Given the lack of sure-footedness about the liquidation of Irish Bank Resolution Corporation, you might be surprised to learn that discussions between the Department of Finance and KPMG had been ongoing for five months, when on the afternoon of 6th February 2013, the “well-planned” Project Red swung into action. IBRC mortgage customers are still awaiting new account details to pay their monthly mortgage, we found out via an obiter dictum in the NAMA chairman’s speech on Thursday that it had made available a €1bn credit line to IBRC as part of the liquidation and who knows if Judge Kelly has been finally provided with a copy of the IBRC Act.
This week in the Dail, the Fianna Fail finance spokesperson Michael McGrath asked Minister for Finance Michael Noonan some detailed questions about KPMG’s role as Special Liquidator. Most of the questions were stonewalled, but the Minister did say “the Department [of Finance] first communicated with KPMG on Friday the 12th October the possibility of their officials being appointed as Special Liquidator of IBRC”
Minister Noonan refused to provide the cost of the KPMG work, and bizarrely claimed that “rates” were “commensurate with those agreed following a tender process undertaken by” NAMA. It is not clear if this refers to hourly “rates” per person employed or overall hourly rates or some different kind of “rates”. Given KPMG is managing well in excess of €20bn of assets, hopefully the 1.5% per annum rule of thumb fee for receivers isn’t being applied – that would be €300m for one year or €150m for the six months during which IBRC is to be fully wound down.
The full parliamentary question and response are here.
Deputy Michael McGrath: asked the date on which his Department first communicated with KPMG regarding the possibility of their being appointed as special liquidator of the Irish Bank Resolution Corporation; the procurement procedures that applied; the estimated value of the contract; and if he will make a statement on the matter.
Minister for Finance, Michael Noonan: The Department first communicated with KPMG on Friday the 12th October the possibility of their officials being appointed as Special Liquidator of IBRC. I am sure the Deputy will understand that for commercial reasons the estimated cost of the contract cannot be disclosed. It is obvious that in the circumstances, a tender process could not have been entered into for the liquidation of IBRC due to the sensitivity of the matter. However, I can assure him that the rates that have been agreed are commensurate with those agreed following a tender process undertaken by the National Asset Management Agency.
As is normal in liquidations of companies, all costs, charges and expenses properly incurred by the Special Liquidators in relation to the winding up of IBRC, including the Special Liquidators’ fees, will be paid out of the assets of IBRC in priority to all other claims.