NAMA might think that a line has been drawn under the Enda Farrell incident, where the now-former NAMA employee bought a €410,000 property, off-market, belonging to a NAMA developer in November 2011 when he was still employed at NAMA. However, questions still remain over what were described as independent “valuations” in August 2012, which were downgraded to a single independent “valuation” in October 2012 and appeared to be no more than a non-independent “opinion” in the report produced by NAMA’s internal investigation of the matter.
However, whilst NAMA has come in for a barrel-load of criticism over the affair, it has gone unremarked that other state agencies are also exposed to risks over their protocols when property owned by the State agency or under its auspices, is sold to their own employees or associates.
Take 16 Clyde Road in Ballsbridge which was apparently bought in April 2012 by a couple comprising an employee of IBRC, Stephen Egan and the more well-known Fiona Muldoon who occupies a senior role at the Central Bank of Ireland. It should be said first and foremost that, unlike the Enda Farrell incident, there is no suggestion whatsoever of malfeasance or shenanigans and it is a fact – again, in contrast to the Enda Farrell incident – that the Ballsbridge property was offered for sale on the open market, which should naturally mean that the buyer, whoever they were, paid the market price. But the property was formerly subject to a mortgage from Irish Nationwide Building Society which was merged with Anglo in 2011 to form IBRC, so it is at least reasonable to ask how IBRC avoids the controversy suffered by NAMA.
Here is the recent history of the property at 16 Clyde Road, pictured above via MyHome.ie – in November 2003 the property was bought from a couple, John and Mary Anderson who were described in the press as “elderly”. The buyers in November 2003 were Lloyd Daly and Siobhan Smyth though Siobhan seems to have later become Siobhan Daly, indicating nuptials. The Dalys had a mortgage with Irish Nationwide Building Society when they purchased the property but this appears to have been satisfied on 20th November 2005. Ulster Bank appears to have had a mortgage with effect from October 2004 until April 2012 on that property and two others 24 Castlewood in Clonsilla and 6 Clonsilla Road in Blanchardstown. In November 2009, Bank of Scotland is shown as a mortgagee. In March 2010, an affidavit of judgment was registered in favour of Melville Dunbar Associates (UK) Limited In 2011, AIB was registered with an affidavit of judgment against the property. The property was apparently sold on 13th April 2012 for €2.2m to Fiona Muldoon and Stephen Egan. That purchase wasn’t registered last week but there have been planning applications this year to Dublin City Council where the applicants are shown as Fiona Muldoon and Stephen Egan.
In the Dail this week, the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance a series of questions on the controls at IBRC to prevent the type of Enda Farrell incident witnessed at NAMA. The Minister replied that IBRC has a conflict of interest of protocol – which NAMA also has. But you will not be heartened to learn that IBRC doesn’t keep records of employees who buy assets owned by IBRC or under its auspices and IBRC’s protocols for maximizing prices seems very vague.
The full parliamentary questions and responses are here:
Deputy Pearse Doherty : the controls that exist in the Irish Bank Resolution Corporation to prevent employees, their spouses, family and associates from benefitting from confidential information obtained from the bank, in the purchase of property from persons and companies which have or have had loans with IBRC.
Minister for Finance, Michael Noonan : I have been informed that IBRC has a Conflicts of Interest Policy (the “Policy”). This policy outlines what the Bank’s Board of Directors and the Group Executive Committee (GEXCO) believes are the essential standards of behaviour expected of employees. All directors and employees of the Bank and its relevant subsidiaries, in all jurisdictions, must adhere to the letter, spirit and intention of the principles set forth in this Policy. Directors and employees must also adhere to all additional policies and procedures in their local jurisdictions. The Policy specifically states that all directors and employees of the Bank have a duty to discharge their contracted duties and responsibilities to the Bank. Directors and employees must not influence, or be perceived to influence, any decisions directly or by association which could benefit connected borrowers and/or an entity in which they have an interest and, this includes any lending decisions, and/or implementation of debt management strategy decisions for connected borrowers.
In order to undertake their job properly, maintain objectivity and impartiality and ensure that judgement cannot be compromised, directors and employees must avoid being put in a position where their personal interests could conflict, or be perceived to conflict with the interests of the Bank. In addition, certain obligations arise under the Ethics in Public Office Acts 1995 and 2001 (‘Ethics Acts’) in respect of Irish Bank Resolution Corporation Limited (‘the Bank’) and its designated subsidiaries. Under these Regulations, all Irish employed directors and certain Irish employed employees of the Bank and its subsidiaries are required by law to comply with the provisions of the Ethics Acts.
Deputy Pearse Doherty the number of Irish Bank Resolution Corporation employees that have, either by themselves or with others, purchased property in each of 2011 and 2012 from persons or companies, which have or have had loans with IBRC.
Minister for Finance, Michael Noonan: I have been informed that IBRC does not have the requisite data to answer this parliamentary question. However all directors and employees of the Bank are governed by a Conflicts of Interest Policy. In addition, all Irish employed directors and certain Irish employees are governed by the Ethics in Public Office Acts 1995 and 2001.
Deputy Pearse Doherty : the protocols and practices taken by the Irish Bank Resolution Corporation to ensure that assets disposed of by IBRC itself, or its borrowers under the auspices of IBRC, are disposed of in a manner which maximises the return to the taxpayer from the disposal.
Minister for Finance, Michael Noonan: The overriding mandate of IBRC is to maximise the recovery of its loans on behalf of the State and by extension the taxpayer. I have been advised that the underlying approach of the Bank is to work constructively with each borrower on an individual basis to identify the most appropriate loan repayment plan. The strategies for loan recovery vary depending on the particular circumstances of the borrower. All credit related decisions are overseen by a multi-faceted governance structure established by the new Board of the Bank. Formal approvals for all credit decisions, including restructuring, extension of facilities, forbearance and disposal of assets are required from one or more of the Bank’s Asset Quality Forums, Group Credit Committee, Transaction Review Committee, Investment Committee, the Board Risk and Compliance Committee, the Board of Directors and in certain instances the Department of Finance. I have been informed by the Bank that a fundamental tenet of this governance structure is that no single business unit or person in IBRC can individually determine the treatment of any borrower or group of borrowers.