THE CHARITIES REGULATOR has said that the liquidated company behind a Galway cinema project recorded no income after 2007, even though it received public funds.

Solas-Galway Picture Palace was set up nearly 10 years ago to oversee the development of an art house cinema in the city centre.

In July 2017 the charity went into voluntary liquidation.

In a statement last night, the Regulator said trustees behind the charity “did not demonstrate adequate levels of care and skill prior to disposing of charitable assets to a private third party operator”.

A report published last night concluded that no income was recorded after 2007 by the charity “when income was in fact generated in the form of donations”.

“Specifically, in relation to donations received from the public, it was incorrect to include these as liabilities as there was never an indication these amounts would be due back to those who donated them,” charity inspectors said.

It also said that the charity did not ensure it had the appropriate corporate governance structure in place.

The necessity for suitable skills, experience and a defined governance structure was essential considering the level of public funding involved and the size of the capital project that was being by managed by the charity.

“The absence of formal documentation of decisions meant the trustees were unable to provide evidence of a robust scrutiny of key decisions which impacted upon the charity’s strategic direction and financial position.

“This was exacerbated by the absence of board renewal and the resulting absence of the necessary skills to oversee a project of this nature.”

Funds

The inspectors found that Solas received over €7 million from public sector bodies, together with the site for the cinema which Galway City Council purchased for €1.9 million in 2007 (the freehold interest in the site is still owned by the Council).

In December 2016, an agreement was reached for the charity to transfer a substantial portion of its assets and liabilities to a private third party operator.

As part of the agreement the third party operator, through a newly incorporated company, was assigned a 30-year lease with Galway City Council for the site on which the partially constructed cinema stood, and a rent of €1 per annum for the first 25 years, with agreement to pay market rent for the final five years.

The third party agreed to pay €881,000 to complete the project.

“The trustees’ decision to enter into negotiations with one preferred operator effectively removed any potential opportunity for the asset to remain within the charitable sector, which may have been a motivation of public donation,” the inspectors said.

The report into Solas-Galway Picture Palace concluded that the charity transferred charitable assets without any independent valuation and/or a competitive disposal process.

“It is important that the disposal of charitable assets is done in a way that is transparent, fair and in the best interests of the charity,” Charities Regulator Chief Executive John Farrelly said.

“While there is now an arthouse cinema in Galway, the lack of oversight and sufficient competence to manage a capital project of this size evidenced in this case serves to undermine public trust and confidence in the management and administration of charities.”

The inspectors’ report can be downloaded from the Charities Regulator’s website