Minister for Finance Michael Noonan has abandoned control over the former Anglo Irish Bank, now known as IBRC. IBRC has to date cost this country €35bn, though its management claims we will get some of this back. These claims might be treated with extreme caution.
We learned recently that Minister Noonan had sought salary reductions at IBRC in April 2012, but he was rebuked.
We have also learned that there is no monitoring of salaries at borrowers by IBRC, in stark contrast to NAMA where they can seemingly account for every euro paid to developers.
We have learned that unlike NAMA, where there is quite a structured policy for dealing with commercial tenants facing distress in their business as a result of rent levels, in IBRC it is all very ad hoc, and it was only last week that Minister Noonan claimed to have asked IBRC to consult with NAMA to see if it might adopt its policy on rent reductions for commercial tenants.
But today we learn in responses to a series of parliamentary questions that IBRC has gone feral and Minister Noonan is no longer even trying to keep control of its affairs.
Earlier this year, we learned that IBRC had written off approximately €100m in Irish service company Siteserv as part of a deal to sell the company to interests associated with Denis O’Brien, a controversial deal because the shareholders in Siteserv were reportedly walking away with €5m and Siteserv was a company which seemingly paid its chief executive, Brian Harvey, in excess of €400,000.
More recently, IBRC has reportedly written off €64m in a British fuels company, Blue Ocean Associates in a transaction also involving a sale to interests associated with Denis O’Brien.
In NAMA, we have been referring to such debt write-offs as “debt forgiveness” and NAMA doesn’t do debt forgiveness unless it involves a work-out with developers over a period of years and after before which, NAMA needs reassure itself that the developer has no more assets that can be used to pay down loans.
And how much debt forgiveness has there been at IBRC? Surely, it has to be more than €160m from the two deals with Denis O’Brien’s interests? Yesterday in the Dail, Minister Noonan refused to provide an overall total, claiming the overall total is “commercially sensitive”. “Commercially sensitive”? Imagine the uproar if NAMA said that it was (a) forgiving debt and (b) the overall total was commercially sensitive. The public reaction would involve tumbrils and guillotines, because NAMA is managing OUR money. Yet IBRC which is 100%-owned by Minister Noonan on our behalf refuses to tell us how many hundreds of millions, or even billions of euros of OUR money that it is writing off.
And it doesn’t stop there.
Minister Noonan was also asked yesterday why NAMA has a policy of monitoring salaries of developers whilst IBRC has no such policy. And unbelievably, there was no justification forthcoming for the difference in policy.
And if you wanted any more proof that IBRC has gone feral, consider the comment provided by its CEO Mike Aynsley, he of the €866,000 remuneration package last year, when asked about IBRC’s engagement with a potential Swiss buyer of Sean Quinn’s property – “It is the bank’s policy not to continue relations with organisations that attempt to apply pressure by threatening to make communications public” said Mike to the Irish Times this month. Yesterday Minister Noonan was asked how many organizations had been blacklisted at IBRC under this policy, there was no response forthcoming. But Minister Noonan was asked if NAMA had a similar policy. Of course it doesn’t, and that was confirmed by the Minister.
Now, I know for a fact that Fine Gael’s parliamentary party has sufficient talent in it to recognize what is going on at IBRC and to see that Minister Noonan has relinquished control, and it is incumbent on them to challenge this behavior by their senior party colleague. And in the Labour Party, I cannot imagine Joan Burton providing these responses for an organization under her control. Minister Burton will lose sleep over cuts of €100m to her social protection budget, yet at the stroke of a pen, €100m is written off at a company being sold to interests associated with Denis O’Brien. Maybe, these elements within government might make their voices heard over the inaction and silence of Minister Noonan.
Minister Noonan was responding yesterday to questions from the Sinn Fein finance spokesperson Pearse Doherty and the full parliamentary questions and responses are here. They should be online shortly at the Oireachtas website.
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide a total of debt write-offs, that is, where a portion of an outstanding loan to a borrower including contractually charged or accrued interest is acknowledged by the bank as unrecoverable, at the Irish Bank Resolution Corporation in each of full-year 2011 and half year of 2012 ending 30 June 2012..
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide in a tabular form a schedule of debt write-offs at the Irish Bank Resolution Corporation in each of full-year 2011 and half year of 2012 ending 30 June 2012 showing the name of the borrower, the book value of the loan outstanding including contractually charged or accrued interest, the amount written off and the date on which the write-off was acknowledged..
Minister for Finance, Michael Noonan: I propose to answer questions 228 and 229 together.
I have been advised that it is not the Bank’s practice to disclose the specific information requested as it is commercially sensitive. It is however the Bank’s clear preference to work constructively with its borrowers on a case by case basis to maximise the recovery of loans. Any proposed restructuring of debt facilities in IBRC is subject to established governance processes and any agreed restructuring of borrowers obligations are designed to ensure the best outcome for the State.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that the chief executive officer of the Irish Bank Resolution Corporation (details supplied) has stated in relation to a reported bid for assets under the control of Irish Bank Resolution Corporation, it is the bank’s policy not to continue relations with organisations that attempt to apply pressure by threatening to make communications public; if he will confirm the number of organisations with which IBRC is not continuing relations as a result of this policy..
Minister for Finance, Michael Noonan: I have been advised that IBRC adheres to a structured procurement process for the appointment of all its advisors. This procurement process is open, objective and transparent and is subject to the Bank’s governance processes including oversight through a regular reporting process by the main Board of the Bank. The Bank have a responsibility to make commercial decisions in the ordinary course of business and will not allow these decisions to be affected by undue influence. I have been informed that IBRC at all times seeks to maximise returns for the Irish taxpayer.
Deputy Pearse Doherty: To ask the Minister for Finance further to a report in a national newspaper that the chief executive officer of the Irish Bank Resolution Corporation (details supplied) has stated in relation to a reported bid for assets under the control of IBRC, it is the bank’s policy not to continue relations with organisations that attempt to apply pressure by threatening to make communications public, if he will confirm if the National Asset Management Agency has a similar policy, and if so, if he will confirm the number of organisations with which NAMA is not continuing relations as a result of any such similar policy.
Minister for Finance, Michael Noonan : I am advised that NAMA has no such policy in place and deals with all genuine counterparties in a professional manner.
Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an explanation for the contrast between practice at the National Asset Management Agency where salaries of their borrowers are closely monitored and practice at the Irish Bank Resolution Corporation where there is no such monitoring at all.
Minister for Finance, Michael Noonan : The overriding mandate of IBRC is to maximise the recovery of loans on behalf of the State. I have been advised that the Bank seeks to work constructively and consensually with each borrower to identify the most appropriate approach available to it in order to maximise the repayment of the loan.
The process followed in managing the recovery process is to assess fully all aspects of a borrower’s circumstances to establish the most appropriate repayment strategy. This assessment includes consideration of debt, asset, income/salary and lifestyle considerations. Agreements that are ultimately reached for agreed repayment plans are judged and enforced to provide the best commercial outcome for the shareholder.
In circumstances where consensual agreements cannot be reached the alternative of receivership, examinership or liquidation is pursued resulting in rigorous enforcement of all recovery options and rights.