This article was first published in the Irish Mail on Sunday newspaper on 17/06/2012
By Michael O’Farrell
Investigations Editor
Mick Wallace faces fresh questions over the way he transferred a villa and vineyard to his brother
Tax-dodging Deputy Mick Wallace is facing fresh questions over the way he transferred a €500,000 Italian villa and vineyard to his brother – at the same time he was refusing to pay €1.4m to the Revenue.
The 2009 transfer was done in such a way that Mr Wallace is still able to use the property as his own, visiting whenever he wants, despite claiming to be effectively broke.
Mr Wallace says he gave the vineyard to his brother to settle a €550,000 debt for building supplies.
But the fact that he did so at the very time he admits defrauding the Revenue will raise questions as to whether the transfer was an attempt to ensure the taxman (or other creditors) could not get their hands on it and sell it to pay off some of his company’s huge debts.
This weekend, Mr Wallace’s brother, Joseph, who is now the owner of the Italian winery, declined to answer questions about the deal.
Among the questions facing the Wallace family are:
- Why would Mick Wallace use a personal asset to pay a business debt? (Mr Wallace has insisted that he and his building firm are separate entities)
- If money was owed to Joseph Wallace’s company, why did he take personal ownership of the vineyard? Should the vineyard have been handed over to the firm rather than Joseph?
- What documents are there showing how the €550,000 debt was accrued?
- Has the Revenue ever been in contact over the deal?
Deputy Wallace could not be contacted this weekend to answer questions about the deal.
He was last seen at Terminal 2 of Dublin Airport on Friday, drinking a pint in the departure lounge bar.
It is thought he may be on his way to watch Ireland’s final Euro 2012 match against Italy – a country with which he has longstanding ties.
Despite his company’s €2.1m debt to the Revenue, which he has said he will start paying from his salary at a rate of around €2,000 a month, Mr Wallace still owns an apartment in Turin, a short distance from the vineyard.
The MoS questioned Mr Wallace about the vineyard transfer in 2009 – before it was known that he had lied to the Revenue, withholding €1.4m in VAT.
At the time, Mr Wallace said he had sold the Italian villa and surrounding vineyard to Joseph after other creditors turned down a chance to bid for it. And he claimed the Revenue had approved the move.
‘I no longer own it [the vineyard]. I had to sell it to a creditor, who happens to be my brother,’ he said at the time.
‘I owed him €550,000 and I sold him the vineyard. It’s not something I wanted to do but he was going to get nothing for the €550,000 worth of material that I had got from him for construction work.’
Mr Wallace had bought the four-acre vineyard and lovingly restored stone villa, which is close to the pretty Piedmont village of Cortemilia, in 2003 for around €70,000 before spending the same amount again on renovations.
It is unclear how his €550,000 debt to his brother’s firm was entirely settled with the private transfer of a property seemingly worth a fraction of that.
The deal raises further questions, since Mr Wallace has acknowledged that he still uses the villa and travels there in his spare time.
A Wallace construction jeep with an Irish registration and the Wallace logo, ‘Life’s short, work hard, play hard’, is often parked outside the villa. Last year, the Wexford TD happily tweeted about going to his vineyard to tend the vines.
‘I still go down there. But I don’t enjoy the fact that I had to sell it and I did offer it to other creditors who didn’t want it. They were holding out for the hope that they’d get money and hopefully they will,’ Mr Wallace told the MoS at the time.
But now that Mr Wallace has acknowledged that he lied and deliberately committed tax fraud during 2008 and 2009, further questions are likely to be asked about the vineyard deal.
A substantial owner of the nationwide Homevalue hardware brand name, Joseph Wallace also runs a petrol station, SuperValu supermarket, a department store and an agricultural supply store in the family’s home town of Wellingtonbridge, Co. Wexford.
Until 2004, he was also a director of Mick Wallace’s main construction company, MJ Wallace Ltd, which was taken into receivership by ACC last year.
But the €550,000 debt and the associated Italian property deal does not appear to be specifically mentioned in any of the company accounts.
The accounts for Joseph Wallace’s hardware holding company, Associated Hardware PLC, do mention that €1.2m in bad debts were incurred in 2009 – but it is unclear if any portion of this relates to the vineyard deal.
In particular, it’s unclear how a company debt could be settled with a personal asset transfer – something that would be in apparent conflict with company law.
Revenue guidelines state that a company must keep records of all transactions in relation to written off bad debts.
The questions posed by the MoS – and delivered to Joseph Wallace in Wellingtonbridge – were not answered.
‘I have to be careful what I say,’ he said before asking for the written questions to be left for his attention at his SuperValu store.
The MoS also requested documentary evidence of the €550,000 debt. In the past, Mick Wallace has said the Revenue audit into his affairs had found no issue with the vineyard transfer – but this and other questions about his Revenue affairs will become clearer if he agrees to a request to make his Revenue affairs public.
The request was made this week by the Dáil Committee on Members’ Interests, which wants to see if Mr Wallace’s tax issues coincide with his time as a TD, before deciding if it can investigate.
But, in the meantime, Mr Wallace is being urged to answer questions he did not directly address during his 10-minute Dáil speech on Thursday.
Those questions include why he and his son, Sasha, doubled their company salaries to almost €300,000 in 2008, around the time the VAT fraud was being committed and when the firm was losing money.
Mr Wallace has also not yet made it clear whether he made his VAT admission to the Revenue only after he was informed of an impending audit in 2010.
And it still remains unclear what assets – in addition to his Dáil Âsalary – he may still own and could sell to help repay his Revenue debt.
For example, the MoS has previously revealed that Mr Wallace bought a Turin apartment in 2001 for an estimated €90,000.
The apartment is a few minutes from the Mole Antonella, the tallest brick structure in the world, and the Porta Palazzo open-air market.
The home is Mr Wallace’s base for indulging in his passion for ÂItalian football, which until Âfinancial woes hit, saw him retain season tickets for AC Milan, ÂJuventus and Torino.
FAMILY AND FRIENDS BOUGHT APARTMENTS, BUT HE KEPT THE VAT
The VAT tax cheat Mick Wallace did not pay was taken largely from apartment sales he made to his family, friends and football associates – including Ireland international Kevin Doyle.
With the property market in freefall, the struggling developer fell back on close family and friends when his Behan Square development, close to Croke Park, did not sell as planned in 2008 and 2009.
Up to a dozen close relatives and football friends – including Ireland star Kevin Doyle – took out mortgages from an assortment of banks to purchase Mr Wallace’s apartments.
But, unknown to them, Mr Wallace’s company kept the VAT they paid and fraudulently declared false
Âbi-monthly Revenue returns.
The only other party that appears to have been willing to purchase in Behan Square is Dublin City Council, which signed a deal in April 2008 for 10 units to be used in the Affordable Housing Scheme.
Because of the collapse in property values, the scheme has been cancelled and the council has confirmed that it is stuck with six apartments, for which it paid just under €1m.
The loss to the taxpayer is compounded because Mr Wallace appears not to have passed on the VAT on those deals either.
In addition to the sales to Dublin City Council, the Property Registration Authority recorded details of a total of 13 sales at Behan Square in 2008 and 2009 – the period in which Mr Wallace has admitted he cheated on his VAT.
Despite a slick advertising brochure and ads in national newspaper property pages, most of those sales appear to have been to close family and friends.
With advertised prices starting at €395,000, purchases by assorted members of the Wallace family alone must have amounted to millions of euro.
Starting weeks after the government’s emergency bank guarantee, in 2008 and 2009 some 10 family members, either individually or jointly, bought in the development.
Among them were Mr Wallace’s sons Sasha, who bought in January 2009 with a First Active mortgage, and Fionn, who bought with a Bank of Scotland mortgage.
At the time, both were directors of Mr Wallace’s company M&J Wallace – the firm liable for the unpaid VAT from those apartment sales.
Other family members who bought are listed as Mary Murphy Wallace, Joseph and Gwenda Wallace, Francis Wallace, Brendan and Mary Wallace. Christina Harpur – a sister of Mick Wallace – also bought an apartment with her daughter of the same name.
Others who came forward include associates from Mr Wallace’s Wexford Youths football team – the most prominent being Kevin Doyle who bought in November 2008 with a mortgage from ACC Bank.
Mr Doyle began his career with Wexford Youths and Mr Wallace is not only a friend but has also acted as his manager and adviser.
A staff member working with the property firm managing the communal areas in Behan Square said: ‘I know Kevin. I have met him a few times. I never dealt with him about the apartment, only his mother and the letting agent.
‘As such, it is not Kevin who is the landlord. He would have bought it, I assume, but any time the annual service charge [is due] or if there is a problem with the apartment, I contact his mother.’
Mr Wallace did not respond this weekend to our questions about the apartment sales. Nor did other family members who could be contacted last night.
A resident at Behan Square, however, said he was surprised at Mr Wallace’s actions.
Leon Harding, who bought his two-bed apartment in 2008 for €225,000 under the council’s Affordable Housing Scheme, said he bought because he admired Mr Wallace’s reputation as a developer with a social conscience. ‘He is the best of a bad lot,’ he said.
‘Yes he has done a bad thing… and he’ll have to pay for that. People do desperate things when they try to keep their business going.’
