Last Friday evening, on the cusp of the bank holiday weekend, the second interim report of the commission of inquiry into IBRC was published by the Department of the Taoiseach. It said Mr Justice Brian Cregan had made little progress in investigating 38 transactions connected with the now liquidated IBRC that led to an aggregate debt write-off by the bank of €1.88 billion.
If you have been following the saga, you will know Mr Justice Cregan had already advised the Government that changes were needed to the 2004 Act covering its work if it was to overcome legal difficulties in relation to banker-customer confidentiality and legal professional privilege.
He has also sought a longer timeframe to submit his final report; it was originally to have been lodged by the end of December 2015. What genius set that deadline?
Legal obstacles
The judge had also previously made it clear that more resources would be required to prevent this investigation running on for “many years” and had indicated that he intended to prioritise the top 12 transactions in terms of write-off (some €1.3 billion between them).
He estimated if one or more new members were appointed to the commission, along with additional legal resources, the 12 investigations could be concluded within “18 months to two years” after the legal obstacles have been resolved.
On Friday, Mr Justice Cregan said he would not be in a position to comment further on the resources, duration or cost of the report until he had received responses to the issues raised in his first report.
The commission was originally established to take the political heat off the Fine Gael-Labour Government in relation to the sale of Siteserv (now Actavo) to Denis O'Brien's Millington Ltd for €45.4 million in March 2012, some 11 months before the bank was placed into liquidation by the State. This involved a debt write-off of more than €100 million by IBRC on loans it had extended to Siteserv.
As part of the transaction, Siteserv shareholders received €5 million for their approval of the deal. We also know the Department of Finance had reservations about the way in which certain transactions were handled by IBRC management and that the nationalised bank allowed Siteserv to handle the sale process itself.
The fact that Siteserv was sold to O'Brien made the transaction particularly incendiary for the Government, given the businessman's past connections with Fine Gael and the Moriarty tribunal's findings in connection with his winning of the second mobile phone licence with Esat.
Siteserv later went on to win a contract to install water meters for Irish Water, which led to all sorts of charges being lobbed at the Government from the Opposition benches, causing friction between Fine Gael and Labour.
The new Siteserv has since become a commercial success, seemingly on course to break €500 million in sales this year, as it sets its sights on expanding into the US.
This feeds the narrative that taxpayers were stiffed in the sale of Siteserv while ignoring the context of the time. The Irish economy was still on its knees and the country was in a bailout programme.
Mortgage holders
Social Democrats TD
Catherine Murphy
has done much of the running on the IBRC write-downs, saying taxpayers have a right to know why such large write-downs were granted to certain borrowers of the bank.
It’s a fair point when you consider that most residential mortgage holders are expected to repay every cent of their home loans. But the reality is that we will probably never know if a better deal could have been achieved by taking another approach to the sale of Siteserv. Nor will we ever know precisely why individual borrowers were treated as they were. And the transactions will not be reversed.
And why stop at IBRC? Why not a commission of investigation into Nama and its even larger write-offs? Or the various State-owned banks and theirs?
The commission was set up on June 16th, 2015 and the costs incurred up to April 7th were €3.7 million. This includes expenses run up by the special liquidators and the Department of Finance but excludes the large legal tab incurred by the former directors of the bank.
As if the €100 million-plus written off by IBRC on Siteserv wasn’t bad enough, we’re now spending millions more of taxpayers’ money on an investigation that is going nowhere. We need to make it stop.
