Liberty Recycling: Frozen bank accounts, suspicious transactions and seized luxury goods

A major criminal investigation into Liberty Recycling only came to the attention of the Charities Regulator in July, with the regulator saying it felt unable to act until planned Garda searches were completed last week.During those searches, two BMW X5 vehicles valued at €250,000 were seized, along with designer goods valued at some €40,000, including Louis Vuitton bags and Rolex watches. While the assets may have dominated the coverage of the searches, other significant events also took place.Liberty Recycling’s bank accounts were frozen, while its computers and documents were also taken for examination. READ MOREDetectives from the Garda National Economic Crime Bureau’s money-laundering unit continue to analyse the material seized, but it has already given rise to further concerns.Rags and riches: How an Irish charity became the focus of a criminal investigation For example, it appears to have uncovered evidence that a Porsche was bought last year, allegedly with the charity’s money, and that a BMW was bought this year. The BMW, according to the regulator, appears to have been bought by an legal entity linked to Liberty Recycling, though the car was in the possession and control of a staff member.The regulator is effectively the secondary agency in this case as the events around Liberty Recycling continue to unfold. It is following the lead of the fast-moving Garda investigation. The regulator, for its part, has gone to the High Court and successfully petitioned for a provisional liquidator, KPMG, to be appointed. That move has put Liberty Recycling, and its bank accounts and revenue streams, in independent hands. Liberty Recycling raises millions each year by selling clothing and textiles it collects via a network of clothes banks across Ireland. It sorts the textiles at a depot in Bluebell, Dublin 12, where truckloads of donated items arrive each week, and these are then sold, mostly to traders in Africa and Asia. Liberty Recycling was established more than two decades ago as a community employment scheme, offering training and jobs to people recovering from drug addiction. As a result, it has received up to €490,000 annually from the Department of Social Protection for community employment schemes.[ Charity in money-laundering investigation received €2m in State funding since 2020Opens in new window ]It had eight trainees it its first year, but has since grown to be a nationwide organisation with revenues of more than €4 million. There are concerns that some of this money was diverted away from the charity for private gain, including the purchasing of luxury vehicles.Legal documents prepared by the Charities Regulator for its application to the High Court this week contain a variety of troubling details. Though nothing is proven, as all of the matters remain under Garda investigation, the regulator sets out its concerns in the court documents.One matter at the centre of the Garda inquiry, according to the regulator, is “suspicious transactions being routed through” Liberty Recycling.“These transactions comprised substantial international transfers of funds which were not commensurate with the level of activity taking place in the charity,” the regulator says.The Garda investigation is “focused on the activities of senior personnel at the charity [Liberty Recycling] and the suspected laundering of the proceeds of crime through the charity’s bank accounts”.As well as the searches last week during which the BMW X5s were seized, a Garda search was carried out last year at the home of a Liberty Recycling staff member. Some €34,705 “believed to belong to the charity” was found at that property “in suspicious circumstances”.The regulator has been clear that none of the trustees of the Liberty Recycling are under investigation. Among them is Sinn Féin TD Aengus Ó Snodaigh, listed as the current chairman. However, it has been critical of the trustees, saying they did not appear to grasp the seriousness of what is alleged to have taken place in the charity, and that their responses to unfolding events were, to a worrying level, lacking in urgency.“You are responsible for the control and management of the charity, and it appears that you are not in a position to answer any of the questions or provide any information requested in our letter sent yesterday morning,” the regulator wrote to the trustees by email last Friday. “More importantly, it would appear that you as charity trustees are no closer to making a decision in relation to the immediate future of the charity, its operations and the engagement of the service-users than when we met with Deputy O’Snodaigh on October 21st. [ Accountant’s office searched as gardaí investigate alleged money laundering at charityOpens in new window ]“We are concerned that as charity trustees, you are not fully informed or aware of certain fundamental information. (This includes) the relationship with recently incorporated entities, of which you are also directors, which are not registered charities.”It also told the trustees they “may have been led to believe” the recently incorporated entities were associated charities “to which assets of the charity may have been transferred and to which payments may have been made”. “Any such transfers would be contrary to the constitution of the charity and charity law. This in itself, if correct, is a very serious matter,” the regulator added.The appointment of provisional liquidators, while belated, means Liberty Recycling has moved into independent hands, raising the prospect that its assets and activities could be taken over by another similar group.However, given the serious and many concerns raised about how it was structured and run, the Garda investigation looks set to continue long after the charity’s future is settled.The material seized last week is still being analysed, with the primary objective of examining any unexplained transfers of funds into and out of the charity, and also how the assets seized last week were funded. No arrests have yet been made, but could take place in the next phase of the inquiry.