Galway steel company alleges financial controller misappropriated €727,000

Coen Steel has secured orders preventing former executive from disposing of assets below €900,000

The High Court heard the financial controller left his post with Galway-based Coen Steel Limited 'abruptly' in June after 17 years in the role. File photograph: iStock
The High Court heard the financial controller left his post with Galway-based Coen Steel Limited 'abruptly' in June after 17 years in the role. File photograph: iStock

An Irish steel company has secured orders to prevent its former financial controller from disposing of his assets below €900,000 due to allegations he misappropriated at least €727,000 of company funds and inflated the firm’s contribution to his pension.

The High Court heard Enda Munnelly left his post with Galway-based Coen Steel Limited “abruptly” in June after 17 years in the role.

Coen Steel is continuing its investigations into Mr Munnelly’s activities with the firm, but it alleges its new chief financial officer has established he removed €727,861 from company accounts since 2016.

The case came before the court on an ex parte basis, so Mr Munnelly has not yet been afforded an opportunity to dispute the claims in court. However, Coen Steel said in legal papers that Mr Munnelly denied all of the allegations in correspondence earlier this week.

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The firm alleges Mr Munnelly made regular unauthorised payments, totalling about €395,000, from the company’s bank account to two credit cards unconnected with Coen Steel. It claims Mr Munnelly used his own “digipass”, along with that of another employee who left the business in 2009, to authorise the transfers.

Over the same period the financial controller made out company cheques to cash, to a total value of €93,000, the firm alleges.

Coen Steel further claims he made unauthorised payments, believed by the firm to total about €205,000, from company accounts into his pension between 2016 and 2022.

Mr Munnelly had a contractual entitlement to a contribution amounting to 15 per cent of his annual salary, but he orchestrated payments well in excess of this and also unilaterally increased his salary, the firm alleges.

The Oranmore company estimates he procured unauthorised salary increases totalling about €32,000 from 2019 to 2021 by indicating to the human resources manager that certain arrangements were agreed. Coen Steel’s managing director, David Coen, said such increases, going beyond 2 to 3 per cent per year, were not authorised in “any shape or form”.

In an affidavit, Mr Coen said the family business has only recently uncovered substantial evidence that Mr Munnelly engaged in a “covert, duplicitous scheme to defraud” the company of a very large sum of money for his own benefit.

It was clear the former employee has for years channelled company money for his own gain in a “wholly unauthorised fashion”, Mr Coen said.

The managing director was “shocked” to learn Mr Munnelly had “grossly abused the complete trust and good faith” placed in him by the business, which was established by Mr Coen’s great-grandfather.

Mr Coen said Mr Munnelly’s past conduct suggests he is capable of attempting to put his assets out of reach.

Coen Steel now has 30 employees and will reach a turnover of about €46 million this year. However, Mr Coen said the company “certainly cannot forgo” the amounts allegedly siphoned by Mr Munnelly as it faces inflationary pressures and a likely industry slowdown next year.

The alleged issues came to light when the firm’s auditor, Grant Thornton, raised questions about accounts last month.

The firm’s counsel, Tony McGillicuddy SC, told the court Mr Munnelly made certain allegations, which he claimed formed part of a protected disclosure, said counsel. This claim was later retracted, but it was revived recently, Mr McGillicuddy added. Coen Steel says there is no substance to the protected disclosure claim.

Coen Steel asked the court to grant a freezing or Mareva-type order against Mr Munnelly to temporarily restrain him from disposing of his assets below €1 million.

Considering the amount Mr Munnelly is alleged to have siphoned, Mr Justice Brian O’Moore was not prepared to grant a freezing order up to the amount proposed by Coen Steel.

From the evidence before him, he said, it was appropriate at this point to make an order preventing the disposal of Mr Munnelly’s assets below €900,000.

The uplift, from the €727,000 alleged to have been taken, took account of the firm’s undertaking to pay damages in the event the court finds against it and the fact investigations into the former employee’s activities only went back as far as 2016.

The judge scheduled the case to return on Monday, but Mr Munnelly is entitled to apply to the court earlier if he wants to try to vary the orders.

Ellen O'Riordan

Ellen O'Riordan

Ellen O'Riordan is High Court Reporter with The Irish Times