Peter McVerry Trust faces a reckoning over financial fog in its operations – The Irish Times

Fr Peter McVerry has been known for generations as a tireless advocate for the homeless, helping some of the most marginalised people in society for five decades. Thousands of families have reason to be grateful for his good work. But now the charity he set up in 1983 is at the centre of a financial and governance crisis, raising questions about what happens next to the services it provides and the property assets it has built up.

A draft report by Charities Regulator inspectors comes near the end of one of two investigations into the affairs of the Peter McVerry Trust, a national charity first known as the Arrupe Society whose aim is to reduce homelessness and the harm caused by substance abuse. The other investigation is for the Approved Housing Bodies Regulatory Authority (AHBRA), the new supervisor of groups such as the McVerry Trust that receive local authority funding to provide housing. The AHBRA said this work is ongoing, with no scheduled deadline.

Such investigations follow governance concerns raised when an abrupt financial crunch led to a €15 million bailout from Minister for Housing Darragh O’Brien. That is a considerable sum. Still, the November decision to release the money reflects the importance of the charity’s services. But it raised sharp questions as to what exactly was going on to necessitate what was, in essence, a huge Government rescue.

Regulatory data sets out the increasing scale of operations now under McVerry Trust control. The trust’s €61.74 million income in 2022 included €43.4 million from central government and local authorities. Over five years between 2018 and 2022 it received some €164.3 million from the State and €72.6 million in donations. Financial accounts show the charity’s freehold property had a value €162.3 million at the end of 2022, up more than €49 million in only 12 months, a period of rapid growth as homelessness hit record levels. It had some 766 staff in 2022 and a €34 million annual payroll.

The scale and scope of such operations, not to mention the reliance on public funding, demands management of the highest calibre and vigorous board scrutiny. But deep-rooted problems that came to the fore after the departure last year of long-time chief executive Pat Doyle have cast a very dark cloud.

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The McVerry Trust is now known to have bought property from its then auditor in 2018, which the inspectors said was a conflict of interest for the auditor. Two years earlier, the ownership of a Kildare property was transferred to the auditor. On the same day, the ownership transferred from the auditor to the trust. The inspectors were told the trust asked the auditor to buy the property and then transfer it to the trust “so that the fact that [Peter McVerry Trust] was purchasing the property was not publicly known”. Mr Doyle did not reply to voice and text messages from The Irish Times. The former auditor, Donal Ryan, did not reply to a phone call to his office.

Mr Doyle, whose 2022 salary was €121,170, was succeeded in June 2023 by Francis Doherty, the former director of housing and communications. Within weeks, Mr Doherty wrote to the Department of Housing warning of significant cash flow problems. Mr Doherty resigned in October, saying the board had made his position untenable. He went on to say “repeated and long-standing governance failings” over years had taken the charity to the brink of financial collapse.

The Minister’s bailout one month later averted disaster. But the trust now faces something of a reckoning.

The inspectors’ draft conclusions are clear enough, summarised in the stark assertion that “numerous key compliance and governance failures” had been identified. Among them was the draft finding that “numerous material transactions relating to property purchases, transfers of funds, loans and takeovers during the review period were not known to, or approved by, the board”.

The trust took over or commenced the process of taking over nine other charities between 2011 and 2022 but the board did not consider whether their charitable purpose aligned with its own. In one case, the McVerry Trust kept a charity “legally active for a period of 10 years after all activity had ceased in that charity”.

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The regulator won’t discuss such findings: “The Charities Regulator has no comment to make at this time as the inspectors appointed by the Charities Regulator to conduct a statutory investigation into the affairs of Peter McVerry Trust (registered Charity Number 20015282) have yet to conclude their investigation.”

Asked about the draft, the McVerry Trust said it had received the document and would submit “extensive feedback” to the inspectors. “We have been engaging constructively and thoroughly with the appointed inspectors throughout this process ahead of the completion of the final report, which will be published in due course.

“As an organisation, we recognise the serious issues of the past and have undertaken extensive work in rebuilding our financial governance over the past six months, including the recruitment of new senior management team and finance team members to ensure best practice going forward.”

On the face of it, the draft report highlights deficiencies. For example, €4.3 million provided by a religious order to buy three specific properties was supposed to be restricted for that purpose. But the draft report said the trust did not buy any of the three properties. A total of €1.5 million of the restricted money – earmarked to buy long-term units for homeless people – was transferred to another charity, unnamed in the report, which was a separate legal entity to the McVerry Trust. That charity used the money to pay McVerry creditors.

“No explanation was provided as to how the transfer of charitable funds to a separate entity advanced [Peter McVerry Trust’s] charitable purchase,” the draft report said. “The inspectors are of the view that such a transfer may demonstrate that [Peter McVerry Trust] was not applying all of its property in furtherance [of] its charitable purpose.”

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All of that is in addition to the questions over the double-counting of “multiple” duplicate properties in the McVerry Trust’s fixed-asset register and the draft conclusion that its “freehold property balance on the financial statements includes properties not controlled or owned” by the trust.

The draft goes on to highlight the “failure to depreciate freehold properties over the useful life of the property” and the “failure to depreciate fixtures, fitting and equipment over the useful life of the assets”. It describes “inappropriate capitalisation of operating expenditure resulting in overstated asset values and profit” and cites an “inability to calculate an accurate gain or loss on disposal of any asset in the [fixed asset register] due to poor record keeping”.

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Such findings raise serious questions about the stewardship of a large property portfolio valued in excess of €160 million on which the trust’s future depends. What is more, the draft found no cash flows, cash on hand or asset or liability figures were provided to the audit committee or to the board until July 2023. “Information was also not broken down by restricted fund,” the draft found, referring to funds that can be lawfully used only for a specific charitable purpose.

All of this suggests the trust may have been operating in something akin to financial fog.

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