Drivetime’s Philip Boucher Hayes reported yesterday that Seán Gallagher got €20,000 seed capital from Louth County Enterprise Board to set up a business (Home Wiring Systems), changed the name of his business to Smarthomes, and then told Louth CC to get stuffed when they came looking for their money back because his finance and legal advisers told him that the liabilities of the first company weren’t the new company’s problem.
Sean Gallagher: The funding from the enterprise board was for working capital to buy, to buy products, to buy materials, to do market, to do market testing but to do mostly to do product-type testing. And that worked quite effectively.So I guess much of the learning was taking place at that stage which is, you know, standard with most companies starting off.
Boucher-Hayes: And was that investment of benefit to Home Wiring Systems?
Gallagher: Yes, I mean in terms of working capital to buy prototype materials and to install the products and test them, it was certainly helpful.
In 2005, the enterprise board asked if they could thank you please have their money back. Gallagher’s finance and legal advisers told him to chill: that debt had disappeared when he performed the herculean entrepreneurial feat of writing the word ‘Smarthomes’ down on a bit of paper in the Companies Registration Office.
Asked if he felt he had a moral obligation to pay the money back because the company at that time had €650,000 on hand, he said:
Gallagher: ”Well we were in a very aggressive growth stage at the time trying to keep up and to grow, to grow the business but, as I say, I met with my finance and legal advisers and I asked them to give me their view on it. As professionals, they felt that it wasn’t a liability of a new company.”
But it gets better. In 2004 Gallagher received €100,000 from the State funded InterTrade Ireland when Smarthomes won its Seedcorn competition. (Gallagher was appointed to the board of InterTrade in 2007 and subsequently became chair of its equity network. He resigned from the body in order to contest the presidential election. He received €30,150 from the State over four years as remuneration for his role.)
So, in 2005 - when Louth County Enterprise Board came looking for their money - Gallagher was a few months on from having been given €100,000 more of State money, but still he felt no moral obligation to repay that €20,000.
He was probably just blinded by his deep, passionate love for the State and wasn’t thinking straight.