18+ | Commercial Content | T&Cs apply | Wagering and T&Cs apply | Play Responsibly | Advertising Disclosure
Vincent Finegan

Vincent Finegan

Financial irregularities at IHRB

Darragh O'Loughlin, CEO of IHRB, the only man to spot anything wrong in financial accountsDarragh O'Loughlin, CEO of IHRB, the only man to spot anything wrong in financial accounts
© Photo Healy Racing

The Mazars report into financial irregularities at the Irish Horseracing Regulatory Board (IHRB) was finally published last week, some 16 months after it was first commissioned. Despite the long-drawn out process that got us to this point, it does finally give clarity on many aspects of the carryon at IHRB and helps us fill in some notable blanks when trying to decipher what actually happened.

Here is a timeline (just the most relevant details) of what we now know occurred:

May 2021 - A voluntary redundancy and early retirement scheme within HRI was extended to cover IHRB staff members under certain eligibility criteria.

June 2021 - Denis Egan, CEO of IHRB, applied for early retirement.

June 2021 - “The IHRB Board approved the retirement payment to the Former CEO based on a negotiated amount (which we understand was subject to advice from an international 3rd party professional services firm with a presence in Ireland) that exceeded the amount available under criteria set by the Scheme by €141,880.” [Mazars Report]

1 July 2021 - Public statement issued by IHRB that Denis Egan was taking early retirement commencing on 30 September.

30 September 2021 - Denis Egan retires with a package totalling €384,870 paid to him by IHRB. This payment was made up of €242,990 (equivalent to the maximum allowed under HRI scheme rules) plus an additional €141,880 lodged into IHRB bank account by Egan’s former employer, The Turf Club.

25 January 2022 - “The Former CFO and Finance Manager of IHRB transferred €350,000 from the Jockeys’ Emergency Fund (“JEF”) to the IHRB bank account. The Former CFO initiated the instruction to make this transfer, and we understand this was motivated by urgent cashflow pressures in order to pay monthly salaries in the context where monthly HRI funding had not yet been received, and having to pay significant voluntary and compulsory redundancy payments at that month end.” [Mazars Report]

29 April 2022 - €350,000 is transferred back to JEF from IHRB bank account.

November 2022 - HRI sends a tranche of funding to IHRB. This funding “under Phase 1 of its organisational transformation programme included an amount of €242,990 relating to the retirement of the Former CEO (Denis Egan).” [Mazars Report]

29 June 2023 - New CEO of IHRB, Darragh O’Loughlin, informed the Public Accounts Committee that he has discovered a matter of grave concern in the 2022 financial accounts of IHRB (the €350,000 transferred in and out of JEF account) and the then CFO, Donal O’Shea, immediately went on voluntary paid leave.

22 August 2023 - Mazars appointed jointly by HRI and IHRB to carry out an independent review of the financial governance of certain transactions of IHRB.

Early July 2024 - “Draft copies of this report or extracts from the draft report were made available to individuals identified by Forvis Mazars who may be subject to potentially adverse review outcomes and conclusions, with a view to review and provide commentary in respect of aspects concerning them.” [Mazars Report]

5 July 2024 - IHRB CFO Donal O’Shea tenders his resignation.

5 November 2024 - Mazars Report is published.

When we break down some of the key elements of what happened here it paints the industry’s regulators and administrators in a very bad light.

First of all, let’s look at what happened with Denis Egan and his early retirement payout. An existing scheme in HRI was extended to cover IHRB staff, but it had strict rules regarding the maximum amounts any individual was entitled to receive. In Egan’s case that amount was capped at €242,990.

For some reason the board of IHRB took advice from a third party company and agreed to sanction Egan’s retirement package at a much higher level than the scheme allowed. In any normal company you simply cannot do this.

The board must have known that this had the potential to cause serious problems, particularly as other staff members were availing of the same scheme, but they carried on regardless and paid Egan €384,870. The amount included his maximum allowance under the scheme (€242,990), which they didn’t formally clear first with HRI, and they then somehow managed to convince Egan’s former employer, The Turf Club, which he had left over three and a half years earlier, to stump up the additional €141,880. The mind boggles.

HRI extended their voluntary redundancy and early retirement scheme to IHRB in May 2021 (presumably after negotiations between the two bodies at a very senior level). Two months later IHRB issued a public statement that Denis Egan was to take early retirement. Even without official contact from IHRB, HRI must have joined the dots and twigged that Egan was availing of their scheme and that IHRB would be required to clear this with them first. Under the terms of the scheme HRI had to be satisfied with the adequacy of each business case and then give formal approval. Neither of those things happened officially.

Then we have the incredible actions of the chief financial officer of IHRB some four months later. Realising that the money had not yet arrived from HRI to cover Egan’s retirement payment and that there was now insufficient cash in IHRB’s bank account to pay staff wages at the end of the month, he took it upon himself to borrow €350,000 from a Charity account he had access to in order to tide the IHRB over.

We are led to believe that Donal O’Shea did this without first informing his interim CEO or his board or any of the Trustees of the Charity from which he was taking the money. He just told his own Finance Manager who he instructed to make the transfer. Presuming that is the truth, it remains astounding that the board of IHRB had no inkling considering they knew that €242,990 of Denis Egan’s exit package had come directly out of their bank account with no matching funds arriving from HRI and yet all the staff wages were still being paid. Nevermind the fact that no Trustee of the Charity noticed anything wrong with their accounts either.

On 31 December 2021 the Jockeys’ Emergency Fund bank account held a cash balance of €604,149. Twenty five days later that balance had shrunk to €254,149 and no Trustee noticed anything. For over three months that bank account was missing €350,000 and nobody noticed?

Under official guidelines as a Trustee of a Charity: “You must make sure that your charity keeps proper books of account. The books of account must have entries from day to day of all money received and paid out by your charity. A record of the assets and liabilities of your charity must also be maintained.”

Here is what the Charity Regulator has to say: “charity trustees are ultimately responsible for the control and management of a charity. Charity trustees are expected to ensure systems and processes are in place to make sure they get the information they need to oversee all of a charity’s activities. This allows them to make fully informed decisions about the charity’s governance, finances and other significant matters.”

The irregularities in the 2022 financial accounts of the IHRB and in the financial accounts of the Jockeys Emergency Fund Charity went unnoticed by everyone until IHRB’s new CEO, Darragh O’Loughlin, spotted the problem on 28 June 2023, one year and five months after the misappropriation of the Charity’s money had taken place.

As part of the Mazars Report a number of current and ex-employees of both IHRB and HRI as well as IHRB board members were interviewed. What is particularly disappointing considering the relative recentness of this matter (everything occurred within the last three years) is that much of the evidence is contradictory.

IHRB board members recall that “HRI supported the IHRB’s retirement payment proposals to its Former CEO. HRI indicated that the Former CEO’s retirement payment could be funded through the Scheme. HRI implied approval of the Former CEO’s retirement payment, in part or in full, by making a payment to IHRB in support of Phase 1 of its organisational transformation programme.”

In contrast, we are told “Mazars did not obtain confirmation from HRI that the Former CEO of IHRB’s retirement payment was supported by HRI, envisaged to be funded through the Scheme, or formally approved by HRI.”

A simple question such as, how come both the board of IHRB and Trustees of the JEF failed to spot anything wrong in either sets of accounts? takes on a different complexion when you realise that 5 of the 6 current Trustees of this Charity are also on the board of IHRB.

Similarly, How could board members of IHRB convince members of the Turf Club to contribute €140K to a former employee’s early retirement package? Well it probably wasn’t too hard when they only had to convince themselves because in many instances they are again the same people.

In a lurid way this whole saga has a hint of Fr Ted about it. We have been constantly reassured that the movement of the €350,000 in and out of the IHRB bank account was not for personal gain, or as Ted might have put it “that money was just resting in my account.” And when it comes to Denis Egan’s max payment of €242,990 miraculously growing into €384,870 it reminds me of Ted explaining to Dougal about the cows, “Ok, for one last time, these are small and the ones out there are far away.”

So much of this simply doesn’t add up. And there is still no real explanation as to why former CFO, Donal O’Shea, suddenly turned rogue. He had worked for both the Turf Club and IHRB for years and the Mazars’ forensic scrutiny of IHRB’s financial accounts all the way back to 2018 didn’t find another single issue with anything he had done.

It is also a sad state of affairs that Mazars had to make 13 basic recommendations to IHRB on how they should change their financial practices and corporate governance in relation to just two aspects of their business. The recommendations are the equivalent of telling a car driver that they should wear a seatbelt and check their mirrors.

IHRB are certainly sending out signals that they intend to finally put their house in order. They have already made significant changes to their procedures and have committed to fully implement all the recommendations from Mazars by the end of next month.

Is that enough? I honestly don’t know, but what I do know is that any organisation that is handling €10 million of our taxpayers money each year and administering as much again for a group of horse racing charities needs to be squeaky clean and fully transparent to boot.