Avocet: the Catholic Church and a Milan cheese factory

EXCLUSIVE by OUR BUSINESS STAFF

Avocet Group chairman Martin Frost told investigators he had to purchase a Tipperary priest's house in his own name while using company cash because of Roman Catholic Church restrictions on selling property to corporates and non-Irish.

The explanation was given to liquidators looking into the affairs of Omega Infinite PLC, the Avocet parent company, which became insolvent and folded in 2019, leaving a trail of debt and 650 anxious shareholders. 

The 'revolutionary' fuel-making technology promoted by Omega failed to deliver any marketable product. But Mr Frost has previously denied allegations that he and his fellow directors had presided over a Ponzi scheme.

Four transfers totalling 155,000 Euros made by Mr Frost from Omega's bank account to a law firm in Ireland as payment for the house in the village of Three Mile Borris, near Thurles, were among the matters queried by insolvency practitioners. They maintain many of the withdrawals made from the Director's Loan Account (DLA) used by Mr Frost did not benefit the company but were for his personal gain.

The involvement of the Catholic Church in the Avocet saga, and £54,000 given by Mr Frost to an Italian farmer are among the topics covered in a liquidators' Letter of Claim sent to Avocet's chief in September 2021 with a demand for clarification and for payment of over £2 million within 28 days.

According to the letter: "The Company made the following payments to the client account of O'Donovan Baker (a firm of solicitors in Cork, Republic of Ireland): 16 March 2018 €15,000; 4 July 2018 €20,000; 11 October 2018 €20,000; 19 October 2018 €100,000; Total €155,000.

"John O'Donovan of O'Donovan Baker has stated to our client that these payments were received as part of the purchase monies for a property at Two Mile Borris, County Tipperary and that they acted on your behalf in the purchase of the said property. None of the payments to O'Donovan Baker were posted to the ledger of your DLA which they should have been if, as you say, they were personal advances to you."

Earlier, in an email to the liquidators, Mr Frost gave this explanation for the Tipperary deal:

"The objective of this cottage was to provide accommodation for Avocet folk working and visiting the Avocet Lisheen operation instead of running up huge accommodation bills. In Two Mile Boris property was difficult to obtain so an arrangement was made to acquire the old priest's house which the church had let to the council for social housing.

"As you are no doubt aware there are (informal) restrictions on who the Irish RC Church will sell to - not to corporates and non-Irish. I have a distinguished Irish pedigree and I was (an) acceptable purchaser to both the Church & State".

He said he had taken the house to be passed on to Avocet Bio Solutions, an Irish-registered subsidiary business of Omega Infinite, previously called Avocet Infinite.

However, the apparently sceptical liquidation team told Mr Frost: "Our clients do not understand the Company to have had any operations in Lisheen and any such operations were conducted by Avocet Bio Solutions plc. As such, they believe that your references to Avocet in your email  were not to the Company and there was therefore no sense in which the purchase of the property was intended to benefit the Company or its business. The Company has a proprietary claim to the assets acquired by you using money misappropriated from the Company. You hold such assets as constructive trustee for the Company."

And the Letter of Claim continued: "Further, your fiduciary duties require you to account to the Company for the use of the €155,000 referred to. The Company is entitled to trace that money into the property purchased in the Republic of Ireland and to require you to account as a constructive trustee.

"If you have transferred the property to Avocet Ireland, then Avocet Ireland is also bound by the constructive trust. The reason is that it is to be inferred from your email that Avocet Ireland was not a bona fide purchaser of the property for value without notice".

The liquidators then turn their attention to the £54,357 paid by Mr Frost from the company's account to one Guillo Onesti.

Mr Frost had told them: ""It is complicated but Avocet Bio Solutions was also to have a large shareholder input from the Roman Catholic Church – in large measure this was to derive from the Italian Onesti family who were giving part of their farms around Milan to the church, the balance including the cheese factory Avocet Bio Solutions was buying for some 20 million euros.

"In 2018 various Avocet & Frost payments were made to the Onesti family and an Italian memorable chapel was given to the Roman Catholic Church. In Two Mile Boris I donated in 2017 to the RC Church part of a playground for their school."

In the view of the liquidators, Omega did not appear to have derived any benefit from this payment to Onesti. Mr Frost's explanation did not suggest there was any prospect of it deriving such a benefit given that it appeared the payments and donations to the Onesti family were intended to benefit Avocet Ireland.

"We consider that by causing or allowing the payment to be made to Mr Onesti, you breached your duties to exercise your powers as a director for the purposes for which they were conferred; to promote the success of the Company in good faith - the payment was intended to promote the success of Avocet Ireland; to act in the best interests of the Company's creditors as a whole; to exercise independent judgment; and skill and care".