Sale of Siteserv based on 'misleading and incomplete information', commission finds

The controversial sale of the Siteserv company to businessman Denis O’Brien in 2012 was based on “misleading and incomplete information,” a provisional finding of a State inquiry has found.

A highly debt-laden Siteserv was sold by the former Anglo Irish Bank to Millington, owned by Mr O’Brien, for €45m in 2012.

As part of the deal, the Irish Banking Resolution Corporation (IBRC) - the entity which succeeded Anglo - wrote off €119m of the €150m it was owed by Siteserv.

The State Commission of Inquiry into the sale, and other matters related to IBRC, headed by Mr Justice Brian Cregan, has circulated a confidential draft final report to witnesses.

The commission has determined that it can be concluded that the bank made its decision to approve the sale of the Siteserv group to Mr O’Brien in good faith, but based on misleading and incomplete information provided to it by the company, the judge said.

The commission has found that it can be concluded the Siteserv transaction was not commercially sound in respect of the manner in which it was conducted, the decisions made and the outcomes achieved. This is the most substantial move by the commission after seven years of investigation.

Judge Cregan described the sales process as being “below the surface” where certain events occurred during the sale without the bank’s knowledge. He is reportedly critical of the terms on which Siteserv was sold.

It is understood that he has found the transaction was “not concluded in a manner that was reasonable from the perspective of the bank”.

Bonuses

Large bonus payments to Siteserv directors on the eve of the sale are also criticised by Judge Cregan who said they received more than corporate finance advisers KPMG and Davy. A €5m payment to Siteserv shareholders as part of the deal “was too high”, the judge has provisionally concluded.

Witnesses have been ordered by Judge Cregan to come back with any observations or responses to his draft conclusions within two months. The judge has restated a conclusion set out in a previous draft interim report last year that the deal was not commercially sound.

Attempts by the Irish Examiner to contact Mr O’Brien’s representative were unsuccessful and Siteserv could not immediately be reached. Bonuses cost the company €802,200, the judge said, noting KPMG received €450,000 and Davy €275,000.

The judge found that these were bonuses on a lavish scale and entirely unacceptable for a company that was costing the taxpayer almost €118m in loan write-offs and losses.