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Archive for May 3rd, 2013

SDThisIsHowItEnds

This evening, we finally have Sean Dunne’s various statements of financial affairs. There is something deeply sad about exposing the financial minutiae of a well-lived life, and the information is brought to you here because Sean owes NAMA, and by extension the Irish state, €185m. Comments will be strictly policed, remember this is a man’s life, or at least the financial aspect of it.

The statements are lengthy at 53 pages and are brought to you here.

In summary, Sean apparently estimates his liabilities at USD 942,204,885 and his assets at USD 55,214,829 though on some summaries there are different figures.

Sean has USD 960 of cash on hand and his bank accounts disclosed have all been frozen. Amongst his listed assets are  “Daily Mail Defamation Claims” – note the plural – and overpaid fees to Dublin solicitors Beauchamps.

There will be analysis here tomorrow – there is a LOT of information in the statement.

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We don’t hear much about Galway developer, James Clancy these days. We say “developer” but James has had his finger in many pies over the years. Back in 2009, when the creditors started closing in after the collapse of the property sector, he was the man who famously told Judge McGovern in Dublin’s High Court that he had been “living on fumes” since 2007. He is the man who brought the Emmedue building material franchise to Ireland, had promoted plans to build a factory in Portarlington in Laois to manufacture the panels, though those plans were never fully realized and there has been a bit of an easter egg hunt to locate the machinery. James was behind the development of the infamous Riverside estate in Portarlington where substandard building made life a nightmare for residents. In 2010, James was jailed for 14 days for contempt during legal action when ACC Bank was trying to recover a debt. There was some rough stuff when creditors tried to recover debts. But he has not hitherto been associated with NAMA, despite it being reported that he had loans from Anglo.

This afternoon’s edition of Iris Oifigiuil reveals that NAMA has had receivers appointed to two of his companies. In both cases, the receivers were appointed on 19th April 2013 and the receiver is David O’Connor of BDO. Both companies are already subject to receiverships so this is presumably just NAMA laying claim to the security underpinning its loans. James’s wife is Sarah.

(1) Clanview Construction Limited. Sole director James Alphonsus Clancy (58)

(2) J&S Property Developments Limited. Directors James Alphonsus Clancy (58) and Sarah Clancy (55)

Remember you can see a comprehensive list of Irish foreclosure action by NAMA here and in this regularly updated spreadsheet.

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Scowler

I must admit to never really taking to Matthew Elderfield, the man who currently holds the twin titles, deputy governor of the Central Bank of Ireland and Financial Regulator. He came in here from Bermuda in January 2010 when our banking sector was in the eye of the storm and three years later, the sector is much changed but still in crisis. Known for his perma-scowl, bowingly captured in the old media, Ireland was another expat posting where he was paid a barrowload of money, and now, three years into a five year contract, he is “returning home” to the UK where he is set to take up a directorship – confirmed this week as director of conduct and governance – in Lloyds in October 2013

Whilst here, he oversaw two lightweight stress tests of the banks, before we got serious under the whip-hand of the IMF and ECB and did it properly at the start of 2011 – by “properly” I mean the results were given more credence by the audience of markets and government though at €30m-odd, they were certainly more expensive than what went before. Matthew was close to the helm when the €30bn of promissory notes were created. Retail banking competition has contracted with banks deleveraging and rationing lending, there are some horror stories about tracker mortgage holders being strong-armed onto variable rate mortgages, variable rates are rising when the trajectory at the ECB is flat to declining. There has been no enquiry into swap mis-selling even though there is a steady stream of actions in our courts. The credit union sector has been bailed out and we still have very expensive receivers acting in the Newbridge branch. Nearly two years after NAMA’s tranches 3/4 were acquired with a par value of €19.2m, the due diligence by Matthew has still not been completed.

On the other hand, the word from those close to the Bank, is Matthew has changed the culture which is now more engaged and accountable than it was under the previous string of Government appointees – some might even call Matthew’s predecessors, “lackluster insiders”. It is thanks to Matthew we have the quarterly data on mortgage arrears, so at least we generally know the scale of the problem, even if solutions have remained elusive. And, although it was controversial and a sizable number vehemently disagree with the decision, the view on here is that Matthew showed courage, a sense of probity and a commercial instinct when he acted against Quinn Insurance.

As for his successor, the odds-on favorite is his underling Fiona Muldoon who was confirmed this week to have the poison-chalice responsibility for the mortgage resolution targets – the view on here is that 25,000 sustainable mortgage solutions by the end of June 2013, two months hence, is fanciful; sincerely though, good luck to her.

When Matthew’s resignation was announced by the Governor of the Bank, Patrick Honohan, it was stated that Matthew was waiving a €100,000 bonus which was magnanimous of him. Questioning in the Dail however raises doubt as to whether the bonus was actually awarded. Minister Noonan was asked “the date on which the bonus was awarded; the amount of the bonus awarded; the maximum bonus to which Mr Elderfield was entitled; and if he will outline the objectives met by Mr Elderfield which gave rise to the award of the bonus.” [ENDS] The relevant response from Minister Noonan merely states “Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Central Bank. Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment. “[ENDS] The Central Bank was asked for comment and if it might clarify the position, but there was no response at time of writing.

There are now, also, questions about rules within the Central Bank to stop employees departing for the private sector where their privileged knowledge might be deployed to the benefit of their new employer. Matthew’s new employer, Lloyds still has a huge exposure to Ireland with its legacy Bank of Scotland (Ireland) loans, some of which are now managed on behalf of BoSI by Certus. Matthew does not have a commercial function at Lloyds but as a director, even of conduct and governance, he is in a position to potentially be very helpful indeed to Lloyds, though there is no suggestion here that Matthew would ever use his three years of privileged knowledge to Lloyds benefit. But what is to stop him? Minister Noonan’s response will not fill you with confidence; the Bank might move resigning employees away from duties which might bring it into conflict with a new private sector employer but there seems to be obstacle, like a confidentiality agreement or Standards in Public Office which might hinder a departing employee to spill the beans to a new employer.Worrying.

Information in the above is partly derived from these parliamentary questions from the Sinn Fein and Fianna Fail finance spokespersons:

(1) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the rationale for providing for a €100,000 termination bonus for the Financial Regulator who was appointed in January 2010 and who has recently tendered his resignation to the Central Bank of Ireland.

 

Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the duties to be performed by the Financial Regulator during his remaining six month’s employment at the Central Bank of Ireland; and if he will provide the expected salary and allowances to be paid to the Financial Regulator during this period.

Minister for Finance, Michael Noonan: I propose to take questions 208 and 210 together.

The terms of the contract agreed by the Central Bank with the Deputy Governor Financial Regulation provided for a performance related payment of €100,000 payable on review of performance at the end of the third year of the contract.

When Mr. Elderfield’s contract was agreed in November 2009 the bonus was part of an agreed remuneration package which involved a 50% paycut from his salary in Bermuda. Mr. Elderfield subsequently took a 15% cut in his Central Bank salary.

Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Bank.

Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment.

The Deputy Governor of Financial Regulation will continue performing the duties as outlined in the contract of employment. However, where a conflict of interest could be perceived in supervisory and other issues he will step away with immediate effect from involvement in these issues. Remuneration for the period is as per the terms in the contract of employment.

(2) Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Question No. 272 on 29 January 2013, the reason it has taken nearly two years for the Financial Regulator to validate the process of the transfer of tranches 3 and 4 to the National Assets Management Agency where the par value of the loans was €19.2 billion and the NAMA acquisition was completed in June 2011..

Minister for Finance, Michael Noonan: While I cannot comment on the work undertaken by the Financial Regulator, as the Deputy will be aware the validation process is complex and the work is essential to ensure that the European Commission guidelines ensuring full transparency in relation to state aid are complied with.

I am advised that the process to have the final tranches validated is in its final phase and will be concluded shortly; at that point my Department will be in a position to apply to the European Commission for its full approval.

(3) Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Questions Nos. 208 and 210 of 23 April 2013, if he will confirm if a bonus had in fact been awarded to Mr Mathew Elderfield; if so, the date on which the bonus was awarded; the amount of the bonus awarded; the maximum bonus to which Mr Elderfield was entitled; and if he will outline the objectives met by Mr Elderfield which gave rise to the award of the bonus.

Minister for Finance, Michael Noonan: I am informed by the Central Bank that the terms of the contract agreed with the Deputy Governor Financial Regulation provided for a performance related payment of €100,000 payable on review of performance at the end of the third year of the contract.

When Mr. Elderfield’s contract was agreed in November 2009, the bonus was part of an agreed remuneration package which involved a 50% cut from his salary in Bermuda. Mr. Elderfield subsequently took a 15% cut in his Central Bank salary.

Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Central Bank. Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment.

(4) Deputy Michael McGrath: To ask the Minister for Finance his views on whether the rules governing employees who leave the Central Bank to take up employment in financial institutions regulated by the bank are adequate to protect the public interest; and if he will make a statement on the matter. [19695/13]

Minister for Finance, Michael Noonan: I am informed that the Central Bank has relevant policies and procedures in place to deal with this potential matter and the Bank believes that its current policies and procedures are appropriate. Specifically, this potential issue is taken into account when drafting new contracts for certain roles or reassigning staff to other duties if a potential for conflict arises.

The Central Bank Code of Ethics requires that in the event of an employee intending to leave the employment of the Central Bank to take up alternative employment, self-employment or business, there is an obligation to provide early notification to line management when a conflict of interest exists, or perceived to exist, between those duties held in the Central Bank and those to be undertaken with the new employer, self-employment or business. In such circumstances, the Central Bank may assign alternative tasks to the individual while their notice period is being served. The notice period may be lengthened in excess of the contractual or statutory notice period, by mutual agreement, where it is considered to be in the best interests of the Central Bank and the employee.

(5) Deputy Pearse Doherty: To ask the Minister for Finance the constraints that apply to employees of the Central Bank of Ireland in the context of resigning and moving to a private sector organisation where confidential or privileged information acquired at the Central Bank of Ireland may be deployed to the benefit of that private sector organisation.

Minister for Finance, Michael Noonan: I am informed by the Central Bank that it has relevant policies and procedures in place to deal with this potential matter and that its current policies and procedures are appropriate.  Specifically, this potential issue is taken into account when drafting new contracts for certain roles or reassigning staff to other duties if a potential for conflict arises.

The Central Bank Code of Ethics requires that in the event of an employee intending to leave the employment of the Central Bank to take up alternative employment, self-employment or business, they are obliged to provide early notification to line management when a conflict of interest exists, or might be perceived to exist, between those duties held in the Central Bank and those to be undertaken with the new employer, self-employment or business. In such circumstances, the Central Bank may assign alternative tasks to the individual while their notice period is being served. The notice period may be lengthened in excess of the contractual or statutory notice period, by mutual agreement, where it is felt that this is in the best interests of the Central Bank and the employee.

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