The KPMG Connection

at

000a7aee-642Hugh-Cooney

Walter Hobbs (top) and Siteserv non-executive director Robert Dix and chairman Hugh Cooney at Siterserv’s EGM in Davy House, Dawson Street, Dublin on April 5 2012

This morning, Mark Paul, in the Irish Times, reports on Finance Minister Michael Noonan’s announcement that KPMG is to carry out a review of the sale of Siteserv to Denis O’Brien’s Millington.

Kieran Wallace and Eamon Richardson of KPMG, the IBRC liquidators, will carry out the review.

From his piece Mr Paul writes that this may be deemed controversial because the Siteserv sale was overseen by Davy and…KPMG.

In effect, the special liquidators from KPMG will review the probity and commercial reasoning behind a transaction that was approved in 2012 by KPMG, albeit by a different department of the accounting firm and by different executives.

Still, this issue of a perceived conflict of interest is likely to be one of the first sticks grasped by the Opposition to beat the Government.

Indeed.

But there’s more.

It also seems likely that there may be further unease given that non-executive director at Siteserv Robert Dix, and chairman of Siteserv Hugh Cooney also have connections with KPMG.

Both Mr Dix and Mr Cooney were vocal in support of the Millington bid at the shareholders’ EGM in April 2012 when Siteserv officially voted to accept the Millington offer, despite reports of higher bids.

According to Mr Dix’s LinkedIn profile, he was a partner in KPMG from 1998 until 2008. It states:

“Initially worked in Audit. Set up Transaction Services in KPMG Ireland in 1999 and ran the division until retirement in 2008 providing mergers and acquisition advice to clients.”

As for Mr Cooney, according to Bloomberg, he’s a consultant and company director at KPMG.

Meanwhile Walter Hobbs, IBRC’s  independent expert, who appeared on RTÉ’s Prime Time last night to defend the Siteserv sale, was himself a director at KPMG.

Good times.

Further to this, readers may wish to recall an article in the Sunday Independent by Tom Lyons about the shareholders’ EGM back in April 2012.

From the article, Mr Lyons wrote:

“The public, the media and the four non-corporate shareholders who showed up now wanted to know if Siteserv had been sold for the best price?

Gripping the podium firmly, Hugh Cooney, the chairman of Siteserv, set out the case for the defence.

Mr Cooney admitted that Anchorage had outbid Mr O’Brien.

But, he said: “This revised higher bid was very carefully considered and was not excluded from the process.” Mr Cooney said conditions attached to this bid, which he did not detail, were less attractive than Mr O’Brien’s proposition — and so it was turned down. Altrad’s bid of €60m, he said, had only recently been received and Siteserv’s board and advisors had turned it down too as it was only “indicative” and had various conditions.

Mr Cooney then addressed the media and its reporting of Mr O’Brien, who beside being a billionaire was also an existing borrower from IBRC.

“Mr O’Brien’s offer represented the best offer in terms of price and conditions,” he said, “We were in no way influenced positively or negatively by the identity of the purchaser.”

“Robert Dix, a KPMG veteran and Siteserv’s senior independent director, who oversaw the sale, defended the company. “We identified a very large number of companies . . . the opinion of the investment committee, our advisors, the board, and confirmed by IBRC, [Mr O’Brien’s] was the best bid,” he said.

Mr Neilson [Ray Neilson of Altrad who claimed to have been shut out of the process and who bought a few shares just to speak at the meeting] was no mood to give up. “We said we would double what was going to the shareholders today and the remainder would go back to the banks,” he insisted. “We would give the banks another €11.5m, the shareholders another €3.5m. We wanted to double shareholder value and give the rest back to the people of Ireland.”

Mr Cooney again pointed to the uncertainty around Altrad’s offer price. “I am an experienced director and take my responsibilities seriously,” he said, “I am very happy to stand over the process.”

“Mr Neilson dismissed claims by Siteserv there was only a “slim” chance that Altrad would stick with its higher bid. “The reality is that with the level of synergies we’d have with Siteserv, €60m would have been a very low bid for it,” Mr Neilson said.

“That was our opening bid. If they’d allowed an open fight as we would see it, where they’d allowed in people with synergy, then I think it could have gone for well in excess of €60m.”

Then it was on to the media briefing by Mr Cooney, Mr Dix and Mr Harvey. Mr Dix was on the defence again from questions from five newspapers and RTE.

“We always knew this transaction would be open to full scrutiny because our lender was being asked to write off a considerable amount of money,” he said. The best deal, he said, had been achieved.

Pressed by the Sunday Independent on how hard the bidders were squeezed to get the maximum price, Mr Dix said: “We had a number of rounds. At the end of them we asked them to put their best foot forward. Eventually, you have to have a final round. Denis O’Brien put the best foot forward.

“Because of leaks to the papers the business came under pressure from its creditors because there were questions around the financial viability of the business,” he explained. “We had to quickly get a transaction done at the best price.”

Mr Harvey is a big shareholder in Siteserv, who will share in some of the €5m in cash being given back to shareholders. The Sunday Independent asked him whether he had significant personal borrowings from IBRC.

“I don’t think it is relevant to anything like this,” Mr Harvey said. “I think that’s unfair,” Mr Cooney said. “We have evaluated all the offers and made a decision. The question you have just asked is inappropriate. You are challenging the robustness of our process.”

Mr Dix said he was aware of “noise” from under-bidders, who he admitted were “unhappy”. The Financial Times asked him why he had not taken the higher Anchorage bid.

“What does more mean?” Mr Dix said. “There are headline prices. All bids were subject to due diligence, subject to deductions for this type of debt, that type of tax. The price in a sense is meaningless. . . the net figure from [Mr O’Brien] was higher.”

Mr Cooney said Siteserv was under pressure to complete the deal swiftly at the end. “Because of the media speculation, credit insurers were threatening to withdraw cover, which was putting further pressure on the company … speed was of the essence,” he said.

Mr Cooney said he believed Siteserv could have lost contracts if the process had been allowed to drag out longer by allowing Altrad another eight weeks to put a bid together.

The Financial Times said this would not have been an issue if Altrad had been brought into the process sooner. “I just can’t understand why two really good advisers, Davy and KPMG, didn’t identify this company. Did they screw up?” it asked. Mr Dix denied this.

The Sunday Independent asked had Siteserv’s advisers run enough bidding rounds to shake out the highest bid. “I am not going to get into the detail,” Mr Dix said. “Each offer was fully researched and developed at every stage. . . It wasn’t rushed through, it took six months.”

Mr Dix said Denis O’Brien’s reputation in the fallout of the Moriarty tribunal report was irrelevant and he said it would have no impact on Siteserv bidding for Irish government contracts.

“I have no concern,” Mr Dix said. “Denis O’Brien is a very successful businessman. Those tribunals are something different. They have nothing to do with me or Siteserv. The EU Commission said in the case of Padraig Flynn [the former European Commissioner who was pursued by the Mahon tribunal] it was nothing to do with him. I think it is something separate from commerce, quite honestly.”

As the briefing ended, Mr Dix gave his final thoughts on a bizarre and fractious end to Siteserv’s days on the Irish Stock Exchange.

“We honestly believe it was run in a fair and transparent way and the outcome was the best for IBRC and all other stakeholders,” he said.

After three firm handshakes, Mr Harvey, Mr Cooney, and Mr Dix ended the briefing.

But where was the taxpayer and IBRC’s man, Mr Hobbs, who couldn’t make it because of a prior engagement?

The Sunday Independent tracked him down on his mobile after IBRC and Siteserv could not immediately reach him.

“There was a lot of different considerations, not just price,” Mr Hobbs said. “We are very happy with the outcome. In these situations everything is carefully considered,” he said.

Tom Lyons: A done deal, but were taxpayers the losers? (Sunday Independent, April 8, 2012)

Pic: Irish Independent

Opposition lashes out at plan for SiteServ review (BreakingNews)

Meanwhile…

29 thoughts on “The KPMG Connection

  1. Ginger_thoughts

    Online News pages at the moment

    Irish Times “Siteserv Controversy”
    Journal “Revealed: How Michael Noonan’s confidence in IBRC bosses was ‘wearing quite thin’
    Irish Independent- Story bottom left of news section “Former IBRC bosses hit back in row with Finance Department. Businessman Denis O’Brien makes first comments on Siteserv deal”

    Who needs Berlusconi …

  2. Clampers Outside!

    “perceived conflict” …will yiz ever fupp off.

    This country is too small, with too few rich business types mingling in ever decreasing smaller elite circles.
    Chinese walls me hole! These guys who have been shown to be untrustworthy in the past are asking us to trust them with this… fupp off !!!

    ( Cripes BS, let me say the F-word just once, properly, please! :) )

    1. McKay

      Chicken. Coming home after a long day looking to roost. At this point the only impartial investigator would be Columbo or at a pinch Jessica Fletcher. Sadly neither are available :(

  3. SC

    KPMG were also the auditors for Irish Nationwide for many years, and the partner came along to the AGM each year and assured the members that everything was rosy. Members lost the possibility of their €10k demutualisation bonus and the state lost €5 billion to cover INBS bad debts. Thanks, KPMG.

    1. Tá Frilly Keane

      You’d swear yer man Wallace was going to be doing anything other than
      checking up on minions on training contacts to make sure the billable hours are on target
      Reading their reports
      And signing off on more overtime

      He’ll be doing ûckall beyond racking up income and making sure KPMG don’t get sued.

      Another phoney
      And another 7 fig bill

      Out Out Out

  4. Tá Frilly Keane

    I’m getting a dose of sum’ting
    Like Cholera
    Or whatever it is you get from rivers of *Shit being pumped onto the general population. Or suckers, as they’d all call us.

    *please don’t poop this out lads. Its the truth. Theres enough redacting by the other crowd as it is.

  5. Ferret McGruber

    I tinkin of commitin a crime. I’m sure de judge will let me investigate meself if i get cot. I’ll tellim Baldy Noonan sez its alrite.

  6. Redmond

    Mr. Hobbs was not a Partner at KPMG – this article is inaccurate. He was a Director when he left the firm 27.5 years ago – how close are you to your 27.5 year former employer?

    1. gary

      Possibly very close, another way of spinning that is that they go back 3 decades together…hand in glove

  7. #Selfie Face

    Did anyone watch prime time last night? I thought Walter Hobbs gave a very good account of the deal from the perspective of someone who appears to know corporate mergers, acquisitions etc. I don’t work in finance and have no knowledge of the nuisances involved.

    I have to say I felt there was something under handed until I saw his interview. What I took from it was:

    1. The dept of finance don’t understand the complexities of these sort of deals and no one in there has worked in the corporate world at a high level.

    2. The media spin is that we lost 105million in the deal however we stood to lose 150m if siteserv failed.

    3. Stockbrokers are always involved in deals where they have clients involved.

    4. Catherine murphy and the majority of politicians have never worked in corporate mergers and acquisitions and therefore haven’t got a clue what they are talking about.

    5. I’m glad I don’t work in banking/finance etc.

    That’s my tuppence.

    1. Mr. T.

      Well, I think you do work in finance and what you’re saying really is that a publicly owned entity such as IBRC is not accountable to the public and that most people don’t understand dodgy dealings at a high corporate level.

      Either that or you’re terribly naive and you need to stop thinking RTE is a reliable source of news.

      1. #Selfie Face

        Mr. T-conspiracy, how did you figure from what I said that IBRC shouldn’t be accountable? Don’t be ridiculous.

        What’s the profession of the majority of politicians? My guess is teachers, publicans and the like. Economists? No. Investors? No. The majors don’t have a clue about corporate deals, fact. But you don’t like facts, do you? Or perhaps the truth also?

    2. Joe the Lion

      I think that’s all fair. What the hell are all those folks asking questions in the Dáil for? Sure what do they know about anything right? They’re not voted in or nothing and these are not publicly owned goods being disposed of which refers.

    3. Kieran NYC

      Alan Dukes did an ok interview on The Last Word today explaining it as well. Sounded fine, but anything that DO’B is connected to deserves a second and third look and probably some disinfectant.

  8. Truth in the News

    All these Legal and Accountancy concerns have “Chinese Walls” there
    specially imported them from China, and it has got to the stage that
    they are so effective that no one connected with them knows nothing about
    anything.
    There is an urgent need to pass new Act called the “Offences against the People”
    and the establishment of Special Criminal Court to try offences comitted under
    this Act by the Criminal Business Class…remember the great cries about the
    “men of voilence” well what the new breed of white collar ones…maybe they
    changed into blueshirts.

Comments are closed.