The Irish Red Cross threatened to take a legal injunction against a board member who resigned over financial concerns at the charity to stop him publicly criticising the organisation.
Darren Ryan resigned from the charity's board in May last year after the board was informed funds donated or granted for specific causes in their current account had been relied on to cover general day-to-day expenses.
Confidential board minutes, seen by The Irish Times, show the charity's board directed senior management that the practice was "to cease immediately, and restricted funding is to be moved into a deposit account".
Restricted funds are donations given to an appeal, such as a disaster relief effort, or bequeathed for a specific purpose.
During a board meeting on May 19th, Mr Ryan asked “if the management had used restricted funding for day to day expenditure”, to which head of finance Rory O’Sullivan said standard practice was “to utilise funding in the current account to support our work”.
The minutes state “Mr Ryan asked for a direct answer on the question he asked, to which the head of finance said yes”.
Mr Ryan resigned from the board a number of days later in protest, and the charity has since threatened him with legal action if he speaks out publicly against the organisation.
In a statement to The Irish Times, a spokeswoman for the Irish Red Cross said "funds in current accounts fluctuate depending on cash flow, and this is what the head of finance was referring to".
She said the charity’s restricted funds from donations “were at all times more than covered” by the total consolidated finances of the organisation, meaning any restricted funding in the current account spent on general costs was covered by financial reserves elsewhere.
‘No issues’
Auditors Mazars has since conducted a review into the matter for the charity, which found "no issues regarding misuse of restricted funds", a spokeswoman said.
However, several sources in the charity sector described the practice of “dipping into” restricted funds to meet general costs as “problematic”.
One source in an Irish overseas aid charity said “restricted means restricted”, and relying on such funds for general costs and then topping them back up would be “against practice”.
The Irish Red Cross is in the midst of significant financial turmoil, and last July only had four to six weeks’ operating reserves, far short of its policy to hold at least three months’ worth.
Last year it was reported that the charity was dealing with a significant funding shortfall, with fundraising down on budgeted expectations.
After his resignation Mr Ryan gave an interview to a local Tipperary radio station in late July, where he raised concerns over financial management at the Red Cross.
Following the interview the Irish Red Cross threatened Mr Ryan with legal action unless he gave a written undertaking “to desist from any further public comment on the subject of the Irish Red Cross” and the charity’s finances.
The solicitor’s letter threatened to take a court injunction against Mr Ryan, to seek an effective gagging order, if he did not comply.
Capital projects
Minutes from the May board meeting also show one national fund had been almost entirely depleted without the board’s knowledge. The fund had been bequeathed by deceased French author Joseph Kessel, and designated by the board to be spent on capital projects.
At the meeting one director asked for the fund’s balance, and was told by Mr O’Sullivan “there was very little remaining”.
When asked “where the fund had gone”, secretary general Liam O’Dwyer and Mr O’Sullivan said they had not been “aware of any conditions on the fund” over how it could be spent.
Former Fianna Fáil minister Pat Carey is chairman of the board, and former Fine Gael TD Olivia Mitchell was recently appointed as vice-chair.
Ms Mitchell said she had confidence the charity’s spending “was all above board”, and there was no question of any funds being “misused”.
