IHRB faces financial governance issue

The transfer of €350,000 from the Jockeys Emergency Fund to the Irish Horseracing Regulatory Board in January 2022 has emerged as the financial issue of "grave concern" communicated by the IHRB's chief executive Darragh O'Loughlin to a parliamentary committee 12 months ago.

The Jockeys Emergency Fund is one of three charities that the IHRB is charged with administering and the IHRB's 2022 annual report states the transfer of funds was reversed three months later.

On June 29 of last year, the IHRB was thrown into turmoil when O'Loughlin appeared in front of a hearing of the Public Accounts Committee (PAC) and digressed from his prepared opening statement to reveal that he had unearthed what was described as a "bombshell" development in his preparation for the hearing.

The matter was identified in the IHRB's 2022 accounts and he noted that the regulator's chief financial officer Donal O'Shea, who had been scheduled to appear in front of the PAC that day, was on "voluntary leave" with immediate effect "without prejudice to his position".

O'Loughlin told the committee it could take "a number of months" for the review to be completed and it was subsequently confirmed that auditing and accounting firm Mazars would undertake the investigation.

Nearly 12 months later, the nature of the financial irregularity has been revealed in the IHRB's 2022 annual report after it was laid before the Oireachtas on Thursday afternoon.

On page 69, in the related party transactions section of the notes to the accounts, it says: "In January 2022 a transfer of €350,000 was made from the Jockeys Emergency Fund to the IHRB; this was subsequently reversed in April 2022. The transfer(s) are the subject of an external independent review." 

Despite the transaction having been made at the beginning of 2022, the board did not become aware of the transfer of monies until the eve of the PAC meeting 18 months later. This was explained in a later note detailing events after the end of the reporting period.

"On 28th June 2023 the board became aware of an issue relating to financial governance which occurred in early 2022. While the matter relates to financial governance, there is no impact on the financial statements. 

"The professional services firm Mazars has been engaged to carry out an independent external review of the financial governance issue and other matters. The review is ongoing."

Centre of attention - IHRB chief executive Darragh O'Loughlin, who last week revealed a matter of 'grave concern' during a Public Accounts Committee hearing 
IHRB boss Darragh O'Loughlin, who revealed the financial governance issue at a PAC hearing last year
Credit: IHRB
Comptroller and auditor general Seamus McCarthy also made reference to the transaction in his report under the heading 'financial governance issue'.

It said: "Note 18 includes a disclosure that €350,000 was transferred from the Jockeys Emergency Fund, a charity bank account under the control of the Irish Horseracing Regulatory Board, to the board’s bank account, in January 2022. The funds were subsequently repaid by the board to the charity account in April 2022. 

"Note 24 and the statement on internal control report that concerns arose in June 2023 about the financial governance of those transactions, and that an independent external review of those concerns and certain other matters is ongoing."

Commenting on the financial governance issue, O'Loughlin said: "When the issue pertaining to a transfer of €350,000 from the Jockeys Emergency Fund to the IHRB and its subsequent repayment came to the board’s attention, we immediately notified the Minister for Agriculture, Food and the Marine, the Comptroller and Auditor General and Horse Racing Ireland. 

"The IHRB then commissioned Mazars to carry out an independent external review and it is our intention to publish the recommendations of the report once it is completed.”

Former IHRB chief executive Denis Egan's exit payment was also a topic of interest during last year's PAC hearing as it was revealed in March 2023 that he received an exit payment of €384,870, a figure that was 58 per cent above what he was entitled to under the terms of the redundancy scheme, after he took early retirement in the autumn of 2021.

It emerged the board elected not to include details of the remuneration package in the 2021 financial statements despite a direct request from the minister of agriculture Charlie McConalogue to do so. The previous minister had granted a derogation to the IHRB from having to publish its chief executive's salary in the financial statements for the three years prior.

Now that the nature of the financial irregularity has been revealed, there will be further pressure on the IHRB to divulge the findings of the Mazars report, particularly before Thursday when its officials are due before PAC again.