The commission of investigation appointed by the Government to investigate certain transactions at IBRC explicitly widens the terms of an original review which was to have been conducted by accountants KPMG, but has now been abandoned.
The commission will not only conduct a wider inquiry, but will also have stronger powers to facilitate its investigation.
As well as IBRC transactions that resulted in a loss of at least €10 million, the commission’s terms of reference specifically include any cases where significant interest rate deals were done with IBRC borrowers on preferential terms.
It has also been asked to investigate any unusual share trading that occurred in relation to any IBRC transactions. This means it will look at the trading in Siteserv shares in the months before IBRC approved its sale to a company owned by Denis O’Brien.
The commission, which is due to report by the end of the year, has been told to respect confidentiality and commercial sensitivity in its final report, but to balance these against the public interest to disclose information.
Liquidators
The initial terms of reference for the KPMG review covered about 40 IBRC transactions that involved losses of €10 million or more to the taxpayer. They also included any other matters which the liquidators judged to be “of concern”. This was seen as giving it scope to undertake a widespread review.
However, in the light of recent controversy, including claims in the Dáil by Catherine Murphy about the interest rate charged to Denis O’Brien on his loans with IBRC, the new terms of reference specifically include examination of any deals with borrowers on their interest rates seen to be given on “preferential terms that were unduly favourable to the borrower”. This will cover cases where IBRC lost more than €4 million in interest payments, compared with interest payable on loans given on the basis of normal interest rates.
The terms also allow investigation of share trading in relation to any deal in which IBRC was involved. Part of the controversy around the Siteserv transaction involved share dealing in the run up to the sale of the business by IBRC. The sale resulted in a €5 million payout to Siteserv’s shareholders.
The terms say that the commission is to report its findings but also has to respect “obligations of confidentiality and to respect commercial sensitivities where those are not incompatible with the public interest.” The commission is to report no later than the end of this year.
The decision to appoint a commission, which will be headed by a judge, follows weeks of controversy over the Government’s request to ask KPMG, the IBRC liquidators, to undertake an initial scoping review of IBRC transactions. This exercise was to have been overseen by retired judge Iarlaith O’Neill.
Opposition
KPMG had advised on the sale of Siteserv and Opposition parties had demanded an inquiry by a party with no previous involvement in that transaction.
Commissions of investigation were introduced in 2004 on the initiative of then minister for justice Michael McDowell after a public clamour against spiralling costs and the excruciatingly slow pace of tribunals of inquiry.
Such commissions are usually chaired by a judge and have all the powers of tribunals, including strong powers of compelling witnesses and documents. They are held on matters of public interest and controversy.
The big difference between commissions and tribunals is that most of their proceedings, including the questioning of witnesses, are conducted in private. This has helped to contain costs and has also led to reports being published within a comparatively short time-span.
