Archive for April 27th, 2013

Welcome Back of the Week


If you support transparency in public life in Ireland, you will be delighted to hear that KildareStreet.com is back this week. Hallelujah! For those of your unfamiliar with KildareStreet.com, it maintains records of Oireachtas proceedings, including parliamentary questions. “Why do we need such a record from third parties?”, I hear you ask, “after all, we have the Oireachtas.ie website which is supposed to do that”. As a heavy-user of the Oireachtas.ie website, I can tell you that it is replete with errors, missing tables, missing answers and if you link to a parliamentary question, chances are they’ll change the link address. Also the Oireachtas website is not Google seachable. KilareStreet.com went offline last September 2012 after the Oireachtas introduced a format, but thank God Almighty, it is back this week – welcome back old friend! And here are a few examples of the Oireachtas record keeping that we can wave goodbye to with KildareStreet.com’s return. If you don’t know what I’m talking about, see if you can spot the mistakes on the Oireachtas records below:





Farewell of the Week

Public Interest directors Margaret Hayes and Ray MacSharry are resigning their roles as public interest directors at Permanent TSB. They announced the resignations at the end of March 2013 and they will not seek re-election at the PTSB AGM on 22nd May 2013. Just before Christmas 2012, the hapless Margaret and Ray schlepped up at the Oireachtas finance committee where they were abused for a couple of hours for failings at the bank. At the time, the role of public interest directors was coming under the spotlight and it seems that the 75-year old Ray and the former civil servant Margaret have had enough. But what will the resignation of these two business and public service titans mean for PTSB?

In the Dail this week, the Government provided a considered assessment of the impact of the two resignations.

Deputy Pearse Doherty: To ask the Minister for Finance if he will provide an assessment of the risk to the financial health and profitability of Permanent TSB as well as to the public interest, from the announced resignation of persons (Mr Ray MacSharry and Ms Margaret Hayes) from the board of PTSB in May 2013; and if he will make a statement on the matter.

Minister for Finance, Michael Noonan: As the Deputy will be aware it is a matter for the Chairman of Permanent TSB to ensure that the board of directors is of sufficient size and has an appropriate mix of expertise to comply with governance, company law and regulatory requirements.  I have been informed that the current board complies with all relevant requirements but is subject to on-going review and renewal as required.  As the Deputy will be aware the directors have fiduciary obligations to the company and have obligations under Section 48 of the Credit Institutions (Stabilisation) Act.

Video of the Week

“In some weird way, the more we fuck things up, the better off we are, I think we’re only eight or nine shit decisions away from freedom”

I often wonder what our Nobel laureate poet Seamus Heaney has been doing for the last five years, when the economy has imploded, emigration has returned with a  vengeance and the country is suffering agony – surely a poet might bother to chronicle such seismic national events, pick a few bon mots and maybe even get some of them to rhyme. Our creativity hasn’t been much in evidence on TV or film either – surely there’s a drama to be made in the style of Conspiracy to set out what happened on the Night of the Bank Guarantee. Comedian Tommy Tiernan partly makes up for it and lifts the team this week with these observations on our crisis.

Quango of the Week


The report and accounts for the Irish Film Board for 2011 were published this week. This is an agency into which we shovelled €18.4m in 2011, comprising €16m earmarked for artistic investment and €2.4m for running the agency. It employs 14 people in Ireland plus a CEO and their total salaries are shown as €904,007 or an average of €60,267 excluding pension contributions and given the CEO gets €95,000 it would seem the salaries are very good indeed. The IFB seemingly employs two further people in Los Angeles. In Ireland, it costs €276,015 to house the 14 staff apparently, and the quango has a range of interesting expenses including a €14,000 subscription to employers’ organization IBEC. Best of all though were the loans to board members, totaling over €2m in 2011, see below.  Fine Gael stalwart and RTE sports commentator, Bill Herlihy has just been appointed chairman of the IFB. Dontcha just love this country!


Non-event of the Week

NAMA, the biggest state agency by a country mile, reported its unaudited accounts for the year. Here is an agency which generated €1.4bn in revenue, disposed of €2.8bn of loan and property assets, advanced €1bn to developers and is currently sitting on €3bn of cash. It generated a profit of €300m before tax. For an Agency that was created from scratch three years ago and which employs 250 today, the results are stonkingly impressive. Yes, it acquired €74bn of loans for just €32bn, but commercial property prices in Ireland have declined 27% since and residential property is down 32% and the economy is at best bumping along the bottom with banks not lending. All in all, the NAMA staff deserve a pat on the back, when you consider what a disaster the whole project could have been.

The results didn’t garner many column inches. The Irish Times managed to get its reporting badly wrong by claiming that NAMA had already obtained judgments against the six parties it sued in the last quarter of 2012. Some of the cases remain outstanding and I think that ex-BDO, ex-Property Industry Ireland Ronan King will be interested to know the Irish Times says that NAMA has obtained a €559,700 against him (it hasn’t, NAMA has just applied for a judgment).


Old media business reform of the Week


Yesterday, we finally saw the 2012 financial results for Independent News and Media, in Ireland publishers of the Irish Independent, Sunday Independent, Herald, Sunday World, Belfast Telegraph, Sunday Life, Irish Daily Star and a number of provincial newspapers. The group has apparently agreed a deal with banks and its pension fund which should see the group rationalized and placed on a secure financial footing. Alas, there is still some cost-cutting to go, and 10% of its 1,000 staff face the chop in the coming year. Rival newspaper publisher Johnston Press, which publishes some Irish provincial titles, this week demonstrated an impressive obsession with cost control when it closed a premises in Scotland and relocated a journalist to….. a local library! There’s more – Johnston  Press said its reporters would be “out in the community more than ever”. How long before the occupants of IN&M HQ on Talbot Street will be working from the Dublin City Library in the Ilac Centre and IN&M’s Lucy Gaffney telling them the move will improve editorial standards by journalists being closer to the community! This was also the week that the Independent.ie reported that it would be introducing what Independent.ie called a “metred paywall” – how many metres tall will the paywall be, no-one yet knows.


Collaterlie Sisters of the Week

It’s bad enough for ordinary people to have to pay special attention to developments in the economy because those whose job it was to regulate and supervise key activities in the economy, cocked it up so badly in the last decade. But having to listen to the old media spewing out endless reams of figures, some weensy, some gargantuan really makes us feel like we’re listening to this all the time

But given we have to listen to all of this, isn’t it amazing that the old media has failed to inform us that we’ve slipped back into recession. Columnist Colette Browne was the first journalist in the Irish old media to inform the nation that we had returned to recession, this more than a month after the CSO confirmed two consecutive quarters of contraction of GDP. The Financial Times became the second old media outlet to do the same yesterday. Where were RTE, the Irish Times (“the paper of what have you”), the Independent and Examiner on 21st March 2013, when the CSO released its figures.

And yesterday, RTE managed to interview the CEO of Independent News and Media about that company’s annual results for 2012 and didn’t probe the debt restructuring which affects two state-owned banks which reportedly have exposure of €150m to IN&M. So we were given almost-bewildering facts about profits and losses and balance sheets but somehow our exposure to IN&M was overlooked.

Film refrain of the Week


“Captain, I’m giving her all she’s got, she’s breaking up, she can no take any more”

It’s not unusual to hear rages against austerity from individuals or the usual suspects, but this was the week when the planets aligned and giants in our cosmos all came out against austerity. We had the European Commission president, Manuel Barroso claiming austerity had reached its limits; we had SIPTU general president Jack O’Connor snaffling the entire €1bn saving in 2014 from the recent promissory note deal and claiming that for his members and he too was saying austerity wasn’t working; we even had business group IBEC warning against higher taxes and their impact on jobs. We had Minister for Social Protection and perhaps future Labour leader, Joan Burton criticizing austerity and its effects across Europe, and of course Ireland is still part of that Europe! We even had the lords spiritual wading in, with Archbishop Diarmuid Martin setting out the effect austerity was having on society.

Unfortunately, there really isn’t much alternative to austerity in a currency union where the primary objective is price stability. If stimulus and growth could be achieved at the click of a finger, do you not think they would have been attempted already? We need to cut the gap between spending and income, so that as a nation, we can stand on our own two feet again. The best we can do is spread the period out over which we close the budget deficit gap, but unfortunately with debt:GDP already at 121% and a mighty €207bn of planned-debt by the end of this year, we really can’t spread the period out too much. At this stage, our problem is debt and unless we default, then unfortunately Michael “Scotty” Noonan has no choice but to give her some more but that doesn’t mean he doesn’t have choices in how the deficit gap is closed.

Table of the Week


Some good news this week from the Department of Finance which provided what it called “half-finalised” economic results for 2012 which showed that our deficit as a % of GDP in 2012 was 7.6% which was a full 1.0% less than the target we have with the Troika. Yes we had the windfall of the mobile phone licence and we had Minister Reilly acting the eejit with the health budget and we have slipped back into recession on the most modest basis in 2012, but all-in-all, the result shows the firm trajectory back to a balanced budget. Debt is planned to be €207bn at the end of 2013 though, and the betting on here is that we will have €1-3bn extra cost this year for IBRC’s liquidation and the jury is still out on NAMA with residential and commercial property prices still declining. Permanent TSB and AIB and even Bank of Ireland are not fully out of the woods, and may be back with the begging bowl. Somehow, Professor Morgan Kelly’s May 2011 estimate of €250bn debt doesn’t seem at all fanciful.


Chutzpah of the Week


Last Sunday, the tone on Twitter was lowered with the above promotional tweet from Ernst and Young. You might recall the Enda Farrell affair at NAMA when the now former NAMA employee firstly purchased a property owned by a NAMA developer without, according to NAMA, disclosing his interest and then in an investigation, the more serious matter of loan details being leaked by Enda was uncovered. What Enda had done was to send files to his wife Alice, who at the time occupied a senior position at Ernst and Young, and Alice forwarded the emails to Enda’s personal email address; that way, Enda bypassed controls at NAMA which stop information being sent to personal email address and the ruse also masked the leaking of the information. Alice has since left Ernst and Young, but how rich of E&Y to now promote its expertise in accessing and processing information! There was no response from E&Y to the comment above.

The Garda investigation of the information leaking appears not to have yet resulted into any arrest. NAMA was seeking costs for its court action against the formerly-golden couple, and Alice was defending the action by claiming she didn’t know the contents of the emails; that case appears to have settled without its terms reaching the media.

Unfit police service of the Week


And finally, the Belfast Telegraph reported last week that police chased a 59-year old man through a forest for 30 minutes before apprehending him. A 59-year old man wearing stockings and suspenders. And nothing else. For 30 minutes! The Dalai Lama certainly seems to have found it amusing above. In a suburb in south Derry which has attracted a reputation for gatherings of what might be called an unconventional nature, two PSNI officers responded to reports of there being a naked man about, and when they arrived at the woods in the Prehen area of the city, they chased the man for 30 minutes before finally apprehending him. Perhaps dope-cheating athletes should dispense with the steroids and the diuretics and just don stockings and suspenders, maybe the embarrassment-factor might be enough to power them to victory.


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Developer and businessman Paddy McKillen is these days making the sort of contribution to the legal industry that he once made to the construction sector. Paddy is suing a range of people in Dublin’s High Court for defamation. He is seeking an injunction against the Sunday Times which apparently obtained details of his loans at IBRC. He is awaiting his appeal in a long-running battle with the Barclay brothers over control of the Maybourne group of hotels in London.

And yesterday, he launched an action against NAMA in Dublin’s High Court. The reference is 2013/4252 P and Paddy is represented by Lyons Kenny solicitors in Dublin. The respondent is “National Asset Management Agency” and as is usual with recently-filed cases, there is no solicitor on record for NAMA.

As this is Ireland, we know neither the cause nor remedy sought.

Paddy and NAMA have previous form. Paddy launched the first major legal challenge to NAMA in 2010 when 15 of his companies went to court in Dublin to stop NAMA taking over their loans. What followed was a marathon process which saw experts such as Nobel laureate Joseph Stiglitz providing evidence to a High Court which eventually rejected all of Paddy’s arguments. Paddy appealed the case to the Supreme Court where the outcome was technically a score-draw in that Paddy won the right to be consulted by NAMA before his loans were acquired but he didn’t have an absolute right to stop the Agency acquiring his loans. NAMA subsequently decided not to acquire most of Paddy’s loans, but it is understood the Agency acquired some loans associated with Paddy where Paddy was part of a consortium. By the way, we still waiting to hear what the final legal bill was in this case, and NAMA has been ordered to pick up Paddy’s costs.

Comment will be sought from Paddy’s spokeswoman but the betting is there won’t be any comment at this stage.

Separately, Paddy is understood to be one of IBRC’s biggest borrowers with personal loans estimated at €300-370m and corporate loans estimated at €550m. The Special Liquidator at IBRC is presently entertaining approaches by borrowers to refinance their loans at 100% – that was the idea, Minister Noonan’s reponse this week does not fill us with confidence. The Barclay brothers – worth €3bn according to last week’s Sunday Times Rich List  – have made it known that they are interested in buying Paddy’s loans and may be prepared to pay a premium on top of their market value. Paddy didn’t even make it onto the Irish-born Rich List which had a threshold of just €41m, though you wonder how accurate the Rich List is.

UPDATE (1): 27th April, 2013. It is understood that Paddy is seeking damages on a number of points including breach of privacy, confidentiality, and breach of section 221 of NAMA Act (lobbying NAMA). It is understood that it is alleged in the claim that interests connected with the Barclay brothers lobbied NAMA with a view to having loans connected with the Maybourne hotels foreclosed, which would have forced Paddy to seek refinancing or see his 36% share in Maybourne diluted in favour of the Barclays. It is understood to be further alleged that NAMA provided interests associated with the Barclays with confidential information on loans in which Paddy had an interest, that such contacts generally breach NAMA’s anti-lobbying rules and that NAMA didn’t act on those breaches. No comment from NAMA as at present.

UPDATE (2): 27th April, 2013. We still don’t have the detail of the application, but trawling back through Oireachtas committee hearings, the NAMA CEO did appear particularly uneasy during this exchange with the Fianna Fail public expenditure and reform spokesperson, Deputy Sean Fleming last October 2012. Deputy Fleming was concerned at unchallenged evidence given in the High Court action in London last year where Paddy was fighting the Barclay brothers over control of the Maybourne hotels. The evidence suggested that NAMA had discussed details of loans connected to Paddy with interests connected to the Barclays. The NAMA CEO said “I do not believe that what has been maintained is correct” in response to Deputy Fleming reading out certain emails, but Deputy Fleming countered that NAMA had not challenged the emails in the London court. The full transcript of last October’s hearing is here, but this is the extract that appears most relevant.

Deputy Sean Fleming:  There is a document on the public record of the courts in England. Therefore, there is nothing confidential about this. It is not sub judice. It is a previous case. I want to read an extract from the public court record of what was stated in the summing up, and I can provide this to anybody who wishes to have it after the meeting. It is on the public court record. It states Mr. Hennigan and Selina Dicker from NAMA then spoke to Mr. Peters, Mr. Hooper and Mr. Faber on 27 January. It further states that on 28 January Mr. Peters e-mailed Mr. Hennigan and Ms Dicker saying, “Thank you for time yesterday on our conference call”. It states, “Richard, Dick and I found it most helpful”. It further states, “Clearly, you have a wealth of knowledge regarding Coroin Limited and its shareholders in some of the latter’s much wider debt and security positions than we would have possibly hoped to have obtained in the relatively short period of time we have been involved”. It also states, “We appreciate your most kind offer to assist us in getting up the learning curve”.

Mr. McDonagh can tell me if I am wrong on this but it could appear from this that NAMA representatives were discussing a company’s business with other people, perhaps to the detriment of one of its clients. I read that extract from the court record. Is Mr. McDonagh aware of this?

Mr. Brendan McDonagh: We are aware of the transcripts. We read the transcripts every day of—–

Deputy Sean Fleming:   Has Mr. McDonagh any problem with what, on the face of it, appears to be a breach of confidentiality, with some of his staff – this was recorded in open court – clearly discussing people’s business with third parties? Has he a problem with that?

Mr. Brendan McDonagh: First, the loans concerning that hotel at the time – I have to be careful what I say because this is subject to appeal – were NAMA loans and second, what the Deputy read is a counter party’s view of a conversation, and I do not believe that what has been maintained is correct.

Deputy Sean Fleming:   NAMA’s representative in the court contradicted that and it is on the public record subsequently. I have not read the full transcript of the court proceedings. What Mr. McDonagh has just said to us is that he, as the chief executive of the NAMA, contradicts the version in that e-mail that was sent to his staff member. He does not accept the accuracy of what his staff member received. Did his staff member not contradict that during the examination in court?

Mr. Brendan McDonagh: I do not believe so.

Deputy Sean Fleming:   Yet Mr. McDonagh contradicts it here months later.

Mr. Brendan McDonagh: All I can say to the Deputy is that based on my view of what he read out, I actually do not believe that to be the case.

Chairman:   Can I clarify one thing before we proceed with this because it is the subject of an appeal. Deputy Fleming is using the transcript from the court and is taking—–

Deputy Sean Fleming:   It is a matter of public record.

Chairman:   I know that but the Deputy is taking a particular reference point from one witness who has contributed to the case. Has he read the full transcript of both sides or positions that were given on this?

Deputy Sean Fleming:  I am not here to answer your questions.

Chairman: If the Deputy is going to pursue a line of questioning—–

Deputy Sean Fleming:   I asked Mr. McDonagh the question and—–

Chairman:   I know but—–

Deputy Sean Fleming:   —–I said, if the Chairman was listening, that I did not read the full transcript. I said that 30 seconds ago.

Chairman:   I would be mindful that the Deputy has not read the full transcript and—–

Deputy Sean Fleming:   I said that.

Chairman:   —–is selecting sections from it.

Deputy Sean Fleming:   I asked Mr. McDonagh to tell me if I was wrong on this. I opened the conversation on this by saying that I had not read the full transcript and that I was just going to quote this from it. Mr. McDonagh said he disagreed with the transcript and that is fine. That was not said in open court but he is saying it here now. All I will say on that, and I will conclude on this point, is that these issues possibly highlight a point I made at previous meetings, possibly with Mr. McDonagh at the Committee of Public Accounts. I think NAMA and the IBRC are in a similar space from the point of view of the Irish taxpayer and I believe if would be better – Mr. McDonagh cannot decide on a policy issue, he has to work within the legislation but we are a policy committee – if the two organisations were under the one umbrella and working together rather than, on occasion, working to separate agendas.

Chairman:   I will take Mr. McDonagh’s concluding remark and then call Deputy Spring. Does Mr. McDonagh wish to add any further comment?

Mr. Brendan McDonagh: No, Chairman.

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If you were expecting details of Sean Dunne’s financial affairs today, it looks as if you’ll be disappointed. At 8am Dublin time, there is no record of Sean having filed the statements which he needs file, the omission of which has caused the judge to threaten to strike out the bankruptcy filing, and for which Sean obtained one filing-extension already though Sean has requested a hearing before the judge on the statements. They’ll be brought to you here, when they become available.


Meantime, the judge in Sean’s bankruptcy has agreed to the request from the bankruptcy trustee to subpoena Credit Suisse to answer questions and provide documents relevant to Sean’s case. In the order yesterday, Judge Alan Shiff says he’s “determined there is good cause for granting the requested relief”

What this means is that the bankruptcy trustee, Richard Coan – who has been granted additional legal resources by the court already – will question representatives from Credit Suisse at the start of May 2013 and may demand documentation. We still don’t know exactly what the trustee is after but we do know that Credit Suisse is not one of the creditors listed on Sean’s bankruptcy filing, and we do know that Credit Suisse was involved in the transaction which saw a €4m apartment in Geneva, Switzerland bought by Sean’s wife, Gayle and Sean’s name was added as a co-purchaser. That apartment was sold, and it appears to be part of NAMA’s case that the source of funds for the purchase was Sean and those funds rightly belong to NAMA. The Dunnes vigorously dispute NAMA’s allegations.

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