Siteserv sale carried out 'in good faith' but based on 'misleading and incomplete information' 

The Government has today published the report of the Commission of Investigation into the Irish Bank Resolution Corporation's sale of Siteserv to Millington

As part of that deal, IBRC — which succeeded Anglo Irish Bank — wrote off €119m of Siteserv's €150m debt pile. Picture: ollingNews.ie

The controversial sale of the Siteserv company to businessman Denis O’Brien in 2012 was carried out “in good faith” but based on “misleading and incomplete information” a 1,500-page report has stated.

The report of the Commission of Investigation into the Irish Bank Resolution Corporation’s (IBRC) sale of Siteserv to Millington, a company owned by Mr O’Brien, for €45m 10 years ago, was published by the Government on Wednesday.

As part of that deal, IBRC, which succeeded Anglo Irish Bank, wrote off €119m of Siteserv’s €150m debt pile.

 

The report by the State commission of inquiry into the sale, headed by Mr Justice Brian Cregan, was given to Taoiseach Micheál Martin in July. 

The Government said it accepts the findings of the commission and believes the report “shines a light on unacceptable practices by certain parties”.

The report finds that the bank could have recovered up to €8.7m more than the €44.3m it agreed to accept. 

It says it can be concluded the Siteserv transaction was not commercially sound in the manner in which it was conducted, the decisions made and the outcomes achieved.

The report finds that on March 4, 2012, the Siteserv board approved in principle the sale of the Siteserv Group to Mr O’Brien. It says Siteserv CEO Brian Harvey attended this meeting and voted at it to approve the sale to Mr O’Brien. 

However, he “concealed from the board the fact that he had a significant financial interest in Mr O’Brien’s bid succeeding”. Mr Harvey also “concealed from the board that [Siteserv co-founder and advisor] Mr [Niall] McFadden was arranging a plan whereby Mr Harvey would purportedly not have to pay tax on his bonus”.

The report finds Mr Harvey “did not pay tax on his €350,000 bonus or on his receipt of shares in Mr O’Brien’s new company” and that Mr McFadden paid no tax on a €480,000 “finder’s fee” paid to him in shares by Mr O’Brien.

It also finds there was a “below the surface” process where certain events occurred in the course of the Siteserv sale process without the knowledge of the bank.

This “below the surface” process meant steps were taken and decisions made in the course of the sale process in a manner that was ‘manifestly improper’ and which undermined the integrity of the Siteserv sale process.

The report finds there is no evidence that Denis O’Brien received a “cosy” or “favourable” interest rate as alleged by Social Democrats TD Catherine Murphy. Ms Murphy called the report “a devastating chronology of a tainted deal”.

In a statement, Mr O’Brien said: “Deputy Murphy used Dáil privilege to make false allegations about me.”

The Taoiseach is arranging to bring recommendations of the commission to the attention of the Department of Enterprise, Trade and Employment, the Revenue Commissioners, the special liquidators of the IBRC, the Corporate Enforcement Agency, the Central Bank, and the official assignee in a bankruptcy case.

Mr Martin said the report, which took seven years to complete, shows “serious findings in respect to the behaviour of quite a number of individuals involved in the sale”.

“The findings are of a nature that would give cause for concern in respect of the behaviour of certain individuals, how certain information was concealed from the bank, from advisors in certain points in time." 

Main findings

• IBRC made its decision to approve the sale of the Siteserv Group “in good faith”, but based on “misleading and incomplete information” provided by the Siteserv company.
• Siteserv CEO Brian Harvey concealed from the board the fact he “had a significant financial interest in Mr O’Brien’s bid succeeding”.
• IBRC could have recovered up to €8.7m more than the €44.3m it agreed to accept in the sale.
• The Siteserv transaction was “so tainted by impropriety and wrongdoing”, that the transaction was not commercially sound.
• Mr Harvey told falsehoods and deceived the bank in respect of his IBRC debt.
• There is no evidence that Denis O’Brien received a “cosy” or “favourable” interest rate.
• A decision to make Mr O’Brien the exclusive bidder gave him “a significant advantage over the other bidders seeking to acquire the Siteserv Group”.
• Bonuses of over €800,000 to Siteserv directors on completion of the sale were “lavish... and entirely unacceptable for a company that was costing the taxpayer almost €118m in loan write-offs and losses”.
• Mr O’Brien paid Siteserv advisor Niall McFadden a €480,000 “finder’s fee” for bringing the investment opportunity to him.
• The report will be sent to the Revenue Commissioners, the IBRC special liquidators, the Corporate Enforcement Agency, and the Central Bank.