managing his operations. Mr. Murphy shared his concern with Mr. Gogarty, and ultimately came to seek his assistance in the removal of Mr. Conroy from the Murphy companies and trusts. In mid-1988 Mr. Murphy resolved to remove Mr. Conroy from all positions of authority, and with the assistance of his legal and financial advisers, he mounted a coup to regain control of his trusts and companies. He succeeded in doing so in June 1988, but for some years thereafter, he was the subject of legal proceedings, which had been commenced by Mr. Conroy and his trusts in various jurisdictions. During the currency of these legal proceedings from June 1988 onwards JMSE was under the management of new directors appointed by Mr. Joseph Murphy Snr.
[edit] June 1988 – July 1989
Mr. Gogarty remained on as Chairman of JMSE after the removal of Mr. Conroy but his role did not increase. The day-to-day management of JMSE was conducted by Mr. Frank Reynolds and Mr. Gabriel Grehan, new directors appointed by Mr. Murphy Snr. on the recommendation of Mr. Gogarty. The overall charge of the company was exercised by Mr. Joseph Murphy Snr., with the advice of his strategy committee, comprising: Mr. Edgar Wadley a former chartered accountant then acting as a financial adviser, Mr. Christopher Oakley an English solicitor and Mr. Roger Copsey, a chartered accountant in Ireland. Mr. Copsey was formerly a partner in the accountancy firm, Midgeley Snelling, with Mr. Wadley.
Whilst Mr. Gogarty had been of assistance to Mr. Murphy in regaining control of his companies he did not play any significant role in the management of JMSE after it had reverted to Mr. Murphy’s control. Mr. Gogarty was at that time 71 years of age, and his primary interest was to secure his pension. Mr. Gogarty’s pension was not a priority issue for Mr. Murphy Snr. The removal of the Chief Executive Mr. Conroy and the majority of Board Members of the Murphy companies had caused considerable disruption, and was of concern to the companies bankers. Mr. Murphy’s priorities were directed towards consolidating his company’s financial position. On the 22nd May 1989, however, a meeting took place between Mr. Murphy Snr. and Mr. Gogarty in London, which resulted in heads of agreement for the pension being reached, and on the 6th July 1989 Mr. Gogarty retired from all positions in the Murphy companies. As part of the terms of his pension he continued to provide services to the companies as a consultant.
[edit] Mr Gogarty's pension from JMSE, 1968 - 1989
It was not a term of Mr. Gogarty’s initial employment with JMSE that he would receive a pension after his retirement. Had he fully retired at 65 years of age in 1982 he would have been dependent solely upon state assistance. He had married his wife who was 20 years his junior and they were the parents of six children who were financially dependent upon him. The Tribunal accepts that Mr. Gogarty was promised a pension by Mr. Murphy Snr. in 1982. On foot of that arrangement some money was lodged to an account opened for him by Mr. Murphy Snr. in the Channel Isles in 1982. This lodgment was not declared to the Irish Revenue authorities at the time, but was subsequently repatriated by Mr. Gogarty, and declared to the Revenue under the terms of the tax amnesty then prevailing.
When Mr. Liam Conroy was appointed as Chief Executive of the Murphy companies in 1982, Mr. Gogarty’s pension position received low priority from him. In view of Mr. Gogarty’s advanced years at that time, it would have required a sizeable capital sum to be invested to secure an annuity for him, and an even larger sum if it was also to provide support for his wife after his death given the difference in their ages. Over the succeeding years Mr. Conroy was unsuccessful in his attempts to secure Mr. Gogarty’s voluntary retirement on pension. Mr. Gogarty’s continuing involvement with the company was considered by Mr. Conroy to run counter to the best interests of the company, and he accordingly resolved in June 1988 to have him dismissed by resolution of the Board. A Board Meeting was convened to take place in Dublin on the 7th June 1988 for that purpose. At this time Mr. Murphy Snr. and Mr. Conroy were in dispute as to the control of the companies, and Mr. Conroy’s attempt to remove Mr. Gogarty was used by Mr. Murphy Snr. as one of the grounds to remove Mr. Conroy from office.
After the successful removal of Mr. Conroy from all positions of authority in June 1988 Mr. Gogarty believed that his pension issue would be satisfactory resolved by Mr. Murphy Snr.. However, it was not until February 1989 that Mr. Copsey was deputed by Mr. Murphy Snr. to discuss Mr. Gogarty’s pension with him. Mr. Copsey and Mr. Gogarty failed to agree on mutually acceptable terms, and their meeting ended with Mr. Gogarty becoming quite emotional on the issue, according to Mr. Copsey.
Direct negotiations later took place between Mr. Murphy Snr. and Mr. Gogarty at the Bonnington Hotel in London on the 22nd May, 1989, and on that occasion, the parties reached mutually acceptable heads of agreement which were to be given legal effect through documents to be drawn up by their respective solicitors. The terms of the pension package negotiated by the parties in May, 1989 were that:-
1. A capital sum of £300,000 would be used to purchase a pension for life for Mr. Gogarty and for his wife after his death.
2. Mr. Gogarty would continue to be paid a sum equivalent to his then salary in return for his acting as a consultant to the Murphy companies for a period of five years after his retirement.
3. Mr. Gogarty and JMSE would share equally in the proceeds of an unresolved claim for extras which was being pursued by JMSE against ESB for work which had been carried out by JMSE years beforehand at the Moneypoint Power Station project. This sharing agreement was in respect of all sums above a base figure which was initially fixed at £40,000, and subsequently revised to £130,000.
4. Mr. Gogarty would be given the use of a company car and expenses.
This pension arrangement was in excess of what Mr. Murphy Snr. had been advised by Mr. Copsey to pay and was approximately equal to that which had been sought by Mr. Gogarty in the course of his failed negotiations with Mr. Copsey.
The Tribunal concludes on the balance of probabilities that Mr. Gogarty’s outstanding pension issue had been resolved to the satisfaction of all parties on the 22nd May, 1989, and accordingly it could not have been the basis of any dispute which could account for a payment of money being made to Mr. Burke three weeks later, in June 1989. The Tribunal is satisfied that at the end of May, and in early June, 1989 the relationship of Mr. Gogarty and Mr. Murphy Snr. was at its zenith. The long unresolved pension issue, extending back to 1982, had been resolved to everybody’s satisfaction, and Mr. Gogarty had no other identifiable grievance, or concern with his employer at that time. The Tribunal concludes that Mr. Gogarty’s attendance at the meeting at Mr. Burke’s house three weeks later was not in furtherance of any scheme devised by Mr. Gogarty to damage the Murphy interests.
[edit] The deterioration in the relationship between Mr Gogarty and the Murphy interests
In late June 1989, a number of matters of concern to Mr. Gogarty arose from the manner in which the affairs of the Murphy companies were being conducted. He became aware of the fact that consideration was being given by Mr. Murphy Snr. and his advisers to the separation from JMSE of its English sister company, AGSE. If this separation was implemented, it would have resulted in JMSE being an unsecured creditor of AGSE’s. AGSE was at that time indebted to JMSE for approximately £1.8m worth of steel and services which had been provided to AGSE by JMSE in connection with its English contracts. In the event that AGSE did not discharge its debt in full to JMSE, JMSE would be insolvent and consequently would be unable to fund the pension package already agreed with Mr. Gogarty.
The annual accounts for JMSE for 1988 had not been signed off by the directors. Mr. Copsey, the Financial Director of JMSE, was insistent that Mr. Gogarty sign off on these accounts. Mr. Gogarty was concerned that the draft accounts had been prepared on the basis of information generated during the period in which Mr. Conroy was in control of the company. He was unhappy about the manner in which Mr. Conroy had conducted the affairs of the Company and was unwilling to accept the accuracy of these accounts. Mr. Gogarty expressed his concern to the other Irish directors, Mr. Frank Reynolds and Mr. Gabriel Grehan, who were equally concerned that they were being requested to sign off on accounts covering a period prior to their appointment as directors, and for a period when Mr. Conroy was in control of the company. Despite Mr. Copsey’s urgings they sought independent legal advice as to their position as directors and, having done so, remained unwilling to sign off on the accounts.
At the insistence of the Irish directors, a Board Meeting for JMSE was convened to take place in Dublin on the 3rd July 1989. The Irish directors had expressed the concern to Mr. Copsey that JMSE was being run by an elite group in the UK without consultation with the Irish directors, and that Board Meetings of the Company had not been held to that date. Accordingly, Mr. Joseph Murphy Snr. travelled to Dublin and attended the meeting of the 3rd July, 1989. Amongst the issues discussed at the meeting was the ongoing failure of the Irish directors to sign off on the 1988 accounts of JMSE. The Tribunal is satisfied that this was a heated meeting, and that, as a result of what was said, Mr. Gogarty came away from the meeting with the belief that his pension entitlement was again in jeopardy in the event that he did not sign off on the accounts, and that he did not assist Mr. Murphy Snr. by furnishing a Replying Affidavit to the then current proceedings which had been launched by Mr. Conroy against the Murphy interests in the Isle of Man. As Mr. Gogarty was unwilling to comply with either of these requests he tendered his resignation from JSME with effect from the 6th July 1989. He continued, however, to provide his services to the Murphy companies in a consultancy capacity as was envisaged in the pension package negotiated with Mr. Murphy Snr. in May 1989.
