Tag Archives: Siteserv

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From top: Catherine Murphy and Denis O’Brien

Further to this.

You may be aware of concerns regarding Siteserv, the business purchased by Denis O’Brien from IRBC with a write off of €100 million that was subsequently awarded the water meter contract.

Questions regarding many aspects of the deal raised by North Kildare TD Catherine Murphy elicted the following response from Siteserv today:

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Hmm.

Ms Murphy replied:

“This absolutely is agenda-driven, my agenda is always to serve the public interest and this deal involved a significant amount of public money being written off. This is very firmly in the public interest. There are questions surrounding the deal which I don’t believe have been adequately dealt with, questions which I, as a parliamentarian, have an obligation to raise.”

Meanwhile, during the Siteserv acquisition, it emerged that lawyers acting for Mr O’Brien’s side and IBRC came from the same firm, Arthur Cox.

Ms Murphy submitted a written question Minister for Finance Michael Noonan concerning this and other anomalies. To wit:

Has his  attention has been drawn to potential conflicts of interest, which existed at the time of the sale, by the former Irish Bank Resolution Corporation, of an entity; specifically if his attention has been drawn to the fact that agents, contracted by the Corporation, to execute the sale, also held significant interests in the entity being sold, that the legal advisors, on the sale, were acting for both the vendor, and purchaser, in the transaction, and that the reported agreed sale terms included a large payment to the board of the entity being sold, and whose votes were obviously required to approve the sale; if so, his views that this presents an alarming set of circumstances, to an entity tasked with protecting the taxpayers’ interests; and if he will make a statement on the matter?

This evening, Mr Noonan responded:

As the Deputy is aware, a Relationship Framework dated 8th July 2009 was in place at the time the Board of IBRC approved the sale of the company referred to in the question. Under this Relationship Framework, the Board of IBRC were required to engage with the Minister for Finance on certain key issues which included “any material acquisitions, disposals, investments, realisations or other transactions, other than in the ordinary course of Anglo Irish Bank’s banking business.” It should be noted that this Relationship Framework did not include any specific monetary thresholds which would trigger mandatory consultation with the Minister for Finance. It should also be noted, that at that time, the ordinary course of the Bank’s business was to conduct an orderly run-down and ultimate liquidation of the Bank. As such, IBRC’s efforts, as a secured lender, to maximise the recovery on its loans to the company referred to in the question was considered to be in the ordinary course of business. For that reason, and under the Relationship Framework in place at that time, IBRC were not required to consult with the Minister for Finance on this matter in advance of making the decision to approve the sale of the company referred to in the question.

Upon the receipt of critical representations following the transaction, Department of Finance officials inquired about the transaction with IBRC management as part of their regular engagement. Following initial discussions, they agreed with IBRC’s Chairman and CEO that they would review the transaction involving the company referred to in the question in greater detail to better understand the decisions taken and the impact these decisions had on the process and the final recovery for the bank.

Through this review, Department of Finance officials were made aware of certain aspects of the transaction which raised concerns with the quality of some of the decisions taken in respect of this transaction, including, among others, that legal advisors to the company referred to in the question had also acted for the purchaser, that a payment had been paid to the shareholders of the company referred to in the question, that some of those shareholders were members of the Board of the company referred to in the question and that a significant proportion of those shareholders appeared to be clients of the financial advisor on the transaction to the company referred to in the question.

In light of these concerns, I subsequently met with IBRC’s Chairman [Alan Dukes] and CEO [Mike Aynsley] to discuss concerns regarding this transaction. The Chairman and CEO confirmed to me the legal advice was provided by two different teams within the law firm concerned and that appropriate Chinese walls were in place between the two teams. They also assured me that the payment to shareholders was necessary to ensure a vote in favour of the deal . They further assured me that the transaction had been thoroughly assessed by the IBRC Board and that the transaction was managed in the best manner possible to achieve the best result for the State.

Good times.

Previously: Denis O’Brien, Fine Gael And The Water Meter Deal

Contains Impurities: The irish Water Timeline

 Pics: Photocall Ireland, Catherine Murphy

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From top: Former Environment Minister Phil Hogan and Minister for Finance Michael Noonan; Former IBRC chairman Alan Dukes; Denis O’Brien; a water meter; Siteserv logo.

 

On March 15, 2012, Denis O’Brien – through his Isle of Man-based acquisition vehicle, Millington – bought Siteserv for €45.4million cash from the IBRC, formerly known as Anglo Irish Bank.

Law firm Arthur Cox represented both IBRC and Millington during the sale.

At the time of the sale, Mr O’Brien owed Anglo hundreds of millions of euro while Siteserv owed Anglo €150million.

The sale involved IBRC agreeing to writing off €100million of Siteserv’s €150million debt.

Mr O’Brien acquired the business on a debt-free basis.

In addition, just under €5million was distributed to Siteserv’s shareholders, with them believed to have received €3.92 for every share they owned.

Soon after the sale, it was reported that some other bidders for Siteserv were unhappy with the deal.

It was reported that Australian hedge fund Anchorage Capital offered a higher price – €52million – but that ‘elements of the offer were considered less attractive then the O’Brien bid’.

It was also reported that French company Altrad claimed it was denied the opportunity to make an offer for Siteserv – saying it had been prepared to offer €60million for the firm but that it was ‘effectively denied the opportunity because its representative was told the Irish group was not for sale’.

Ray Neilson, a senior manager with Altrad, told the Irish Times he had emailed then Siteserv CEO Brian Harvey four times between 2011 and shortly before the deal was agreed with Mr O’Brien but that he was told the firm was not for sale. These claims were rejected by Siteserv.

In July 2013,  GMC Sierra won a State contract to install water meters in Dublin city, the Midlands, Wicklow, Kildare, Offaly, Laois, Mayo, Roscommon, Donegal, Sligo and Leitrim.

GMC Sierra is comprised of GMC Utilities Group and Sierra Support Services Group. Sierra is a subsidiary of Siteserv.

Last December, Independent TD for Kildare North, Catherine Murphy raised her concerns about GMC Sierra’s water meter contract, in the Dáil, asking how could GMC Sierra be awarded a contract [by former Environment Minister Phil Hogan] for water meters even though it didn’t legally come into existence until July 15, 2013, 15 days after the closing date for bids.

She also asked Finance Minister Michael Noonan if he was satisfied that the IBRC acted in the best interests of the State when it sold Siteserv to Denis O’Brien/Millington.

In his reply, Mr Noonan stated that the IBRC acted “at an arm’s length to the State” and that “commercial decisions in relation to IBRC were solely a decision for the bank.”

Further to this…

Ms Murphy has been doing some more digging – in particular, on the matter of the sale of Siteserv to Mr O’Brien/Millington.

In a parliamentary question, Ms Murphy asked Minister Noonan to furnish her with the so-called Relationship Framework and Operational Protocol which oversaw the interactions between the Finance Minister and the former management and board [headed by Alan Dukes, former Fine Gael leader] of IBRC before it was liquidated.

Ms Murphy asked Mr Noonan to indicate to her the precise financial thresholds under the framework which would have “triggered mandatory consultation in advance of a transaction and/or disposal”.

In a reply on February 26 last,  Minister Noonan confirmed to Ms Murphy that the bank would consult with the minister in relation to “any transaction which resulted in an adverse impact on total regulatory capital of the bank of greater than €100million would require interaction between the minister and the IBRC”.

Further to this, Ms Murphy then asked, if that was the protocol, why wasn’t Minister Noonan involved in discussions with IBRC, regarding the Siteserv sale.

In a reply received last night, Minister Noonan stated that the protocol only came into effect on March 29, 2012 – 14 days after the Siteserv sale was completed.

Last night, Ms Murphy said:

“I’m not surprised by the replies which confirm what I, and others, have long suspected – that the background to this deal and the eventual awarding of the metering contract is mired in convenient circumstances that all amount to something which leaves a very bad taste in the mouth of most right minded citizens.”

Meanwhile, readers may also wish to recall how – following on from Enda Kenny’s controversial ringing of the bell at the New York Stock Exchange with Mr O’Brien on March 19, 2012 – on March 28, 2012, Labour’s Joan Burton spoke about Mr O’Brien in the Dáil, saying:

“It is perhaps time for the Government to reflect on how it should in future interact with people against whom adverse findings have been made by tribunals… We live in a Republic and the representation of each citizen should be what counts rather than the amount of money a particular citizen can spend. We can look forward to a period of reform in which this Government will change the political landscape and our capacity to report and hold to account lobbyists.”

Good times

Previously: Contains Impurities

Thanks Catherine Murphy

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https://www.youtube.com/watch?v=m9Zhs_e8ts8

“Minister, there would be some unease about the fact that Denis O’Brien’s close political links may have been instrumental in his bid to buy Siteserv, the company that won the State contract to install water meters for Irish Water.

“I think the idea that powerful businessmen with close ties to the establishment still end up profiteering from decisions made by governments or semi-State bodies must be a worry for this Government as you promised that things would be different.”

“The very nature by which this gentleman ended up in possession of Siteserv is very questionable. He did a deal with IBRC where €100m of debt that Siteserv owed to IBRC, which was really the taxpayer, was wiped off….”

“…two higher bids for the company that would have earned the State more money were rejected and a former Fine Gael minister [Alan Dukes] was chairman of IBRC at the time the deal was approved”.

Independent TD Mick Wallace in the Dáil under privilege (*blows raspberry*) today.

“I think that is a very worrying set of assertions as opposed to a question…That politicisation of the public procurement system would be quite improper and unlawful … Bluntly, considering the deputy’s position, I am surprised at some of the assertions he has made.”

Minister Brendan Howlin responding.

Wallace says O’Brien’s Siteserv bid ‘questionable’ (RTÉ)

Previously: Denis O’Brien and That Siteserv Deal

Denis O’Brien

The story so far:

Denis O’Brien owes Anglo hundreds of millions.

Siteserv owes Anglo €144 million.

Denis buys Siteserv debt-free for €45 million in cash.

Now?

A FRENCH company has claimed it was denied the opportunity to make an offer for Irish company Siteserv…The Altrad group, which owns companies in the same areas of business as Siteserv, said at the weekend that it had been prepared to offer €60 million for the Irish firm. But it was effectively denied the opportunity because its representative was told the Irish group was not for sale.

Also:

Yesterday, the Sunday Business Post reported that the underbidder for Siteserv is understood to have offered a higher price for the company. Sources said that Australian hedge fund Anchorage Capital had put more money on the table, but elements of the offer were considered less attractive then the O’Brien bid, the newspaper reported.

Oh.

Firm claims It was Excluded From Siteserv Sale To O’Brien (Barry O’Halloran, Irish Times)

French Company Unhappy With O’Brien’s Siteserv deal (Daily Business Post)