A year since a €15 million bailout from the government for the Peter McVerry Trust, a damning inspectors’ report has landed another significant blow to Ireland’s largest housing charity. The report raises significant concerns over the charity’s governance, criticising the board, led by Deirdre-Ann Barr, for poor control over irregular spending and lax practices.
In a damaging reflection of the charity’s management, the report reveals that the Trust made a formal monetary commitment of €4.3 million with a donation from the Capuchin order to purchase five designated properties, despite already owning four of these. Moreover, the charity relocated €2 million from a ‘sinking fund’ intended for property maintenance to pay off contractors, dwindling the fund to a mere €125. Without board authorisation, the trust accumulated a tax liability of €8.2 million and failed to delineate money owed to creditors or from debtors, or the scale of debt financing in its accounts.
The report from the Charities Regulator investigators indicates a rampant failure in the governance of an institution which received €164.3 million from the state and €72.6 million in donations between 2018 and 2022. This casts doubt over the future of the trust and its board.
A senior housing official expressed uncertainty over the trust’s future.
The Regulator stated on Monday that charity trustees are obliged to ensure that funds, donations or grants intended for a specific charitable purpose are not diverted elsewhere. Additionally, trustees must have sufficient information to supervise all operations.
However, the charity failed to meet these expectations. The investigators discovered multiple violations of compliance and governance. While charities are legally bound to respect donor restrictions on funds, the Regulator identified a disregard for donor intentions.
Instances of the inappropriate blending and transfer of restricted and unrestricted funds were identified by the inspectors, as well as the unauthorised application of restricted funds for operational purposes. The Capuchin Day Centre’s 2022 donation of €4.73 million included €4.3 million for the property purchases and an additional €430,000 specifically allocated to the sinking fund.
The report has stated that the trust did not utilise the specific donations for the intended purposes but instead used them to cover payments almost exclusively to its debts. The Capuchin Day Centre, a part of the Capuchin Franciscan order, refrained from commenting on this report—citing that the issue is under legal review.
The charity was founded by Father Peter McVerry in 1983, with the Jesuit priest opening his first homeless boys’ shelter in 1979, five years after commencing work with disadvantaged communities in Summerhill, central Dublin. This later turned into his lifelong mission.
The trust provides thousands with housing, prevention from homelessness, and substance abuse treatment services. It owns properties outright whose estimated value was €162.3m in 2022, with net assets worth about €49.5m. However, recent evidence indicated serious missteps in the charity’s financial and asset management.
Fr McVerry, a lifelong board member and its secretary, declined to comment on the report. The 18-year Chief Executive, Pat Doyle, who departed in May 2023 amidst increasing debt and cash flow problems, played a controversial role. A third-party company where he acted as a director reportedly received €350,000 from the Capuchin funds of the Peter McVerry Trust. The transfer was authorised in December 2022 without any conflict of interest declared to the board. The entire amount was reimbursed in 2023.
Doyle, who did not comment on this matter, told the investigators that he had majorly served as a finance director during his tenure. The investigation team highlighted that no details of cash flows, available cash, assets or liabilities were provided to the audit committee or the board until two months after Doyle’s departure.
The board is yet to clarify why it did not question Doyle about this. The trust attributed the financial trouble to “unsustainable” growth and “lack of enough investment in the head office resources”. Subsequently, Francis Doherty, who succeeded Doyle, resigned after four months in October citing “persistent and historical governance failings” that nearly led the charity to financial ruin. In Doherty’s resignation letter, he stated that he was instructed “not to issue any communications to any regulatory body or any other stakeholder” without board or chairperson approval. Doherty perceived this as “unfair restriction”.
Barr is not only a regulatory figure in another institution but also exercises a key role in the Central Bank’s regulatory panel – the one that enforces laws regulating financial services. Her responsibilities also involve chairing the board for the Irish Blood Transfusion Service and being a board director for the State forestry firm, Coillte.
She became part of the board of McVerry in September 2020 and assumed the position of chairwoman by May 2022, coincidentally, right before a crisis. The major concern for the board now is its inability to ensure the charity’s sound management.
The inquiry identified many significant transactions related to property acquisitions, fund transfers, loans, and takeovers within the review duration, all of which the board was unaware or did not approve of. Financial supervision and donor intent were areas the board received criticism for, specifically regarding the use of restricted funds. Furthermore, the investigators could not find convincing evidence of the trustees implementing proper financial measures.
These revelations seem to imply that the trustees were oblivious to the actual operations, which is quite contrary to their expected roles.
Adding to the controversy, the report uncovered discrepancies in board documents: On July 11th, 2023, as written in the board meeting minutes, the ‘board was not aware of the creditor’s outstanding volume’ despite endorsing the financial statements on May 11th, 2023, which supposedly included around €19.5 million in current and non-current creditors.
Another insight provided by the Comptroller & Auditor General’s report suggested that the mismanagement is still ongoing. As recently as June, the trust could not supply all the required information (e.g. staff changes and numbers, cost-saving measures, cash flow, and budget) when queried by the Department of Housing. Though additional details were provided in July, there were still some “pending items” the trust promised to work on.
When questioned whether the board intended to continue its tenure and whether it still held any trust, no response was provided by the trust. They merely stated, in a Monday statement, that financial control “shortcomings” were recognized and the “intensive work” of restoring the organization was indicated.
Interestingly, although the inspectors discovered the trust laid claim to property assets worth over €5 million that weren’t in their ownership, the board chose to remain silent on whether any action was taken in determining the ownership.
Deirdre-Ann Barr, Chair of the State blood board, did not respond to an inquiry that raised questions about the potential impact on her role from the findings of the inspectors’ report. The State blood board is actually a registered charity that falls under the jurisdiction of the Charities Regulator. Stephen Donnelly, the Health Minister, also remained silent on the matter when questioned about his confidence in Barr’s capabilities for her position.
Furthermore, it was confirmed by a representative that the board of the Irish Blood Transfusion Service is in full support of Barr in her position of chair. The report by the inspectors was shortly followed by an additional investigation into the Peter McVerry Trust by the Approved Housing Bodies Regulatory Authority. This state authority supervises not-for-profit housing organizations – with the findings of the Charities Regulator already causing concern, it’s likely further negative revelations will emerge.
The inspectors’ findings have been communicated to other significant authorities and could potentially lead to further repercussions. The Association of Chartered Certified Accountants did not comment on the inspectors’ findings about the trust’s previous auditor, Donal Ryan & Associates, based out of Dublin. Allegedly, a “conflict of interest” arose when the auditor sold nine properties to the trust while still acting as their auditor – the auditor has declined to provide a comment.
The report is presently under scrutiny by the housing department – it is not clear whether the state will conclude that it would be more effective to have the assets and services of the charity managed by another organisation. The Housing Minister, Darragh O’Brien is believed to support the Trust’s emergency and frontline services remaining with the government. There is a potential for the housing assets to be moved to an organisation with a different name and structure, though this decision is yet to be made.