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Archive for March 2nd, 2013

Meooww of the Week

“It will take a great deal more than the expenditure of hot air and windy rhetoric in basketball arenas to achieve a successful outcome in this battle” SIPTU statement on 24th February 2013

All is not sweetness and light in Ireland’s powerful unions. At a recent union-organised march through central Dublin which attracted 10-60,000 marchers depending on whose estimate you believe, there were calls for a general strike which were drowned out when certain officials switched on a device that sounded like a horn. Some say that those calling for a general strike weren’t even union members. But the dissension was clearly evident this week when one union dismissed what appears to be a new voice for workers in this State, the 24/7 Frontline Alliance which represents six unions and representative organizations presently. The 24/7 Frontline Alliance held a well-attended rally a fortnight ago in the National Basketball Stadium in Tallaght, west Dublin. The frontline workers will tend to be those on lower pay and a fissure is opening up between those public servants on higher pay – put variously at over €65,000 or over €100,000 – and the rest who are the majority.

Stalinist development of the Week

“There are no direct reductions for those on a remuneration, ahm, ah,  there are direct pay reductions for those on remuneration on those higher than €65,000” What An Taoiseach Enda Kenny actually said in the Dail during Leaders’ Questions on 26th February 2013.

“Over the course of the agreement, the overall savings target will be achieved. There are direct pay reductions for those on remuneration higher than €65,000 and there is an increments freeze of varying lengths at different pay ranges that is designed to protect those at the lower level“ The Dail record of what An Taoiseach said.

A personal bugbear on here is the deterioration in the recording of business in the Oireachtas on the Oireachtas website. Questions are routinely omitted as are tables included in parliamentary responses. During the week, An Taoiseach Enda Kenny was responding to Leaders’ Questions about the Croke Park 2 deal. And if you were listening live, you will have pricked up your ears when Enda backtracked on what he was saying. He started to say that there were no direct reduction for those on a remuneration and he was going to say less than €65,000 or €35,000, but he corrected himself and referred to direct pay reductions to those earning more than €65,000.

Okay, maybe this is wonkish.

But when consulting the official record of the Dail, the first part of what An Taoiseach actually said was omitted entirely. Luckily there is a video recording of proceedings, but if you play the recording and compare it with the transcript, practically every sentence has changes. So, the official transcript of Dail proceedings is heavily doctored. You can read the transcript here and the video of Leaders Questions is here – it’s the Gerry Adams questions video which is second on the page.

When did we allow this to happen?

Media censorship of the Week

“And Tom, can I reply to your point. And by the way listeners will think that I am arguing an entirely self-interested point of view and of course I am, but let me say that I have argued this for a long time, and during the 11 years that I was in RTE, I argued it again and again. They tried to make it part of my contract when I joined RTE in 1996 that I would support the corporate objectives of  RTE and I refused and had it taken out of the contract, I have always argued the point that I am now arguing” Vincent Browne on the “Tonight with Vincent Browne” show on 27th February 2013 at 16:30.

Oh, how we all carped at the proposed new “charter” in Independent News and Media which would require persistent adversarial editorial comment on certain individuals to be approved by IN&M management. But we appear to have completely overlooked the fact that RTE requires its presenters to support corporate objectives, which presumably neuters their voiced opinions when it comes to matters like RTE’s losses, the licence fee and RTE’s distortion of the state’s media sector. And where was the NUJ or BECTU when these terms were being imposed.

Media hold-up of the Week

PatRabbitte

Communications minister Pat Rabbitte – above right – announced this week that he intended replacing the TV licence fee, currently €160, with a new charge called the broadcasting charge. No word on the level of the new charge but as only 75% of households pay the licence fee, there is the potential to substantially increase the €184m a year that RTE collected in licence fee income in 2011 even if the new broadcast charge is held at the same level as the licence fee. There will still be evaders but it will be far harder to evade when by default every home in the land is liable.

And where might the increased income be spent? There is a possibility that we’ll get better programming, but who are we kidding. It is likely to go into plugging RTE’s massive losses – €70m in 2011 including a €50m loss on its pension scheme and a reported €50m deficit alone in 2012 – and of course there are the mega salaries which in 2009 included over €700,000 for Pat Kenny and over €500,000 for Marian Finucane. And there is the RTE way of doing things. It was claimed during the week that RTE’s Prime Time programme, which now broadcasts three nights a week, has 40 staff compared with just three on “Tonight with Vincent Browne” which broadcasts four nights a week.  You can well see why Minister Rabbitte needs to get a third more income into RTE!

Where’s the Beef of the Week

ProfAlanReillyTheEnlightenedOne

This is Professor Alan Reilly, the CEO of the Food Safety Authority of Ireland, the organization which first uncovered the horse meat and DNA contamination scandal in November 2012. If you see Alan, you should rub his pate or kick him up the arse, whatever you do, just make some physical contact with him because he is the personification of good luck and some of it might rub off on you.  He must be the seventh son of the seventh son or such-like, because it was revealed in the Dail this week that the tests in November 2012 which uncovered the horsemeat in burgers were not driven by a tip off but were “simply routine work”, this despite the health minister James Reilly confirming that “prior to November 2012 the FSAI had not tested for horse DNA”. Those in the DNA testing business will tell you that when presented with a substance for analysis, you need to know what you’re looking for. So you can’t just take a sample of burger, press a switch and hey presto! get a full DNA analysis. You have to have some DNA profile to test the burger against. So, of all the species of all the genera of all the families of all the orders of all the classes of all the phyla in all the world, the FSAI just happened to test for horse DNA in November 2012, having never tested for it before.

Seriously, send Professor Reilly an email and ask him for his prediction of the Lotto numbers this evening. The parliamentary question this week to Minister for Health James Reilly and response are shown below by the way.

Elsewhere, the Fianna Fail agriculture spokesperson Eamon O’Cuiv challenged agriculture minister Simon Coveney and asked why he was leading the response to the horse meat scandal, because in Ireland, the FSAI reports, NOT to Minister Coveney but to the health minister, James Reilly. The tenor of the challenge was that Minister Coveney was doing everything to sweep the scandal under the carpet because he was “captured” by the industry he represented. Minister Reilly on the other hand has a primary duty to healthcare. More horsemeat was uncovered this week, including in Ikea meatballs and Polish meat processors. No word yet on the progress of any Garda investigation. At least, there’s no queue in McDonalds or Burger King if you just pop in for a coffee.

Deputy Pearse Doherty: To ask the Minister for Health if the Food Safety Authority of Ireland was responding to a tip-off when it tested for horse DNA in certain foods in November 2012; the number of times in 2012 the FSAI tested for horse DNA in foods prior to November 2012; and if he will make a statement on the matter.

Minister for Health, James Reilly: The Food Safety Authority of Ireland (FSAI), as part of their monitoring and surveillance programme on labelling of foods, conducted a small survey in November 2012 to investigate the authenticity of meat products and, specifically, to check on the type of animal species in meat products.  There was no tip off involved. This was simply routine work similar to that done in the past with other foods, such as Cod. Prior to November 2012 the FSAI had not tested for horse DNA.

Chart of the Week

EconomicTraining

It’s a common enough refrain in Ireland that the economy of the State is being directed by four people, two primary school teachers, one secondary school teacher and a trade unionist. They’re referring to the Economic Management Council comprising of An Taoiseach Enda Kenny, An Tanaiste Eamon Gilmore, Minister for Public Expenditure and Reform Brendan Howlin and Minister for Finance Michael Noonan. Germany’s Chancellor Angela Merkel is a quantum physicist and its finance minister is a former lawyer having studied economics and law at university.

So the refrain leads to the claim that our problems are down to amateurs managing complex economic matters. Over at VoxEU, they conducted a study of the qualifications of prime ministers, finance ministers and heads of central banks between 1973 and 2010.

You won’t be surprised to learn that “our lot” are not very qualified in economics.

But you might be surprised that some of the best performing nations don’t have very qualified people either.

And you might be just as surprised that some of the most baskety-cased countries have some of the bst qualified people.

Book of the Week

FingersCover 

“Fingers, the man who brought down Irish Nationwide and cost us €5.4bn” by Tom Lyons and Richard Curran,  available from Amazon at GBP 12.74 and Easons online at €14.99. Yesterday in Eason’s on O’Connell Street, it was selling for €15.99 and at 6pm, copies were being bought at what looked like an impressive rate

Sunday Independent journalist and probably the finest finance journalist in Ireland today, Tom Lyons and Sunday Business Post journalist Richard Curran have collaborated to produce what is the most definitive book to date, on the basket case formerly known as Irish Nationwide Building Society, most associated with its CEO Michael Fingleton who left in 2009. Irish Nationwide has cost us a €5.4bn bailout, it was merged with Anglo into a new entity called Irish Bank Resolution Corporation, which as we know was placed in special liquidation three weeks ago.

On Thursday last, the book was launched at Hodges Figgis in central Dublin. Apart from missing an index, it is a fantastic record of Irish Nationwide over 300 pages, brimming with detail and context. It’s as much a history of the Irish (and UK) property boom as it is of Irish Nationwide, and is likely to serve as a textbook for how not to run a bank in the decades ahead.

Expat of the Week

FrankKenny 

It seems that a few Irish property investors should have been ringing in the New Year with some additional cheer, as an Irish developer made a killing on a New York property deal. Dublin-born Frank Kenny who was mentored by Paddy Spain, then at Lisneys and Bill Nowlan, then at Irish Life, went on to found Willett Companies “in the early 1990s”. In 2006, it bought a fine bit of Manhattan real estate, a 72,000 sq ft building on Spring Street in Manhattan for USD 46m. Just before Christmas, it was sold for USD 122.6m, though an unsuccessful buyer is suing over what it claims was a breach of contract. Willetts claims to now manage USD 1bn of commercial assets in New York, New Jersey and Connecticut.

I wonder if any NAMA developers were investors in Willetts’ recent success.

Word of the Week

“include”

Pay attention here, because the meaning of this word has been established this week in our courts at vast expense to you. Yes, NAMA this week lost its appeal against a decision of the Information Commissioner which held that NAMA was a public authority, meaning that it was subject to environmental information requests. The case hinged on the interpretation of the word “includes” in the EU Directive 2003/4/EC. The Directive lists those bodies which are to be regarded as public bodies and uses the “includes” word when listing some of those bodies. NAMA argued that “includes” in this case means “may but does not necessarily include” and said that this interpretation allowed it to deny being a public body. Judge Colm Mac Eochaidh was having none of it, and upheld journalist Gavin Sheridan and Information Commissioner Emily O’Reilly’s interpretation.

NAMA may appeal the decision to the Supreme Court, but given that (a) environmental requests are not likely to reveal very much about NAMA’s operations and (b) that NAMA should be included in forthcoming Freedom of Information reforms and (c) NAMA has already run up vast (unspecified) costs, an appeal is not a foregone conclusion.

Dieting tip of the Week

“Cosmic ordering”

The Broadcasting Authority of Ireland this week published its two-monthly summary of complaints received and processed. As in previous reports, it was TV3’s now discontinued late night psychic reading programming which attracted most complaints, two of which were fully upheld as they appeared to be providing health advice which is a no-no. Elsewhere poor old Vincent Browne was in the doghouse for having described Israel in unkind terms on his “Tonight with Vincent Browne” show and TV3’s morning show failed to deal with an abortion discussion in a balanced way, it was held. One of the complaints that was only partially upheld was from a Ms Burgess who claimed that, in response to a request for help with weight loss from a punter, a psychic promoted “cosmic ordering” and “drinking hot water and lemon”. It isn’t explained in the decision what “cosmic ordering” actually is, so a suggested interpretation on here is that, when in a restaurant it refers to “ordering” space or nothing.

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Paddy McKillen’s appeal in London’s courts concluded three weeks ago with judgment reserved.

The UK satirical magazine Private Eye – in the current issue, City News at the back – reports on an aspect of the case which seems to have been overlooked in the Irish media, which had fielded an impressive two reporters to attend the three day appeal. The overlooked aspect is the continuing financial miracle that is Mr Derek Quinlan.

The magazine reports that Paddy McKillen’s barrister Lord Goldsmith told the court during the appeal that Derek has three separate judgments against him for €50m, €6.5m and €3m and has had his yacht and art collection repossessed. The barrister also stated that although the Barclay brothers had acquired Derek’s loans from NAMA and others that were secured on Derek’s shares in the Maybourne group of hotels, that the Barclays were not charging Derek interest on the loans which are for tens of millions. Not only that, but the Barclays had given Derek and his wife personally sums of €1m and GBP 1.86m (€2.2m) and only €500,000 was characterized as a loan.

And yet, Private Eye notes, Derek managed to be represented by three learn’d friends at the recent three day appeal. Private Eye says that Derek is bankrupt even if he hasn’t been bankrupted. It also questions why NAMA has not moved to bankrupt him.

One person who would just love to see Derek bankrupted is Paddy McKillen of course. If that happened, then Derek’s 36% stake in the hotels would be offered to Paddy who already owns 36% and the Barclay brothers who own 28%. Paddy would snap up his entitlement which would give Paddy majority ownership of the hotel group.

And Paddy would probably love to see this bankruptcy sooner rather than later, because Paddy has very large pending financial commitments – not only is IBRC flogging off his personal loans estimated to be around €300m and his corporate loans which have been reported to be €550m, but Paddy mysteriously came up with the readies to pick up his share of a rights issue last December 2012 which cost him over €60m. Last Sunday, the Sunday Business Post reported that the Barclay brothers were making it clear to IBRC that they would be bidding for Paddy’s loans when the Special Liquidator puts them up for sale, and that they were prepared to offer a premium over the market value.  And Paddy’s funders for the rights issue – speculated upon to be New York based – will be looking for their pound of flesh and an exit as well. Paddy also faces €25m of legal costs from this battle with the Barclays though it is understood that he has paid a portion of these. Of course the slate for these costs may be wiped clean if Paddy wins his appeal, with judgment expected any day now.

Private Eye’s angle in its reporting is presumably coloured by its antipathy towards the Barclay brothers-owned Telegraph newspaper, dubbed the Torygraph by the liberal Private Eye and also the piercing of hokum, and the Barclay brothers characterization of financial support for Derek as nothing more than helping out a friend in need possibly falls under this heading – for chrissakes, despite the millions in benefit provided by the Barclays to Derek, they still can’t even spell his name correctly, referring to him as “Derrick”.

Private Eye is unlikely to be overly concerned for the interests of the Irish taxpayer but it does ask (again) why NAMA is keeping Derek financially alive whilst he continues to live a life of apparent luxury.

NAMA, however is not known for its philanthropy towards developers, though the Agency has yet to bankrupt anyone and last year in a parliamentary question on NAMA and its bankruptcy dealings, Minister for Finance Michael Noonan said that “it is worth noting that bankruptcy proceedings are rarely brought by secured creditors and usually in cases of non or lack of full disclosure.”NAMA has already foreclosed on a range of Derek Quinlan property already.

So if NAMA is “keeping Derek alive”, it is doing so for financial reasons. Hopefully NAMA also considers the financial benefit of bankrupting, or threatening to bankrupt, Derek now. The Barclays are likely to pay a premium to stop that, and Paddy McKillen would probably pay something for it to happen. But is this a bidding war that NAMA has the cojones to entertain, and does it realize that a premium on Derek’s head has an expiry date?

Lastly, and this is unrelated to the Private Eye reporting. When Ian Kehoe reported last Sunday that the Barclays were willing to pay a premium for Paddy McKillen’s loans at IBRC, it was unclear if that included a premium on top of the par value of the loans. So if the loans had a par value of €300m, might the Barclays pay €305m. NAMA continues to be adamant that the most it can receive for a loan is the par value, and that is why it sold the €800m of Maybourne loans to the Barclays in 2011 at par, and not a penny more.  If it transpires that the Barclays as special purchasers do pay more than the book value of IBRC’s loans, then Messrs Mulcahy and McDonagh should hang their heads. We’ll see.

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