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Archive for March 30th, 2013

SDSummary

Well, with an €185m judgment owing to NAMA and €164m owing to non-NAMA banks, and with receivers appointed to most of his former property in Ireland, there won’t be much debate over whether the former Baron of Ballsbridge, Sean Dunne is in fact insolvent. According to the US court system PACER, Sean filed for bankruptcy yesterday under the US chapter 7 code (the most common code for bankrupts, and contrasts with Chapter 13 where the debtor seeks an extended arrangement with creditors)

Last month, Ulster Bank made moves in Dublin’s High Court to have Sean declared bankrupt in Ireland where he would face 3-12 years before he would be discharged. Instead, it seems, he has opted for a [CORRECTION] 120-150 day bankruptcy, in the state of Connecticut in the US, which means he will be discharged by end of August 2013 at latest, unless his creditors object to the bankruptcy. Though, as we have seen in the case of David Drumm who filed for bankruptcy in neighbouring state of Massachusetts in October 2010, that US bankruptcy can be drawn out if creditors object to the process or to disclosures in the process. And in the case of Sean, Ulster Bank may claim that Sean’s centre of main interest is in Ireland, rather than the US.

NAMA’s case against Sean and his wife, Gayle, currently being slugged out in the Connecticut Superior Court may need to be re-evaluated by NAMA. NAMA has previously stated that it is neutral on where one of its developers pursues bankruptcy, but plainly in this case, there may be grounds for taking a position.

Sean is represented in his bankruptcy case by a new attorney named James Berman from Zeis Law, a Connecticut specialist in bankruptcy. Zeis Law says “James Berman has been named the Best Lawyers’ 2013 Stamford Litigation – Bankruptcy Lawyer of the Year” A bankruptcy trustee has been temporarily appointed and their name is Richard Coan. There are no documents filed on PACER yet, but it is hoped that they can be brought to you imminently.

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The news from Cyprus on Thursday suggests that banks, which opened for six hours for the first time in 12 days, experienced brisk business but there was no panicky mobbing of the banks with depositors breaching public order in attempts to get at their money. The sense imparted through the media is that there was a strong expectation of a visible meltdown, but it just didn’t transpire, which tends to augur well for the future of Cyprus.

According to commenter John Gallaher who was keeping a close eye on the comings and goings at the Fitzrovia, London branch of Bank of Cyprus on Thursday, the London branch was busy and it seemed there was a steady stream of people making withdrawals.

So, how much money  is leaving the Cypriot banking system at present? We just don’t know and you can bet that neither the central bank in Cyprus nor the ECB will offer up this information, unless it portrays a positive message. Like our own central bank here in Dublin, the central bank of Cyprus produces monthly banking financial information, and the latest available is for the end of February 2013 which was published this week, but I cannot see in it details of ECB support for Cypriot banks. Old media reporting suggested that the ECB had lent €9-10bn to Cypriot banks two weeks ago. Haircuts on certain deposits will reduce liabilities in banks’ balance sheets which should also reduce reliance on ECB funding, but deposits flying out the door will do the opposite and force banks to seek alternative sources of cash.

The view on here is that €500m per day may have been exiting Cypriot banks during the 12 day shutdown. But who knows? The central bank of Cyprus and ECB, probably, but they’re staying schtum. If the withdrawals had been modest, I would have expected a statement to that effect. So there appears to be a lockdown in effect on information.

We found out on Thursday that the haircutting of deposits in Cypriot banks might be illegal and unconstitutional.

OhOoooh

We also found heard allegations of shenanigans yesterday in Greek newspapers alleging that Cypriot banks had written off millions of euros in loans to, amongst others, Cypriot politicians. Cyprus is regarded by Transparency International as the 29th most honest county in the world, that’s just four spots below Ireland at position 25, so Cyprus is no clear-cut banana republic.

We are in the dark over precisely what capital controls apply in overseas branches of Cypriot banks, with a request for information and comment from here last week, met with a meaningless response.

Al Jazeera is reporting that “Bankers have told Al Jazeera that they will only penalise depositors once all their liabilities have been offset against their assets.” In other words, rack up as much expenditure as possible on your credit card and you can offset that against your deposits. I wonder how many Lamborghinis have been purchased on credit card in Cyprus in the past fortnight? After all, if you have a €400,000 balance at Bank of Cyprus or Bank Laiki, it would make sense as you are facing wipeout of deposits in excess of €100,000.

It remains to be seen if we will see information released by the banks. It seems Cyprus has a weak media and political opposition so idiosyncrasies over the implementation of capital controls are unlikely to be closely examined. Our experience in Ireland has told us that people are reluctant to pursue legal challenges to attempts to deal with the financial crises.

So, all of this may blow over. But I wouldn’t bet on it.

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The fallout from the decision to place Irish Bank Resolution Corporation into special liquidation in February 2013, continues with mortgage borrowers who comprise the €1.8bn IBRC mortgage book facing an uncertain future. There are mixed messages coming from Minister for Finance Michael Noonan as to the fate of the IBRC mortgage book, but indications are that the special liquidator will attempt to sell it in one job lot.

WilliamPrasifka

However individual mortgage borrowers with grievances with IBRC are finding that the Financial Services Ombudsman, led by understated US-born William Prasifka (pictured, above), is refusing to proceed with investigations of complaints which involve IBRC. Here is a recent letter from the Ombudsman to an IBRC mortgage borrower with personal details redacted.

OmbudsmanIBRCMortgage

However in the Dail, Minister Noonan is maintaining that the special liquidation does not prevent investigations of complaints into IBRC by the Ombudsman.  The Sinn Fein finance spokesperson Pearse Doherty asked Minister Noonan if the Ombudsman could now investigate complaints and was told “the Financial Services Ombudsman is not precluded from investigating complaints by mortgage holders against the former IBRC” but the Minister also said that the Ombudsman was independent in how he discharged his duties.

So, here we have the minister of the day holding one opinion on the legislation used to liquidate IBRC and we have the Ombudsman holding another. And in the middle is the mortgage borrower who can’t progress their complaint.  This is the sort of mess that gives public administration a bad name.

The full parliamentary question and response are here.

Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm that the Financial Services Ombudsman, due to the Irish bank Resolution Corporation Act 2013, cannot now investigate complaints by mortgage holders against the IBRC; and if he will make a statement on the matter.

Minister for Finance, Michael Noonan: Firstly, I must point out that the Financial Services Ombudsman is independent in the performance of his statutory functions and it would not be appropriate for me to comment on how he performs those duties.

The Irish Bank Resolution Corporation Act 2013 was passed on 7 February 2013. Pursuant to the provisions of the Act, I made a Special Liquidation Order for the purpose of winding up IBRC.

Section 6(6) of the Act specifically provides that the making of a special liquidation order does not preclude any investigation by certain authorities, including authorities which may investigate any person under or by virtue of any enactment, rule of law or contract. The Financial Services Ombudsman investigates complaints by eligible consumers in respect of certain conduct by regulated financial service providers pursuant to part VIIB of the Central Bank Act 1942.

Therefore, I have been advised that the Financial Services Ombudsman is not precluded from investigating complaints by mortgage holders against the former IBRC due to the new Act.

As I mentioned, the Financial Services Ombudsman is independent in the performance of his duties and I understand that he may have taken a more restrictive interpretation of the Irish Bank Resolution Corporation Act 2013 provisions.

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NAMA developer and Northern Ireland bankrupt, Alastair Jackson and his company, Eassda Ireland Limited, will be pleased with a judgment in the High Court on 6th March 2013, which has just now been published. Judge Murphy ruled that a couple, Joseph and Catherine Corcoran must comply with the terms of a settlement between the developer and the couple in 2009, which will see a house on a Wicklow estate sold to the couple reportedly for an overall total of nearly €2m as long as Eassda completes certain building works on a snag list, some of which like removing paint splashes appearing very minor indeed.

The long-running case concerns No 6 Glenair Manor off Priory Road in Delgany, county Wicklow which was developed by Eassda Ireland Limited in the mid 2000s. You will find homes in the exclusive estate on offer on Daft.ie today for €400,000 and the most recent sale on the Property Price Register appears to be No 5 which sold for €872,246 in October 2010, on the eve of the IMF bailout, but the Corcorans reportedly agreed to pay an eye-watering €1.85m for their home, paying a deposit of €185,000 in 2005, before the property bubble burst. The €1.85m reportedly comprised €500,000 for the site and €1.35m for the construction of the home. Although no financial figures are referred to in the court judgment, it would now appear that the couple must pay the balance when Eassda completes its work.

Eassda has been involved in a range of Irish property developments from the upmarket Moyvalley and New Forest golf resorts to the more downmarket Gleann Riada estate in Longford where NAMA demolished its first property, an apartment block which was part of the large estate, last year. Alastair Jackson from Templepatrick in county Antrim should emerge from bankruptcy in Northern Ireland in May 2013. In September 2011, Eassda Ireland reached a €3.6m tax settlement with the Revenue Commissioners.

There are nine properties on the estate and they are fine five-bedroom homes, but with property down 50% from peak, and possibly 75% looking at the property on the estate advertised on Daft.ie, the couple will not be happy campers.

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Risky business of the Week

At midnight on Thursday, the Eligible Liabilities Guarantee from the Government to Bank of Ireland, AIB/EBS and Permanent TSB expired, which meant that depositors with deposits in excess of €100,000 would no longer be covered with the deposit guarantee on the excess, though they still enjoy a guarantee on deposits of less than €100,000. We learned that just before the ELG expired, Bank of Ireland issued €5bn of bonds and Permanent TSB issued €3.065bn; in both cases, the issues were artificial in that both banks issued bonds to themselves that can be exchanged for cash at the ECB until 2015. AIB didn’t issue anything with its spokesperson Niamh Hennessy saying “AIB’s liquidity position is healthy” and that AIB didn’t want to issue bonds which would incur guarantee fees payable to the Government. As Cyprus remains on the brink of the abyss, withdrawing the ELG this week was risky for the Irish government, though as we saw in Cyprus, guarantees ultimately aren’t worth the paper they’re written on when governments are pinned to the collar.

Carrigsodom and Ballygomorrah of the Week

FootFetishistsNirvana 

Some light relief this week when we learned the Department of Health was providing €124,000 annual funding to a charity which supports 16-24 year olds; the range of services provided by SpunOut.ie is impressive, ranging from advice on mental health to drugs to life skills, but all focus this week was on its skinny repertoire of sex advice, and particularly its advice on threesomes. Having been predictably discovered by Sindo sex expert Niamh Horan, no time was wasted in getting offended comment from Fine Gael’s straitlaced Michelle Mulherrin and hey presto! you had a scandal. Liberal champion Colette Browne used her column in the Irish Examiner to defend the charity whilst critically evaluating the advice provided on threesomes. The title of her column? “Threesomes are sleazy, but let’s not get our knickers in a twist” But “knickers”? What knickers? In Carrigsodom and Ballygomorrah, do we even wear knickers anymore?

Crackdown on Cheek of the Week

MartinCallinan

“Showing disrespect to the minister of the day or to the commissioner of the day is not on, as far as I am concerned and I don’t expect it from either a member of sergeant or garda rank” Commissioner Martin Callinan speaking after criticism of Minister Shatter and of himself by the AGSI this week where four sergeants from Carlow and Kilkenny walked out during both addresses and afterwards provided expressions of “no confidence” in either Minister or Commissioner. The usual form of protest previously was giving the minister “the silent treatment”, criticism of the Garda Commissioner is unprecedented. The Gardai are not happy about cuts in resources and pay, and see the Commissioner as an extension of the political establishment that is now attacking the force. The four officers claimed they had a mandate from their members to mount the protest in the manner exhibited, and the four faced the possibility  disciplinary proceedings for their troubles, after the protest.

As the week drew to a close, and after an informal disciplinary hearing in Templemore, the four sergeants claimed that although they stated they hadn’t confidence in the Commissioner, that was not in fact their personal view, but the views of the people they represented. A statement was issued to the effect that both sides now regarded the matter as closed. Except, there is a third side in all of this, the general public which has seen calculated insubordination by Gardai who are genuinely at their wits end with balancing their incomes.

Doublespeak of the Week

247FrontLineAllianceCuts

The 24/7 Frontline Alliance this week produced what it called an “actuarial report” on pay cuts proposed under Croke Park 2. It indicated that workers earning less than €65,000 faced cuts of up to 11.4% for a staff nurse down to 3% for a firefighter.

HowlinCuts

On the other hand, when the Minister for Public Expenditure and Reform, Brendan Howlin was recently asked in the Dail for the pre- and post- Croke Park 2 gross salaries and allowances, he merely said that those earning less than €65,000 would continue to earn the same. I tend to believe the 24/7 Frontline Alliance in this.

Easter Egg of the Week

Given the weekend that’s in it, you might like to know why you may be seeing A LOT more chocolate bunnies wrapped up in golden foil this weekend. Lindt, the Swiss chocolate maker has just lost a trademark infringement case where it claimed exclusive rights to the familiar Lindt chocolate bunny and it objected to rivals flogging their fattening fare in similar attire. So you’ll be seeing a lot more colonies of golden bunnies, like these ones from rival Italian chocolate company, Ferrero Rocher

MrAmbassadorYoureInsultingUsWithThisKitsch

Coalition partner of the Week

HolySmokeBatmanRobinIsGettingCheeky

This was the election leaflet produced by the Labour party in the Meath East by-election which was held this week, and where Fine Gael’s Helen McEntee romped home whilst coalition partners Labour saw a 78% collapse in their vote from 21.04% at General Election 2011 to just 4.57% this week. Labour’s man lost his deposit and must shoulder his expenses. The election leaflet above is said to have rankled amongst coalition partners, but in the end, it just didn’t matter as Labour was wiped out. Poor Aodhan O’Riordain, the Labour TD in Dublin pulled the short straw to appear on the Vincent Browne show on Thursday night – see screengrab below, left – to defend the indefensible. Fine Gael’s Damien English from Meath West who was Helen McEntee’s election manager could hardly contain his mirth, though he eventually composed himself to say with a straight face that he didn’t think Meath East was reflective of attitudes to Labour nationally.

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Crime of the Week

MixedAndCertainlyNotAnarchy 

This was the week when the Central Statistics Office issued annual crime figures for 2012, together with a comparison with 2011.  Overall, crime is down, but as is usual with these annual reports, there were varying results with murders, sexual offence and burglaries up slightly and big declines in assaults, dangerous acts, damage against property, public order offences and offences against the government. Critics of the Gardai will zoom in on burglaries after a spate of well-publicised rural burglaries, many aggravated.

Table of the Week

LocalAuthorityFunding

One of the common reasons cited for the introduction of the local property tax or “family home tax” as Sinn Fein call it or the “bankers bailout tax” as People Before Profit call it, is that the money collected will be used in local areas. This is a load of rubbish. The Government funds local authorities to the tune of €2bn per annum, and what is going to happen is the Government will reduce local authority funding by the amount collected. The only truth in this is the Government needs to collect more in tax to plug a deficit and “expanding the tax base”, “introducing a stable recurring tax”, “funding local services” are hogwash.

Baby boom of the Week

BanGardaBabyBoom 

It seems that Ban Gardai are getting more and more pregnant. Figures released by the justice minister, Alan Shatter last week show that in 2011 there was a 20% increase in the number of Gardai that availed of paid maternity compared with 2010. And so far in 2012, we are on track for a 16% increase over 2011. The projected numbers seeking maternity leave in 2013 are 384, up from 330 in 2012 and just 273 in 2011.

We’re open (but) of the Week

WereOpenBut

Cypriot banks opened for six hours on Thursday for the first time in 12 days. In Cyprus, there was brisk business but the banks weren’t mobbed as feared. We still don’t know the rate at which deposits in Cypriot banks are being depleted, and the last information from the secretive ECB was that it had advanced €9bn in emergency lending, and that was two weeks ago before the banks closed. On Thursday, the above was the message greeting Bank Laiki customers, who it is believed, will see the excess of €100,000 in their deposit accounts wiped out entirely, or if not, they’ll have to wait years to get anything back. Those with less than €100,000 are untouched. Well, except for the capital controls that have been “temporarily” imposed and these are the restrictions that currently apply in Bank Laiki.

TV royalty of the Week

RTESalaries

RTE strategically published the salaries of its Top 10 presenters this week. Pat Kenny is top of the heap with €630,000 though he faces an imminent renegotiation of his contract, assuming RTE wants to continue the relationship of course. Oh, and assuming the 65-year old Pat would want to continue with RTE, but then again, where else would he go? When the old media went looking for comment after the revelations, the RTE presenters went to ground as the fog of the Easter holidays moved in to offer temporary respite. What we received this week were the top salaries of presenters, we still don’t know the top salaries for RTE management of course, but we do know that in its last published accounts for 2011,  including a €50m charge on its pension fund – that loss is equivalent to €61 for 1.147m households that each paid RTE €160 or €183.6m  in total licence fees in 2011. In a crisis-hit Ireland in 2013, these salaries are unforgivable, and both RTE management and the presenters will be held to account when the fog clears after Easter. We still don’t know how much RTE presenters earn in extracurricular activities, like penning memoirs, after communications minister Pat Rabbitte abnegated responsibility for RTE this week,  but we finally got the RTE policy for staff  which sets out the rules on competing with RTE

CompetingAgainstRTE

and gifts.

RTEGiftPolicy

So I guess the RTE policy allows you to accept five hardback books one day, five concert tickets the next, a “moderately valued” product or service from a business promoted the next day, five CD albums the next day and at the weekend some promoted business might be good enough to take the kids off your hands with weekend jobs. As long as the gifts don’t come from the same source and are notified to RTE management, then you’re golden.

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