It includes some of the country’s oldest failings, and a few new ones as well. The story holds the secret of business success in some corners, and the failings of politics in others. And, above all, it shows how, even in straitened times, the few will always prosper, while the many take the heat.
The five pieces making up this yarn are The Little People’s Bank; Chinese Walls; Denis O’Brien; Water Meters and The Inquiry.
In the beginning, there was Siteserv. This is a construction services company that got into a lot of trouble between 2006 and 2008 buying up other companies. The honchos who ran the outfit were paid up members of the club which instilled a belief of invincibility on their own members, and the Irish economy. The good times were never going to end.
READ MORE: ALISON O'CONNOR: An inquiry into Siteserv will justify Independent TD’s efforts .
Financing the buying spree were Anglo Irish Bank. In the end, Siteserv found itself in debt to the tune of €150million.
By 2011, the state had taken over Anglo’s debts, and was intent on salvaging what it could for the citizens, who, by then, had had their living standards and quality of life reduced to varying degrees.
The Anglo name was toxic so it was changed to Irish Bank Resolution Corporation (IBRC), owned by the citizens, or, if you like, The Little People’s Bank.
We now know the close relationships between the small number of seriously big borrowers, and the bank’s executives, persisted when the bank was taken over by the state. CEO Mike Ansyley was at one point in regular text contact with major developer and customer Paddy McKillan. He also dined on a number of occasions with McKillan and another major borrower, Denis O’Brien.
When the Department of Finance expressed concern about these relationships, Ansley said his relationship with customers like this was “strong but not inappropriate”. That, of course, is a subjective judgement, but for the citizens who were picking up the tab for all the reckless lending done by the bank, it is hardly reassuring.
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Like much of what went on in the halcyon days, the deal with Siteserv was not orthodox. Instead of appointing a receiver to the company in order to retrieve what it could of the €150m, IBRC let them at it themselves. This is in sharp contrast to the approach the bank, and other financial institutions, have adopted in calling in debts accrued by your average citizen.
A sale was organised. The corporate advisor at the centre of the sale, Walter Hobbs, has said the best deal was obtained in flogging the company to a Denis O’Brien-owned vehicle for €45m. This left the bank out of pocket by €105m. But there was a little something for the Siteserv shareholders in the form of €5m.
For those who invested in a company that borrowed recklessly, this was a nice little parting gift. Unfortunately, no such generosity is extended to those who bought homes in the same period and have found themselves struggling with inflated mortgages. Then there were the professionals whose ways remain a mystery. Arthur Cox solicitors acted for both sides. A lay person uninitiated in the ways of these “professionals”, might perceive a conflict of interest here.
Not on your life. These things are governed by “Chinese walls”, as Sean Corkery, the CEO of Siteserv, explained on Morning Ireland last month.
“Chinese walls are, you know, the legal firm, absolutely committing on a professional basis that information doesn’t pass between the professional dealing with one company and the professional dealing with the other, irrespective of the fact that they might be employed by the same legal firm,” he said. That’s grand so. Nothing to worry about.
Chinese Walls were all the rage through the bubble years, with legal firms, auditors, accountants and various consultants operating on both sides of the wall, fortified in the knowledge that their personal integrity always trumps the grubby business of turning a buck.
Unfortunately, it’s highly unlikely that The Little People’s Bank got a reduced rate from these “professionals” in the Siteserv deal on the basis that they were working for the other side too, with both clients contributing to the bottom line.
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The principal new owner of Siteserv is a man who is now looming increasingly large over Irish life. Denis O’Brien is a dominant media owner, has a very wide range of business interests, and contributes generously in the cultural and social spheres. He is admired by some, feared by others — including politicians, due to his media interests — and eyed with suspicion, to put it at its mildest, by certain sections of the population.
O’Brien also attracted controversy when the Moriarty Tribunal found that he had paid large sums of money to former minister Michael Lowry, whose department oversaw the awarding of a lucrative mobile phone licence in 1995, which an O’Brien company won. O’Brien has vehemently disputed the findings.
This purchase of Siteserv brought O’Brien into the construction services sector. In 2013, twelve months after the purchase, a subsidiary of the company was awarded a contract to install water meters. For those opposed to water charges, this is conspiracy manna.
The toxicity of the water charge issue, and all associated with it, is what prompted a revisiting of the Siteserv sale. This led all the way to the Freedom of Information request from Independent TD Catherine Murphy, which kicked the current reawakening of the controversy.
Now we are moving on to one of the great institutions of modern Irish life — The Inquiry. A familiar narrative is taking shape with the Siteserv deal. Something controversial happened in the past, but was let lie at the time. Later, often due to some unrelated issue, the controversy reawakens, and causes political ructions. Bring on The Inquiry. It would now seem that any commercial deal involving the state should make early provision for The Inquiry, to be initiated at some stage.
In this particular case, it might well be asked why an inquiry was not conducted in the months after the sale when officials at the Department of Finance expressed concerns. Instead, we do things the Irish way, which is to ignore any smell until it becomes overpowering and threatens to contaminate political interests.
This inquiry is going to be conducted in its initial phase by two professionals from KPMG.
And guess what? KPMG was also involved in the initial deal, with an executive having a role in the group which was charged with organising the sale. Naturally, the Chinese Walls will go up again. Naturally, if the KPMG lads conducting the inquiry find that anything was shoddy or ill advised they will report without fear or favour.
And that’s Siteserv in five easy pieces, a perfect example of where we’re at in Ireland today.