During tonight’s debate on the Commission of Investigation into certain IBRC transactions, including the sale of Siteserv to Denis O’Brien…
When I met with the Minister yesterday I highlighted that my main concern would be that the investigation does not end on Prom [Promissory note] night and that it extends into the time when the IBRC was in liquidation.
There are many issues that straddle both time periods and it is vital that the investigation can properly follow these threads.
For example, the purchaser of Siteserv, was already significantly indebted to IBRC. We know that on the 7th of March 2013 – one month post liquidation – that he wrote to the special liquidator seeking to reschedule his outstanding loans over a further 3 year period.
We know that he claims to have been allowed a similar extension by virtue of a verbal agreement he claims he had with the CEO of IBRC (Mike Aynsley).
We also know that, according to IBRC, the credit committee had never approved such a previous agreement yet Mr O’Brien maintains it was in place and he requested that the special liquidator be made to honour that verbal agreement.
I wish the minister to clarify if the assertion of such a verbal agreement will be enough to satisfy the Terms of Reference regarding the ‘contractual obligations’ required in relation to investigating issues that straddle pre & post liquidation.
We know that the credit committee met on the 23rd of May 2013 – two months after Mr O’Brien’s approach to the special liquidator and at that time the outstanding balance owed to IBRC by Mr O’Brien was in the region of €325million.
It is worth, at this point, asking the question as to why someone, so heavily indebted, was allowed to make significant purchases from IBRC rather than being asked to pay down his outstanding loans. Were other bailed-out banks financing this buying exercise? Was he borrowing from Peter to pay Paul?
Interestingly, an article that appeared in the UK edition of the Sunday Times in January 2012 showed that in 2011 & 2012 the IBRC refinanced some of Mr O’Brien’s loans and increased their security stake in some of his investments. It seems illogical that in the same time period they allowed him to purchase Siteserv for example.
The point here is that some of the documents I am referring to relate to the Special Liquidators era hence the need for the period to be covered by the terms of reference.
In recent days, The Chairman of IBRC (Mr Dukes) has made much of the fact that the Central Bank conducted a review, prior to July 2012, and apparently found no problems.
Contradicting that assertion however is a relevant piece from the FOI documents from inside the Department when they said
“We are concerned that the Central Bank report compiled on the transaction vindicates their position. To be clear we are concerned with a number of the decisions taken by the bank in relation to this transaction.”
….Yet It was not until I received an FOI of July 2012 internal Dept memos did we learn that the Department officials were expressing serious concern over the effectiveness of the CEO and the management team and they had serious concerns over the way a number of large transactions, including the Siteserv sale had been handled.
….Another significant issue that raised its head in some of the early reporting of this controversy but has since been replaced by other developments is the share activity in Siteserv prior to its sale.
Various sources of information told me that the Siteserv share activity in November 2011 – the period during which the bidding process was underway – was irregular and that there had been a significant share spike around the time it was sold resulting in a nice windfall for some lucky investors.
Unfortunately it was indicated to me that some of those investors may not have been so much lucky as they were well-informed. Indeed the Chairman of IBRC confirmed in an RTÉ interview that Denis O’Brien for example, had been given advance notice of the sale before it was announced. Did others have similar information?
The unfortunate thing here is that while I know what insider trading is, I don’t yet know how we deal with it here in Ireland. On foot of my information regarding share activity, I wrote to the Irish Stock Exchange who advised me that it was not within their remit and that I should talk to the Central Bank.
I wrote to the Central Bank who told me it was outside of their remit. I then wrote to the Office of the Director of Corporate Enforcement whose reply came back today to tell me that it does not appear to come within the remit of their office.
….In my speech on May 28th I referred to loans held by Mr O’Brien that were due to be repaid in full in 2011 and 2012. We know they were not repaid in that timeframe.
Effectively, once the agreed term expired, those loans were in default and became callable on demand. IBRC’s own terms and conditions allowed them to charge default interest rates yet they chose not to do so in this case.
Many sources have come forward both before and since that speech, to say that they had personal experience of being both performing and non-performing borrowers of IBRC and their experience of their loans being called in, in a ruthless fashion and other defaulting borrowers talk of the punitive interest rates applied to them.
…..The plight of the former Irish Nationwide Mortgage holders and the way in which they have been treated by IBRC compared to the very favourable environment that seems to have been provided to Mr O’Brien for example is perhaps an indication.
Catherine Murphy, Independent TD for Kildare North