In Greystones, Co Wicklow.
Stephen Hanlon writes:
You’d think Stephen Donnelly would have the budget to update the information on his office sign in Greystones now he’s on the Fianna Fáil big bucks…
Further to Wicklow Independent TD and (Social Democrats co-founder) Stephen Donnelly’s decision to join Fianna Fáil.
Anton D’Alton, a Greystones, North Wicklow resident, writes:
I couldn’t help noticing that Stephen Donnelly, formerly an Independent TD and once a founding member of the Social Democrats has decided to cast his lot with Fianna Fáil, and is set to become that party’s spokesman for Brexit.
I’m sure as I am that the good citizens of Wicklow, and more particularly those from Greystones are choking on their quinoa at the thought.
Sadly, it was all too predictable that Donnelly would end his perfect isolation and cast his lot with the Soldiers of Destiny. it would seem, ambition got the best of him.
However, in his rush to join the ranks of the Soldiers of Destiny, Donnelly who was making his mark as a free ranger hunting down the vultures, has now swapped his independence to become a meaningless NCO in charge of jungle outpost.
Indeed, one wonders for how long ‘The Donnelly’ will last in Fianna Fáil before he realises he has committed the political equivalent of Seppuku?
Fianna Fáil are no doubt very pleased with themselves at the moment, or at least the one’s in Mount Street are. They are past masters at the game of ‘seek out and smother’ especially when it comes independent minded candidates with the potential to do mischief to their interests at a later date.
From their vantage point in Mount Street, they made a simple calculation that it would be far better to have Donnelly ‘inside the tent’ performing as a political castrati in a sideshow rather than on the outside and singing a different tune.
Fianna Fáil’s short-term gain is Donnelly’s long-term loss. What he doesn’t realise yet, is that the electorate in North Wicklow have long memories and are not as forgiving of shape-shifters as constituents in other counties might be?
And there is one factor he has not calculated yet; namely how to deal to deal with Fianna Fáil’s notorious Wicklow cummans?
If Donnelly thought the Social Democrats were obstreperous, he’s in for a rude awakening.
What he might not have realised was that rebel Fianna Fáilers in Wicklow, helped orchestrate his election back in 2011, in order to dispose of the unpleasant Dick Roche.
And believe you me, they are a fickle and crafty bunch when it comes to dealing with parachute candidates sponsored by Mount Street.
The hills of Wicklow are awash with the dead carcasses of fair weather candidates thrown out of the mother ship only to be shot by the renegades on arrival.
It may well be that Donnelly thinks that the only people whose nose will be out of joint in North Wicklow are The Blue Rinse Brigade who frequent Avoca, or The Blow-Ins who queue like lemmings outside The Happy Pear on Sundays.
Perhaps in his conceit, he believes the regular voters in North Wicklow will forgive him. They won’t and they never will.
So the die is cast. Humpty is in for a big fall. When that happens, no one in Mount Street will be there to put him back together again.
Earlier: A Limerick A Day
(Sam Boal, Rolling News)
New Fianna Fáil TD Stephen Donnelly (left) and Michaél Martin this afternoon
He’ll want a toupée next.
@iamDarragh Really? Take a look at Fianna Fail policies for the past 15 years and tell me you don’t see serious incompetence.
— Stephen Donnelly (@DonnellyStephen) November 14, 2011
Stephen Donnelly TD
Following his unexpected departure from the Social Democrats Stephen Donnelly went on the Pat Kenny show on Newstalk where he spoke with Jonathan Healy (sitting in for Pat) about his future plans.
Jonathan Healy: First of all, after all that’s happened this week, has the dust settled somewhat?
Stephen Donnelly: “Yeah, I think it has. It’s been a tough few days, the decision on Monday was a very sad decision for me, personally. It was some time in coming, y’know, I’ve been considering it, I’ve been talking to some people, but I’ve been immersed in the Social Democrats for the best part of two years, and it was a very intense thing to do. I’m very proud to have done it, very proud to have worked with the people that were involved with it.
..it was a sad day, but yeah, life moves on. The country moves on, there are important things to be doing. We’d #appletax on Wednesday, we’ve the new vulture fund amendment for Minister Noonan, which is a great first step, a lot of additional work, so life moves on. There are more important things than the soap opera of politics.”
Healy: “Well, we’ve all been through dramatic breakups in our lifetimes. This was quite dramatic, as your fellow co-leaders, if I can call them that, were suggesting you were workshy, did that hurt?”
Donnelly: “No, it didn’t hurt at all, I grew up in Ireland with a mop of red hair, you learn to get a fairly thick skin pretty quick. I’m more than capable of throwing stones across the House, I have done so many times over the last six years, so not at all.”
Healy: “Were you workshy, that’s the question!”
Donnelly: “No. One of the comments I made to one of my colleagues was ‘if they’re going to have a go, you’d think they’d pick something with a little more credibility’. There’s nobody involved in setting up a new party, and to be honest, Jonathan, very few people in politics that are workshy. It’s an intense job, it’s a very rewarding job, but no, clearly there was no merit to that. Look, it was a tough week for everybody, they felt they had to say something. I think it was disappointing, they let themselves down, it’s irrelevant.”
Healy: “Have you spoken to Roisín [Shorthall] or have you spoken to Catherine [Murphy] since this happened on Monday?”
Donnelly: “No, no we haven’t. We had an awkward session in the Dáil with the three of us in there as we’re all still in the same technical group. But we’re all there to serve, you know, and we’ll move on. We’ll all do the best we can as TDs, the best we can to our ability, so we’ll just move on.”
Healy: “You want to be in government, you’ve made that clear…”
Donnelly: “Sorry, can I, sorry to cut across you there, I haven’t made that clear, that’s not why I’m in politics…”
Healy: “No, your motivation is, if you’re in government in whatever capacity, you make more of a difference.”
Healy: “That’s what I’m saying.”
Donnelly: “Sorry, yeah.”
Healy: “You have more of an opportunity now, perhaps, to do that, because, we know the arithmetic in the Dáil. There are many people now outside of your own constituency, who would like to see you serve some way in government. And let’s face it, you’re hot property, in political terms, Fine Gael might want you, Fianna Fáil might want you, is the phone ringing?”
Donnelly: “No, the phone isn’t ringing, I’ve had a few texts from a few friends of mine in some of the other political parties, I haven’t been approached on John [Halligan], and John is a Minister of State, not said that he’s resigning, but he has obviously sent out a few warning shots, and is taking the situation in Waterford very carefully. But, y’know, Minister Halligan has a job, and no-one is taking his place, because he’s doing it.”
Healy: “I was asking more about Fianna Fáil, who seem to be linked to you in some way. Has a call come through from Mícheál Martin yet?”
Donnelly: “No, no call has come through, I have taken soundings, I will continue to take soundings both in Leinster House and more importantly here in Wicklow. I was around the constituency yesterday, around Arklow town and Wicklow, talking to supporters, and talking to people on the street. Just listening. You know, ultimately, I work for them, we work for them. So, it’s important that I hear what they have to say on the best thing to do…
Healy: “So for now, you’re staying as an Independent, for now, but the future will probably hold something different, you just don’t know what that is yet, you’ll have to consult widely.”
Donnelly: “Yeah, yeah. Exactly.”
Listen back in full here.
Roisin Shortall, Catherine Murphy and Stephen Donnelly at the launch of the Social Democrats in July 2015
Further to Stephen Donnelly’s announcement earlier today that he is leaving the Social Democrats.
The Wicklow/east Carlow TD spoke to Mary Wilson on RTÉ’s Drivetime this evening.
From the interview…
Mary Wilson: “Were you overwhelmed by the dedication it takes?”
Stephen Donnelly: “No, not at all, Mary. But can I start, I’ll come directly back to that, can I just say today’s decision is, is a very sad one for me personally. It’s one that I’ve thought about long and hard. Catherine [Murphy], Roisin [Shortall] and myself have been working on this for nearly two years. I consider it a great privilege to have worked with Catherine and Roisin. They’re two formidable parliamentarians. I feel, I consider it a great privilege to have worked with our candidates in the election and everyone who’s been involved in the Social Democrats. So, first and foremost, for me, I just want to say that this, this is a sad day – we’ve all invested a lot in it. To your question: look, I think it’s an unfortunate line that Catherine and Roisin are taking. Nobody can start a new political party work-shy. I’ve certainly been accused of all manner of things in my time. But nobody has ever accused me of being work-shy. Look, the reality is we all worked very, very hard on this and I have concluded, sadly, after nearly two years at it, the team, it’s not that it wasn’t working, I think we got some great things done together. It wasn’t working well enough and it just wasn’t working well enough for me. And Mary, anybody who’s listening to the show will understand. Will have been involved in a sports team or a business or whatever it may be. They come together with a good group of people, everybody tries to make it work and, after a reasonable period of time, in this case, for me, nearly two years, somebody on that team, or more people on the team say, ‘do you know what? Look, we’ve all been trying, it just isn’t working for me, this is no longer the right thing for me to be doing’. And so I’m stepping back. That’s what’s going on.”
Wilson: “Or, you could conclude, from the tone of the contributions from Roisin and Catherine, and now from yourself and your statement today, you’re not a team player.”
Donnelly: [Laughs] “Yeah, I don’t think anyone is kind of, who works with me in politics or outside of politics, would conclude that. You can suggest it, but I mean…”
Wilson: “Well I’m reading the line in your own statement, where you say, ‘despite the many obstacles new parties face, one critical component is that the leadership team must function very well together as a team, in spite of everyone’s best efforts, I have concluded our partnership didn’t have that’. You didn’t have that.”
Donnelly: “Maybe, maybe. Am I partly to blame for it? Absolutely I am. In any relationship, in this case, where I was in a relationship where I was in a three-way partnership, of course, there are things I could point to and say, you know, did I always preform at my best – of course not. None of us ever do. It’s a team effort. We all tried, we all did things right, we all made mistakes and, sadly, I have concluded, after a considerable period of time, and after a lot of conversation, and talking to Catherine and Roisin about this, for some time, it isn’t right for me, and it isn’t right for the party either, and that’s the decision I’ve taken.”
Wilson: “So will you continue on now, as an Independent? Or would you, at some stage, in the future, consider joining another party? Or founding another party?”
Donnelly: “Well, look, my head, for the last two years, has been in Social Democrats and my head, over the last few weeks, has been only in whether or not to stay and continue to make a try. I can concluded some time ago that it probably wasn’t right but I, you know, kept going, gave every chance and, by the way, as did Catherine and Roisin. We all tried.”
Wilson: “It must have been an awful blow to you, Stephen Donnelly, I mean you came close in a couple of constituencies in the election, but that you didn’t add value to the party. You’re still there with the three TDs that you entered the last election with.”
Donnelly: “Yeah, yeah, it is a blow, there’s no question about it. It’s been a tough week. I’ve been speaking during the week with people involved in the party, who I care a great deal for and, you know, any of us, with our work colleagues, we feel a sense of obligation, we feel a loyalty, we feel a debt of gratitude, so yes, it does come as a blow. However, if we move from the personal to the professional, I’m elected to do the best job I can do, to serve my constituents here in Wicklow, west Carlow and to serve the country as best I can. And I concluded that I was no longer doing that in the Social Democrats.”
Wilson: “I know but you concluded two years ago that your best way of serving your constituents was to be part of a political party, to move forward the changes that you wanted to bring forward. Now you’re concluding you’re better off as an Independent, or are you?”
Donnelly: “Well, no, all I’m doing today, Mary, is concluding, or announcing the decision I concluded a few days ago, is to say, I can’t serve my constituents and my country as best as I want to within the situation I was in. Like, Catherine, Roisin and myself, everyone who got involved in the Social Democrats, and by the way, I wish the party the very best, we tried to do something very, very difficult to do and if you try these things, you have to be prepared to fail. Now, let me be absolutely clear, I am not suggesting, in any way, that the party has failed, it hasn’t. But for me, my involvement has, had got to the point where I said, ‘no, look, this just isn’t the right place for you to be anymore’. But you have to take those risks. I mean politics needs to be shaken up, we need people in there who are willing to stick the head above the parapet and say ‘look, here’s a set of values we all believe in, let’s try and make this work, let’s try and work together and affect good, positive change in the country’. There is so much opportunity and, you know, other parliamentarians and myself, we’ve got to be able to take risks and that’s what this was.”
Wilson: “Would you take the risk again? Would you join an existing political party?”
Donnelly: “Oh look, for two years, or nearly two years, I’ve been involved in the Social Democrats, the last few weeks, I’ve just been thinking about whether or not to do that, today, I’m just announcing, ‘look, I’m stepping back, it’s a hard decision’. I will be consulting with supporters in Wicklow, I started doing it today. There will be people coming into the office this evening and I’m going to be around the county over the next few days. So, that is a conversation that will have to be had. It will be had quickly and it will be had with my supporters.”
Wilson: :You must look though, at some of the Independent colleagues you had in the past, you see them in Government now: Shane Ross, Katherine Zappone, you see the opportunity they have, perhaps, to implement some of the policies that they want to implement. You’d like a slice of that.”
Donnelly: “I think anyone who has the great honour of being elected to the Dail, or the Seanad, or in this case, I guess, the Dail, should aspire to office, but like let’s not forget the vulture fund decision, let’s take that as an example. I think, Minister Ross, Minister Zappone, and I imagine other Independents involved there, would appear to have forced that over the line. But myself and Pearse Doherty and Michael McGrath and others, from outside of Government, have been raising these issues in the last few months and there’s been fantastic work done by RTE, by Prime Time, by journalists like Mark Paul, in the Irish Times, and others, so, it’s not that if you’re in Government, you have all the power and all the influence and, if you’re not, you don’t. You can influence the direction of the country from anywhere. From you, your colleagues in the media, me, my colleagues in the opposition benches, or indeed within Government. This vulture fund decision which was taken today, is an example of that. I wrote to the charity regulator before the [Dail] break and said, ‘Look, are you aware that this is going on with charities in the country? Would you take a look?’ and they got back to me, just about two days ago, and said, ‘you know what? we are going to take a look. So you can affect positive change from anywhere but, if you’re asking me straight, would I love to be in Government one day? Of course I would. I’d be astounded to hear any TD say that they wouldn’t.”
Wilson: “Say differently. Would you be open to an approach from another political party? Would you open to an approach from Fianna Fáil? Or would you immediately say, ‘no, ideologically, I could never join that party’?”
Donnelly: “No, I’m just not there, Mary. That’s exactly the kind of conversation I’m going to have with my supporters here in Wicklow over the next few days and next few weeks.”
Wilson: “But that in itself is interesting, that that is the conversation you’re having about where you go from here. Whether it’s into another political party or whether you’re not definite back to the road of the Independent.”
Donnelly: “No, look the objective, if you’re lucky enough to be elected to serve, in my case, to represent the people of Wicklow and east Carlow, you always want to do that to the best of your ability. I’ve done it as an Independent, I’ve done it as the founder of a party, so I’ll be going into conversations here in Wicklow with a very open mind, you know, I want to serve, I want to do the best job that I can. There’s a huge opportunity out there for the country, there’s a lot of people who were left behind in the recession, there’s a lot of important work to be done. And I want to be involved in doing it.”
Wilson: “Will you stay in politics long-term Stephen Donnelly? You never struck me as a lifer?”
Donnelly: “I’m certainly an accidental politician. There’ no question about that. Before 2011, I don’t know if I’d ever met a politician to be honest, I’d certainly never been in a political party and I’d been out of the country for ten years. I got involved, Mary, I think actually your show was one of the first ones I went on, I remember my hand shaking…”
Wilson: “I remember that too.”
Donnelly: “…for the first time, I was so nervous. And I read out a statement and tried to sound confident. I got in, in response to the crisis, I just wanted to help. My mum spent a long career in public service as a teacher and in a girls’ reformatory, as with the hundreds of thousands of public servants around the country. I like working for my country. I’d no idea how I’d find politics, it’s been bizarre and rewarding and difficult and an incredible honour. I really had no idea…”
Wilson: “Will you stay in politics?”
Donnelly: “That’s a question for the people of Wicklow and east Carlow. My answer is I would very much like to continue to represent them but it is their seat and they get to decide that, not me.”
Listen back in full here
Earlier: Stephen Gonnelly
From left: Stephen Donnelly, Roisin Shortall and Catherine Murphy
“Stephen Donnelly T.D. has informed us that he is leaving the Social Democrats.
We are disappointed that he has decided to walk away from the project, we undertook, to establish and build the Party.
The Executive Committee of the Party has reaffirmed its commitment to the vision of a strong economy, fair society and honest politics.
We are fully committed to the project and will endeavour to develop the Party into an exciting force for change in Irish Politics.
As is the case across the globe the defence of social democratic values is not dependent on one personality or politician – but rather is a collective pursuit.
Since the Social Democrats were first founded, in July 2015, we have worked to build the party brick-by-brick. This is a long term project which requires dedication, hard work, long hours and a major commitment from all involved including our elected representatives.
The levels of dedication required for such a major undertaking can be overwhelming for some.
However our elected Councillors, our staff team and our volunteers are passionate about our project and we will now get on with the job of building our party.
We wish Stephen the best in his future endeavours and look forward, with excitement, to the future development of the Social Democrats.”
A statement by the Social Democrats announcing the departure of Stephen Donnelly.
More as we get it.
Statement via Gavan Reilly. Pic: Soc Dems
Catherine Murphy tells me she's hopeful Stephen Donnelly will remain within their Dáil group to maintain speaking rights
— Gavan Reilly (@gavreilly) September 5, 2016
Parliamentary correspondent at The Irish Times, Michael O’Regan; Enda and Nicolas Sarkozy in 2014
During The Gathering slot on the Today With Sean O’Rourke show, the panel discussed the fallout of Brexit.
The panel included Stephen Donnelly, Social Democrat TD; Michael O’Regan, parliamentary correspondent of The Irish Times; Dearbhail McDonald, Group Business Editor at Independent News and Media; and Mairead McGuinness, Fine Gael MEP and Vice-President of the European Parliament.
During their discussion, they talked about the effectiveness of Enda Kenny when it comes to matters concerning Brexit.
Stephen Donnelly: “I would have no faith in Enda Kenny or Michael Noonan negotiating anything on behalf of Ireland, on a European level. At every single point, during the crisis, Ireland had either the worst deal, in terms of the bailout or the joint worst deal and every single improvement we got came from Portugal or Greece or another country.”
Michael O’Regan: “That’s unfair.”
Donnelly: “No, that is absolutely…”
O’Regan: “That’s deeply unfair. That’s deeply unfair.”
Donnelly: “They are the facts.”
O’Regan: “No, no, no. That’s deeply unfair to the negotiation skills of Enda Kenny and Michael Noonan and others. Noonan is a very wily, and Kenny…”
Donnelly: “Michael…I’m sorry, Michael…”
O’Regan: “…is recognised in Europe as being quite skilful.”
Donnelly: “And if I was in Europe and Enda Kenny kept coming over and paying me all of this money that he didn’t own, on behalf of the Irish people, I’d be telling everyone he’s a great lad as well. The facts. Let’s look at the facts. The facts are, we had an every, single point, over the next number of years, the worst deal, or the joint worst deal. The facts are that Eamon Gilmore and Enda Kenny came back and said, ‘look, we have a seismic shift, we’re going to get retrospective recapitalisation’. And the facts are it never happened.”
Sean O’Rourke: “But they got back…”
Mairead McGuinness: “The facts also are that the economy has recovered, and needs to recover more, that employment has increased, that there is stability. The option… would you have pulled the plug completely and collapsed the economy, like what Greece tried to do?”
Donnelly: “It’s a non-question. Obviously…”
McGuinness: “It’s not a non-question.”
Donnelly: “Mairead, asking someone if they’d collapse the economy is a non-question. The question is when Michael Noonan…”
McGuinness: “Well it could have been the outcome of what you are proposing.”
Donnelly: “The question is when Michael Noonan and Enda Kenny went out to Europe, did they, at any time, get us a better deal? And the answer to that question is: no, they did not. Our better deals came from Greece and Portugal negotiating better deals and then we got them as well. Just on the leadership, Sean, very quickly. The TDs kind of banging the drum is one thing, actually, the much more interesting bit is the fact that Enda Kenny’s chief economic advisor is on his way to the EIB in a few months time. You want to look at the most telling timetable for the Taoiseach’s departure, it’s when his chief economic advisor leaves, it’s not when…”
O’Rourke: “Sure he can get another one. Sure people are coming and going in the White House all the time…”
McGuinness: “Yeah, I don’t think that’s quite on the button..”
O’Rourke: “And the state department in the United States.. and look Alistair Campbell moved out of 10, Downing Street, long before Tony Blair.”
Listen back here in full
You may recall how, last week, Social Democrats TD Stephen Donnelly told how a family in Kilkenny – Sarah and Dominic and their two children – were being evicted.
He explained that the eviction was taking place after the Government sold the family’s mortgage to a US investment firm called, Mars Capital.
Earlier today, during Leaders’ Questions, Mr Donnelly returned to the matter and explained that Mars Capital is owned by The Matheson Foundation, a registered charity.
From the debate:
Stephen Donnelly: “Last week I outlined how a US vulture fund structured its Irish subsidiary, Mars Capital, to avoid paying taxes in Ireland on its Irish profits. I believe these vulture funds are about to pull off the largest avoidance of tax on Irish profits in the history of the State. The scale is likely to be in the tens of billions of euro in missed taxes. These are taxes being avoided by Irish companies on Irish domestic profits earned off the backs of distressed Irish families.”
“Irish charities are being used to play a key part in this tax avoidance. Mars Capital is owned by a registered charity, the Matheson Foundation. The stated mission of the charity is to help Irish children to fulfil their potential. It contributes to causes such as the Irish Society for the Prevention of Cruelty to Children, ISPCC, Barnardos and Temple Street Children’s University Hospital. The charity does not mention its ownership of Mars Capital.”
“One reporter I spoke to believes that the charity might own more than 200 companies. At a time when public faith in the charity sector has been rocked yet again, a children’s charity is being used to help a vulture fund avoid paying taxes to the Irish State on its Irish profits.”
“It is very effective. In spite of annual revenues in year one of over €14 million, Mars Capital paid total corporation tax to the Irish State of €250. Companies such as Mars Capital are known as section 110 companies. Section 110 was introduced in 1997 to allow the International Financial Services Centre, IFSC, win global securitisation deals. These involve global companies structuring global assets in Ireland. Their profits were not earned here, so section 110 helps these companies avoid paying taxes here on those profits. The vulture funds are now using section 110 companies to avoid paying taxes in Ireland on Irish profits. Section 110 companies were not created to re-route Irish domestic profits to offshore locations. However, my understanding is that almost all of the vulture funds whose profits are generated in Ireland have section 110 status.”
“How big is the scale of the tax avoidance by these vulture funds? Irish companies typically pay approximately 30% tax on their profits, between corporation tax and dividends tax. Vulture funds typically target minimum returns on their Irish investments of 15% to 20% per year over seven to ten years. That means a €100 million investment by a vulture fund should generate €100 million in taxes for the Irish State.”
“To be clear, the level of taxes being missed by the Irish State is likely to be well over half of the total value of all of the distressed loan books sold by NAMA, IBRC and private banks.”
“Will the Government direct Revenue to cancel section 110 status for all vulture funds in Ireland? Will it provide Revenue with the extra resources to execute this quickly and to reclaim back taxes? Will it direct the Charities Regulator to pull charity status where that status is being used to help avoid Irish tax on Irish profits? Will it direct NAMA to not sell assets to vulture funds if these funds are structured to avoid Irish taxes on Irish profits?”
Tánaiste Frances Fitzgerald: I thank the Deputy. Section 110 of the Taxes Consolidation Act 1997 sets out the taxation regime for securitisation and other structured finance transactions. Under the Taxes Consolidation Act, a qualifying section 110 company is chargeable to tax at 25% but has its profits computed by reference to the rules available to trading companies. As a result, the companies are generally structured in such a way that they are effectively tax-neutral. A company must notify the Office of the Revenue Commissioners in advance of its intention to fall within the scope of section 110. The companies are required to pay their taxes and file their tax returns in the same way as all other companies and are subject to the same monitoring by the Revenue Commissioners, an important point to note.”
“I understand that officials from the Department of Finance and the Revenue Commissioners are currently examining recent media coverage concerning the use of certain physical vehicles for property investments – indeed, Deputy Donnelly has raised this issue before, as has Deputy Pearse Doherty. Should these investigations uncover tax avoidance schemes or abuses which erode the tax base and cause reputational issues for the State, then appropriate action will be taken and any necessary legislative tax changes that may be required will be put forward for the consideration of the Minister for Finance. Therefore, I can confirm that the Department of Finance and the Revenue Commissioners are examining this issue with a view to taking action.”
“I would also respond to the Deputy’s point in regard to charitable status. Clearly, this issue needs examination by the Charities Regulator. I have been in contact with the Charities Regulator and asked him to examine the particular issues which the Deputy has raised about the granting of charitable status and how it is being used by certain companies at present.”
Donnelly: “I thank the Tánaiste for her reply. I am very glad to see the Government is taking this seriously. We could be looking at missed taxes to the Irish State to the tune of €1 billion to €2 billion a year, or even more. If it is €1 billion a year, that equates to some €20 million a week in missed taxes. The section 110 structures were set up for a legitimate reason in 1997 under the Taxes Consolidation Act. They are now being used by nearly all of the vulture funds to take profits generated in Ireland and, very frustratingly, to take profits generated in Ireland by ordinary, decent families trying to pay their way out of negative equity and distressed mortgages. Section 110 was never intended to be used to pull Irish-generated profits out of the country. This is happening on a scale that is potentially worth tens of billions of euro.”
“I acknowledge what the Tánaiste said about the Revenue Commissioners. Will she come back to the House on this issue as a matter of urgency, ideally before the recess? What we should be doing in the finance Bill which is coming up with the budget, or even before that, is shutting this down.”
Fitzgerald: “I repeat that officials from the Department of Finance and the Revenue Commissioners are currently examining this issue, in particular the use of certain vehicles for property investments. This is clearly an issue of concern, particularly the point the Deputy raised yesterday in regard to the use of charitable status, which I believe needs investigation. The Minister for Finance will take note of the outcome of the investigations that Revenue and the Department of Finance are undertaking at present on this issue. There is no doubt that, if it needs to be addressed, he will address it in a comprehensive way in the budget. It is important that we first have a full analysis to have the entire picture put on the table and see what the results of the investigations are to determine whether changes are necessary.
Transcript via Oireachtas.ie
Previously: The Story Of Sarah And Dominic
During Leaders’ Questions, Social Democrats TD Stephen Donnelly raised the case of a family – Sarah, Dominic and their two children – who are being evicted from their home in Kilkenny.
The eviction comes after the Government sold the family’s mortgage to US investment firm, Mars Capital.
Stephen Donnelly: “Sarah and Dominic live in Kilkenny with their two kids and they bought their home in 2007. The shop in which Sarah worked in Kilkenny closed and the couple were unable to service their mortgage fully, although they are getting back on their feet. Two years ago, the Minister’s Government sold Sarah and Dominic’s mortgage to a US investment firm, which is now evicting Sarah, Dominic and their two children. Last week, the journalist Niall Brady reported that the Government sold Sarah’s mortgage and that of thousands of others to the US investment firm at a 58% discount. That would have brought Sarah’s €350,000 mortgage to approximately €140,000, which is approximately the value of the property and a mortgage that Sarah and Dominic can afford. The firm is Oaktree Capital and Sarah and Dominic know them as Mars Capital, which is the company that Oaktree set up to buy thousands of mortgages in Ireland.”
“At the time of the sale, the Government refused to allow Sarah and Dominic, or any of the Irish mortgage holders, to bid on their own mortgages. Instead, it sold them to Mars Capital with a discount of 58%. Mars Capital structured the deal in such a way that the real discount it got was closer to 70%, which would have brought Sarah’s mortgage down from €350,000 to approximately €100,000. She cannot service the €350,000 so she is being evicted, which is bad news for her, Dominic and the kids but very good news for Oaktree Capital. Its accounts indicate that for its €80 million investment, it will get a return of €400 million.”
“It gets worse. An examination of Mars Capital’s accounts is a masterclass in tax avoidance. The accounts indicate that the interest income minus the interest costs for the year come to €4,559,904. Astoundingly, the figure for administrative expenses against that is €4,558,904, leaving exactly €1,000 in taxable profit. The company has three shares issued to three different charitable trusts. The finances are also structured to ensure all interest payments and mortgage payments from Sarah and Dominic and everybody else, as well as all capital gains, can be offset against costs, ensuring there are no taxes owed.”
“Why did the Government sell an asset that required just €80 million to buy and that one of the leading hedge funds in the world believes is worth approximately €400 million? What does the Minister and his Government say to Sarah, Dominic, their children and the many others being evicted by these foreign firms or struggling to pay their taxes? Does the Minister accept the State will receive almost no benefit in taxes, either on profits or capital gains from these companies? Will the Government launch an investigation into the tax affairs of all these funds that purchase these mortgages in Ireland to ensure not just tax compliance – as tax avoidance is legal – but that the real profits and capital gains that these funds make will be declared properly in Ireland and taxed accordingly?”
Richard Bruton: “…The Government is acutely conscious of the needs of vulnerable people who are in this situation and we are seeking to develop more effective services, both legal and otherwise. As Deputies know, under the insolvency courts, financial institutions can no longer block an agreement that has been developed by a practitioner in this sphere. The courts can be used to overturn resistance by a lender to giving approval to a reasonable deal.”
Donnelly: “With respect, my question was not about the crash mats the Government is putting in place for people it has pushed off the wall. My question is about tax. Tax avoidance is not an issue for the Revenue Commissioners because it is legal.”
“It would appear that this Government is guilty of facilitating wholesale tax avoidance by international investment firms making windfall profits in Ireland off the backs of ordinary, decent people trying to pay their mortgages, like Sarah and Dominic. We do not know where Mars Capital is sending this money. They are called “notes”. We do not know where they are going, but what we do know is that Oaktree Capital, if one looks at the SEC filings, holds multiple investment firms in the Cayman Islands.
An Ceann Comhairle Seán Ó Fearghaíl: “The Deputy is just out of time.”
Donnelly: “Ceann Comhairle. Let me ask the following questions. Was the Department of Finance, directly or indirectly, shown the tax avoidance structures that these firms, like Mars Capital, were going to use? Why was it not made part of any sale that all profits and capital gains accruing to these firms would be…”
Ó Fearghaíl: “The Deputy is now out of time. The clock applies to him…”
Donnelly: “…would be..”
Ó Fearghaíl: “…in the same way as it applies to everybody else.”
Donnelly: “Thank you.”
Ó Fearghaíl: “The time has elapsed, so will the Deputy resume his seat?”
Donnelly: “Thank you, Ceann Comhairle. Can I ask the Minister…”
Ó Fearghaíl: “No. I am not speaking for the sake of speaking. It is my job to enforce the Standing Orders. The time has elapsed. Will the Deputy resume his seat?”
Donnelly: “To reiterate the question, will the Minister consider an investigation and report back to the House on the extent of the tax avoidance we are seeing here?”
Bruton: “The Finance Acts provide for anti-avoidance measures and the Revenue Commissioners execute those. They have the powers to deal with them effectively. Those powers have been enhanced every year, in every Finance Bill over the years. If additional reform to the Finance Acts is necessary, it is open to the Deputy to bring forward such amendments, but in respect of the existing Revenue arrangements, they will enforce those.”
“If the Deputy has details of some new avoidance mechanisms that ought to be scrutinised by the Revenue Commissioners they will more than pleased to consider them and bring forward to the House measures to protect against them in time for the next Finance Bill. I do not have access to the information the Deputy has about the specific avoidance structures he describes but the Revenue Commissioners are there to enforce the rules. There are general anti-avoidance provisions in the Finance Acts and they are overseen and executed by Revenue.”
Transcript via Oireachtas.ie