SMART TELECOM plc paid €1.3 million in "non-business" expenses for two directors during a period in which it lost more than €90 million, accounts published this week state.
Smart Telecom plc owns 10 per cent of a new company, Smart Yuroe Broadband Ltd, formed after the plc's biggest shareholder, Brendan Murtagh, rescued the business.
Smart Yuroe Broadband (SYB) trades as Smart Telecom, but is a separate company to the plc, which now acts solely as a holding company.
Accounts for 2006, the plc's last year as a telecoms operator, state that it paid non-business expenses worth €859,237 for former chief executive, Oisín Fanning, in 2005 and 2006, which it is now seeking to recover.
"In addition, the company is seeking an additional €306,523 remitted on behalf of Mr Fanning to purchase shares in Outpost Properties Ltd, the owner of the company's headquarters," the document adds. The accounts also say that in 2006, the plc "discharged non-business expenses amounting to €149,475" on behalf of executive director Pearl Roche. It is also attempting to recover this money.
Mr Fanning told The Irish Times yesterday that the money was paid to him and Ms Roche as part of a bonus agreed by Smart Telecom plc's remuneration committee and fully disclosed to shareholders.
The bonus payments included a deposit paid on the directors' behalf for the company's headquarters. Both directors left the company in October 2006. Mr Fanning agreed a severance deal of €700,000, €250,00 of which was paid. According to the accounts, the company has suspended payment of the balance while it attempts to recover the other payments from Mr Fanning. The document states that this is "a matter of legal dispute between the parties". The accounts, sent to the plc's 1,600 shareholders this week, show that in 2006, the last year that the plc operated as a telecoms provider, its operations lost €67.8 million.
Interest charges boosted this to €71 million, while the loss for the year was €70.95 million, more than three times the €23.15 million loss recorded in 2005.
This brings to €94 million the total amount lost by the company during it which it made the payments on the directors' behalf.
The balance sheet shows that the profit and loss account was in the red to the tune of €120.3 million at the end of 2006, compared with €49.4 million a year earlier.
Revenues in 2007 fell €9 million to €36.6 million. In 2006, the plc's shareholders voted for a rescue deal put together by Brendan Murtagh, under which he bought 90 per cent of Smart's business for €1, while taking over its €50 million debt.
