“We will amend the rules to ensure that no senior public servant (including political appointees) or Minister can work in the private sector in any area involving a potential conflict of interest with their former area of public employment, until at least two years have elapsed after they have left the public service.” Fine Gael/Labour Programme for Government March 2011
““I am delighted to announce this latest transaction which represents another vote of confidence by international investors in Ireland’s recovery and the government’s banking policies in particular. Since making this €1 billion investment in Bank of Ireland in July 2011 the Irish taxpayer has received a generous return of 10% per annum on its money” Minister for Finance Michael Noonan, part of statement on 9th January 2013, after he announced the imminent sale earlier that day
“I welcome Michael Torpey to the Group where I know that his vast experience of the banking sector and his in-depth knowledge of Bank of Ireland will contribute greatly to the implementation of our business strategies and to our dealing with the challenges and opportunities ahead. I would also like to thank Denis Donovan for the role he has played in continuing to manage our Corporate and Treasury Division in conjunction with the other responsibilities he has undertaken in recent years in relation to Group Strategy and our deleveraging and restructuring initiatives” CEO of Bank of Ireland, Richie Boucher, part of statement on 16th January 2013
“I would like to take this opportunity to wish Michael every success in his new role in Bank of Ireland. As the Head of the Shareholder Management Unit in the Department Michael has been fully committed to resolving the banking crisis in Ireland and has contributed greatly to the restructuring of the Irish Banking sector. I have no doubt that Michael will continue to make a valuable contribution to the Irish Banking sector in his new role” Minister for Finance Michael Noonan, part of statement on 16th January 2013
“On the issue of the official to which Deputy Pearse Doherty referred [Michael Torpey], he went on holidays to Australia on 14 December and did not return until last week. In accordance with normal practice, he will not take up duty in the banks for another two months. There is a kind of cordon sanitaire for three months so there is no conflict of interest in the way this was operated. It is a general policy to reduce the borrowed moneys put into the banks by the taxpayer” Minister for Finance Michael Noonan in the Dail 17th January 2013
Last week, the Opposition politicians scratched the surface of the €1bn transaction that was announced and completed in less than 8 hours on 9th January 2013, when they were all still technically on holidays. On Wednesday, it was announced that the head of the Shareholder Management Unit in the Department of Finance, Michael Torpey, was being poached by Bank of Ireland to a plum new role as chief executive of a Bank of Ireland operating unit. No details were disclosed on salaries but we do know that Richie Boucher earns €640,000 per annum. We also know that Minister for Finance Michael Noonan allows bank staff to be recruited for more than €500,000 per annum – for example, the chief risk officer at IBRC was recruited last summer at an unspecified €500,000-plus salary.
The Shareholder Management Unit in the Department of Finance is responsible for managing our shares and stakes in the covered banks. And so far, we have shoveled €4.7bn into Bank of Ireland, though we have received some of that back in the form of bank guarantee fees, dividends and interest on securities. One security we held in Bank of Ireland was the so-called Contingent Capital Note or “CCN” or “CoCo” – this was a €1bn loan to Bank of Ireland until 2016 which paid us 10% per annum. If Bank of Ireland made further losses and its capital base was decimated then the CCNs would be converted to ordinary shares. So it’s a simple loan paying 10% per annum repayable in 2016 but also it’s convertible into ordinary shares if things deteriorate at Bank of Ireland.
Bank of Ireland wanted the Government to sell its CCNs. We know this because Bank of Ireland is picking up the lionshare of the costs incurred in the recent disposal of the €1bn CCNs – why else would it agree to pick up these costs, unless it did in fact want the Government to sell the CCNs.
The Government sold the CCNs on 9th January 2013, announcing a so-called “open book” that morning, and announcing the conclusion of the sale in the afternoon. After the sale, the CCNs traded on a secondary market at a profit to the €1.01bn sale price achieved by the Government. Whilst there is no clear evidence of fault in the way in the CCNs were offered, the quick sale and the profit on the secondary market afterwards beg questions as to whether the CCNs were adequately marketed to ensure potential buyers had access to information, and could put funds in place to settle the transaction on 16th January.
And then on 16th January, the head of the unit responsible for the CCNs bales, and joins Bank of Ireland, or at least he will be joining “before the end of the first quarter of 2013”
Minister Noonan welcomes the appointment of Michael Torpey to Bank of Ireland. The Minister was questioned in the Dail this week by the Sinn Fein finance spokesperson, and perhaps surprisingly, the Minister was familiar with Michael Torpey’s holidays. There was the implication that being the other side of the world, that Michael Torpey was cut off from what was happening with the Bank of Ireland CCNs. We don’t need Mick Dundee to demonstrate the absurdness of that implication!
No-one is casting aspersions on Michael Torpey or suggesting any malfeasance whatsoever on his part, but does anyone else see the perceived and the potential conflict of interest in the above?
“We will amend the rules to ensure that no senior public servant (including political appointees) or Minister can work in the private sector in any area involving a potential conflict of interest with their former area of public employment, until at least two years have elapsed after they have left the public service.”
A strict application of this sort of rule as broadly applied would prevent anyone “senior” in the ministry of finance from taking a job in a very wide range of occupations connected to finance, industry or tax i.e. the sort of things they know something about. I suppose they might be allowed to open a restaurant? Or perhaps we should pay them a salary for the two year cooling off period? or perhaps the idea is just to restrict their career choices so that they can be paid less?
@Otto, or maybe the intention was to deny unjustified enrichment from access to privileged confidential information at the heart of Government. Michael Torpey presumably joins Bank of Ireland with an intimate uptodate knowledge of the internal and confidential goings-on at AIB, the other “pillar bank” in which the state has a 99.8% stake. Don’t see anything untoward with that? Again, this is not to cast aspersions on Michael Torpey, it is not he after all that makes the rules and good luck to him. But Minister Noonan has questions to answer, though at this stage, it seems clear that he is tired in the job and has just let the ball drop too often.
“the intention was to deny unjustified enrichment from access to privileged confidential information at the heart of Government”. That’s correct, and a plausible justification, but its vastly overbroad if that is the goal, and if actually applied as stated would be an extraordinary restriction on career opportunities which would have to be compensated for by the public purse “buying out” the cooling off period.
This is the single most depressing piece of news I’ve read in 2013.
It’s bad enough for the move to happen, but for the Minister to welcome it and act as if it’s grand altogether… very disappointing.
I think the facts cast their own aspersions in this particular case, on everyone concerned.
It seems clear therefore that the Government had a buyer or small group of buyers lined up and waiting for the transaction before the morning of the 9th of January …..
…..and it is also clear that these buyers entered into that morning deal with the expectation of profit in a resale. It would seem that the method of sale has cost the Government money.
Given this and additional “after-market” developments, I believe it is likely that some scandal-of-sorts has taken place over the course of this particular bond sale. At the very least it can be said that the circumstances of this sale are not likely to engender public trust.
Just on this, I would like to point out that senior employees in the DoF, work in the very institution that makes the rules. This is the single largest issue with DoF officials waltzing over to the banks. We cannot tolerate a situation where gamekeepers make or have input into the rules of institutions they may be seeking future employment from.
@NWL
Data taken directly from Linkedin.
“”Banking Specialist
Department of Finance, Government Buildings, Upper Merrion Street, Dublin 2.
August 2011 – Present (1 year 6 months)
I was recruited as Head of Banking at Ireland’s National Treasury Management Agency to lead the recapitalisation by the Irish State of its banking system and to manage the State’s interests in these banks. Following a transfer of these functions to the Finance Ministry, I moved on secondment there in August 2011 to lead the equivalent function.
Head of Banking
NTMA, Grand Canal Street, Dublin 2.
May 2010 – August 2011 (1 year 4 months)
Group Treasurer
Irish Life & Permanent
Public Company; 1001-5000 employees; IPM.I; Financial Services industry
April 2009 – May 2010 (1 year 2 months)
Operated as Group Treasurer at IL&P during a period of restructuring in 2009/10, having previously been Group Treasurer from 1992 to 2000.
Group Finance Director
Ulster Bank
Public Company; 5001-10,000 employees; Banking industry
January 2004 – January 2008 (4 years 1 month) Dublin
Finance Director of Ulster Bank Group, third largest full service bank in the Republic of Ireland and No. 1 in Northern Ireland. Ulster Bank Group is a wholly owned subsidiary of RBS Group.
Finance Director
First Active plc
2000 – January 2004 (4 years)
Finance Director of First Active plc, a former building society, from 2000 until its acquisition by Ulster Bank Group on behalf of RBS Group. Was appointed Group Finance Director of Ulster Bank Group following the acquisition.””
It would appears therefore that Mr Torpey has effectively been in charge of the State shareholding in banks since May 2010.
There are a number of questions that arise, mostly policy questions.
Why was the ‘Shareholding Unit’ moved from the NTMA to the DOF in August 2011. To what purpose was this? If the NTMA is the repository of State shareholding management expertise, why did the DOF want this moved?
Who made the decision to sell the BOI shareholding (at a 75% haircut in July / August 2011). Was the sale being blocked by the NTMA and was this the reason for the move to the DOF, who wanted rid of the banks at any price.
The ‘garden leave’ period is far too short. It is to be assumed that Mr Torpey now has significant confidential information about AIB and PTSB, competitors of BOI. If I were on the board of these companies, I would question this BOI recruitment. I would strenuously object to it.
The whole situation is most unsatisfactory.
@Joseph
” If I were on the board of these companies, I would question this BOI recruitment. I would strenuously object to it.”
Really? But Minister for Finance Michael Noonan is the shareholder of 99.8% of AIB’s shares and 99.5% of PTSB’s shares, and he has positively welcome the appointment.
Maybe the public interest directors might kick up a fuss….