The managing director of Sail Ireland, the largest yacht charter company in the Republic, has been convicted of breaches of the company law following his role in a Business Expansion Scheme (BES) company. Mr Michael Loughnane and Massam Ltd, a BES company he set up to provide yachts for his business, were investigated earlier this year by the Tanaiste, Ms Harney, following a complaint from a member of the scheme.

Mr Loughnane was fined £500 (€635) in the Dublin District Court last week as was the BES company, which traded as Clearwater Sailing and is being wound up for failing to hold an annual general meeting. In addition, the company and Mr Loughnane were convicted of failing to keep a register of the interests of the director and secretary. This is to allow third parties see what other business the company's officers are involved with.

The businessman said yesterday that the three boats owned by the BES company were being sold, and the proceeds would be distributed to BES shareholders. "Two have now been sold. They are taking longer to sell than we had hoped, " he said.

Mr Loughnane added that he was unable to say whether the BES investors would have made a profit on their investment, but the craft were being sold at the market price.

"The meeting has now been held and everything is in order," he said.

The most recent accounts for Massam filed in the companies office relate to 1995. They show that BES investors put £325,000 into the company and the scheme was due to expire in April last year, when the investors were due to obtain the return on the investment through a sale of the company or by liquidating it and distributing the assets, according to documents filed in the companies office.

The three vessels were on hire to Sail Ireland, the yacht charter company based in Kinsale, Co Cork, also run by Mr Loughnane. The boats in the BES scheme were separate from the 12 yachts owned by Sail Ireland, he said.

The Department of Enterprise, Trade and Employment directed Massam to hold a general meeting after one of the BES scheme members complained he was not being provided with adequate information by the company. A prosecution was initiated after the company failed to comply with the instructions.

Successful convictions were also obtained for the first time last week against companies and directors for failing to keep proper books and records.

The prosecutions were brought on the basis of notifications to the Companies' Office by the companies' auditors who could not determine if proper books and accounts had been kept.

Auditors are obliged to make such notifications under company law. The two companies were Continental Fine Arts and Heidelberg Property. The four directors of Continental Fine Arts are all residents of the Channel Islands and conducted no business in Ireland.

The company was fined £50 and £300 expenses.

Ms Miriam Connolly, a director of Heidelberg Property, which traded as Kellermann's Pizzeria in Dalkey, Co Dublin, was fined £500.