The current chief executive of Cycling Ireland, Matt McKerrow, and its former president, Liam Collins, did not adhere to "good governance" in their bid to reach a funding and development agreement with the EvoPro Racing team, a new review into the debacle has concluded.
The review - by auditors BDO - points out the decision by chief executive McKerrow and then president Collins to sign a document of agreement with the team in December, 2021, went ahead without first obtaining board permission and despite coming directly in the wake of another serious controversy.
BDO points out the "lack of adherence to good governance" in signing the EvoPro Racing document occurred just a month after an earlier report into Cycling Ireland - over its use of false documents to apply for grants - highlighted a litany of concerns about governance within the national governing body.
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McKerrow was chief executive during the full span of the false documents controversy, though he was not involved in the submission of the documents. Collins was not involved with Cycling Ireland at that point. Collins was only elected president in November, 2021, by which point the false documents controversy had run its course and the Sport Ireland-commissioned KOSI into the affair had already been completed.
While BDO is an auditing firm, its report into the controversy concerning Cycling Ireland and EvoPro Racing is not an audit document. Instead, it is a review which contains the views of its authors. It was circulated to all adult members of Cycling Ireland today, Friday.
However, the national governing body has not released the report beyond its membership, its funders and the Oireachtas Committee on Sport. That means the report has not been released publicly or to the media.
Cycling Ireland said sharing the report in this way was done on legal advice and it warned its members not to pass the report on to any third party.
It should be noted there is no suggestion - nor has there ever been any suggestion - of dishonestly by anyone involved in the Cycling Ireland-EvoPro Racing collapsed deal. Instead, the matter centres on whether due process was followed and when and how information about the proposal was shared within Cycling Ireland.
In December, 2021, it emerged Cycling Ireland had agreed to fund the EvoPro Racing Continental team, which is based in Belgium. The move was broadly welcomed by members of the road cycling community.
It was intended the agreement would fund an academy within the team. That academy would be made up of young Irish cyclists who would ride for EvoPro Racing, with their membership of the team supported by Cycling Ireland and with the intention the structure would help their development as athletes.
In part exchange for the funding for the team, EvoPro Racing had agreed to provide support - using its vehicles and staff, for example - to Irish teams when they were racing in Europe.
However, early in 2022 the envisaged agreement ran into difficulties when word of the agreement, and the manner it was provisionally entered into, began to spread within Cycling Ireland, specifically among board members.
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The plan was eventually abandoned and no funding was ever received by EvoPro Racing, which has continued to operate this year independently of Cycling Ireland. BDO was asked by Cycling Ireland in February to carry out a review into all of the circumstances of the doomed agreement.
The review has concluded that a document entitled "heads of agreement" was signed on December 21st, 2021, by McKerrow and Collins for Cycling Ireland and by Morgan Fox and PJ Nolan, who co-founded and co-own EvoPro Racing. While the document was called a "heads of an agreement" it was also referred to as a "memorandum of understanding". All parties have since said it was not legally binding.
The BDO report says discussions about a possible agreement between Cycling Ireland and EvoPro Racing were taking place as early as April, 2021, some eight months before the agreement document was signed, and that at least 10 people previously or currently associated with Cycling Ireland were aware of those talks.
The BDO report added Collins believed the signing of the document in December, 2021, represented a continuation of the process that was already underway long before he became president. a position he has since stepped away from, though McKerrow remains chief executive.
The BDO report concludes:
- Collins and McKerrow "were the only two individuals from Cycling Ireland who consented to and electronically signed the heads of agreement" with EvoPro Racing in December, 2021.
- There was "no consideration documented" by Collins or McKerrow of the "UCI code of ethics regarding conflicts of interests involving family members and acquaintances". This, BDO suggests, was relevant as one of the riders set to ride for EvoPro Racing in 2022 - Seán Nolan - was a nephew of team co-owner PJ Nolan and another, Cian Keogh, was in a relationship with a relative of Liam Collins at the time the initial agreement document was signed. However, the BDO report stops well short of saying either Nolan or Keogh were set to benefit from the deal and that a conflict of interest arose. Instead, it says the connections "could have had the effect of creating a perception of a possible influence on the merits of the proposed" deal between Cycling Ireland and EvoPro Racing. BDO also stops well short of saying Nolan or Keogh were even confirmed members of the planned academy, stating instead they "potentially" stood to benefit from the Cycling Ireland-EvoPro Racing deal.
- The board of Cycling Ireland "was not informed" until January 21st, 2022, about "the proposed arrangement" between Cycling Ireland and EvoPro Racing. At that point "no financial budget had been considered" by McKerrow or Collins in relation "to the potential funding costs" of EvoPro Racing under the agreement they signed.
- Neither McKerrow nor Collins consulted the board before that agreement was drafted and no legal advice was sought on the status of the agreement signed in December, 2021. However, it is stressed in the BDO report the agreement was not legally binding and the parties have told BDO that as the arrangement was only taking shape, the time had not arrived to seek legal advice.
- There was no "quantification" of the potential financial obligations for Cycling Ireand that would arise from the December, 2021, agreement and "no financial due diligence" of EvoPro Racing was carried out by anyone in Cycling Ireland. However, Collins has told BDO that due diligence was not carried out in December, 2021, because the document signed at that stage was not legally binding.
- EvoPro Racing's Nolan said the arrangement for 2022 was to be capped at €300,000. Of that, €100,000 would be spent on bikes and kit that would be retained by Cycling Ireland meaning the true cost to Cycling Ireland would be €200,000 in 2022. However, one Cycling Ireland official estimated the deal could be worth "up to €480,000" in 2022.
- The BDO report also says "no consideration was documented" around whether a national federation could, under UCI rules, support a team in the manner planned by Cycling Ireland for EvoPro Racing.
- There was no "documented authorisation granted by the board to permit a single board
member and the CEO to sign the heads of agreement" of December 21st, 2021, on behalf of Cycling Ireland. And once the board became aware of the document it "took steps to ensure any potential financial obligations assumed by either/both parties were void".
The BDO report also documents how, in January and February of this year. discussions took place between Cycling Ireland and EvoPro Racing to put a revised arrangement in place, though this was never agreed upon. And when EvoPro Racing purchased equipment, on the strength of the deal it believed it had with Cycling Ireland, and sent invoices to the national governing body, these were not paid.
BDO also says when it performed checks on EvoPro Sports Ltd, as a company, it found it was a dormant company for 2019 and 2020. However, the BDO report says EvoPro Racing co-founder Morgan Fox told Cycling Ireland that another company, Tyberry Limited, was the sponsor of the team and was a holding company for a number of businesses.
BDO said it found Tyberry Limited had a deficit of €389,447 - and creditors of €448,444 on the balance sheet. However, PJ Nolan told BDO that Tyberry Limited was not insolvent and its creditors were himself and Fox. The BDO report also found when EvoPro Racing was being registered, via Cycling Ireland, as a UCI Continental team, Cycling Ireland did not gather the financial documents and assurances about the team that it should have for supply to the UCI.
The BDO report details a list of items or documents Cycling Ireland told the UCI it had obtained from the team but which, according to the records available to BDO, Cycling Ireland had not obtained.
Separate to Cycling Ireland's role in the team registration, Morgan Fox told BDO some documents that could be submitted by teams during their registration process were categoried as being needed by the UCI only "if applicable". He said if those documents were not furnished, and were not subsequently requested, then EvoPro Racing had acted in accordance with the instructions under the team registration process.
Fox outlined to BDO the team's registration process for 2019, 2020 and 2021 and informed BDO that no paying agent existed for EvoPro Racing. As such, Fox "informed BDO that in his view no accounts were required". BDO says Fox's views were validated by both Cycling Ireland and the UCI.
More to folllow.
