You have to ask yourself that if I wanted to sell something to myself, for more than it’s worth, in order to pay myself from the over-inflated price, would that be okay with the Companies Act?
Tony Groves writes:
Back in the Halcyon Days of the Celtic Tiger, I remember coming across a particularly complex (and not a little brilliant) version of the common practise of Cheque Kiting.
Cheque Kiting, for those of you unfamiliar, is where an individual has two (or more) accounts in different banks. He writes a cheque to himself (this first cheque is called the kite) from Bank A and lodges it into Bank B.
The following day (taking advantage of Bank B’s lax clearing system) writes a cheque to himself from Bank B and lodges it to Bank A.
These artificial funds are then lodged; allowing the first cheque to clear. The cycle then repeats, typically escalating the amounts until he is either caught, cleans out the accounts and runs, or lodges legitimate funds to cover the Kite.
The case I came across was based on the circular kite model, but due to the involvement of several individuals (over 10) and spread across every retail bank in the country at that time it was not easily discovered.
The seemingly reasonable monies involved in the cheques, the various clearing cycles of the banks and the fact that there was several people involved made detection next to impossible for any one bank. It really was well constructed and went on for months.
When the fraud was eventually spotted (due to address irregularities) and the kites crashed to earth, the Banks had been taken for several thousand euro. It really was a significant amount of money and I’m not sure any of the participants were ever brought to justice.
I recall seeing the last transactions on one accounts involved; it was a Laser Card purchase in Dublin Airport. So long, farewell, auf Wiedersehen, adieu…
When I read earlier how Independent News and Media Chief Executive Robert Pitt had made a Protected Disclosure regarding Denis O’Brien’s attempts to sell a company he owns (Newstalk, part of his Communicorp empire) to a Company (Independent News & Media) where he is the major shareholder, I had a flashback.
We know very little about the deal. But I suspect a Protected Disclosure wasn’t made lightly.
Whatever was in the Disclosure seems to have triggered the Office of the Director of Corporate Enforcement’s involvement.
It is also well known that the two parties could not agree on the price, with INM wanting to pay less than Communicorp are asking for.
We also understand from reports that if the higher price had been be agreed, Denis O’Brien stood to receive a “significant payout”.
I don’t want to go into the individuals involved and their links with Mr O’Brien, they are available here.
You have to ask yourself that if I wanted to sell something to myself, for more than it’s worth, in order to pay myself from the over-inflated price, would that be okay with the Companies Act?
Even if it is legal, are the conflicts of interest not such that it would call into question individual’s fitness to operate public broadcasting licences? I don’t know. Nobody is really saying what did or did not nearly happen.
We know there was a falling out. We hear rumours of resignations. None of it looks good from a Corporate Responsibility viewpoint. Particularly given Denis O’Brien’s ability to have a “chilling effect” on democracy.
There are many kites floating out in the air here. Like all complex kites the cords become tangled and it’s difficult to know who caused the entire thing to crash to earth. I still laugh at the audacity of the Cheque Kite I was caught out by.
I look regularly agog at the audacity of Denis O’Brien, none more so than in his attempt to sell his company to his other company. What has all this got to do with Cheque Kiting? Maybe nothing; it just makes you think, doesn’t it…
Tony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly at Trickstersworld
From left: Sinn Féin TD Peadar Tóibín, Communications Director at the IRFU Stephen McNamara, Minister for Social Protection Leo Varadkar, Barrister and Irish Times columnist Noel Whelan and specialist in cross-border co-operation Caitríona Mullan before going on RTE Radio One’s Marian Finucane show on Sunday, February 26
In The Sunday Times.
Stephen O’Brien reported that Ed McCann, INM group managing editor, Fionnan Sheahan, editor of the Irish Independent, and Cormac Bourke, editor of the Sunday Independent, had met with RTE’s head of radio Jim Jennings on March 3 to raise concerns about what they perceived to be an anti-INM agenda in RTE.
The meeting followed a Marian Finucane Show on RTÉ Radio One on Sunday, February 26.
During that show, the panel was: Sinn Féin TD Peadar Tóibín, Communications Director at the Irish Rugby Football Union Stephen McNamara, Minister for Social Protection Leo Varadkar, Barrister and Irish Times columnist Noel Whelan and Caitríona Mullan, chair of the International Centre for Local and Regional Development.
Amongst other things, the panel talked about the recent newspaper coverage of Fine Gael TDs Leo Varadkar and Simon Coveney and the future leadership of Fine Gael.
In addition, Mr Tóibín alleged that Niall O’Connor, political correspondent of the Irish Independent, encouraged Fine Gael TD Alan Farrell to name Sinn Féin TDs Dessie Ellis and Martin Ferris in the Dáil while he made a statement about the 1983 murder of prison officer Brian Stack on December 7 last.
A spokesman for INM later contacted the show, and Ms Finucane read out a statement denying the claim.
A source familiar with the March 3 meeting said INM went in “with all guns blazing” and claimed RTE admitted “they got it wrong on the show that morning”.
A transcript of some of what was said during that particular show…
Stephen McNamara: “I suppose the coverage in relation to it is extensive and, you know, if you do love politics then, you’re going to feast on the newspapers for today and the next couple of weeks. I think, sort of, for the lay person, maybe, who’s looking at it and I think that is definitely what people want: is to know more about the policies than the personalities and I think, during the week, what struck me about it is that we were starting to go down maybe the wrong road in relation to, you know, the background of the people and their family make-up and things like that.”
“And that’s actually something that troubled me from early on this week where we had, where we had sort of partners being mentioned and words like ‘attractive wife’ and things like that were starting to come in. So I think that was one area that troubled me during the week.
“I think the Sundays, there’s a huge amount to read in relation to it, in relation to the policies, I think it would be great to get back to that because there’s actually an awful lot of really good stuff happening in this country at the moment. You know – the number of cranes around the skyline…”
Marian Finucane: “They’re growing…they’re having babies again.”
Finucane: “Noel, you were very annoyed about that coverage in the [Irish] Independent during the week?”
Noel Whelan: “Well, I have a very simple view that who somebody is, married or in a relationship, or whether they’re in relationship or not, is entirely irrelevant to the question of their capacity to do their job. In all professions, occasionally, the partner will be more prominent in the office or more prominent at, you know, work-related events than others. But, frankly, I think it’s largely irrelevant. I did feel that there was a sense that it was bubbling, not…what struck me was there was no political reportage from political reporters that this was an issue within Fine Gael, you know, in a Fine Gael contest.”
“It was simply the media and opinion, photographic editing and otherwise, the Independent newspapers, in particular, speaking to troll it effectively as an issue. I think the fact that it has been called out will play some part in pushing it back against. I wouldn’t be surprised if it reemerges later in the campaign.”
Finucane: “Yeah, Michael McDowell is writing on the back page of the [Sunday] Business Post and he says ‘I would not be so cynical as to suggest…’ and he goes on to say ‘a linkage between the new coolness to Leo and his apparent support for the INM pensioners. Leo went public about his discussions with the AG and the Pensions Board chairman to see if he could intervene on the side of the pensioners in their High Court litigation with INM in early December’ and he had said beforehand that you were the darling of the media, kind of up to that, and you got very, very positive coverage. Two questions: How did you feel when you saw that coverage during the week? And what do you think of that suggestion?”
Leo Varadkar: “Well, I think what Michael McDowell’s suggestion there is that because I took a position, supporting the pensioners and staff in Independent News and Media that maybe people higher up in Independent News and Media, you know, took exception at that. And that that might be the source of some of the negative coverage. I’ve actually no reason to believe that. You know? So, I don’t believe that’s the case. But that’s certainly one of the ideas and stories being put around the bubble if you like at the moment.”
“On the more personal issue, I think if you’re in politics you have to have a thick skin. I put posters of my face on poles, I knock on people’s doors uninvited, so you do have to accept a certain degree of attention to your life that you wouldn’t have if you were a private citizen. But, for me, my plan and my view is that: my private life and my family life are not going to be an issue in this campaign or any political campaign I’m involved in. And I really hope nobody else makes an issue of it either.”
Peadar Tóibín: “Yeah, we have an oligopoly in the media in this country. We have a newspaper group that owns nearly 50% of the print media in the State and owns two radio stations. I’ve spoken to journalists off the record and they have agreed with me in my analysis of that affect over the rest of the political debate but they won’t call them out because some day they will need Independent News and Media to pay their mortgages…”
Finucane: “Very likely…”
Tóibín: “Etc, so, that’s one thing. Secondly, politicians typically won’t call out Independent News and Media on these issues because they know that, well, they’ve, they worry, at least, that they will be dealt with in a more abrasive fashion in those newspapers in the future. I think what’s happened in the last number of weeks with regards the focus on the personal lives of the people running in the election is disgusting to be honest. I think it’s absolutely shocking that that would happen…”
Whelan: “Irrespective of who the politicians or the parties were, I just felt the concept of a newspaper trying to set the agenda about what the issues would be in a leadership campaign, in the initially subtle and then unsubtle way, in which the Independent newspapers were doing… and I’m conscious. I mean, I write for The Irish Times, they don’t tell me what to write. And if they did, I wouldn’t write for The Irish Times. But I am conscious that if you begin to comment on what any other media organisation is doing: particularly by one which buys ink in barrels to the extent of the Independent newspapers does. Then you always run the risk of putting yourself in the firing line. And I appreciate that’s sometimes the difficulty Leo and other politicians involved in these kinds of contests may feel they are in, that they can’t actually necessarily throw light on these issues because it’ll only compound the extent to which they become the focus of negative publicity.”
Dublin City University Professor Colum Kenny said while he did not view the potential take over [Of Celtic media by Denis O’Brien’s Independent News and Media] in personal terms, he said he had “difficulties” appearing before a committee looking at the take over of INM on which Mr [Michael’ Lowry sits.
“I think there’s a conflict of interest“, he said.
He also expressed concern over the lack of “firm details” regarding the takeover and said such circumstances made it difficult to give an informed position.
Prof Kenny said he did not understand how the committee had been asked to make a consideration of a matter before the Broadcasting Authority
Then Fine Gael Communications Minister Michael Lowry and Denis O’Brien in 1997
Elaine Loughlin, in The Irish Examiner, reports:
The National Union of Journalists have written to the Committee on Communications, Climate Change and Environment asking that Mr Lowry “recuse himself” from all discussions around the acquisition of the Celtic Media Group of local newspapers by Independent News and Media.
The committee met in private yesterday to discuss this letter, but they were told that they do not have the power to ask him to step aside.
…Committee members received legal advice during the meeting and were told that Mr Lowry cannot be asked to excuse himself.
It is understood TDs and senators were told while Mr Lowry could recuse himself if he believed there was a conflict of interest, members do not have the power to demand or even ask he step aside during the hearings.
Fine Gael TD Noel Rock wrote a column about Independent News and Media (INM) and its pension cuts – some of which will amount to 70% – describing the company’s moves as “appalling”.
He also referred to the pockets of INM’s biggest shareholder, Denis O’Brien, without naming him.
Mr Rock wrote:
“… But what shifts it from appalling to repugnant is that INM is a massively profitable company, in large part because workers agreed to write down the value of their pensions by 40 per cent in 2013.
“INM announced some months ago that it made a profit of €37 million in 2015. It will have a Euromillions Jackpot figure of €87 million in pure cash burning a hole in its corporate pockets by the end of this month.
“…Sadly, and wrongly, this is not illegal in Ireland. It is in Britain.
“…While Minister for Social Protection Leo Varadkar is investigating the possibility of intervening in the forthcoming High Court hearing on the capital restructuring of INM and asking the court to consider appropriateness of capital restructuring when it’s closing this pension scheme, it’s certainly worth asking if a “wait and see” approach is good enough, or whether we need to directly intervene.
“…[INM shareholders] also benefited when banks, including the state-owned AIB as well as Bank of Ireland, wrote off almost €140 million in INM debt. These are banks that we bailed out.
“So every single person in Ireland was involved in the indirect bailout of INM. We wrote off their debts, and they crushed their own pensioners to the tune of two-fifths of their entitlement.
“We didn’t take that hit as a society so that, three years later, the company would come back, throw its pensioners under a proverbial bus, and suck all the money out of the company for the shareholders we, effectively, did a deal with.
“Nor did we do it so that the company could use the cash it is taking off pensioners and transfer it directly into the pockets of its largest shareholder, by buying Newstalk or any other asset he happens to have.”
Protest outside the INM egm, Alexander Hotel, Dublin 2 on Monday
We have come to a dividend in the road.
David Wall writes:
As the Christmas approaches the Gardaí have issued a well-timed reminder to be vigilant about theft. Key times for shoplifting and bag snatching are identified as being afternoons on Thursday, Friday and Saturday.
This time of year is busy: Christmas parties, Christmas shopping general goodwill and merriment doesn’t come cheap so we do need to be careful with our possessions.
What the Gardaí did not give a warning about was pension snatching. Understandably so, because this is not illegal; morally reprehensible but not illegal. What makes it worse is the reasoning behind the theft: dividends.
These pensions are not being abused to save a flagging business, nor are they simply gone. No, instead they are being used to pay dividends. To create a payment that is unnecessary. Who the share-holders are is interesting, but irrelevant. What matters is the action they are taking.
Interestingly, Leo Varadkar has spoken to the Attorney General with regard to this but little has come of it yet. Is this Leo’s chance to ride in on his steed and save the day, just in time for Enda to retire?
But Varadkar’s heroic actions shouldn’t be needed. Why are the board members of INM allowed to steal from a pension pot that was already agreed? They don’t have to offer the defined benefit scheme to new entrants as their business model evolves, however surely there is a moral obligation to honour such a longstanding agreement.
This is an opportunity for the men and women who run our country to take a positive strong stance and actually take a strong role in helping the people they represent.
The government could finally take affirmative action against white collar crime rather than setting up toothless, costly inquiries. Now is the time for the government to show that democracy works and that the government can and will work for the majority.
I commend Leo Varadkar for taking the public step of discussing this with the Attorney General, I only hope that this is not a fruitless discussion.
Current and former employees of Independent News and Media (INM) and their supporters demonstrating against significant pension cuts at INM in Dublin on Monday
As a great-granddaughter of William Martin Murphy – founder of Independent News & Media (INM) – I and many of his relatives are shocked and disgusted at the behaviour of the board of INM in reference to the pension debacle.
Murphy was a fair and honest man and would never have taken away his workers’ pension rights. As a country we seem to have lost decency in a lot of business behaviour.
Further to yesterday’s vote by the board of Independent News and Media to give shareholders a dividend while closing off the company’s pension scheme – and the protest by former and current employers over the same…
During Order of Business in the Dáil.
Fianna Fáil TD Willie O’Dea asked Taoiseach Enda Kenny if he found it acceptable that “a solvent, profitable company in this country, can change and close down a defined benefit pension scheme, on a whim – to the detriment of their pensioners and deferred pensioners”?
Readers will note that Mr O’Dea didn’t specifically name Independent News and Media (INM) and neither did Mr Kenny in his reply to Mr O’Dea….
Willie O’Dea: “There’s an implied recognition in the Programme for Government that the pension problem in this country needs to be dealt with. Now, can I ask you: do you find it acceptable that a solvent, profitable company in this country, can change and close down a defined benefit pension scheme, on a whim – to the detriment of their pensioners and deferred pensioners and there is no provision in Irish law to deal with it. Can you tell me when such a provision will be put in place?”
Enda Kenny: “There is no law, no legislation governing this, in respect of Ireland. As you know, there are two defined benefit pensions in respect of the case that you’re probably referring to. In Britain, they have a defined benefit which is based upon levies and only becomes of, only becomes, is only used when the company involved becomes insolvent. The measure, company, we refer to now, is not insolvent. This is a matter in respect of defined benefit contributions that has caused quite a difficultly, a number of difficulties, over the period. Obviously, the last actual certificates filled by defined benefit schemes with the Pensions Authority show that over 60 per cent meet the standard and the remaining schemes had recovery plans. And there is concern that the certificates due in the coming months will, however, show significant deterioration.”
“The operation of a pension scheme is, in the first instance, a matter for the trusteesof the particular scheme. The minister met recently with the chairperson of the Pensions Authority. He’s asked the authority to report back to him with an assessment of the current overall position in relation to defined benefit schemes. So he will report to the House when that comes back.”
Social Democrats TD Catherine Murphy also raised the matter but did specifically mention INM.
Catherine Murphy: “…Taoiseach, do you now accept that there is a gap in the law that is leaving a group of people, we’re seeing with one company, INM, the Independent newspapers, we’re seeing them – whom have the benefit, mind you, of €130m-plus being written off by AIB and the Bank of Ireland – leaving people who’ve worked in that industry, they’ve deferred their pensions in a lot of cases, leaving them very exposed because of this gap in the law.”
“There’s an urgency about this and other companies doing exactly the same thing. Taoiseach, do you not see that there is a need for urgent legislation in respect of this gap in the law?”
Kenny: “Well, the point is that, in the UK, there is a pension protection fund which is paid for by levies, but it only comes into use when the company is insolvent and the company you mentioned is not insolvent. Clearly, the…
Ceann Comhairle: “The Taoiseach, without interruption.”
Kenny: “The minister has met with the chairman of the Pensions Authority. He’s asked him to report back on the issue of defined benefit pensions. The situation that will arise over the coming months and coming years, obviously, we’ll deliberate on that when he, when he has that report back…”
Outside the Alexander Hotel on Fenian Street in Dublin 2.
Current and former employees of Independent News and Media (INM) and their supporters demonstrate against significant pension cuts at INM. The protest is being organised by Siptu and the National Union of Journalists (NUJ).
The protest is taking place as, inside the Alexander Hotel, INM shareholders hold an extraordinary general meeting (EGM).