On the 18 April 2012, Sinn Féin’s Finance spokesperson Pearse Doherty received a reply from Minister for Finance Michael Noonan to a question he had asked several weeks earlier about a deal just undertaken by IBRC concerning loans to a company called Siteserv.
Siteserv had borrowed €150 million from Anglo Irish Bank. The company was broke and appeared set to close. The deal, agreed by IBRC involved the acquisition of Siteserv by Millington, a company owned by businessman Denis O Brien, for€45.42 million euros. Seventy per cent of the money it owed IBRC was written off. The tax payers lost €105 million on the deal.
There was another sting in the tail. Shareholders, including chief executives at the company, received €4.96 million. For a company that was busted.
The taxpayer took a hit of over €100 million, and the shareholders walked away with millions.
So Pearse asked the Minister what exactly was going on. And Minister Noonan responded with one of those gloriously obnoxious lines that could only be thought up by a Fine Gael, Labour or Fianna Fáil minister: “Notwithstanding the State’s ownership of the bank, IBRC operates at an arm’s length capacity from the State in relation to commercial issues.”
Basically – ‘even though we own the bank, we don’t take any interest in what is going on’.
And that’s the line the Irish Government has been running with since Freedom of Information requests by independent TD Catherine Murphy brought a renewed focus onto the Siteserv deal. Political anger and media interest has now put the spotlight on a host of other deals involving IBRC and the writing off of hundreds of millions in taxpayers' money.
In respect of Siteserv we now know that as well as shareholders getting a sweetener of €5 million to ensure the deal went ahead, the same legal advisers acted for both the purchaser and seller.
We also know that Denis O'Brien’s company was not the highest bidder but yet emerged as the successful bidder. We know the Minister for Finance was briefed by Department of Finance officials on serious concerns over this transaction and briefed equally on broader concerns over other transactions and the modus operandi of IBRC.
The Minister claimed that IBRC reviewed the Siteserv sale. Mr. Noonan – a former leader of Fine Gael – sat down with Alan Dukes the Chairman of IBRC and also a former leader of Fine Gael and Fine Gael Minister for Finance- and accepted his verbal assurances that IBRC was behaving properly. The concerns of Departmental officials were ignored.
The Siteserv deal is not the only one that saw debt written down. More than €64 million was written off for Blue Ocean Associates before being purchased by a consortium, also involving, as it happens, Denis O'Brien. There was an almost 50% write-down of €300 million in debts in the purchase of Topaz. Mr. O'Brien is also involved in this.
The Sunday Times ran this story on its front page on Sunday April 19thbut two days later when challenged on it in the Dáil the Taoiseach said he had not read the reports. He then appeared to pluck out of the air a suggestion that the Comptroller and Auditor General could look at the circumstances surrounding the deal to determine whether the taxpayer had got value for money.
This was the government trying to kick the issue to touch. Last week in the Dáil during Leaders I asked the Taoiseach three questions. The first was why the Minister for Finance failed to ask the IBRC chairman, Alan Dukes, to conduct a full and independent review of the sale as recommended by Department of Finance officials. The second was what were the other large transactions conducted by IBRC? The third was for him to establish an independent Commission of Investigation of these matters. The Taoiseach failed to answer these questions.
As it happens it quickly emerged that the Comptroller and Auditor does not have the authority to investigate Siteserv. The Taoiseach is bound to have known this – so a different approach was needed.
Desperate to avoid a Commission of Investigation the Minister for Finance then announced that the special liquidators, who helped close IBRC down, would be asked to review all transactions at IBRC over €10 million. The liquidators are also from KPMG, one of the four big world auditors, and we know that when the Siteserv deal was being done, the sales process was overseen by KPMG and stockbrokers Davy.
Alan Dukes was not amused and held a press conference at which he said that the Department of Finance was kept abreast of the sales process at all stages. He also said that the IRBC board never had a review of the Siteserv transaction. This contradicts Minister Noonan's claim that there was a review.
Last Sunday new Freedom of Information reports revealed that share activity in Siteserv significantly increased in the month before it was sold off by IBRC and that the share register, which contained the details of those who bought the shares, was given to the liquidator in July 2012.
The following day, and in an obvious attempt to defuse public concern about the involvement of KPMG and to avoid having to establish a Commission of Investigation, the government announced the appointment of a retired High Court Judge Mr Justice Iarfhlaith O' Neill to oversee ‘any actual or perceived conflicts of interests.’
Murkier and murkier. The twists and turns of this story have stayed in the media headlines now for two weeks and there seems to be little prospect of the story going away.
Of course, there is a much wider political issue here centring on Fine Gael, Labour and Fianna Fáil’s refusal to ever accept accountability for events that happen on their watch.
It’s also all about the relationship between the parties and big business and their compliant attitude to the elites – the Golden Cicrle – in contrast for example to struggling households and working families.
But IBRC was not the only government owned agency handling massive debts arising from the economic crash. NAMA took over much of the debt arising from the collapse of the construction industry and is handling billions in taxpayers' money. Minister Noonan has ordered NAMA to wind up faster than its 2020 remit demands – meaning NAMA is rushing sales processes and there is a lack of transparency there too. Last year, it sold off it’s entire loan book for the north at a €400 million discount - €400 million the Irish taxpayer will never see again.
Irish taxpayers’ assets are being disposed of by NAMA at a rate of hundreds of millions every month – and we don’t know if we’re getting full value for money.
We do need an inquiry into what happened in IBRC- during its operation and its liquidation. And that inquiry should include NAMA. The public good and taxpayers interests require that all transactions, including the acquisition of assets by NAMA be subjected to thorough independent scrutiny in a Commission of Investigation.