Four members of a family involved in a medical equipment distribution company which went into liquidation, following what a judge said was "an egregious and long-running fraud", have been disqualified from holding directorships.
Mr Justice Senan Allen imposed disqualifications from directorships on the four who were involved in Dublin-based Eurosurgical Ltd.
He imposed a 15-year disqualification on Eurosurgical Ltd’s majority shareholder, Ray Kane, 14 years and three months on his sons, Alan and Gary Kane, and nine years and nine months on their sister Alison Kane. Alan had been a director until 2015 while his two siblings were directors and minority shareholders.
The court had been asked to consider whether certain disqualification periods, agreed as part of a settlement between the four and liquidator George Maloney, were sufficient.
Mr Justice Allen also gave judgment against all four for €18 million subject to a stay on certain terms.
Prime Time Investigates
A July 2015 RTE Prime Time Investigates programme made revelations about the company's business practices including that senior hospital staff, which the company dealt with, had received expensive gifts and holidays while Eurosurgical received commercially sensitive information about the firm's competitors.
Around the same time it became known the father, Ray Kane, had fraudulently misappropriated millions of euros of company funds.
Mr Justice Allen said Mr Maloney was appointed liquidator of Eurosurgical in May 2016 on the petition of the three Kane children. The liquidator later sought disqualification orders and to make them personally liable for the firm's debts over failure to keep proper accounts.
In June 2016, Ray Kane was declared bankrupt. He denied the liquidator’s claims against him.
Gary Kane, the judge said, downplayed his role and capability to have acted as a director and "heaped blame" on his father Ray.
He disclaimed all responsibility for fraud though acknowledged the failure to keep proper books and records. He appealed to the court not to declare him or his brother or sister personally responsible for the debts of the company, or to make a disqualification order against any of them.
Ray Kane emphatically rejected the evidence of his children as to the extent of their involvement in the matters complained of, the judge said.
Agreement
Arising out of talks with the liquidator, an agreement was made last November to settle all issues on terms including certain disqualification orders against all of them or for terms the court may decide. The proposed disqualification periods were: 15 years or more against Ray, 12 years or more against the two sons and not less than seven against the sister.
They also agreed to accept judgments of €18 million against them subject to a stay on certain conditions.
Mr Justice Allen said among a number of admitted facts revealed by the liquidator's investigation was that some US$57,000 (€41,000) which was recorded as having been paid by the company for supplies, was in fact paid for medical treatment in the United States of America for a member of Alan Kane's family.
Transfer of assets
The company also purported to transfer substantially all of its assets to a company called Gemini Surgical Innovations Limited for what is now acknowledged to have been a significant undervalue and when they knew a €3.4 million tax demand was about to be raised against the firm.
The judge said that up to the very last minute, the three children sought to attribute all of the blame for the manner in which the company’s business was conducted to the father and play down their own roles and responsibility. They had, however belatedly, acknowledged the seriousness of their misconduct and the consequence of disqualification which that must inevitably attract.
He did not believe the proposed disqualification periods for the three children took sufficient account of what was done immediately prior to the presentation of the petition for liquidation.
This was not merely a case in which the three children facilitated and participated "in an egregious and long-running fraud until they were exposed" but a case in which, when they could see the writing on the wall, they brought with them nearly three quarters of the value of the company’s business with a view, at least, to preserving or replacing their jobs.
He saw no no evidence of repentance, or of any effort to make amends and the three children "do not appear to me to have truly recognised their responsibility but rather persist in emphasising that the first respondent, their father, had the lion’s share of the spoils".
