Over two and a half years, a housing charity paid its CEO €265,435 without putting him on payroll or agreeing and signing a contract, says a report issued last week from the Charities Regulator.
“He stressed his wish not to be an employee,” the report quotes the charity, Cabhru Housing Association Services (CHAS), as noting, in the course of the regulator’s investigation.
The lack of a signed contract and clarity around the CEO’s position at Cabhru Housing Association Services (CHAS) “has created a potential financial liability for the charity”, says the report.
The report also found that the former CEO, Miceal McGovern, allowed a friend to stay over in a vacant social home and stayed over himself in others, following the investigation, which the regulator launched after a media query.
Addresses in social housing complexes were used in filings for two companies connected to him, it found.
His use of the social homes to register companies at, was “inappropriate” says the report. One of his sons was secretary of one of the companies, and one of his sons was director of the other.
CHAS’ current chairperson, Liam Meagher, says that the board has reviewed its organisational structure, and made practical changes including hiring a human resources agency.
It has put a plan in place to ensure compliance with the charities governance code, he said, and the board will continue to meet weekly until the work is complete.
Dublin City Council’s plans to sell a social-housing complex called James McSweeney House on Berkeley Street in Phibsboro to CHAS, so the charity could redevelop it, were shelved in February 2020, after the allegations were made public.
That month, a council spokesperson said it would ask CHAS to surrender its lease on the building back to the council.
Last Thursday, the complex looked abandoned, with grass and weeds growing on the drive behind a locked gate.
A council spokesperson says the council will demolish and redevelop the site in line with the current planning permission, “once the process of surrendering the lease by Chas has been completed”.
They do not have a timeline for the work at this point, she said.
Concerns and Choices
In December 2019, independent Councillor Mannix Flynn had raised concerns about the council’s plans to transfer the land to the charity that ran the complex, which housed older people.
Flynn said that CHAS had rented out some of the social homes to students and that the charity’s treatment of the tenants was unacceptable.
“The way that this agency treated the elderly tenants was absolutely atrocious … ,” said Flynn at the time.
The council managers recommended that councillors transfer the site still. However, councillors, who get the final say when it comes to selling council property, refused.
At the time, the CEO of CHAS was McGovern, who had earlier been convicted of breaches of the Companies Act – for not keeping “proper books of account” for his private company Tenants First (Ireland) Ltd, and for acting as a director of it while bankrupt – and disqualified from being a director of a company for five years, from 2004 to 2009.
Last week, the Charities Regulator published its report into the allegations about CHAS under McGovern’s management.
Throughout, the report refers to McGovern’s role as “the Former CEO/consultant”.
The charity continued to pay McGovern as a consultant after he became the interim CEO in mid-2017. From mid-2017 to the end of January 2020, CHAS paid McGovern €265,435 as a contractor.
The Revenue’s definition of an employee says that all staff that are integral to the functioning of an organisation are employees, not self-employed contractors. McGovern was the organisation’s chief executive officer.
“Although draft contracts were prepared at various stages, these were never agreed and signed,” says the report.
McGovern asked to be paid as a self-employed contractor instead of as a PAYE worker, says the regulator’s report.
CHAS paid McGovern €50,300 in 2017. He didn’t charge them for VAT that year, says the report.
From the start of 2018 onwards, VAT was included on invoices with the money paid by CHAS to McGovern’s company Project Implementation Ltd.
CHAS paid McGovern €97,056 in 2018, €108,854 in 2019 and €9,225 for January 2020.
McGovern’s salary was benchmarked by an independent external agent and the inspectors saw a copy of that report, it says.
Meagher, the current chairperson of CHAS, says that McGovern started working for the charity as a consultant for two days a week, to administer the charity’s registration with the Housing Agency.
Over time, his workload increased and he helped to set up a new IT system, says Meagher.
When he was appointed as interim CEO in May 2017, he was working a two-day week, says Meagher.
“The Board took the view that it did not want to make a long term commitment to the employment of a senior member of staff,” he says. “It believed that engagement by means of a contract was a more flexible arrangement to have in place.”
The Charities Regulator’s report says that “the lack of an agreed contract and the lack of clarity regarding the position of the Former CEO/Consultant by the Board has created a potential financial liability for the Charity”.
Meagher says McGovern shouldn’t have been paid directly for a period in 2017, before CHAS began paying him through his company, but that CHAS has now sorted this issue with the Revenue.
“A settlement, including PAYE, USC, PRSI together with interest and penalties was paid to Revenue, to cover the period of time when the former CEO should have been regarded as an employee,” he says.
Renting Social Homes to Students
CHAS took in around €115,000 renting the social homes to students, says the report.
The charity was planning a redevelopment of McSweeney House, and so it was moving elderly tenants out of social homes there slowly, as it could find other placements for them. That left some homes vacant.
The charity had a tenant in its other property, Father Scully House, that was an agency working with international students.
McGovern suggested at a board meeting that the agency help the charity bring in students on a short-term basis, “which could generate some additional income for the Charity while the de-tenanting process continued”, the regulator’s report found.
It didn’t separate out the commercial income from the charitable income, and nor did it have contracts in place for the commercial business.
There is no suggestion that any funds were misappropriated. “No evidence was provided to suggest that commercial rents and student rental income was not utilised for charitable purposes,” says the report.
However, the constitution of the charity says that the property should only be used for charitable purposes, as set out in the constitution.
The board didn’t consider the implications of changing the use of its asset from a charitable purpose to an income-generation purpose, says the report, although this goes against its constitution.
Who Stayed Where?
In January 2020 a tenant living in Father Scully House, a social housing complex for older people on Gardiner Street in the city centre, said that McGovern regularly stayed in an apartment there overnight.
The tenant said that saw McGovern’s car there late at night and that his name was also on the letterbox.
Meagher says that McGovern’s name was never on the letterbox. “I can confirm that the former CEO never had his name on one of those letterboxes,” he says.
Yet McGovern and his son had both given 74 Father Scully House to the Companies Registration Office as their address.
McGovern blamed the accountants for that, saying they should have updated the address.
The Charities Regulator’s report says that it is up to the directors to make sure they have listed their correct residential address.
But “the addresses of the Charity were most likely used as a practical measure for the Former CEO/Consultant to receive company information in a timely manner at his place of work”, says the report.
In Berkeley Street in Phibsboro, a different tenant (unconnected to the first), said that McGovern was staying in that complex too at night and that he had also given the use of the other apartments to a friend or relative.
The Charities Regulator’s inspectors spoke to 11 people for its investigation, including staff and board members, a Dublin City Council official and others, according to the report – but it didn’t speak to any tenants in the complexes.
According to the report, McGovern and the CHAS board say that McGovern stopped using 74 Father Scully House as an office and overnight stays in mid-2017.
Board members told the investigators that they allowed the overnight stays because McGovern was driving from County Down, where he lives, it says.
The report says that once 74 Father Scully House was allocated to a social tenant, in mid-2017, McGovern switched to using 21 James McSweeney House for overnights.
That flat was vacant because the charity was de-tenanting for the refurb.
According to the Charities Regulator’s report, staff discovered that a friend of McGovern’s was staying at 5 James McSweeney House in September or October 2019 but didn’t immediately report that to the board.
The friend attended a CHAS Christmas party and told a staff member’s partner that he was living in one of the social homes, says the report.
McGovern was also involved in another housing association, Foras Voluntary Housing Association, which was not connected to CHAS, says the report.
One of the other directors of that company listed 21 McSweeney House as his residential address, with the Companies Registration Office.
The Charities Regulator wouldn’t comment on follow-up questions about the report, including why inspectors didn’t interview tenants in the complexes.
The board of CHAS has made changes to tighten up governance following the report, says Meagher.
No one else has been hired in the charity on a self-employed basis, he says.
The charity has reviewed its organisational structure, appointed a new operations manager and finance manager and recruited an accountant, he says.
“An Action Plan was developed and approved by the Board that will ensure substantial compliance with both the Charities Code of Governance and the Housing Regulator’s three standards by the end of this year,” he says.
The board now meets weekly to address gaps identified in the review of compliance and will continue to do so until all governance gaps are addressed, he says.
“The Board is committed to the highest standards of probity and transparency,” said Meagher, and will work closely with the Charities Regulator to ensure compliance.