Archive for December 23rd, 2012

New feature: Donate!

[NOTE: Donate feature disabled 26th May, 2013]

In response to surprisingly popular demand, and to help defray costs in producing a comprehensive record of the NAMA experiment, a new “Donate” feature is being added on here today where you will be able to, should you wish, contribute to the ongoing chronicle of the NAMA years.

If you press the “Donate” button shown below, you will be given the opportunity to send a donation via Paypal to the blog email address which is  – jagdipsingh2008 at hotmail dot co dot uk.

UPDATE: 24th December 2012. To comply with anti-money laundering rules and the transparency demanded by Paypal, a “donations coordinator” had to volunteer who would link their account to Paypal, and alas Paypal insist on displaying that name to donators in receipts issued for donations,  so before there is a “hunt the donations coordinator” remember it is just that and no more.


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One of the most-commented aspects of the recent Budget 2013 announcements was the absence of solid detail in support of the savings and cuts in the health budget in 2013 and given the experience of budget overruns and sub-par performance by Minister for Health James Reilly in 2012, there has been considerable concern that the savings and cuts were not achievable in 2013, and as they amounted to €781m for 2013 alone and €1,173m in 2014, that’s a concern.

In the Dail this week, the Sinn Fein finance spokesperson Pearse Doherty quizzed the public expenditure and reform minister, the health minister and his junior minister, about the detail of the savings and cuts. Although some further detail was forthcoming, the responses don’t fill you with confidence that the Minister is across the challenges that now confront him, and which he singularly failed to meet in 2012.

We don’t learn very much save there will be further workplace change and savings which will be agreed with unions and there will be €120m of savings from a new agreement with drug suppliers.

The profiling of savings by month in 2013 should be available in February 2012, and these will be carefully studied to see if health savings are being backloaded, and health is set to be the Departmental budget that will be most closely scrutinised with the publication of monthly Exchequer Statements in 2013. It is a disgrace that in 2012, the capital budget was cynically cut back to compensate for overruns in the Department of Health – if we had been spending our capital budget, which remember was reduced in the December 2012 budget, then we would have had 4-7,000 extra people employed in the economy this Christmas.

The parliamentary questions and responses are here:

Deputy Pearse Doherty: provide an analysis of the €308 million of pay related savings in his Department’s budget in 2013; and if he will set out the way such savings estimates were validated by his Department.

Minister for Health, James Reilly: A total of €308m in pay-related savings has been targeted for the health services in 2013. These savings will be achieved under three separate headings: firstly, by intensifying the implementation of the Public Service Agreement within the health services, secondly, through the negotiation of an agreement on further workplace change and savings with public sector unions, as has been proposed by Government, and thirdly, through further reductions in staffing in 2013.

Required measures under the PSA and included in the recently-revised sectorial plan for Health include new rosters in hospitals, changes in skill mix in nursing homes, the implementation of the recent agreement reached with Hospital Consultants, a significant reduction in overtime and agency spending and a reduction in management grades.

The Government has initiated discussions with the Trade Unions on a new agenda for improvements in the productivity of public servants and reductions in the cost of delivery of public services. Detailed engagement is expected to commence early in 2013, under the leadership of the Department of Public Expenditure and Reform.

Implementation of the PSA is overseen by the national-level Implementation Body. Each sector is required to provide periodic reports to the Implementation Body and this arrangement will continue in respect of measures to be implemented in 2013.

Deputy Pearse Doherty: provide the underlying workings in support of the €60 million savings on Department vote in his Department’s 2013 budget; and if he will set out the way such savings estimates were validated by his Department.

Minister for Health, James Reilly: The adjustments to the Department of Health Vote, Vote 38, are set out in the Budget book published recently and available on the website of the Department of Public Expenditure and Reform.

The Department of Health Vote is being reduced by €90m. This arises from a range of measures. Even allowing for additional expenditure related to the EU Presidency, there will be a reduction in the Department’s Administrative Budget. There will be savings on the National Treatment Purchase Fund and €25m of its budget will be transferred to the HSE for use in an Intervention Fund. There will also be a range of further reductions, including a reduction in funding to health agencies.

Deputy Pearse Doherty: if he will provide the underlying workings in support of the €70 million reduced professional fees in the Department of Health 2013 budget; and if he will set out the way such savings estimates were validated by his Department.

Minister for Public Expenditure and Reform, Brendan Howlin:   I refer the Deputy to the Minister for Heath who has responsibility for achieving the €70m savings target set by Government in the estimates by way of a reduction in professional fees.

It is matter for the Minister for Health to determine by regulation the appropriate level of reduction in professional fees for the different health professionals having regard to the state of the public finances and the other factors set out in Section 9 of the Financial Emergency Measures in the Public Interest Act 2009 following a 30 day consultation process with the relevant interests.

Deputy Pearse Doherty: provide the underlying workings in support of the €160 million reduction in cost of drugs and other prescribed items in his Department budget for 2013; and if he will set out the way such savings estimates were validated by his Department.

Minister of State at the Department of Health, Alex White: Due to the very difficult and challenging economic environment, the Government has committed to achieving additional savings of €160 in expenditure on drugs and medicines in 2013 as set out in the following table:

IPHA/APMI Agreement on Drug Price Reductions

€120 million

Quality Prescribing Initiative

€20 million

Reduce price of oral nutritional supplements

€5 million

Delisting products from GMS scheme

€15 million

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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.

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