independent journalism ON Sunday RED C POLL: Fine Gael rising as Sinn FÉin slips Election 2016 pages 3 and 17 Six pages of news and analysis from the campaign trail pages 17-22 IsBrexit rugby safeIan Guider for reports kids?from InLondon the Magazine February 7, 2016 businesspost.ie Price €3.00 pages 13-15 EXCLUSIVE INTERVIEW FROM BOSTON JAIL Drumm: I’m coming home to tell the whole story l ‘I have been living a nightmare for the past eight years’ l ‘I’m not a fugitive, and I never was’

By Tom Lyons my US attorney should they anyone would accept that structed this way, and there Business Editor Interview: pages 4-5 wish to speak to me,” he one person was to blame for has been a concerted effort added. the difficulties Ireland expe- by the Irish government and David Drumm, the former “I informed the local US rienced. But it has been con- to page 2 chief executive of Anglo Irish authorities of the situation Bank, will tomorrow apply to with Ireland in January 2015. come home to Ireland imme- These are not the actions of a diately. fugitive, yet I am still regarded In an exclusive interview as having fled,” Drumm said. from jail in Boston, Drumm “It makes no sense and I told The Sunday Business Post: “I believe the Irish government have given clear instructions constructed it. . . They creat- that all rights to challenge the ed a situation where I was a extradition in the US should be [tomorrow] to achieve this. Drumm also said: “I am confirmed fugitive with no waived and no other options I cannot indicate my deter- not a fugitive, and never was. basis whatsoever for that con- available to me should be pur- mination to have these is- I never fled Ireland. clusion simply because they sued in order to facilitate an sues dealt with in Ireland any “I was available to the Irish needed it to extradite me.” immediate return to Ireland. stronger than waiving all my authorities at any time and In an extensive interview “I am hopeful that I can ap- rights to resist extradition,” indeed informed them in July Drumm said: “It is very dif- ply to the Court on Monday he added. 2013 that they should contact ficult for me to think that no gimmicks Get Connected Inside Dublin’s start-up hubs just the lowest monthly Free 56-page magazine mortgage repayments

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Vol.29. No. 06 Matt Cooper meets WARNING YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY OTHER LOAN SECURED ON IT. property tycoon Lending criteria, underwriting, terms and conditions apply. Security and insurance required. The maximum Mortgage is 90% of the property value. To avail of the 0.2% Discounted Rate, you must mandate your salary and pay your new KBC Mortgage by Direct Debit from your KBC Current Account. Offer excludes Buy to Let Mortgages. KBC Bank Ireland plc Stephen Vernon pages 8-9 is regulated by the Central Bank of Ireland. The Sunday Business Post 4 Drumm speaks February 7, 2016 Exclusive David Drumm interview ‘The government will do anything to silence me’

David Drumm: the former Anglo Irish Bank chief executive has been living in the US since 2009 Picture: Tony O’Shea

TL: How hard is prison for you and your ordeal. This has provided great comfort family? to my wife and children. My family and After seven years in exile in the US, DD: The worst aspect is how the Irish Lorraine’s family in Ireland have dis- government interfered in the US justice rupted their own lives to be by our side system to influence my circumstanc- and support me, and I could not endure David Drumm is ready to come home. es and right to bail. Although I cannot this without them. The support of my speak about some elements of their in- employer, friends and colleagues is a volvement, with some information un- source of great comfort to Lorraine, our In an exclusive interview, the former der seal, I can say that I had no chance girls and me, and we are all incredibly of succeeding in getting bail when the I feel very grateful for this. Irish government directly appealed to strongly Anglo Irish Bank chief executive gives the court to deny me bail. The magistrate TL: Why did you not come home judge referred to this in his written bail about voluntarily before now? judgment. DD: I would have returned to Ireland It came as a great shock to us that the dealing if the Irish government had asked me to, his side of the story Irish government would seek to impose and if I had received some assurances on me what many Irish judges have re- with this in that what I had witnessed to that point after his bank was nationalised. He is now and informed them that I understood fused to permit when considering send- would not continue. They didn’t ask, they on the brink of returning home. He has from media reports that Ireland may seek ing Irish or other citizens to the US under Ireland, not didn’t demand. instructed his US attorneys to “explore all my extradition. the extradition treaty. It was deeply up- in the US In fact, I never heard from them. While opportunities” to speed up his passage to The US attorney was surprised that I setting for all of us to consider that the it remains a commonly held view that the Ireland, and plans to waive his rights to had not been formally informed by Ire- Irish government was behind this. Irish government demanded my return challenge his extradition. land, as I had an attorney on record. I My detention has had a deep and last- to Ireland, this is simply not true. In July It has been a long road for Drumm. He informed the US attorney of where I lived ing effect on my family and their sense 2013, my Irish solicitor informed the Irish Tom Lyons once ran a bank feted as one of the best and worked, and indicated that I was of security, and indeed the shattering of authorities that they should make contact in the world, only to later see it blamed not in hiding from this, but was living in the notion that every person has certain with my US attorney should they wish to Business Editor for the economic destruction of a coun- Wellesley, Massachusetts and working rights that cannot be denied to them. This speak with me or make any demands of try. Nothing is ever that simple. In this in both Boston and New York, and that I is the hardest for them to understand. me. They failed to make any contact with exclusive interview, he tells his side of intended to defend any claim by the Irish Despite the awful circumstances, my my US attorney, and that remained the t is exactly 120 days since Da- the story from behind bars. government. This was acknowledged. family have remained staunchly by my case through the secret issuing of charges vid Drumm was arrested and However, on October 10, I was arrested side and they support me with incredible against me, and subsequent extradition detained by United States mar- Tom Lyons: What was it like being by US Marshals in the presence of my dedication. This is far worse for them proceedings. They all but excluded the shals on October 10 of last year. arrested and detained in the US? family on the Saturday of the bank hol- than it is for me, and yet they endure it possibility that I would return to Ireland Since then, the 49-year-old David Drumm: It was very unpleas- iday weekend. My attorneys were later with a determined sense that justice will I was libelled voluntarily. has remained silent in prison ant and unexpected. In January 2015, told that this was on foot of “extraordi- prevail some day and this nightmare will in Boston, pending his extradi- reports were appearing in Irish news- nary pressure from the Irish government end for all of us. 55 times by TL: What do you say to the suggestion tion hearing. The former chief papers that the Irish government in- to arrest [me] on that particular week- We have had extraordinary support just one Irish that you fled Ireland? executive of Anglo Irish Bank has been a tended to issue extradition proceedings end”, despite my having voluntarily made from our local church and our parish DD: The suggestion that I fled Ireland Ifigure of public vilification since leaving against me. Through my own attorney, myself known to the US attorneys some priest, who has visited Lorraine and the newspaper is simply untrue, and there is no basis Ireland to live in the US in 2009, not long I approached the US attorney in Boston nine months before. girls at our home many times during this for this. Certain elements of the media The Sunday Business Post February 7, 2016 Drumm speaks 5 ‘The government will do anything to silence me’ settlement agreement reached with the feel very strongly about dealing with this a very high price for this already. bank allowed them to pursue me for the in Ireland, not in the US. rest of my life, should they so decide, TL: You have been harshly criticised even if the full debt had been satisfied. I TL: Have you had any response to this by a judge in your bankruptcy case in agreed to this, and to forfeit my pension offer? the US. Do you accept these findings? Is and future earnings in an extraordinarily DD: I understand that the DPP will not there another side to the story? one-sided and brutal agreement, as I agree to our request, and will oppose bail. simply wanted to resolve the issue and Although this is a disappointment and At this point, Drumm alleges that he bring this to an end. I have indicated very perplexing, it does not diminish was badly advised by his attorneys While the agreement would have taken many times my my desire to return to Ireland and deal at the time. As a result, he disagrees everything from me, it did give me what with these issues rather than litigating with the judgement given during his was most important to my family and wish to return to them over many years in the US. Given bankruptcy case. me – a form of closure that would have the urgency that the Irish government DD: There is little I can do about this, allowed me to get on with my family life Ireland suggests in their desire to see me return and his view was so strongly put that it and work and put this behind us. The you would think that they would agree is next to impossible for me to counter- agreement was approved by the board of to this but they have not. act its effect. In the appeal, we failed to Anglo (IBRC), sanctioned and accepted. As a consequence of my strong desire include all matters under appeal and so The Department of Finance then in- to get to Ireland, I have instructed my US left certain findings unchallenged, and tervened and vetoed the settlement, and attorneys last week to explore all oppor- this was the principal reason the appeal ordered the bank to initiate litigation. tunities with the US and Irish authorities failed. I dearly wish I could have handled This was a shocking intervention by to expedite a return to Ireland and I have this better, but I simply got it wrong, and the Irish government where 100 per cent given clear instructions that all rights to my family and I will continue to suffer recovery of taxpayer-owed monies was challenge the extradition in the US should the consequences for that. rejected in favour of spending millions be waived and no other options available of dollars litigating to get the exact same There is to me should be pursued in order to facil- TL: What is your view of the result, except of course that the taxpayer itate an immediate return to Ireland. I’m conclusions of the banking inquiry? picked up the bill for the legal costs. sometimes a hopeful that I can apply to the court on DD: I acknowledge the hard work done The Irish government spent $5 million naivety about Monday of next week [ie, tomorrow] to by the members and the toll it took on in legal fees litigating against me to re- achieve this. I cannot indicate my deter- them, but I reserve my position on the Drumm hits back cover what they already had secured in doing what mination to have these issues dealt with final report. I provided testimony that the settlement agreement – meaning that in Ireland any stronger than waiving all shed light on a great number of critical ✽ when the original share loan is included, you think is my rights to resist extradition. matters but, unfortunately, my submis- Says he would have come the cost to the Irish taxpayer is $15 million sion was rejected for reasons only the and counting. It indicated to me that there the right thing TL: Some people blame you for you Irish government know. back to Ireland if the authorities would never be any reasonable or rational when politics is causing Ireland’s economy to collapse. The Sunday Business Post was the only behaviour from the Irish government, How would you respond to that? newspaper in Ireland to point out the and that I needed to be very careful in involved DD: It’s very difficult for me to think inaccuracies in the Irish government had asked him to do so my dealings with them. that anyone would accept that one person position that Anglo lost €30 billion. It My only option at this point was to find was to blame for the difficulties Ireland is an astonishing untruth that has been ✽ Refuses to accept the a way that a third party would take over in the absence of the actual authorities experienced. But it has been constructed ingrained in the public conscience to such control of the situation and deal with making the demand. this way, and there has been a concert- an extent that it is next to impossible to the state-controlled bank, as the Irish ed effort by the Irish government and dislodge it. government’s description of government was allowing no room for TL: Why is it so important that to you certain parts of the media to drive this I believe, however, without taking a sensible settlement, an extraordinary that the Director of Public Prosecutions message home. There is no doubt that it position on the inquiry report, that even- him as ‘a fugitive’ situation considering that the settlement does not oppose your bail in Ireland? has worked. I was the chief executive of tually the truth will come out – partic- gave them 100 per cent recovery. I then DD: I am not a fugitive, and never was. the bank that everyone blames as being ularly when those currently under the took the decision to enter US bankruptcy I never fled Ireland. I pose no risk. My at the centre of the difficulties, but this control of Nama are eventually free to as a last and only resort. experiences with the Irish government is not supported by the facts, or indeed speak out about what really happened. By the time I was asked to give evi- mean that I continue to hold a deep mis- the evidence. dence to the banking inquiry, you can trust. In asking the DPP not to oppose bail Anglo Irish Bank, in common with TL: What have you learned since see that I now had every reason to have in Ireland, I simply sought a consensus. all the Irish banks and indeed the in- leaving Anglo Irish Bank? a deep mistrust of the Irish government This would indicate to me that I would ternational banks, played a part in the DD: That there is sometimes a naivety and their motives but I still felt that I be treated fairly. I recognise the separa- difficulties. During this time of extraor- about doing what you think is the right needed to respond, as I was required to tion between the process and the Irish dinary worldwide financial turmoil, with thing when politics is involved. do. Despite being advised by just about government, but it has not stopped them the banking system across Europe and everyone around me that I should not interfering before (as they did in the US) the US failing, the Irish banks could not TL: Do you regret not staying in Ireland? expect to be treated fairly, I proceeded and I simply needed some assurance that have escaped. Every bank contributed DD: There are many people around me and offered to give evidence. they would play it straight. to the problems, and the economy as a who would say that what has happened The process is supposed to be confi- I have, for some time, wished to agree whole faltered for this reason and other to my family and me would never have dential and protected by legislation, yet a return so that my family and I can get economic causes. Contagion from the happened had I stayed in Ireland. They when I made my submission through through this ordeal; and to try and bring US, especially after the collapse of Le- believe that I handed the Irish govern- and many politicians continue to insist you fairly? my US attorney, it was leaked within some sense of balance to this. I need to man Brothers, placed what seemed to ment the perfect scapegoat by moving to that I fled Ireland. Using such language DD: I have seen first-hand how the Irish hours to the media. Some three days be able to support my family, work, and be insurmountable pressure on the Irish the US. I don’t know whether this is true to describe my return home to Boston government responded to the financial later, the Irish authorities decided that participate fully in my defence. None of financial system. or not, but I suspect there must be some effectively created a “fugitive” status – crisis, and this was my first indication my testimony could not be admitted to these is possible without bail. Asking the The Irish government played a very truth to it. Of course I have regrets. I am something that could not be further from that they were not to be trusted. In 2008, the inquiry record or be made public for DPP to agree to bail without the need for a significant and central role in what was deeply saddened that Ireland’s economy the truth, yet it took hold in the minds a wide group of government represen- legal reasons, citing the threat it would bitter battle where I pose no risk seemed to follow, and it was the Irish govern- collapsed. Anglo was not the only reason of the public and that is how I am now tatives were intimately involved in the pose to prejudice trials underway or in sensible, so we could focus on getting ment which decided to place the financial this happened, but it was of course part regarded. efforts to save the Irish banking system, the future, including my own. Once my through this and providing some measure burden on Irish people, not the banks. I of the story. A fugitive is commonly described as and to avert a potential collapse of the submission was firmly in the public do- of relief for my family and indeed my am blamed for what the Irish govern- I wouldn’t wish what has happened someone fleeing justice or in hiding. Nei- economy. main, it was then, and only then, deemed wider family, friends and supporters who ment imposed on Irish people, and this to me on anyone, as it has been a liv- ther description applies to me. But when This included senior civil servants from not appropriate for publication. have all stood by me resolutely. is grossly unfair. ing nightmare. Whatever about leaving these words are used repeatedly, they the Central Bank, Financial Regulator The Irish government’s behaviour in all I am willing to accept responsibility Ireland, the sooner I can get back, the become accepted as fact. Investigations and Department of Finance. Their names these matters has influenced my think- TL: In return for flying home for my personal failings, but I always sooner I can start the process of bringing into the banking crisis started early in have never been published and their roles ing, and made me very reluctant to take immediately, what are you offering to acted in good faith. The role of the chief this to an end. 2009, and continued throughout that never examined. anything to do with them on face value. do? executive is to carry out the instructions year and beyond. I never believed that Almost all of these people escaped any DD: I don’t see it as offering something of the board, and I did my best in con- TL: What comes next for you? I was a target of these investigations, so blame and are never associated with what TL: When the first Anglo trial started in return, or some sort of bargain with siderably difficult circumstances. I only DD: I’m determined to get to Ireland how could I ever be justifiably described happened in 2008, yet they were central without you, why didn’t you come the DPP. It is simply this: I have indicated ask that any Irish person who feels I am as quickly as possible, and start my de- as a fugitive? to events. In fact, nothing that transpired home at that point, whatever about many times my wish to return to Ireland responsible should at least permit me to fence of the charges levied against me. I was available to the Irish authorities could have happened without their in- before? to deal with these issues. I have done this give my side of events and examine the I believe that the truth will eventually at any time, and indeed informed them volvement. Some remain in their posts, DD: I understand why you would ask informally for many weeks with the Irish facts, before condemning me. surface, and I think this is important for in July 2013 that they should contact my others retired on generous terms . . . none the question, but you must understand authorities. On January 26, I made my the Irish public who have endured so US attorney should they wish to speak to of them attracted the attention of Irish that I had no contact from the Irish gov- position clear formally in order to prompt TL: Are there things you feel that you much over the past number of years. I me. I informed the local US authorities of investigators into the banking crisis. ernment. from July 2013 onwards. There at least some response. have been blamed for unfairly? have to get this out of my life, regardless the situation with Ireland in January 2015. When I suggest that the names, roles was no indication from the Irish author- On March 1, just three weeks from now, DD: Politicians and certain elements of of the consequences. These are not the actions of a fugitive, and detailed activities of each of these ities that they wished to speak with me, I will start my defence in the US, and I am the Irish media have vilified me to such an I’ve been living a nightmare for the yet I am still regarded as having fled. It people will be a central part of my story, and I would have thought that if they strongly advised that I am very likely to extraordinary extent that it is impossible past eight years, and I have to bring it to makes no sense, and I believe the Irish I get a ferocious reaction from the Irish did, then they might have made contact get bail once we establish the depth and for me to defend myself. At the last count, a close. My family deserves at least that. government constructed it. government. They will never permit this, at that stage. The fact remains that they detail of my defence in the US against in a review undertaken by libel attorneys, They’ve stood by me and supported me When you consider the consequences and will do everything in their power to did not, despite being invited to contact extradition. This will certainly take many I was libelled 55 times by just one Irish throughout this ordeal, and I can never of what they have done, it is alarming silence me. This is a frightening position to my US attorney. years, as several commentators have in- newspaper. This has never happened in repay that. in the extreme. They created a situation be in: stay silent and accept all blame, or Politicians were speaking freely about dicated. And it is very likely that most, if Ireland before, and it is extraordinary in Despite the awful circumstances and where I was a confirmed fugitive, with tell the story as it was and face the entire me both inside and outside the [Dáil] not all, of the charges will be struck out the extreme. There is no remedy for this. the frightening ordeal we have been no basis whatsoever for that conclusion, might of the Irish government bearing chamber, which is devastating to my basic in this process. My role was no different than any Irish through and continue to endure, I take simply because they needed it to extradite down on you. and fundamental right to a fair hearing. Despite this, I want to deal with this banking chief executive working closely great comfort in the kindness and support me. You cannot extradite a person unless In 2009 and 2010, I offered all assets Certain parts of the media were picking in Ireland, and I feel that this would be with senior Irish civil servants to avert of a great many Irish people who have you make sure they are conferred with that I possessed to the government-con- up on this and making calls for me to the better course of action for my family a crisis, yet to the average member of remained dedicated to helping me. This fugitive status. trolled bank, in full settlement of the return to Ireland, making any chance and myself. Indeed, it would be better for the Irish public I am seen as wholly re- is very much an Irish trait, and I want $10 million share loans. I don’t use the that I would be fairly treated impossible. Ireland, rather than me having to make sponsible. Of course, I feel I am unfairly to be back among Irish people so I can TL: Do you not trust the state to treat words “full” and “final” though, as the No rational person would respond to this, my defence on an international stage. I blamed, and my family and I have paid bring this to an end. The Sunday Business Post 8 Siteserv fiasco November 15, 2015 GAME OVER? Trough unrivalled sources and access to confidential reports and data, we reveal why the Siteserv investigation was doomed to fail. Who knew what, and when. And what happens now

Te commission was sparked originally Finance, Siteserv and O’Brien were killed off those interest rates result in a differential of by questions in the Dáil raised by the Social and that there was little risk of the commission more than €4 million in interest due over the Democrats TD Catherine Murphy about how ever reporting before the next election. standard applicable interest rates for loans of the media and telecoms’ mogul Denis O’Brien Tis is a stretch. However, the errors iden- that nature, or where the amendments give ended up acquiring a company called Siteserv tified by Judge Cregan are so many and so rise to or are likely to give rise to potential from IBRC, a vehicle established to wind down obvious that it is hard not to conclude that concerns.” Anglo Irish Bank. the commission’s terms of reference were Judge Cregan concluded that he has “diffi- Tom Lyons Te sale led to the state-owned bank losing thrown together by people who understood culties” trying to examine the issue of interest more than €100 million. Siteserv went on a little about banking. rates “at all” on numerous grounds. Business Editor year or so later to win state contracts to install In the scramble to come up with anything Te judge said that to determine wheth- water meters, thrusting the low-profile busi- to dampen the media roar about Siteserv (and er someone has a “preferential interest rate” reat fiascos often take time ness into the spotlight. Murphy’s questions to some extent the Fennelly Report) no time would require the bank to have a “standard” to unfold, bubbling away about Siteserv had, over the months, spiralled appears to have been taken to consider whether interest rate to measure every other interest behind the scenes before into other things. the commission was workable. It is hard not rate against. exploding onto centre stage. A Freedom of Information request had re- to conclude it was a rush job. IBRC did not have one, he concluded. Tis Last Friday, Mr Justice vealed the fraught relationship between IBRC is not surprising. IBRC was a complex bank Brian Cregan, the man management and the Department of Finance. How we broke the story last week in a financial crisis. Anyone drafting terms of appointed by the state to Documents were released showing that the Stonewalls from Merrion St reference for the commission could have found run the Commission of department had concerns about half a dozen On July 22, the commission first met with Te importance of privilege and confidenti- this out easily by asking the bank’s former Investigation into IBRC, dispatched a letter deals including Siteserv. Derek Moran, the secretary general of the ality was well known to the special liquidator. management or its special liquidator. Gto Taoiseach Enda Kenny. Te message: the Concerns are to be expected when a bank in Department of Finance, to discuss its terms It had been engaged in a battle with the And there is more. investigations had run aground. liquidation is doing hundreds of deals. Wrong- of reference and scope. family of Seán Quinn over these very issues Te judge said his terms of reference were Judge Cregan had concluded his task was doing is another thing entirely. Tere was another meeting on July 29. Ten for several years. It knew what its legal po- also “silent” about the period of time that impossible; banking confidentiality and le- As Minister for Finance Michael Noonan said the commission wrote to the department for sition was. should be examined. gal privilege meant he could not review core earlier this year, there was “no evidence” of the first time on August 10, formally seeking On August 13, the commission wrote back It is not clear to him if he should be looking documents in his investigation. any wrongdoing in relation to IBRC. Instead information. Four days later the department asking for more detail about its concerns. at interest rates granted from before the bank Last Sunday, Te Sunday Business Post exclu- there was innuendo. replied. KPMG replied on August 17. was nationalised but still in effect under the sively revealed the story, triggering a public Te state decided to set up a Commission On August 24, the Department of Finance On August 24, the commission sent over new IBRC management. and political backlash. of Investigation to get to the bottom of things. wrote for the first time to the commission draft directives setting out what it wanted and For example, if a borrower secured a low Just after 8am on Monday morning Dara “Te remit is six months, and if it can’t be citing banking confidentiality, commercial in what timeframe. Two days later, KPMG re- interest rate in the bubble, the bank still had Murphy, Minister of State at the Department delivered in six months then I expect that sensitivity, privacy and Official Secrets Act sponded. to honour the deal in the bust. of the Taoiseach, was on Morning Ireland. “I the sole member will produce a report of the concerns. Te commission then issued a series of di- It does not seem fair that the new IBRC man- don’t know,” he admitted when asked when work that has been done to date at that point,” All of these issues, it feared, might prevent it rectives on August 27. It wanted a schedule agement should be quizzed about historic in- did Kenny first realise the investigation was Kenny said on June 10. giving the commission everything it required. of transactions of deals that created capital terest rates granted by their predecessors that in trouble. “What happened in the past is in the past, Te department said if it voluntarily handed losses of more than €10 million. It also wanted the bank was legally bound to honour. “Te Taoiseach, as he always is, was decisive so whether it is Denis O’Brien or anybody over this kind of information it risked being a witness statement setting out the facts in Judge Cregan concluded that, without better and requested the Attorney General urgently else, the terms of reference are there for the sued. It asked for a formal direction. time definition, his task was again impossible. to look at this matter and report back to gov- commission for investigation and I expect On August 31, the commission met the de- Cregan also noted that he has been asked ernment,” he said. “I have complete and total that they will do their job fully, completely, partment again. On September 9, the commis- to look at interest rates charged on loans that confidence in the advice that was given.” thoroughly and very professionally.” sion issued three draft directives and asked the went on to lose large sums. He said it was “un- In London, on a visit to Number 10 Downing On June 16, the state formally set up the department for observations. Tese were given. likely” to make any difference what interest Street, Kenny reassured the public that the is- commission to “investigate certain transac- Directives were then issued. Tese sought a rate was charged one way or another on the sues would be dealt with “clearly, transparently tions, activities and management decisions at schedule of all core documents and a chronol- bank’s worst loans in a global financial crisis. and in an absolutely accountable fashion”. the IBRC”, from its nationalisation in January ogy of interactions between the department, Cregan concluded that producing a “mean- “Te judge has identified what he considers 2009 until its liquidation on February 7, 2013. finance minister Michael Noonan and the IBRC. ingful” report on interest rates based on the are deficiencies in his powers. Now I need to Terms of reference for the commission were Copies of framework agreements governing Siteserv was terms of reference he was given is impossible. know what that actually means, because I published and its cost was estimated at €4 the relationship between the state and IBRC dissolved. Te He has asked for this element of his terms intend to address it. million. were also sought. Contact details for civil ser- of reference to be redrafted into something “And in so far as a request from the Justice A six-month deadline was given. A speedy vants both in the department and those who commission was not achievable. It was his third wall. Unworkable dealing with this, we will see, based on the commission was essential to minimise the had left it were requested. gobbledygook. advice from the Attorney General, what needs reputational damage felt by anyone put under On October 1, the department handed over informed either of to be done to make that happen.” the spotlight. some documents. But again the issue of confi- Calm down was the message: the Taoiseach Retired High Court Judge Daniel O’Keeffe dentiality and legal privilege was mentioned. this event, or that it Siteserv 1.0 and the Attorney General, Máire Whelan, were was initially appointed to lead the commission. When it came to handing over documents Te Commission of Investigation was sparked on the case. Te implication was that the cabi- He was later replaced on July 9 by Mr Justice relating to specific borrowers from IBRC, the was pending by the deal made – in controversial circum- net would sort it out. Only, nothing happened. Brian Cregan of the High Court. department believed that legally it could not stances – to sell Sitserv to the businessman Te crisis continues. Finally the commission was ready to start. give them to the commission. Denis O’Brien. It was the first of many brick walls. relation to each transaction. O’Brien acquired the brand, operating busi- On August 31, the commission got a book- nesses and assets of Siteserv on March 16, 2012. Déjà vu Damning conclusions let outlining 15 deals within this scope and a Kieran Wallace of KPMG (later the special But hadn’t this all happened before? Six months From the beginning, Judge Cregan’s investi- Woes with KPMG booklet setting out related documents. liquidator of IBRC) was then appointed to wind earlier Kenny, advised by Whelan, set up the gation hit problems. Te source of all of these KPMG has been the special liquidator of IBRC Tere was also a covering letter that same up the company called Siteserv. Commission of Investigation. Back then he problems can be traced back to the poorly since February 2013, when the state decided to day from A&L Goodbody asking the commis- A final meeting was called for members and had trotted out similar lines. Now it was back thought-out terms of reference he was given. liquidate the bank. It is the primary source of sion to note that the bank believed there was on May 6, 2015, a final account of Siteserv was to the drawing board. He has been asked to look at 38 transactions documents relating to the vast number of items confidentiality and privilege issues preventing registered with the Companies Registration in total, which had write-downs of more than the commission has been asked to investigate. it releasing all documents. Office. Tis meant that if, within three months, €10 million. Siteserv is among these deals, but Te first contacts between the special liqui- During September, the special liquidator no order was sought from the court, Siteserv 12 Crowe Street there are many more obscure ones. Added dator and the commission were towards the sent over more documents relating to all 38 would be dissolved. When a company is dis- Dundalk, Co.Louth together, the 38 transactions saw total write- end of July 2015. Tis saw letters exchanged transactions, as well as supporting statements solved it does not exist legally. Tel: 042 933 6811 downs of €1 billion. between both sides discussing the nature and of fact. Tis carried on into October. Hundreds On June 16, 2015, the Commission of Inves- Fax: 042 993 3372 Write-downs of €1 billion sound like a lot. scope of the documents the commission re- of thousands of documents were uncovered. tigation was set up to look at IBRC, including Web: www.kmr.ie However, in the context of Ireland’s financial quired. But the confidentiality and legal privilege the Siteserv transaction. collapse it is a relatively small sum. Every bank On August 7, the commission asked KPMG to issues did not go away. Meanwhile, three months went by and on in Ireland has written off huge sums. IBRC voluntarily disclose documents. On August 12, Cregan had hit his second wall. August 6, 2015, Siteserv was dissolved. Te was not alone. the special liquidator wrote back saying it could commission was not informed either of this Judge Cregan was also asked to look at the not hand over certain documentation, citing Interest rate gobbledygook event, or that it was pending. Our client, based in the North East, has built a brand new issue of interest rates, listed share dealings in banking confidentiality and legal privilege. On September 22, the commission heard any borrower from the bank, and anything Interest rates were included in the terms of from KPMG that Siteserv had been dissolved. 35 Hectolitre Fully Automated Brewery. Our client is now else that popped up of public interest. “Te reference of the commission in response to Tis created a big problem; how could the com- interested in discussing with interested parties the pos- kitchen sink provision,” one source told me claims made in the Dáil about so-called special mission investigate an entity that did not exist? sibility of Selling, Leasing or entering into partnership to at the time. Nation’s interest rates given by IBRC to the businessman KPMG as special liquidator said it did not operate this Brewery. He has now produced a draft interim report, Denis O’Brien. believe that dissolving Siteserv would make a circulated to various parties. When Judge Cre- O’Brien has stated that these claims are false. difference, as the commission was concerned gan includes responses from the various people top legal It would have been easy for the commission only with how the deal was done, not with Expressions of interest are welcomed to KMR Registered named in the report he will then deliver Kenny to discover this, but for whatever reason, the what happened afterwards. Auditors, 12 Crowe Street, Dundalk, Co Louth before a final interim report. It is then up to Kenny eagle’s government shied away from asking it to look Tis might have been true if the commis- 30th November 2015. Please reference all correspond- and the Attorney General to decide where into something specific to O’Brien. sion’s terms of reference had specifically men- ence “Brewery”. All correspondence will be forwarded to things go next. rocky It decided instead to give the commission the tioned Siteserv and defined what it wanted our client for further consideration and will be replied to Cregan’s initial conclusions are damning. more Herculean task of looking at all interest examined exactly. It did not. Roadblocks, many of which should have rates given by IBRC. Te terms of reference Cregan concluded that Siteserv had to be in due course. been anticipated when the commission was term the commission was given was to look at: brought back from the dead and reinstated as being set up, are revealed at every turn. Máire Whelan “Whether the interest rates or any extension a company. KPMG has agreed to do this and Correspondence should be forwarded by post to KMR Political cynics have concluded that this profled, to interest rates or any periods for repayments voluntarily give Cregan any documentation or by email [email protected]. was somehow deliberate and that it ensured page 25 were given by IBRC on preferential terms that he requires. Tis fourth wall is surmountable, that questions about IBRC, the Department of were unduly favourable to any borrower, where but it was another unforseen problem. The Sunday Business Post November 15, 2015 Siteserv fiasco 9 Pat Leahy The inquiry is going nowhere, and everyone in government knows it Sitting out the problem n Saturday night last, Tao- never know – it could take longer. This largely explains why the commission was iseach Enda Kenny was Ministers rushed to defend Whelan against the set up in the first place, when nobody through- among his own people in charges that her advice on setting up the inquiry out government really believed there had been Castlebar, attending a func- was suspect. any significant wrongdoing. tion to mark 40 years as a But the facts were unhelpful. No matter how But Fine Gael also doesn’t want to be seen by TD. they sought to spin it, the government had given O’Brien as hostile to him. No government, in Some 400 guests ate, the judge a job to do, but not given him the tools fairness, wants to antagonise a press baron. drank and hurrahed the to do it. This explains why the inquiry was charged night away in the Breaffy House Resort. At the weekly cabinet briefing for journal- with investigating 38 transactions, plus anything OKenny shook hands, gave the thumbs-up and ists in Leinster House, government spokesmen else that took its fancy. This ensured that even clapped backs, basking in the ecstatic acclaim sought to downplay the questions about the AG. if the commission got around to reporting on of his own people – at least a few of whom must Nobody else had raised questions about the O’Brien’s banking and commercial affairs, it have stopped to wonder at how unexpected life issues of confidentiality or privilege when the wouldn’t be for a very long time indeed. can be. inquiry was being set up, they insisted. It wasn’t If the coalition is determined to sit out a short- But he knew another political storm was fair to single out the Attorney General for failing term blame game, the longer the week went on about to break over his government. to do so. the more it became apparent that a similar ap- Back in Dublin, senior officials were working As defences go, it was pretty thin. Is it not proach would be taken to the question of where furiously to plot a way through the controversy precisely the Attorney General’s job to see legal the inquiry went from here. they knew was about to ignite. difficulties where lay people can’t? Exactly what To the question, “What are you going to do Mr Justice Brian Cregan, who had been tasked does the government have a legal adviser for, if now?”, several senior coalition sources privately with inquiring into the sale of utilities and ser- not that? answer: “Nothing.” vices company Siteserv to telecoms and media Politically, Whelan’s position was safe. In- The Dáil will rise for Christmas in a few weeks. mogul Denis O’Brien, among several other ter-party sensitivity and the late stage of the Between now and then, the government will be matters, had written to the Taoiseach to say that waiting for, and then considering, the interim he was “not in a position to proceed with its in- report of Judge Cregan. vestigation into any of the relevant “write-off” The Dáil will rise in mid-December. When it transactions”, citing concerns about banking returns in January, it will be for a few weeks at confidentiality and legal privilege. most. One of the advantages of government is that Perhaps legislative amendments will be its immense resources means it often has a brought to assist the inquiry; perhaps not. head-start on a political crisis. But that doesn’t Nobody in government will lose much sleep Wilson Creative last forever. over it. Most of them never wanted the bloody Government Buildings knew the cat was out Nobody in thing in the first place. Siteserv 2.0 Good names prejudiced of the bag and they had their response ready government will lose Though nobody is willing to say it publicly, the when The Sunday Business Post reported the story feeling throughout the apparatus of government Prior to the sale of Siteserv – a company listed The commission has only begun to interact last Sunday morning. much sleep over it is clear: in the short term, the inquiry is dead. on the Irish Stock Exchange – there were a few with the board of directors of IBRC who have Kenny travelled from Mayo to Enniskillen And what about the long term? The simple unusual transactions in its shares. been under investigation for five months, where he was to lay a wreath at the cenotaph answer is this: a few months before an election, Someone appeared to be buying shares in despite no evidence being produced against there at the Remembrance Day service. it’s all about the short term. “Somebody else’s the company during the sale process, despite them. Speaking to reporters, he confirmed the Post electoral cycle meant that ministers – who all problem,” shrugs one highly-placed source. its huge debts of €150 million. This was odd. The commission cannot really interact with story, and said that the coalition would look at speak warmly of her anyway – were never going That’s about it, all right. The business of this The company’s shares had been languishing, them until it has all the relevant documen- emergency legislation to fix the problem. to permit her to be pushed into resigning. government is almost complete. While the con- as everyone in the market knew that its debts tation to put to them and ascertain why they The issue would dominate the news agenda But in comparison with her low-key prede- troversy does demonstrate how an administra- were far larger than its assets. made particular decisions. until it was knocked off by the extraordinary cessors, she has been a remarkably error-prone tion whose focus is no longer on the day-to-day The suspicion was that whoever was buying On November 9, Alan Dukes, the former story of child sexual abuse allegations made attorney general. business of government is more susceptible the shares must have known that a payout of chairman of IBRC and ex-Fine Gael minister against a former government minister. It is difficult to overestimate Fine Gael’s ner- to the perils of unforeseen events, there is an €5 million was going to be given to share- for finance, issued a media statement setting As Kenny returned from Enniskillen, back in vousness on all matters relating to Denis O’Brien. unreality to promising inquiries that will only holders in advance, and was using insider out the directors’ position. He said they were Dublin officials were scrambling to find a fix that The party is desperate not to be seen as too close commence in earnest next year, and everyone information about the deal to make a gain. “deeply concerned” and accepted Cregan’s would get them through the next few days. That to the tycoon, or – horror of horrors – doing him knows it. Siteserv’s shares were tightly held, so the analysis of the “apparent impasse”. is always the first priority of political crisis man- a favour. The coalition will sit this out, because it can. potential gain (if there was one) was in the The directors, he said, wanted to “cooperate agement. hundreds of thousands of euro. fully” with the commission, but said that to do But there was also the The commission was asked to look at so would require them to be given access to rather more complex whether with any deal “unusual share trading all documents. “Without such full and unre- question of how the le- occurred which would give rise to an inference stricted access, the directors’ legal right to fair gal conundrum thrown that inside information was improperly pro- process cannot be ensured,” he said. up by the judge could be vided to, or used by, persons, and in the event He said the directors did not even know solved. Never mind that that such an inference does arise, whether any what transactions were being reviewed. How- the Attorney General and such information was actually improperly ever, he said, the directors believed that as the her senior officials still provided”. proceedings of the commission are in private, believed the judge was The Irish Stock Exchange has its own duties then confidentiality can be preserved. over-cautious. of professional services secrecy. “The directors’ right to their good names The judge was the judge, The commission is understood to have con- is being prejudiced by the current impasse. and therefore his word cluded that it may be “unable” to make the There is a real danger that this situation will was writ. exchange cooperate with it by giving it access persist for a lengthy period, despite the fact The initial determina- to relevant information, as it has insufficient that not a single shred of evidence has been tion among officials was powers. produced to stand up the various allegations that emergency legislation It was wall number five. and innuendoes circulated during the last six could be produced and months,” Dukes concluded. okayed by the cabinet on This time there was no wall. Tuesday. More trouble on Dame St However, by Monday it The Central Bank’s secrecy obligations are was emerging that there “complex” and “largely grounded” in European Spitting bullets could be difficulties with Union law, Judge Cregan concluded. Domes- None of the 38 borrowers who received write- this. tic legislation he feared is “insufficient” to downs have been contacted yet. By the time the Dáil overcome this. Some suspect they may fall under the remit met on Tuesday, it was This is a problem for the commission if it of the commission, but they don’t know for clear that there were two hopes to complete a full report based on all sure, other than from media reports. separate aspects to the the relevant facts. Their reputations have all been indirectly controversy: the blame It is known that the Department of Finance damaged by being linked to a state Commis- game – whose fault is all raised concerns about certain transactions sion of Investigation, but they have no way of this? – and the question carried out by IBRC management, including defending themselves. of what the government Siteserv. What is less well known is that the “I am spitting bullets, and I can only guess could do to rescue the management of IBRC sent these deals to the how Denis [O’Brien] is feeling,” is how one inquiry. Central Bank for its review. business person (who is involved in one of Kenny batted back op- The Central Bank concluded that IBRC’s the 38 deals under investigation) described position questions about management had no questions to answer his reaction. the affair in the Dáil. “I about any deal sent to it for review, including The €100 million write-down relating to do not know of anybody Siteserv. Siteserv was because its previous owners bor- in the House who does The exact thinking of the Central Bank rowed too much money. O’Brien was only its not want this matter dealt appears, however, to be inaccessible to the new buyer. with thoroughly, compre- commission because of European Union law. He declined to comment last week when hensively and in an ab- Cregan hopes he can get around this by contacted, but is very unlikely to be pleased solutely accountable way looking at information held by the special at this latest turn of events. in the public interest,” he liquidator of IBRC detailing its conversations told Fianna Fáil leader Mi- with the Central Bank. cheál Martin. But the bank may not have everything. It No clear way forward Fianna Fáil back- was wall number six. There are six walls preventing the Commission bencher Robert Troy of Investigation carrying out interrupted him. “Look its work. in the mirror!” he inter- Most of these were predict- jected. able, but somehow no one Ah, but there were legal EIIS WIND FARM thought of them. The Taoi- difficulties, Kenny read EIIS WIND FARM INVESTMENT OPPORTUNITY seach is now trying to come from his briefing note. INVESTMENT OPPORTUNITY up with a way to get things He was at his most GURTEEN WINDFARM LTD., is moving again, but it is hard emollient, most reason- to see what can be done. able, most Bertie-esque. pleased to announce the Even if a way is found to get “I believe the questions opening of the Gurteen around the legal obstacles, that have arisen should Windfarm EIIS Investment there are still hundreds of be considered by all the thousands of core documents parties and the members Opportunity, offering investors to be reviewed and all in, po- of the House before a de- a premium of 10% in addition tentially millions of pages. cision is made on the best Judge Cregan has indicat- way to proceed,” he said. to the tax relief available. ed his work could take up to Sure aren’t we all in this PROJECT PARTICULARS eight years unless a second together? judge is appointed to help That morning, the cab-  Up to 40% tax relief available. him. The bill, whenever the inet had not reviewed the  Fully consented, construction ready, asset backed project commission concludes, could emergency legislation with very strong cashflows, located in Co. Tipperary. be astronomical. proposed over the week-  Experienced project developers with a track record. The political bill for Kenny end, but rather a “menu of  Projected IRR of c.15% should also be expensive, but options” proposed by the  No Commission Fee, No Annual Fee, No Exit fee. just as the commission finds Attorney General, Máire itself bogged down in com- Whelan. FOR A COPY OF THE INFORMATION MEMORANDUM PLEASE plexity and detail, the public, Ministers agreed to SEND AN EMAIL WITH YOUR CONTACT DETAILS TO: too, can be forgiven for find- await the interim report [email protected] or phone 086 8012757 ing things hard to follow. It is of the judge, which is ex- a hell of a mess. pected this week. But you

IRELAND’S FINANCIAL, POLITICAL AND ECONOMIC NEWSPAPER Is your health insurance policy David McWilliams a waste of money? The tragic mistake of MoneyPlus, page 1 joining the euro p20 Is rugby safe for kids? In the Magazine March 15, 2015 businesspost.ie Price €2.90 The files they don’t want you to see

22 men and Sean Quinn Derek Quinlan Sean Dunne €26 Billion Liam Carroll Sean Mulryan The secret report that convinced Denis O’Brien Cowen the banks weren’t bust Johnny Ronan BY TOM LYONS still out by more than €50 guaranteed by the taxpayer) to collapse. that its biggest single impaired Bank of Ireland, meanwhile, Ray Grehan billion from the €64 billion will remain above regulatory PwC identifies that Irish loan at the time was of just €31 insisted that developers such The Sunday Business Post can required by the taxpayer to bail levels in the period to 2011.” banks have a €63 billion land million to a chicken farmer in as Sean Dunne were good for today reveal the secret PwC out the banks. Reading the report, how- and development land expo- Poland accused of fraud. to page 2 report into Ireland’s banks After receiving the report ever – and the many caveats sure alone and that many of that shows how just 22 men in November 2008, taoiseach included by PwC, such as the the country’s biggest devel- ended up owing €25.5 billion Brian Cowen claimed in the assumption that the banks opers were already struggling to their banks. Dáil that he was right to guar- were telling it the truth – it is or failing to pay their interest The report also shows how antee Ireland’s toxic banks as hard to understand how Cow- bills on their massive land PwC said that in its worst they had more than enough en was so definitive. banks. case scenario, Ireland’s banks cash to survive the next three Ireland’s developers were The top 22 developers alone would lose only €10.6 billion. years. creaking under the strain in in the country had an €8.8 However, this was clearly He said: “The PwC report November 2008 and even the billion exposure to develop- qualified. demonstrates, under a num- banks acknowledge that some ment land. PwC also shows The €10.6 billion figure was ber of stress scenarios, cap- of them, such as Fota Island that Irish banks had no idea of twice what Ireland’s banks ital levels in the covered in- boss John Fleming (later a the scale of losses facing them. told the state at that time, but stitutions (the six Irish banks bankrupt) were already close For example, AIB told PwC Introducing Greg Kavanagh, the self proclaimed Ronaldo of Irish property Profile, page 19 Pub prices in Government bids to Dublin ‘twice stop flood of home that of Tokyo’ repossessions By Jack l Horgan-Jones Package of measures to be unveiled later this month

JD Wetherspoon is being By Róisín Burke, knowledge of the discus- process for the bank veto, and shut out of the central Emma Kennedy sions, the Department of there’s broad agreement that Dublin pub market by and Pat Leahy Finance has been asked to that needs to be addressed,” property prices which return to the EMC next week one government source said. “must be twice as high The government will unveil a with proposals in three broad “There is a clear picture form- as Tokyo”, the compa- package of measures later this areas – reducing the term of ing that some banks are not ny’s chief executive has month which it hopes will put bankruptcy, extending mort- holding up their side of the warned. a stop to the flood of home gage-to-rent schemes, and deal.” Tim Martin said that JD repossession cases currently removing the banks’ veto on While discussions on the Wetherspoon has tabled coming before the courts. proposals from personal in- shape of the likely debt plan the highest bids in its his- The economic management solvency practitioners. Senior continue, there are concerns tory for Dublin city centre council (EMC) – the inner finance official Ann Nolan is that a revamped mortgage- Move forward. With confidence. pubs. The pub magnate cabinet of Taoiseach, Tánaiste, said to be coordinating the to-rent scheme will not be added that he expects Minister for Finance Michael proposals. enough to tackle Ireland’s No matter how complex your business Wetherspoons’ prices Noonan, public expenditure The intention, say sources, is debt crisis. questions, we have the capabilities and to rise incrementally in minister Brendan Howlin and to remove the politically un- “There are only certain experience to deliver the answers you need Ireland over the coming senior officials – has discussed acceptable vista of widespread things you can do to the mort- years, saying that price the repossession crisis repeat- repossessions before the next gage-to-rent scheme,” said to move forward. As the world’s largest tags are currently “lower edly in recent weeks. election. David Hall, chief executive consulting firm, we can help you take decisive than is sustainable for the According to sources with “There’s no real appeals to page 2 action and achieve sustainable results. long term”. see page 7 deloitte.com/ie/consulting Vol.28. No. 11 BANKERS’ PAY . . . How many Copyright © 2015 Deloitte. All rights reserved. Permanent TSB staff earn €100,000 or more? page 9 The Sunday Business Post 2 News March 15, 2015

Index Community ownership plan for wind farms

 Common tax base By Jack Horgan-Jones in the midlands. gy John Reilly said that while firmed that it is considering “I believe the government resources by 2020. In that sit- floated The new plan would see no final decision had been solar farms on cutaway bogs is looking at consulting on a uation, Ireland would have to EU’s new competition Bord na Móna is eyeing a rad- communities offered the made, the company “defi- in the midlands if the gov- range of tariffs next year and buy credits from other coun- commissioner, Margrethe ical new plan to enhance the chance to control an equity nitely sees potential for com- ernment were to sign off on Bord na Móna is currently tries. With Europe increasing- Vestager, spoke to Jack public acceptability of wind stake in a wind farm, with munity ownership of future a subsidy for the technolo- looking at the potential to ly unlikely to beat its targets farms by offering commu- Bord na Móna potentially renewable energy projects, gy. The company considers co-locate solar panels with by much, the cost of scarce Horgan-Jones nities the chance to cash in guaranteeing a loan advanced and we’re looking at several solar panels a “real option” wind turbines to optimise the credits will skyrocket. page 5 on an ownership stake in the to the community to fund the models around the world”. in hitting renewable energy use of existing grid capacity,” “The cost of non-compli- power plants. venture. “Later this year, we will take targets after the current target Reilly said. ance is estimated at €150 mil-  Right to die case looms The semi-state this month Revenues from the wind our innovative approach even period expires in 2020. Former He warned, however, that lion for every percentage point A Dublin woman will go on trial next announced ambitious plans to farm could then service the further and consult with local Bord Gáis chief executive John the government could face Ireland misses our target by. month for assisting in the suicide of spend hundreds of millions of debt as well as providing a communities on the subject Mullins has already said that serious costs if Ireland fails to Current projections are that another woman, in a case likely to re- euro on wind power, but has cash dividend for local com- of community ownership,” he wants to go into business hit its mandated target of gen- we could miss by 3 per cent or ignite the debate surrounding euthanasia faced substantial local oppo- munities involved. he said. building solar farms in Ireland erating 16 per cent of overall 4 per cent, so that could cost us and the ‘right to die’ sition to its plans, especially Bord na Móna head of ener- The semi-state also con- if a subsidy tariff is established. energy needs from renewable €500 million per year.” page 7

 Limerick hospital plan stalls Briefing A businessman with plans to construct a private hospital in the city has accused the VHI of being “anti-competitive” by Creighton lays her cards on refusing to support his proposal page 8 the table with Renua launch  PTSB’s profit hopes working on their own “big launch” Permanent TSB is holding Young working of a new alliance, with the aim of out the prospect of being mums, business getting a significant number of de- profitable sooner than clared candidates. forecast as it looks to tap people targeted “Lucinda didn’t have enough private investors for €525 people with her when she started million to plug a capital shortfall in bid to break in January. We won’t be making that mistake. We’re going to have a big page 9 through group walking out on the plinth,” one independent TD said.  Banking inquiry But Creighton maintains that there It’s Week 10 and Elaine are now 180 people willing to go for- Byrne is writing about her ward for Renua Ireland in next year’s own experience before the general election. Candidates such as banking inquiry Jonathan Irwin – the founder of the page 10 Jack and Jill Foundation – have real Michael Brennan credibility. He is expected to run in  Interview Kildare South. Political There is a hotel owner, a social Dermot Smurfit is having a very busy worker, and a farmer in the form of retirement. Packaging entrepreneur Correspondent Jason Fitzgerald, who founded the Jefferson Smurfit’s youngest son spoke to Irish Farmers with Designated Land Philip Connolly about his varied business First it was the Reform Alliance, then group in Cork to protest at the impact interests it was Reboot Ireland and now it is Lucinda Creighton (pictured with, from right, Jonathan Irwin and Eddie Hobbs) launches her new political party of restrictions to protect endangered page 17 Renua Ireland. Renua Ireland Barry Cronin species. Lucinda Creighton and her fel- Renua Ireland president Eddie  Profile low exiles from Fine Gael have been Hobbs is a bogeyman for many pub- Greg Kavanagh, one searching for a path out of the po- Party name ‘contrived and too corporate’ lic sector workers, given his repeat- of Ireland’s most litical wilderness for the past two ed criticisms of their pay levels and years. Now Creighton and three of Lucinda Creighton has slipped up it isn’t,” O’Rourke said. on since. “Renua is about a mo- pension entitlements. He extend- high-profile property her former Fine Gael colleagues have with the name of her new polit- She said that the tone of the ment in time, whereas a political ed an olive branch to public sector developers, has emerged settled on a new party which will ical party, according to branding name was too feminine and soft party is about ethos over time. I workers at the launch, saying that he from the property crash have a constitution, a code of ethics, experts. for a political party. “The deciding don’t think Ireland needs to be wanted those who were innovators with one of the largest land banks in the a fundraising target of €500,000 and Mel O’Rourke, founder of cre- thing should be – does it sound in a constant state of ‘renua’,” he to join “in larger numbers”. He is still country a plan to run 40 to 50 candidates in ative agency Creative Inc, said the right? Does it sound like it could said. He added that the logo looks prevaricating over whether he will page 19 the general election. name Renua lacked credibility. be a party that could lead? Un- contrived as it is too corporate run or not. wBut even his presence But can it become any bigger than “This is a party that’s taking on fortunately it doesn’t,” she said. and does not seem accessible to a in the party means that a substantial  Insured but not just a party with Creighton as leader the big boys, the ones that have Andrew Bradley, director at younger audience. “It’s between number of public sector workers will covered and a couple of existing TDs? the history, the heritage, so this Bradley Brand and Design, said stools. It’s neither bold and fo- likely be looking elsewhere. Does health insurance There has been a history in Ireland name, whatever it was going to people were in the “renua mode” cused or conservative. It’s stuck The MC for the party’s first press of new parties rising and falling, from be, needed to be really strong and five years ago, but have moved in the middle.” Colette Sexton conference was Liam McCabe, who make sense? Health editor Clann na Poblachta to the Progres- previously worked as the manager Susan Mitchell reports sive Democrats. But councillor John of Senator David Norris’s turbulent Money Plus, page 1 Leahy, who is expected to run for the as collateral. families,” she said. “You won’t be allowed to spread 2011 presidential election campaign. party in Offaly, said the party had to “We’re looking at what’s right for The party says it will publish de- rumours about your political op- Creighton is also being helped by  The hub culture stick to its core values. the country and what’s right for the tailed policies on all issues over the ponents or make political slurs,” her secretary Samantha Long, who Emmet Ryan looks at the “Even though the PDs achieved a people,” he said. coming months. At present its web- he said. And he said that the party’s quit Fine Gael after the party decided role that hubs play for tech lot, I don’t believe they moved with Electoral strategists say that a key site lists a series of general principles, ethics code would also demand that to nominate John McNulty for the start-ups the times and they went away from voter group in next year’s gener- many of which amount to little more TDs conducted themselves properly vacant Seanad seat instead of her. Money Plus, pages 6-7 their values. It’s not all about being a al election will be young working than platitudes. The section on chil- in the Dáil chamber. “There’ll be no cabinet minister – you have to pinch mothers in their 30s and 40s, who are dren, for instance, reads: “There is heckling – or it’ll be at an absolute Coalition yourself and ask ‘are we still with our often burdened with high mortgages no greater moral and political issue minimum,” he said. In the party’s launch video at the  Babyproof your career! values and our beliefs?’ ” and high childcare costs. than securing the future of children. Science Gallery in Dublin, the new Fiona Ness on extreme family planning Renua Ireland is making a clear The personalities Renua Ireland logo was superim- for work-focused women in Mother The policies pitch to this group with a promise of New politics There has been much scepticism posed over a picture of Government Courage Renua Ireland is promising to keep a childcare tax credit split between Renua Ireland is promising to “throw about Renua Ireland’s prospects of Buildings. It was a clear statement of The Magazine, page 16 water charges but to abolish Irish parents and the childcare provider off the shackles of the whip sys- success, given the limited number of intent. Creighton has said that it is not Water. It is also going to retain the to ensure that it is not wiped out by tem”. But free votes will only apply TDs and senators who have come on about the group holding the balance  Languedoc property tax, but rework it to re- higher charges. to issues of conscience, such as the board. Targets such as independent of power in the next general elec- rebooted duce the higher property tax bills Creighton said that nothing had abortion legislation that resulted in TDs Denis Naughten and Stephen tion. But if Renua Ireland is to have Tomás Clancy revels in in urban areas. been done to deal with the huge Creighton and other Fine Gael TDs Donnelly have stayed away. Fine any immediate impact, then that is France’s rebel wines Like the PDs, the party is mak- childcare burden on families, which and senators losing the party whip Gael Senator Paul Bradford, who is exactly what it is going to be about. ing a big play for the business vote. was like a “second mortgage”. in 2013. Creighton’s husband, is going to run Sinn Féin has been ruled out as a The Magazine, page 32 Councillor Ronan McMahon, who “We just feel that has to become The party is planning to have a in Cork East, but his fellow former coalition partner, and Creighton has finished fourth in the recent Dublin a priority. We all talk the talk about whip on its general policies and for Fine Gael Senator Fidelma Healy said that she does not want to “prop  The bold and the South West by-election, said that the women in politics and in business, votes on budgets. Then there is the Eames is running in Galway West up” a diminished Fine Gael-Labour beautiful party wanted a new credit system for but we have to free them up and ethics code. Dublin North East TD as an independent. coalition which has been rejected Interior designer Catriona businesses. This would allow busi- make it possible for them. The cost Terence Flanagan said it would re- In the background, independent by voters. But there is still plenty of Hanly’s debut fashion nesses to borrow at cheap rates, using of childcare is a huge disincentive quire elected members to uphold the TDs such as Shane Ross, Finian room for manoeuvre – if they get capsule collection invoices from slow-paying suppliers for women and parents to even start highest standards or be kicked out. McGrath and John Halligan are still the numbers. The Magazine, page 8 Action on repossessions Debt charity meets with from page 1 that mean families could solution in contact with out of the deal. insolvency agency of the Irish Mortgage stay in their homes. the Taoiseach’s advisers, Ross McGuire of dis- Holders Organisation. “It Several other firms have said: “I am very hopeful tressed mortgage adviser By Emma Kennedy the reasonable living standards needs to be fundamental- hired experienced teams that mortgage-to-lease group New Beginnings allowed under ISI debt deals, ly changed. I’m not con- with distressed debt man- will be mainstreamed in also confirmed that “a big British debt charity StepChange, and whether or not StepChange vinced that the mortgage- agement backgrounds the coming weeks and that development that would which is set to launch a bank- will apply similar rules when to-rent scheme can help with a view to having a a real solution will be on open up the way for a pub- backed debt resolution service negotiating with distressed bor- the numbers that are in role in the plans. offer for the 30,000-plus lic-private partnership” here in the coming months, has rowers. trouble. They need to look Repossession proceed- families in arrears for two was under way. met with the state’s insolvency “The ISI is not in a position at something else.” ings, which have been years or more,” she said. Banks will not be co- agency to discuss the debt land- to comment on StepChange’s As first reported by this escalating dramatically One such private player, erced into cooperating scape here. proposed template,” the ISI paper previously, part of in the courts, are one of Arizun, went under offer with the plans, but are The meeting comes amid spokesman said. He added that the proposed solution may the government’s central recently to buy 5,000 dis- likely to do so as the solu- ongoing negotiations between no further meetings with the be to bring in private- preoccupations at present. tressed mortgages with a tion will involve their most StepChange, Irish banks and British debt charity had been ly-backed organisations TD Regina Doherty, face value of €1.4 billion troubling tranches of debt banking industry body Banking “scheduled at this juncture”. that would support dis- who has been involved from Permanent TSB, but being taken off their bal- and Payments Federation Ire- Banking sources indicated tressed mortgage lenders in putting organisations one source says that the ance sheets at a market land regarding the introduction that negotiations with Step- in ‘mortgage to let’ deals that may be part of the bank subsequently pulled price. of a restructuring scheme for Change date back to a collapsed borrowers with debts across Central Bank pilot scheme for multiple lenders. tackling debts across multiple StepChange is understood to lenders. be very close to launching in the The British debt charity was The PwC files: 22 men and €26bn Irish market, and is also under- appointed to operate the pilot from page 1 Ireland’s developer kings on his home on Ailesbury rious structural issues in stood to have been in contact scheme, and figures published were massively over- Road. Irish banks. with the Central Bank recently. by the Central Bank last April their loans when the bank stretched and failing in Developer Liam Carroll, It said AIB had breached “StepChange requested a revealed that close to 300 dis- ended up losing €120 mil- many cases to pay their meanwhile, needed €120 Financial Regulator limits meeting with members of the tressed borrowers were referred lion on the so-called Baron company interest bills. million just to survive the on sector concentrations Insolvency Service of Ireland to StepChange by lenders for of Ballsbridge alone. Bernard McNamara, for next 12 months, while by lending too much for and the meeting was held in assessment during the pilot. Anglo thought its worst example, was facing “seri- financier Derek Quinlan builders to buy develop- February,” a spokesman for the About half of those received loan at the time owed by ous cashflow difficulties” was being put under pres- ment land and it notes Insolvency Service said.Sources proposed solutions to their a minor developer might and was “discussing” in the sure to sell his art collec- that 78.2 per cent of An- suggest that one of the topics overall debt situation during the cost it €16 million. thick of the crisis raising tion. glo’s loan book was out to discussed at the meeting was four-month pilot. PwC also shows that €2.5 million more secured PwC also identified se- property companies. The Sunday Business Post 12 The PwC Files March 15, 2015 SPECIAL INVESTIGATION

Tom Lyons In 2008, the government instructed PwC to examine the state of Ireland’s banks. The report has since remained secret. Until now The PwC files revealed wo days after receiving a secret report PwC’s Dublin headquarters called Project Atlas from accountants on North Wall Quay PwC, Brian Cowen, the then taoiseach, Picture: Feargal Ward was in confident form in the Dáil. He told his fellow politicians and the world on November 19, 2008 that Irish banks’ capital levels would remain above regulatory thresholds for the next three years. This was the same period that covered the life of his ios for Ireland’s banks, all of which turned out to be Tgovernment’s decision to guarantee its toxic banks. hopelessly optimistic. “The report confirms that all of the institutions Take Anglo Irish Bank, whose collapse would cost reviewed were in excess of regulatory capital require- Ireland €30 billion. PwC states that Anglo’s manage- ments as at September 30, 2008,” Cowen declared. ment has run models for what the future will look “The PwC report demonstrates under a number like under four scenarios. In the best case scenario, of stress scenarios that capital levels in the covered Anglo predicts it will make a €3.7 billion profit be- institutions will remain above regulatory levels in the tween 2009 and 2011 – with lending impairments period to 2011,” he said. of €1.5 billion. In the worst case, Anglo will make a The message was that PwC had proved that Cowen profit of €794 million – even after losing €4.3 billion was right. His decision to guarantee Ireland’s entire on bad loans. banking system had been vindicated. Debate over. AIB produces similar optimistic scenarios, with the bank predicting it will still make profits of over €1 ✽ ✽ ✽ billion every year between 2008 and 2011. In reality, On page 93 of the report, PwC identifies the nu- of course, AIB cost the taxpayer €20 billion over that clear button – although it does not call it this – that read through the actual PwC report that period. Similar fictions are presented in great detail will destroy Ireland and bankrupt its banking system: The scope of Cowen based his claims on tells a different by Bank of Ireland, EBS and Irish Life & Permanent. non-cash generating land and development projects. story. The Atlas report presents a frightening PwC reports that both Anglo Irish Bank and Irish Exposure to land and development projects across geography of reckless lending in Ireland’s Nationwide are dismissive of the worst case scenar- the six banks comes to a frightening total of €63 bil- Project Atlas banks. Time and again, PwC states it has re- ios. Even after both banks came within days of going lion, PwC concludes. This was 14.8 per cent of Irish Alied on “management information”. This is not surprising bust only two months earlier at the time of the bank banks’ entire loan books. Phase 1 of Project Atlas began on September 18, given the time constraints of compiling the report and guarantee, both remained adamant they had a profit- Even before including a domestic housing bubble 2008, on Anglo Irish Bank, Irish Life & Permanent was in line with the brief from government. able future ahead. and overpriced global commercial property, this and Irish Nationwide. The very bankers who had brought Ireland to the “Anglo consider this scenario unrealistic . . . [Irish spelled massive danger. brink of going bust are the key source of the PwC re- Nationwide] management believe the PwC scenarios PwC spends pages discussing whether land is Phase 2 began on October 14, 2008, and covered port. As a result, the report does not confirm anything to be unrealistic,” according to the PwC report. zoned or has planning permission. There is no sense all six Irish banks by adding in AIB, Bank of other than that Ireland’s bankers still don’t believe Irish Nationwide management, PwC said, had from the PwC report of the danger that having an Ireland and the EBS. This finished in mid- they will go bust. even “run” its own scenarios on its “own model” that exposure of €63 billion to development land was November (and later began again in 2009 when PwC spends pages examining various loss scenar- shows it making money. almost certainly going to blow a giant hole in Irish it became clear the crisis showed no signs of banks’ balance sheets. abating.) Land and development land alone meant Anglo (€19.7 billion, or 26.7 per cent, of all its loans) and The then financial regulator Patrick Neary Irish Nationwide (€5.6 billion, or 47 per cent, of all commissioned Project Atlas, and his office was of its loans) had to go bust. AIB, with an exposure responsible for disseminating its findings to the of €23.7 billion to land and development, was also state. clearly in serious trouble. PwC made a number of important points at the The only thing that could change this was if the start of Project Atlas. world quickly returned to the conditions of the bub- ■ “Our information was obtained primarily from ble. Given the fact that Lehman Brothers, one of the credit review sheets/credit mark-ups prepared world’s biggest banks, had gone bust, only an ex- by management, and discussions with senior treme optimist would predict the world was going to relationship-lending underwriters and senior return to anywhere near where it was. central credit risk personnel in the banks.” The PwC report also highlights the unfairness of ■ “In the time available, we have not conducted what has happened in Ireland. any detailed review of credit files or validated There was an enormous concentration of debt assertions made by management.” around just a very few individuals. PwC states the top ■ “We have not, in the time available to us, 22 borrowers from Ireland’s banks cumulatively owe checked the adequacy of security, valuation €25.5 billion. Based on “loan review sheets and man- reporting etc or all of the underlying agement summaries”, PwC gives all 22 exposures a documentation in any bank.” risk rating. ■ “Because events and circumstances frequently Only five borrowers were in the “high risk” cate- do not occur as expected, there will always gory. This was despite the top 22 borrowers having be differences between predicted and actual an exposure of €8.8 billion to development land. On results, and those differences will be material.” page 122 of the report, PwC states that Anglo feared its worst 20 borrowers might cost it €300 million. The caveats and qualifications in the PwC “This exposure is supported by the security held on report reflect the uncertainties of the day. those assets which totals €227.3 million,” PwC states. Taoiseach Brian Cowen, however, was far more “We note that this is based on recent valuations bullish in his comments in the Dáil. and assumes that these assets can be readily sold.” A tiny loan with a provision of just €100,000 (owed by a businessman with no property exposure) was expects the real number to be “at least twice this laughably enough to make it into Anglo’s top 20 im- sum”. paired loans list. Top of Anglo’s provision list was a On page 113 of the PwC report, a table is produced relatively small developer on whom the bank fretted comparing loans that are identified as “impaired” it might lose €15.7 million. This was peanuts com- by each of the banks. In total, all six banks find only When it comes to helping SMEs all over Ireland, we pared to the real losses facing Anglo. €4.5 billion worth of loans are impaired (versus the Every business know that there’s no such thing as a “one-size-fits- Later in its report, it states that it is concerned, for €64 billion ultimate losses of Ireland’s banks). Anglo all” funding solution. That’s why we get to know example, about the ability of Anglo to be repaid by admits only 0.6 per cent of its loan book, or €423 is different. each SME we deal with, understanding their business Sean Quinn, who owes the bank €2.7 billion. million, is impaired. and tailor-making products to suit their specific Similar figures are reproduced by all the banks. AIB states only 1.2 per cent of its loan book is im- needs. We provide Invoice Finance and related Irish Nationwide, for example, claims it might lose paired, or €1.7 billion. AIB’s biggest worries are Ber- That’s why our products for all kinds of SMEs, all over Ireland, just €283.2 million on its worst loans. The real num- nard McNamara and JJ Fleming. helping people move their businesses forward. ber was €5.6 billion. AIB was right in this case, but the bank is way off Incredibly, a loan provision of just €800,000 was how big a cost both developers will ultimately prove funding solutions We make it our business to be fast, flexible and enough to make it into the rogue building society’s to be. easy to do business with, guaranteeing a decision top 12 impaired loan list. Among other developers noted by PwC is Sean on funding within 5 days. are flexible. The EBS came up with a similar fantasy. Its most Dunne who is now living in the US having left debts If you are a business, invoicing for goods and impaired loan was a loan of €13 million to the fraud- of hundreds of millions of euro behind him. services to your customers, talk to us today ster solicitor Thomas Byrne. It too simply didn’t “In the current environment, a lot of his capital about how we can help your business grow. understand, or wouldn’t admit, that its loans to de- is tied into non-generating assets,” PwC concludes. velopers could ever be in trouble. Interest roll-ups On the following three pages, The Sunday Business (ie, when developers did not pay interest, let alone Post reproduces PwC’s findings about the 22 biggest capital) was already a big problem that PwC clearly borrowers in the country who ended up owing Irish identifies. banks €26 billion cumulatively. AIB, for example, estimated interest roll-ups at There are lots of warning signs, from massive land €600 million. Banks use interest roll-ups for differ- banks generating no income, to developers having so ent reasons, but one of them is that the borrower is little cash they are considering selling their paintings 01 297 4911 bibbyfs.ie Moving business forward simply unable to pay his interest: a clear danger sign. or doing equity releases on their own mansions. Anglo said its interest roll-ups in 2008 were €450 The numbers and individual stories are telling and million. PwC states it does not believe the bank and disturbing.

2011683 MBF Phase 2 210x168 V3.indd 1 05/03/2015 17:00 The Sunday Business Post March 15, 2015 The PwC Files 13

Brian Cowen: the former taoiseach was confident People of about the banks in 2008 Picture: Tony O'Shea influence, people of blame The property bubble and subsequent bank bailout had devastating results for this Gavin country. It is time we were told Sheridan exactly who was responsible t’s now more than six years since books of the banks end up with such a Ireland made a decision which small group of people? In a country this would have devastating conse- small, how connected are those people to Findings in Project Atlas quences on its people. Yet amaz- the people who were in power from 1997 ingly, after so much time has to 2011? The €63 billion land and devel- expects it might lose €15.7 million. AIB’s sector concentration: Ac- Anglo’s interest roll ups could be passed, we still know relatively Which politicians, and civil servants, opment bombshell: This was the PwC notes that Anglo’s list is “based cording to PwC, “The Financial twice estimate: PwC states that little about how the crisis came were responsible for pouring fuel on the biggest danger facing Irish banks at on recent valuations” and assumes Regulator applies a limit on sector AIB says it has rolled up interest of about, and who exactly was re- fire of an out-of-control property bubble that time as land and development assets “can be readily sold”. Similar concentrations equating to 200 per €600 million, Anglo €450 million sponsible. – the people who made the policy deci- land generated little income and underestimates of losses were pro- cent of own funds for one sector or and Irish Nationwide €514 million. IToday The Sunday Business Post names sions both around property development was always going to be the slowest duced by all the banks. 250 per cent of own funds for two Bank of Ireland’s figures were “not names around tens of billions of euro lent and banking regulation? How close were to recover. related sectors. available”. PwC said it did not be- to a very small, but influential, group of bankers to politicians, and in what way? Loans in this category for each Irish Nationwide’s ‘prudence’: “At September 30, 2008, AIB’s lieve Anglo’s interest roll-up num- people during the property bubble. These How close were property developers to bank were: AIB (€23.7 billion); Bank Irish Nationwide loaned €74 million property exposure (excluding Po- bers and said: “We would estimate names and the exposures they had, have politicians, and what policy decisions of Ireland (€13.6 billion); Anglo to fund a byzantine palace in Surrey land, Britain and parts of the capital at least twice this sum.” – up until now – been rumoured or re- were made in their favour? (€19.7 billion); Irish Nationwide called Updown Court with a bowl- markets) totalling 275 per cent of dacted. But citizens have a right to know: But if there’s one thing that stands out (€5.6 billion); EBS (€516 million); ing alley, cinema and five swimming own funds and 390 per cent when Irish Life & Permanent was not many were effectively bailed out through in efforts to understand the crisis it is Irish Life and Permanent (Zero). pools. combined with development and seen as big danger: IL&P emerges guarantees, a bad bank and bailouts. this: secrecy. Anglo’s top 20 development/land The society lists it as its second land exposures therefore breaching well from the PwC report as it only Whose interests has secrecy served? Ireland is by clients alone owed €6.6 billion. biggest problem borrower as it ex- the above limits. has a relatively small exposure to Certainly not the interests of citizens. its nature a se- pects to lose €34.3 million on it. “We understand that the sector developers. The real dangers facing And when consultants are hired by cretive country. Irish banks’ €121.5 billion expo- “Given the current market con- concentration framework is cur- it, the prolonged economic crash, its government to find out some of what And secrecy sure to Britain: PwC notes that “40 ditions, a 46 per cent impairment rently being reviewed by the Finan- tracker mortgage book and funding happened, why do only a small group of breeds corrup- per cent of loans are lent outside was deemed prudent,” the report cial Regulator.” model, would only emerge later. people see it, and then it languishes on a tion, malad- Ireland with 55 per cent of Irish notes. In total €4.2 billion or 42 per shelf thereafter? How many other reports ministration Nationwide’s book outside Ireland, cent of the society’s entire loan book Bank of Ireland most realistic: Trophy development sites meant will never see the light of day? and incompe- primarily in Britain. is classed as “speculative property “Impaired loans totalled €4.5 billion key developers had blown their The banking inquiry only recent- tence. We talk “On average, 43 per cent of AIB, investment”. at September 30, 2008 across all the boomtime profits: PwC notes that ly commenced hearing evidence. The about trans- One thing Bank of Ireland and Anglo’s loans banks, with the largest impairment Bernard McNamara had “difficul- process so far has been dismal. With so parency and are outside Ireland”. General concentration: PwC states being in Bank of Ireland totalling ties” after spending €388 million many members of the inquiry needing accountability, stands out In total Irish banks have loaned “78.2 per cent of Anglo’s book is lent €1.9 billion.” Bank of Ireland had on two sites at the Burlington Hotel their moment in the spotlight, it seems but we very €256 billion in Ireland, €121.5 bil- to property companies, 5.5 per cent placed 8.9 per cent of its loan book in 2007. Ray Grehan had “severe almost impossible for them to ask any rarely see it. It in efforts to lion in Britain and €48.6 billion in for personal investment and 6.3 per on its “monitored” list, but Anglo cash difficulties” after he spent €172 probing questions at all. By the time a makes for good other international jurisdictions. cent to hotels. 44.2 per cent of Bank felt only 2.6 per cent of its book million (€83.7 million an acre) on witness is beginning to say anything in- sound bites, understand If Irish banks had been allowed to of Ireland’s book is in home mort- deserved this treatment. Anglo had the Veterinary College in Dublin 4. teresting, time is up and we move on to but countless the crisis: collapse, it would have had a huge gages. It appears that concentration another list called “notable” loans John Lally had “significant cashflow another set of often unrelated questions. government or impact on Britain. limits may be exceeded in a number of €1.4 billion, further confusing problems” after spending €150 mil- It often feels like everyone is in a hurry to consultant re- secrecy of cases.” things. lion on two sites in Sandyford. get the inquiry over with. ports gathering AIB’s Polish chicken farmer: AIB’s It’s also four years since Ireland re- dust on shelves worst 20 borrowers on September quested a bailout, which was a direct are testament 31, 2008, according to the bank, consequence of the decision made two to our inability owed it just €377 million, of which How much the Irish banks actually lost years earlier. Much of the media focus to act. the bank expects to lose only €107 has been on that and on the guarantee If we are to learn anything from the million. The most any borrower on Bank’s worst case PwC scenario 1 PwC scenario 2 What actually decision itself – and while the circum- crisis, we must begin throwing open the this list owes is €37 million and the scenario November 2008 November 2008 happened stances around it are interesting to jour- doors on the past immediately. This must least is €9.9 million. AIB €2.04 billion €3.2 billion €4.052 billion €20.8 billion nalists, and make for dramatic re-telling include the public understanding and The single biggest loss facing AIB – Bank of Ireland €1.458 billion €2.359 billion €2.799 billion €4.9 billion – it was not the guarantee decision that having copies of every report generated according to the bank – is €31 mil- Anglo €1.45 billion €2.255 billion €2.98 billion €29 billion really sank the country. as a result of the crisis, and every docu- lion it fears it has lost to an alleged Irish Life & Permanent €52 million €316 million €320 million €3.065 billion It was the property bubble that pre- ment surrounding the decisions made by fraudster chicken farmer in Poland. EBS €19 million €105 million €125 million €1 billion ceded it that led us down that path in the cabinet over the preceding decade. Irish Nationwide €138 million €387 million N / A €5.4 billion first place. We are the ones paying for the conse- Anglo thought its worst loan Total €5.157 billion €8.622 billion €10.663 billion €64 billion up front, but And it is this issue we have yet to seri- quences of decisions made at the highest might lose €16 million: Anglo Irish ultimately after asset sales, ously tackle. Who benefited from the lar- levels of government, the least we can Bank’s top 20 impaired loans list as the state estimated this gesse of cheap and easy money from the ask is why – and for whose benefit – at August 31, 2008 states that the year the final cost will be Irish banks? How did so much of the loan those decisions were made. number one borrower on this list is €35 billion. a low-profile developer who owes Source: PwC analysis/Department of Finance it €31 million, of which the bank “The bracing manifesto of a forward-looking radical.” BoI’s €9.5 billion Achilles heel Andrew Hill, Financial Times By Tom Lyons called global property book, which had featured racy models strewn across Ireland said even in a “stress loss” sce- by then loaned €9.5 billion mainly in kitchen worktops. nario it did not expect he would lose p until May 2004, when its Ireland, was beginning to show signs Bank of Ireland said it feared it will money on this. then chief executive Mike of strain. lose €26 million on the project in a Bank of Ireland a few years lat- Soden resigned, Bank of PwC said Bank of Ireland was es- “stress case” scenario. er ended up losing €120 million on Ireland’s single largest timating losses in this book of €220 It actually lost €126 million when Dunne (who now lives in the United loan loss in its then 221- million, but that this could rise by €80 Nama bought the site for just €40 States) when his loans were bought Uyear history was €25 million. million more in a worst-case scenario. million. by Nama. The PwC report reveals that by No- The report shows how Bank of Ire- Landmark Developments, led by Other high rollers the bank has a vember 2008, the bank feared it would land, for so long a conservative, blue- Paddy Shovlin (who went bankrupt large exposure to include Bernard Mc- break that record at least four times chip bank, now had large exposures to in Britain in 2012) was loaned €180 Namara (who went bankrupt in Britain with individual borrowers in its global some of the Celtic Tiger’s biggest and million to develop the Beacon South in 2012) and financier Derek Quinlan. property book alone. most prolific players. Quarter in Sandyford in Dublin. Overall, Bank of Ireland is more pes- Under its then chief executive Brian These included a €166 million loan Bank of Ireland said it could lose simistic about the outlook for Ireland Goggin, Bank of Ireland had pursued to Belmayne, a North Dublin hous- €13 million on this loan. It actually than its rivals. It did examine scenarios Anglo, AIB and Irish Nationwide by ing estate being developed by Donal lost €130 million on it when it was where house prices fell by 30 per cent taking on ever bigger risks in its global Caulfield. The private jet flying- de acquired by Nama some years later. and unemployment hit 9 per cent, but property book. veloper is best known for his risqué Sean Dunne, the report states, owes it still failed to predict by some distance The PwC report reveals how this so- advertisements for Belmayne, which the bank €191 million, but Bank of how bad things would get. The problems with mapping the crisis By Tom Lyons “The assessment of loan loss This meant there was a de- est roll ups could be used by alise assets”, this could lead to provisions is difficult espe- lay between banks suspecting banks to paper over the cracks a wave of defaults by devel- wC makes a number cially as previous economic internally there could be a big with big developers. opers and “another round of of important points downturns are not necessarily problem with a developer and When big developers got impairment provisions”. in its “executive a guide to the present.” it being shown externally in into trouble, and could not Making seeing the full pic- summary” about Under IFRS rules PwC said: their figures. make their interest payments, ture even harder PwC notes is OUT NOW the problems facing “There is an inherent lag be- Making things even harder banks simply did not charge that Irish banks all had their Pit trying to work out just what tween economic factors that was the fact that interest roll- them interest, thereby avoid- own way of grading the risk- is going on inside Irish banks. indicate that loan losses will ups were allowed under IFRS. ing them going into default. iness of borrowers. In The Second Curve, Handy builds on a life’s One of the key problems occur (for example, decline Interest roll ups could make PwC identifies interest roll Some banks expressed big work to glimpse into the future and see what for Irish banks, it believes, are in property values, interest sense – in the good times – as up as an issue in Irish banks concerns about individual challenges and opportunities lie ahead. He looks International Financial Re- rate changes, unemployment it meant developers could get particularly in AIB, Anglo and developers while others con- at current trends in capitalism and asks whether porting Standards (IFRS) rules etc) and specific impairment on with building without hav- Irish Nationwide. The cumu- tinued to believe they were which govern Irish banks’ ac- factors which will crystallise ing to worry about repaying lative amounts extended to rich men. it is a sustainable system. He explores the counts. the booking of a specific im- interest on their loans used developers was already over The banks should have, but dangers of a society built on credit. He challenges This is now well recognised pairment.” to acquire and build out a site. €1.5 billion. did not, understand the full the myth that remorseless growth is essential. He as one of the main reasons The areas where “impair- It also, however, encouraged PwC also notes that “short- extent of the borrowings of even asks whether we should rethink our roles in (with others being things like ment provisions and ex- developers to hoard land as falls in cash interest or capital Ireland’s biggest developers. life – as students, parents, workers and voters – herd mentality, mass delusion, pected losses are beginning they kept buying more and repayments are being made PwC concluded: “There individual self-interest and so to manifest themselves are more of it in the knowledge up out of the borrower’s other may be genuine reasons for and what the aims of an ideal society of the future on) why Irish banks got it so in development land banks, that it would be some years resources”. such differences in some cases should be. wrong when it came to pre- residential development and before they had to repay even It predicts correctly that if . . . This could be attributed to Photo by Liz Handy dicting their losses. to a lesser extent commercial interest on their loans. there is a “prolonged econom- a harsher view being taken in PwC notes on this matter: real estate development”. In the financial crisis, inter- ic downturn or inability to re- some cases.” The Sunday Business Post 14 The PwC Files March 15, 2015 The gang of 22 The PwC files: what they reveal 1 Sean Quinn Properties and Markland Holdings 6 Bernard Nationwide claim he is worth €500 A mere 22 men and their (a joint venture with Paddy Kelly million to €1 billion, and “believe” Total borrowings: the owner of Kelland Homes). Mul- McNamara he has 350 unencumbered assets. associated companies ended €2.85 billion ryan-linked entities “total bank Total borrowings: Gannon is working with Nama indebtedness” could be as high as on developing his projects, but it Ireland’s former richest man, Sean €2.7 billion, PwC estimated. €1.67 billion will take many years before he is up owing the Irish banks Quinn tops the borrowing pile, ow- Anglo’s exposure was €1.3 bil- Bank of Ireland, which funded able to repay all his debts. ing €2.7 billion to Anglo Irish Bank lion and PwC warned that cashflow Bernard McNamara to the tune of €25.6 billion by the time the and €145 million to Bank of Ire- was “getting tighter”. Markland, it €184 million, had already hit the land. PwC states the Quinn Group said, owed €324 million and there red alert button on the builder’s 9 Cosgrave country’s property bubble also owed €1.37 billion to its banks was already “interest roll-ups” on borrowings at the time of the Proj- Group and bondholders. The accountants key sites. ect Atlas review, the documents state it is “likely” the Quinn Group Mulryan entities owed Bank of reveal. The bank gave him one of its Total borrowings: burst. will have to be broken up, but they Ireland €456 million on projects highest risk indexes, and was ex- €1.086 billion also note that the Fermanagh busi- from the Whitewater Shopping pecting up to €43 million in losses As revealed in detail today nessman had “resisted”. Centre in Newbridge to the Ku in a worst case scenario. His other While brothers Peter, Joseph and PwC tells the state that Anglo Damm building in Berlin. In ad- lenders were AIB (€448 million), Michael Cosgrave’s €1 billion Irish in the PwC dossier, each has been lending to Quinn to prop dition, Bank of Ireland had funded Anglo (€996 million) and EBS (€42 borrowings were mostly owed to up its own shares “following an Markland $65 million to buy 47 million). AIB, PwC also noted the Cosgrave inability by Quinn to fund losses branches of Citibank in New York McNamara expected to sell re- Group’s “significant borrowings of the men faced huge from margin calls on a substantial state. There was also £108 million tail units around Grafton Street to outside the six institutions” - CFD (contracts for difference) ex- of loans to fund Ghostcharm, a pay off some of his debts, despite through a €1 billion RBS-led in- financial pressure when posure built up in Anglo shares.” company set up to buy industrial the market being very weak. His vestment facility which also in- It later emerged that Anglo also land in Dublin’s docks. interest in the Irish Glass Bottle volved Bank of Ireland and Irish loaned Quinn hundreds of millions According to PwC, Savills “ver- site, along with Quinlan, had al- Nationwide. This meant their total the report was submitted to to buy actual shares in the bank – a bally” indicated the value of this ready had interest rolled up of exposure was €2.1 billion. form of lending which would later land had fallen 10 to 15 per cent. €36.3 million, and this site alone Joe O’Reilly PwC noted evidence of a “tight government in November be found to be criminally illegal. AIB’s exposure to Mulryan was was putting the developer “under short term cashflow” in the Cos- PwC says Anglo was relying on €310 million. AIB believed 2005 financial pressure”. He also had grave Group. The report mentions 2008. In many cases, they a valuation of the Quinn Group development land prices for the “most significant” land bank a “missed scheduled €50 million of €4.7 billion drawn up by NCB, Kildare were “realistic” when in the country, with debts of €659 repayment in May 2008” from a which was part-owned by Quinn, making estimates of how much million. AIB and Bank of Ireland planned refinancing in Santry. would go on to leave the and PwC states it believes its valu- trouble the developer was in. believed he was one of their most AIB had loaned the group €687 ation was “extremely optimistic”. Mulryan was Irish Nationwide’s risky developers, but they had set million, of which €381 million taxpayer shouldering losses The NCB valuation of the Quinn “single largest exposure” at €258 aside only €30 million between was spent on a ‘landclub’, also Group turned out to be off by bil- million, owed mainly on devel- them as provisions. Anglo estimat- part-financed by Bank of Ireland. that cumulatively added up lions. opment land. PwC states that cal- ed that, just to keep ticking over, Main risks were cashflow problems Quinn has since gone bankrupt, culations for Mulryan were based McNamara needed to make €58 over the next 12 to 18 months. Cos- and the cost of his empire’s collapse on 2008 prices. It said that, if asset million a year. grave’s problems were described as to many billions of euro. to the taxpayer and motorists is values fell by 50 per cent, there McNamara, said PwC, was facing “short-term cashflow”. The group estimated at over €2 billion. would be a “shortfall of €600 “severe cashflow difficulties”.- De remains one of Ireland's strongest During the boom, the 22 million”. spite this, the EBS was “discussing” property businesses. 2 Joe O’Reilly lending McNamara €2.5 million were at the forefront of Irish more secured on a mansion on Castlethorn / 4 Derek Quinlan Ailesbury Road in Dublin 4. 10 Denis O’Brien capitalism. However, after Crossridge Total borrowings: McNamara later went bankrupt Total borrowings: €1.84 billion in Britain, hundreds lost their jobs, €1 billion Total borrowings: and the bill for the taxpayer was the bust, their risks were Derek Quinlan and associated in- several hundred million. He is now Mobile phone and media tycoon €2.3 billion vestors had enormous borrowings: back in Dublin. Denis O’Brien and related entities guaranteed by the state. Here, PwC notes that what it describes AIB (€761 millIon), Anglo (€803 owed Irish banks €1 billion. About as the Joe O’Reilly connection is million) and Bank of Ireland (€274 Gerry Gannon €785 million was owed to Anglo, related to personal, company and million). But AIB still estimated his 7 Treasury mainly relating to working capital for the first time, are details joint venture borrowings. net worth at €447 million in Octo- Holdings for Digicel and property invest- He owned 40 per cent of house- ber 2008. How it could have arrived ments. O’Brien’s interest bill alone of how much they borrowed, builder Castlethorn and 40 per cent at this figure is unexplained. PwC Total borrowings: for Anglo came to €67 million a of Crossridge, the company behind noted that one of Quinlan and his €1.613 billion year. and why. the Dundrum Town Centre. O’Reil- partner Glenn Maud’s biggest deals, Other Anglo loans related to of- ly-linked entities owe AIB €454 the €1 billion acquisition of the Johnny Ronan and Richard Barrett’s fice blocks in the South Docks and million, including a €102 million Citi tower in London, was already Treasury Holdings is described as a a €22 million loan for a house on More importantly, the personal facility; €132 million re- under pressure to “fully meet” in- “very complex organisation with Shrewsbury Road, as well as lend- lating to Dundrum; and €67 million terest payments. significant interests outside of Ire- ing to fund Topaz, a petrol retailer, information reveals how owed by Snowbury, a joint venture Quinlan, PwC said, was “tar- land”. The Irish banks had exposure and Blue Ocean Associates, a fuel to build Killeen Castle. Bank of geting” some asset sales to meet of more than €1.6 billion to Trea- business. PwC said O’Brien owed both PwC and Ireland’s Ireland is owed €405 million on some of his debts. PwC said he was sury, which was among the most AIB €298 million. Dundrum, the Pavilion shopping being “closely monitored” by AIB. ambitious developers of the boom. According to Anglo, O’Brien’s centre in Swords, and property PwC states: “No provision has been According to Project Atlas, the net worth at June 30, 2008 was banks underestimated the in Dublin 4. Anglo is owed €1.5 taken (on Quinlan) but if the asset company run by Ronan (who had €1.3 billion, with cash balances billion in total, with €650 million disposal strategy is not successful a a personal worth of €700 million, of €13.2 million. size of the crisis facing the owed by O’Reilly companies and provision may be required in sub- according to the report) and Bar- O’Brien’s loans, said PwC, were the remainder “personal to JOR”, sequent years.” rett had a total loan facility limit of “currently performing”, and his including €352 million to develop Things were so bad Quinlan was more than €2.1 billion. “underlying wealth” meant Anglo country. O’Connell Street. PwC states it is even being asked to sell “a personal A majority of the €1.6 billion did “not see a need for a provision “unable” to say how much O’Reilly art collection to an auction”, if he borrowed by the firm was owed Noel Smyth at this time”. This is what PwC said about owes non-Irish banks. could not raise cash from selling to Anglo Irish Bank, which had O’Brien also owed Bank of Ire- O’Reilly’s vast land banks, it the Berkeley Hotel in London. He loaned more than €1 billion to five land €42 million. Ireland’s biggest borrowers in notes, are “unlikely” to be devel- went on to leave Ireland for Swit- companies related to Treasury. The O’Brien he went on to repay all oped in the “short-term.” Today, zerland and London. firm also owed AIB €340 million his debts to Anglo. He is one of AIB O’Connell Street has still not been and Bank of Ireland €251.8 million. and Bank of Ireland’s best clients. November 2008. developed. Land banks built up by Bank of Ireland had just agreed After IBRC loans connected to O’Reilly have collapsed in value, 5 Michael a loan facility of €142 million to Topaz were sold off, O’Brien took but Dundrum and other retail units O’Flynn co-finance Battersea Power Sta- majority control of the business, have done better. tion. Bank of Ireland debt related having acquired its debt at a dis- By Tom Lyons, and linked to the project had already been count. companies downgraded to “grade 8 (watch Jack Horgan-Jones 3 Sean Mulryan risk)”. Total borrowings: €2.4 Total borrowings: Treasury later went into liquida- 11 Achilleas and Philip Connolly €1.8 billion tion. Its collapse has cost the state Kallakis billion hundreds of millions. Barrett now Sean Mulryan’s borrowings were Anglo Irish Bank was Michael lives in the Far East, while Ronan Total borrowings: both personal and via Ballymore O’Flynn’s biggest backer, with is finalising the paperwork for his €888 million €1.02 billion drawn down. Bank of exit from Nama. Ireland had funded him to the tune Greek businessman Achilleas of €242 million, AIB advanced him Kallakis,a poker player nicknamed €140 million, and Irish Nationwide 8 Gerry Gannon The Don, is described as borrowing loaned him €285 million. Total borrowings: from AIB to buy 12 offices and two Despite the high gearing of his houses in Britain. HOME CARE loans, PwC noted that “none of €1.237 billion Derek Quinlan It would later emerge that one of the banks considers O’Flynn Con- “A reliable longstanding client with the properties Kallakis had claimed struction to be an immediate risk, a strong net worth who has the to AIB to have bought was a pent- citing an experience in acquiring ability to cover any interest short- house in London for £100 million. sites without planning and suc- fall from his other income” is how PwC states that a Hong Kong-list- cessfully developing”. the PwC report described Gerry ed company called Sun Hung Kai PwC notes that sales on his prime Gannon. (SHK) was due to do a big deal with developed assets at the AIB-backed Despite having borrowings of Kallakis. Elysian project and the Ballincollig €1.2 billion from Anglo, AIB and However, PwC notes that SHK development built with loans from Irish Nationwide, he was “per- claims it had “not issued” bind- INBS “have slowed considerably”. ceived as a low-risk customer ing guarantees to this deal. PwC PwC noted his large exposure to due to his high net worth, which states AIB is having “ongoing dis- land banks, and warned it would is underpinned by a large number cussions” with the Greek busi- be hard to get these going again. of unencumbered properties”. nessman about his loans. It also O’Flynn was among the “least Gannon had a huge land bank states that the SHK deal was “not risky”, according to PwC, who pre- which, PwC said, “may be difficult adequately formalised which dicted he would have “short-term to realise in the current economic reflected a weakness in AIB’s cashflow” issues lasting perhaps climate”, especially until Metro credit management framework 12 to 18 months. His loans of €1.8 North was built. PwC also point- . . . ”. PwC was told this issue was Stay Happy at Home billion were sold last year for €1.1 ed to potential cashflow problems. a “dispute”; it later transpired to billion. Gannon owed Anglo €610 million, be a fraud. AIB €510 million, and Irish Nation- During the trial which later led wide €117 million. Anglo and Irish Ray Grehan to Kallakis’s conviction for fraud, The Sunday Business Post March 15, 2015 The PwC Files 15 The gang of 22

The PwC files: what they reveal Sean Quinn Bernard McNamara it emerged that AIB was notified in May 2008 about concerns about him; and that, in November 2008, one of its bankers flew to Hong Kong to meet SHK, only to be told it had not signed any guarantees and the seals used on documents purporting to be theirs were fakes.

12 Liam Carroll Total borrowings: €1 billion PwC bases its report on apartment kingpin Liam Carroll on “manage- ment information” supplied by AIB and Bank of Ireland. Carroll borrowed €884 million and €116 million from the banks respec- Michael O’Flynn Johnny Ronan Sean Mulryan Liam Carroll tively. PwC states: “AIB estimates spent €166 million, or €22.2 mil- not marked Doherty down for also pointed out that GardenPrime drain . . . on cashflow”. in respect of Bovale”. Liam Carroll to have a net worth lion per acre, on the site. PwC said provisioning, “citing strong full “have a related €440 million de- PwC also warned that McAleer Two years later, PwC noted of €3.2 billion.” His assets, the his borrowings were €658 million, interest cover and strong LTVs. This rivative exposure for interest and & Rush could face financing dif- that Bovale had “some lack of bank claimed, were worth €5.2 split between AIB and Anglo. appears reasonable”. Doherty re- inflation swaps over the period ficulties. Its land bank in Ireland, management depth”. billion. His debt to Irish and British AIB had placed Fleming in its mains in talks with Nama about of the 30 year lease to Citigroup”, PwC said, faced “significant mar- The Baileys and their compa- banks was €3 billion. critical category of loans at the exiting. and the bank had confirmed that ket risk” as it was “possible” prop- ny were €529 million in the hole AIB states it loaned Carroll €449 start of the year, due to “the large the derivatives were already “out erty prices might fall further. to Anglo. Bovale was the sec- million to buy zoned land with- number of completed but unsold of the money” by £75 million. AIB “Currently, the group appears to ond-highest Anglo development/ out planning permission alone. It units across a range of British and 16 PCO 199 also loaned money to Maud’s in- generate sufficient funds to meet land borrower, and one of only claims that Carroll – despite his Irish developments”. The report (Vendart) vestment company Propinvest. its repayment requirements, as nine on the bank’s list of its top 20 so-called fortune – calculated said only 108 apartments at the PwC said Fitch had downgraded such no provision is deemed nec- clients land/development facing a that he needed €120 million just Allegro site out of 419 had been Total borrowings: part of Propinvest’s portfolio, fol- essary.” future provisioning risk, with the to survive 2009. AIB, said PwC, sold, and that “closing same has €646.7 million lowing a revaluation that “suggest- bank putting aside €130 million was convinced that Carroll would been slow”. It warned the devel- ed a 30 per cent decline”. to cover losses. be able to raise tens of millions oper “may be forced to aggressive- PCO 199 is a group of companies 20 Fitzwilliam At the time of the PwC re- more from “equity releases”. ly discount properties in order to related to Tottenham Hotspur Finance Corp port, Bovale was facing imme- PwC concludes that there “ap- maintain liquidity”. FC vice-president David Pearl’s 18 David Daly diate funding risks. It had availed pears to be sufficient security to Vacant sites for housing units Vendart Group. Anglo said it “did Total borrowings: (Noel Smyth) of interest roll -ups, and was in cover the bank’s exposure at Sep- Gerry Barrett in Waterford, Cork and Limerick not see any requirement for a pro- Total borrowings: discussions with Bank of Ireland tember 30, 2008”. were also of concern. With regard vision against these loans”. €588 million over a €30 million loan to meet Carroll’s fortune was built on to Fleming’s steel company, which The bank, which had lent more David Daly snapped up the Bond €543 million its Anglo repayments, which itself the sand of a giant exposure to PwC said he needed to sell, the than a third of the group’s estimat- Street homes of Louis Vuitton and PwC states that Noel Smyth, the would be secured on lands valued speculative property. The collapse accountants reported: “Heads of ed €1.5 billion debts, had renego- Mulberry through loans from AIB, principal of Fitzwilliam, was worth at €220 million. of his empire into liquidation has Term have been agreed for the tiated all of the firm’s facilities at along with a section of Dublin’s €125 million in October 2007, ac- cost the state, by conservative es- sale of a 50 per cent interest in the time of the report. The loans to Grafton Street. AIB lent Daly €462 cording to KPMG, based on the timates, more than €1 billion. the business for €120 million.” the eight companies grouped un- million for investment properties, value of his art, home and land. 22 The Grehan Fleming went bankrupt in Britain der the exposure from PCO 199 in which also included sites in Balls- His main asset was The Square brothers in 2010. Now back in the London the PwC report were “mainly in- bridge and on St Stephen’s Green. Shopping Centre, which had total 13 Gerry Barrett property game, he left hundreds terest-only with limited amounts PwC noted that AIB “believes borrowings of €395 million. Total borrowings: Total borrowings: of millions of losses behind him being paid off the capital”. the customer will have a short- A legal dispute with a group of €570 million in Ireland. Pearl, which would go on to fall of approximately €4 million rival developers, led by former IRA €705.2 million launch legal action against the in 2009 between the rent on its man Tom McFeely, was prevent- Brothers Ray and Danny Grehan The Galway developer, known for IBRC in London in 2014, had used investment property and interest ing The Square being developed, may have had a “broad portfolio his high-profile investments in 15 Pat Doherty/ the Anglo loan facilities for 234 and capital payments on its debt”. PwC noted. It also said Smyth had of residential sites and develop- luxury hotels, was in deep trouble Harcourt properties, mainly retail and office However, AIB believed that the British assets of £250 million (with ments, hotels and commercial by the time Project Atlas trained its real estate in Britain, which had an risk would be mitigated by “rent borrowings of £200 million) which projects”, but cracks were already sights on him. The Atlas document Developments average occupancy level of 96 per reviews, cash deposits held by would be “difficult” to sell in the appearing by 2008. reveals that Barrett’s reported €55 Denis O’Brien Total borrowings: cent. According to PwC, the port- Daly and estimated unencum- existing market. According to PwC, “a large million purchase of Ashford Castle folio was “well diversified”. There bered assets of €100 million”. Smyth later sold artworks and number of unsold residential in 2007 had already led to a row €650 million had “been no history of default, Bank of Ireland had an exposure property assets. He continues to units at present indicates inter- with Anglo, which was respon- million in non-income generating Pat Doherty’s Harcourt Develop- and interest and capital payments of €126 million to Daly, which re- be an active investor. est shortfall in 2009 and a need sible for €608.2 million of his assets”. ments was involved in everything have been paid on time”. lated to residential sites in Ireland to commence an asset disposal borrowings. “A programme of forced sales from the Titanic Quarter in Belfast and Britain via Albany Homes. Ac- strategy”. “Anglo disagrees with his strat- could result in asset values being to investments in Freeport, Grand cording to PwC, the “sales risk on 21 Bovale AIB’s €425 million land and de- egy in relation to hotels and de- depressed below the underlying Bahama and Jersey in the Channel 17 Glenn Maud the British and Irish residential Developments velopment exposure to the broth- clined to finance Ashford Castle. debt levels and a provision of ap- Islands. Total borrowings: units is high, given the downturn ers represented the “third-biggest The hotel group is incurring €5 proximately €100 million may PwC states Anglo had advanced in the market”. Total borrowings: land and development exposure” million to €6 million in trading be required in 2009/2010,” the $38.5 million for a Las Vegas site. €605.5 million €529 million across its book. In total, AIB losses per annum,” the report document warns. Barrett’s em- AIB also backed him to the tune A British partner of Derek Quinlan, loaned the Grehans €511 million. reads. pire is being sold off, crystallising of €12.9 million, and advanced a Maud was “the largest exposure to 19 McAleer Before the death of the Celtic Ti- The report noted that the In addition to Ashford, Barrett’s substantial losses. €21.8 million loan for the Royal AIB”, but the bank “did not see & Rushe ger, brothers Tom and Mick Bailey brothers had used Bank of Ire- hotel empire included investments Oasis Hotel in the Bahamas. any issue” with the developer as of Bovale Developments were no land, which had lent €59 million, in the G Hotel in Galway, the D Ho- By the time the credit crunch hit, of September 2008. His concerns Total borrowings: strangers to controversy. In 2006, and Bank of Scotland (Ireland) tel in Drogheda and another hotel 14 John J Fleming/ Doherty had built up borrowings included Garden Prime, which €545 million the pair were forced into a record for a “recent” British deal, and in Grand Canal Dock in Dublin. Fleming Group of €650 million to fund Harcourt’s owed €300 million and was part settlement with the Revenue that AIB expected to be “less in- Anglo had already booked €100 massive ambitions, with €257 mil- of the deal for the Citi Tower, a Ca- Northern Ireland construction Commissioners which saw them volved” in the brothers’ British million against the builder as a Total borrowings: lion in AIB and €393 million in An- nary Wharf skyscraper which was firm McAleer & Rushe owed Bank hand over €22.7 million in back deals “going forward”. possible future provision risk. €658 million glo. Both banks saw his borrowings acquired in late 2007 for £1 billion of Ireland €375 million and AIB taxes and fines. The Grehans were also “exposed Barrett also features on Project as relatively risk-free, assigning through a 50-50 joint venture be- €170 million. McAleer & Rushe At the time, the PwC investigator to planning risk on a number of Atlas’ list of cross bank watch list PwC predicts the dire straits facing him credit gradings at the less risky tween Maud and Quinlan, funded was involved at the time in doz- assigned to look into Bovale said its significant sites, meaning that exposures – the developers who a developer: Fota Island builder end of the scale. AIB estimated his by £875 million senior debt from ens of projects including building that he had “never encountered a a realisation of value is likely to were rated as risky by more than John J Fleming. His purchase of the annual income from these at €33 Allied Irish Bank and Santander. hotels for Starwood and the Jurys failure to maintain proper books take a number of years”. one of their banks. Barrett, the former Allegro site in Sandyford is million per annum. PwC said there was already an Inn Hotel Group as well as houses. of account that compares with the Both of them eventually went report notes, “has acquired €181 flagged by PwC as a “trophy”. He PwC said that the banks had interest shortfall on the property. It The main risk for the group was “a extent and gravity of the failures bankrupt. What will your .IRISH name be? THE NEW TOPLEVEL DOMAIN THAT CLEARLY SAYS ‘IRISH’ .IRISH is the new top-level domain for Irish organisations and people all over the world who want a distinctive and memorable web address that clearly says ‘Irish’. Trademark holders can apply to register names during an exclusive trademark registration period from March 17 to May 16, 2015. For more information about trademark registration and other registration opportunities, visit www.nic.irish today. GlobalBrands CustomerCare SocialScene TaxAdvice CoolStu FoodExports

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