THE basic question being asked by Independent TD Catherine Murphy in pressing for a full inquiry into transactions and deals done by the Irish Bank Resolution Corporation has been whether or not taxpayers got the best value for their money.
We knew IBRC, formerly Anglo Irish Bank, was going to lose money. Its former chief executive Mike Aynsley put IBRC’s job — with a loan book in excess of €22bn — into perspective in an interview with an Australian magazine in 2011 when he said it was “the shittiest bank in the world in an economy that’s in disarray...”.
Several years later, and there is now a public appetite to unwind some of the bargain basement sales of businesses and loans agreed by IBRC — mainly thanks to the persistence of Ms Murphy. The inquiry signed off on by Cabinet today will have the unenviable task of looking at deals done over a four-year period, including any with preferential terms agreed. At the centre of concerns is the sale of Siteserv to businessman Denis O’Brien — which resulted in losses of €119m
But there is a plethora of unanswered questions the judge-led inquiry will be expected to answer.
Amid reports that up to 40 businesses and individuals benefited from write-downs on their debts of more than €1bn, there is a clamour to identify losses to loans, aside from the Siteserv deal. Other businesses reported to have received large writedowns include the family of former billionaire Sean Quinn, television station TV3, and a number of security and technology firms. The initial terms of the inquiry were to look at any deal with a minimum €10m writedown.
Revelations about strained relations between the department and IBRC were the first signs that something was amiss for TDs seeking answers. Finance Minister Michael Noonan says the department was kept at arm’s length from the bank until a changed framework was introduced. No doubt he will be reluctant to give the inquiry any scope to examine what oversight or role he or the department had with IBRC, especially as we near a general election. However, the emergence of missing files, the existence of previous reviews and correspondence which identified the fraught relations on both sides leaves very awkward questions hanging in the air for his officials.
The deal saw shareholders receive €5m. While Siteserv was purchased for €45m, the sale saw the State write off €119m owed to it, via IBRC, by Siteserv. As reported in April, 121,000 shares were sold in Siteserv in October 2011. But the following month, 6.4m shares were sold. This was despite the fact interested parties, who offered more than Denis O’Brien’s Millington, were being told that no sale was planned.
Ms Murphy has claimed Mr O’Brien received “extremely favourable rates” from IBRC when repaying loans and that he was paying 1.25% in interest when the bank should have been charging 7.5%. Questions remain as to what Mr O’Brien requested in a letter in October 2013 to Kieran Wallace, the liquidator of IBRC, about his loans and whether any preferential treatment potentially represented a subsidy for the businessman. Mr O’Brien says Ms Murphy’s claims were “erroneous”.
One of the main remits of the IBRC inquiry is to ascertain if any transaction causes public concern in respect of the ultimate return to taxpayers.
The probe will examine IBRC’s internal controls and governance procedures and whether they were fit for purpose. Former officials with the bank have vehemently denied there was any wrongdoing. Former IBRC chairman Alan Dukes claimed as recently as the weekend that no client was on an interest rate lower than 3% and that the Siteserv deal was a sale he would stand over. Already though, sources in the bank have started to point out that officials and clients were largely locked in on historic deals or interest rates, agreed when Anglo Irish Bank was nationalised.
Even if the Coalition runs its full term until March next year, all indications are that the depth of the inquiry, coupled with any potential legal challenges by big businesses or individuals, will delay or slow its completion.
While there are suggestions that parts of it — including the controversial sale of Siteserv — could be isolated and completed in an interim report, there are also whispers in Leinster House that a snap election could be called directly after the summer. This would mean that any interim report would not see the light of day until after the next government is formed.