IHRB CFO bombshell shakes Irish horse racing governance to its core
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For a body that dedicates its work to protecting the integrity and reputation of Irish Horseracing, the Irish Horseracing Regulatory Board (IHRB) finds itself, as an organisation, in crisis, following extraordinary scenes at an Oireachtas Public Accounts hearing.
At the beginning of Thursday's committee session, it was announced by the chief executive of the IHRB — to the shock of everyone in attendance and watching at home — that the chief financial officer had left the organisation hours before.
While mystery surrounds the exact nature of Donal O’Shea’s period of “voluntary leave” from the body, it is now not believed to be directly related to an almost €400,000 payment to previous CEO Denis Egan — the discovery of a financial discrepancy which led to O’Shea’s departure is now being probed by an independent inquiry headed by Mazars.
At the hearing, chief executive Darragh O’Loughlin cut a gaunt and nervous figure as he delivered the news that the other key witness from the IHRB would not be present, and gave some detail as to his absence.
“Our chief financial officer is on a period of voluntary leave, without prejudice, to his position,” said the CEO, to the astonishment of Committee Room 3, moments after the session began.
“Since when?” asked the chair of the committee, Brian Stanley TD.
“Yesterday,” was the response from O’Loughlin, who when pushed said he didn’t want to say anything that might prejudice an ongoing review into IHRB, except that the reason “is financial in nature”.
O’Loughlin said that he had been made aware of a matter which was of “grave concern” and that in the “past 48 hours in the course of preparing for this meeting, I became aware of a hitherto unknown issue that occurred in early 2022”.
“I immediately brought it to the attention of the chair of the audit and risk committee and the board of the IHRB. The board has commissioned a full review of the matter to be conducted by an independent firm.
“The preliminary facts, as they are known, have been disclosed to the relevant bodies, including the office of the comptroller and auditor general, Horse Racing Ireland, and the Department of Agriculture, Food and the Marine.
“The committee will appreciate I am not in a position to give any further details of the matter, pending the outcome of the independent review.”
The news came like a bolt across the hearing, which had hoped that the IHRB would be able to shed some light on a deeply troubling transaction from the organisation to its outgoing CEO in 2021.
This relates to a scheme set up by the IHRB in May of 2021 when CEO Denis Egan emailed staff to tell them of an enhanced retirement package which set out that a payment of two years' salary would be delivered to any personnel who qualify.
Egan cautioned that there would “be no exception to this”— then by happy coincidence, he himself decided to avail of the new pastures payment within weeks of the announcement.
But what we learned in March of this year was that Denis Egan was paid a generous €384,870 termination payment in September 2021, or €141,880 more than he should have received, under his own stated rules.
That’s more than 50% over and above what he should have received, but in the words of the Comptroller and Auditor General, Seamus McCarthy, a fee which was “to a significant extent, an exception”.
The platinum parachute payment was approved for “additional payment” from the Turf Club and the Irish National Hunt Steeplechase Committee, while the IHRB were at pains to point out, it did not contribute to this contribution and no public funds were used.
The public funds, incidentally, work out at €10.2m in taxpayers' money in 2021 — now approximately €16m — which is routed to the IHRB through Horse Racing Ireland (HRI).
While the investigation into this payment is underway and will take the summer to complete, there was a sense of irony that the body which was established to regulate and rule over horseracing is now being forensically examined for a “grave” breach of rules of its own.
Despite the extraordinary discoveries at the PAC on Thursday, the Department of Agriculture said it was satisfied with the board of the IHRB, which consists of just two independent directors.
The assistant secretary general at the department appeared unconcerned at the make-up of a board which presides over such dysfunctional elements for a sporting regulatory body.
That the issue over previously undisclosed payments to a CEO is only now coming to light, is not entirely the fault of the IHRB. It should be noted that only last year the Minister for Agriculture asked for details about the CEO’s salary at the IHRB, where previously that was left entirely to the regulatory body to reveal or not.
In May 2022, the minister decreed that the derogation which had existed, was now being lifted and he wanted full disclosure.
This, said the IHRB chief executive “placed us in a difficult position legally because the contract of employment of the individuals in question didn’t contain any provisions providing for the publication of his terms and conditions” (under GDPR privacy rules).
"For now the IHRB assured the committee today that its fresh audit is now underway and is one which will be a “very thorough and extensive review”.
But what sort of faith can the public have in IHRB going forward, indeed its board and its CEO?
While Deputy Catherine Murphy described matters at Thursday’s proceedings as “very, very, very unusual”, the coming months will determine just how unusual financial governance has been at IHRB — and will be in the future.