On what Michael Lynn is up to, Denis O'Brien's interview in 'Forbes' magazine, FGS predictions for teh accountancy sector, and how the banks are coping with liquidity issues
O'Brien is a telecoms maverick, says 'Forbes'
TELECOMS TYCOON Denis O'Brien features on the cover of this week's Forbes magazine and is portrayed as a swashbuckling entrepreneur setting up mobile operations in some of the most dangerous countries in the world.
O'Brien tells Forbes his strategy is to: "Get big fast. (Damn) the cost. Be brave. Go over the cliff. (The competition) doesn't have the balls." It's all very Top Gun.
"Combining shrewd political instincts, a relentless drive to cut costs and a little Irish charm, he's put phones into the hands of seven million people," says Forbes.
The magazine chronicles O'Brien's investments in Papua New Guinea, where his office is "protected by razor wire and a half-dozen guards carrying shotguns and pistols"; East Timor, where O'Brien is pursuing a licence despite a rebel uprising, and Fiji, where he had to abandon mobile towers for a time after a coup.
Citing his experience in Fiji as a "nightmare", O'Brien said he was not about to stop investing in dangerous places. "If you just focus on risk, you can't do a thing."
Forbes says O'Brien's plan is to have mobile operations in 45 countries in two years, generating more than a billion dollars in operating income. He has focused so far on the Caribbean and the Pacific.
He has expanded into El Salvador and Honduras, bringing him into competition with Mexican mobile phone billionaire Carlos Slim Helu, who has been buying shares in Independent News & Media, where O'Brien is battling with Sir Anthony O'Reilly.
"I don't think about Slim every day," O'Brien told the magazine.
The telecoms boss repeats his interest in entering the US mobile phone market, saying he could close the gap fast by selling cheap, prepaid mobiles.
The magazine says that while in search of a mobile licence in Nicaragua, O'Brien asked President Daniel Ortega, Ronald Reagan's nemesis, to sign a photo to his mother: "Greetings to a fellow revolutionary."
Described as a maverick, O'Brien is unperturbed by coups and kidnappings, and is never one to suffer doubts, says Forbes.
"You run like MacArthur from island to island - and you conquer," O'Brien said. "This is going to be a very big business."
Over hill and dale, Lynn keeps roaming
JUST WHAT is absconded solicitor Michael Lynn up to?
Days before the Law Society revealed plans this week to overhaul a conveyancing system exploited by Lynn to double- and triple-mortgage properties, the solicitor was pictured wandering the streets of Budapest.
Lynn seems to be thumbing his nose at the Irish establishment. He has made no representations in the plethora of High Court cases against him since he failed to turn up for a cross-examination last December and the Law Society and banks have progressed their cases against him in his absence.
He has even, quite audaciously, shown a willingness to testify for his former client, Galway builder Brian Cunningham, in his case against First Active over the collapse of Cunningham's construction business in 2003.
However, Lynn is only willing to give his evidence by video-link because he faces arrest if he returns to Ireland - there is still a High Court arrest warrant outstanding over his no-show last year. The judge in the Cunningham case is due to rule on the video-link application shortly.
While the court and the banks continue to deal with his €80 million bank debt pile at home, Lynn is visiting countries such as Portugal, Bulgaria and Hungary where his property business Kendar has significant interests.
His Portuguese business (Kendar Portugal) has a new name (Vantea) and new management, though they stress Lynn is not involved in the new firm and sold his interest, but they would not identify the new owners.
There have also been changes recently to Lynn's Kendar Bulgaria business, with the ownership of companies and land in the eastern European country being transferred to other companies based overseas. Lynn's development on the Black Sea at Shkorpilovtsi was recently transferred to a company called Boyana Estates which has an address at Lynn's former apartment in Sofia.
The solicitor listed Boyana Estates as the name on a Bulgarian bank account, one of his 154 accounts, in an affidavit he filed in the High Court in Dublin last November. Boyana Estates is thought to be owned by a company in Cyprus called Caviarteria Technologies.
In his affidavit, Lynn listed a bank account in Liechtenstein as being owned by Caviarteria.
There is a complex web of companies around Europe linking Lynn's property interests.
The recent changes to Kendar are difficult to follow. However, one thing is clear: while Lynn remains at large, his European property business - developed with substantial borrowings from Irish banks and deposits from Irish customers - has been undergoing significant changes.
In the meantime, there are few signs that Lynn is prepared to return home to face the music or that the Garda is about to enforce the arrest warrant overseas.
ECB line of credit helps banks cope with liquidity problems
THE BANKS appear to be coping well with liquidity if the amount borrowed from the European Central Bank's repo facilities are anything to go by.
Financial institutions have tapped the ECB for extra liquidity since the credit crunch began to bite last autumn. Irish bank borrowings from the ECB jumped from €23.8 billion in October 2007 to €39.4 million by the end of last year, due to covering end-of- year positions. It has not risen above that level since then and stood at €38.3 billion at the end of June.
The Central Bank says these figures include borrowings by IFSC-based international banks, so that may distort the figures for the Irish banks.
The stigma attached to going to the ECB discount hatch, which was noted most by UK analysts, has largely gone.
The term-funding markets are also open to Irish banks seeking financing.
Bank of Ireland showed its ability to raise €1.25 billion in term funding last month, albeit at a rate of some 175 basis points more than this time last year. The global crisis has hit banks with a double whammy - not only has it driven up the margins paid for money over the inter-bank rates (at which banks lend to each other) but also the inter-bank rates themselves.
Observers will be watching closely for the rate Irish Life Permanent pays for the €3 billion in term funding due to mature shortly. The company has confirmed it has raised €2 billion and expects to raise the final €1 billion by the end of this month.
It is unlikely to wait until its interim results on August 27th to provide more details. The share price rose 21 per cent last Friday after the company confirmed it had raised two-thirds of the money.
FGS tips more mergers in sector
MORE ACCOUNTANCY firms are likely to merge or form alliances with rivals so there are fewer overlaps, more services to offer clients and partners can focus on accountancy rather managing a practice.
So says Ian Duffy, managing partner at FGS (formerly Farrell Grant Sparks). Duffy is an engineer by training but has worked for Andersen Consulting (now Accenture), IBI Corporate Finance and Anglo Irish Bank.
He engineered the most recent merger on the accountancy scene when FGS joined forces with Moore Stephens Caplin Meehan earlier this month.
He says FGS is looking at more alliances rather than mergers. "We are reviewing what we are doing outside Dublin. We would look to create alliances rather than just expanding for the sake of it."
The enlarged firm, which will trade under the FGS name, will have revenues of more than €30 million, 30 partners and 300 staff.
The merger links the seventh biggest accountancy firm with the 16th in terms of fee income, according to Finance magazine's 2007 survey of the sector.
FGS trails the big four (PricewaterhouseCoopers, KPMG, Deloitte and Ernst Young) and top two in the next tier (BDO Simpson Xavier and Grant Thornton).
The practice, founded by Pearse Farrell and Greg Sparks in 1982, has offices in Dublin, Belfast and Longford. It has dropped the Farrell Grant Sparks name in favour of the FGS acronym and the merger will give the firm a much stronger foothold in the Dublin market. Duffy says FGS will look at alliances with practices in Cork and Limerick.
He adds the practice's corporate recovery and insolvency division has seen an increase in business, as the downturn bites.
"There is not going to be a quick fix," he says. "There will be a significant increase in bank and loan restructuring required over the coming months."
