Noonan defends civil servant poached by Bank of Ireland – he was in Australia at time of controversial transaction

“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?

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