Category: Comment

I’ve blogged about Wikileaks here before and, despite usually focusing on Irish issues, think it’s worthwhile to do so again now.

Updated: MSNBC coverage at the bottom.

Today they released a video showing US helicopters attacking a group of people in Baghdad in 2007. Two Reuters journalists were murdered and two children seriously wounded in the attack. It appears 12 people died as a result. On the right the son of Reuters journalist, Saeed Chmagh, grieves for his father.

Since the murders Reuters have been seeking the videos under the FOI Act but have been continuously refused.

The US government has lied about the incident consistently, claiming all those killed and wounded – including the children and journalists – were “insurgents”.

The video was released at 4pm today our time after being leaked but the western media is relatively quiet on it. Al Jazeera is leading with it. MSNBC’s Dylan Rattigan Show seems to be the only US network program going to give it a push. The Guardian and BBC each have something small and the HuffPo has some useful paragraphs;

None of the members of the group were taking hostile action, contrary to the Pentagon’s initial cover story; they were milling about on a street corner. One man was evidently carrying a gun, though that was and is hardly an uncommon occurrence in Baghdad.

Reporters working for WikiLeaks determined that the driver of the van was a good Samaritan on his way to take his small children to a tutoring session. He was killed and his two children were badly injured.

…but there’s very little else from the Western media, as far as I can see. Nothing from the Irish outlets yet.

Continue reading “Wikileaks release video of attack in Baghdad”

Below are a number of quotes from Minister Brian Lenihan which were reported in the media or said by him in the Dáil since the bank guarantee in September 2008.

Several of them are clearly contradicted by subsequent events*, of which some would be very recent. Others will probably be contradicted by events* to come.

Feel free to add your own in the comment box below or email them to mark[@]thestory[.]ie (remove the brackets). Please provide a link to cite your source. It’s worth keeping a log of these as events* continue. Continue reading “Quotes from Minister for Finance, Brian Lenihan”

Browsing through SI 15/2010 a while ago I noticed many more companies within Anglo were falling under the Ethics in Public Office Act than previously.

I picked a random company from the list, Gertonabbey Limited, which now falls under that Act.

Gertonabbbey is part owned by Anglo Irish Bank. The company secretary for Gertonabbey is Natasha Mercer, who up until recently was also the company secretary for Anglo itself. The directors are Brian Gerard Spillane and Patrick Gerard Price. The ultimate owner of Gertonabbey (and Anglo is a shareholder) is Raycastle Limited, Bernard McNamara’s company. Gertonabby is a subsidiary of Radora Developments, which is a subsidiary of Raycastle.

Guess what Gertonabbey owns? 29-31 Adelaide Road, otherwise known as the building which houses the Department of Communications.

The taxpayer is paying €2.524m to rent the building to a combination of Anglo (the taxpayer) and Bernard McNamara.

Oh what a tangled web.

Gerard O’Neill, economist and director of Amarach Research, has some interesting observations on Anglo over on his blog, Turbulence Ahead. After quoting a section from their most recent report, he says…

So there you have it: the bank that’s going to cost us northwards of another €18 billion to ‘save’, isn’t actually lending, and the lending ‘increase’ they report is entirely the result of capitalising interest on unpaid loans (plus the fees they paid themselves). Alan Dukes, Anglo’s new chairman argues that closing Anglo rather than saving it would cost over €20 billion. It’s sort of getting to the point where closure looks like the more financially prudent option, don’t you think?

Read the full post at this link.

The biggest question about Anglo, has been, and always has been, the relationship between it and its biggest debtor, Sean Quinn’s group. He was also at one point the bank’s biggest shareholder. We don’t know whether he was (or is) also a bondholder.

Last year I took a detailed look at Quinn’s network of companies – and the recent news brings this work back into focus. To say the Quinn Group of companies is large would be understating it. And remember, the Quinn Group owes Anglo billions of euro – so it is important to see what potentially was borrowed by the Group in order to fund their investments. Where did all the money go?

Quinn Group (ROI) Limited (Limited as of 2007) was the Ultimate Owner of the Quinn companies. It has an address at Dublin Road, Cavan. In the year to end 2007 it had operating revenue of €1.8bn and total assets of €2.6bn. It’s losses before tax in 2007 was €425,308. In 2007 it had tangible fixed assets valued at €1.2bn. Current and former directors of the group include:

1. Mr Brendan Tuohy (Wicklow, former Sec Gen at the Department of Communications)
2. Mr (John) Dara O’Reilly (Cavan)
3. Mr Kevin Lunney (Cavan)
4. Mr Liam McCaffrey (Enniskillen)
5. Mr Patrick Murphy (Shankill, Co Dublin)
6. Mr Peter Quinn (Enniskillen)
7. Mr Patrick Anthony O’Neill (Kilkenny)
8. Mr Sean Quinn (Cavan)
9. Ms Patricia Quinn (Cavan)
10. Mr Dara O’Reilly (as above) Company Secretary (since 27/06/2007)

Quinn Group (ROI) Limited has two subsidiaries. One is its wholly owned subsidiary, Quinn Group Limited and it also has a large stake in a company called Quinn Investments Sweden AB.

Quinn Group Limited (GB) has multiple, mostly wholly owned, subsidiaries. These are:

QUINN AVIATION LIMITED
QUINN CONCRETE LIMITED
QUINN GROUP FAMILY PROPERTIES LIMITED
QUINN GROUP PROPERTY HOLDINGS LIMITED
QUINN INVESTMENTS LIMITED
QUINN PLASTICS LIMITED (Britain)
QUINN PROPERTY MANAGEMENT LIMITED (Britain)
QUINN QUARRYING AND CONCRETE LIMITED
QUINN CEMENT Limited (not wholly owned)
SARCON (No. 159) Limited (not wholly owned)

Quinn Group Family Properties has its own wholly owned subsidiaries:

Barge Public House Limited (with its own subsidiary called Barge Property Limited)
Messers Maguire Public House Limited
Molesworth Street Hotel Limited
Quinns Cat and Cage Public House Limited (with its own subsidiary called C & C Property Limited)
Quinns Public House Drumcondra Limited (with its own subsidiary called Quinn’s Drumcondra Property Limited)
Quinns Q Bar Limited (with two subsidiaries called Quinn’s Q Bar Property Limited and Quinns Public House Finglas Limited)

Quinn Group Property Holdings Limited has a subsidiary called Quinn Warehousing Limited.

Quinn Investments Limited has five subsidiaries:

Quinn Financial Services Holdings Limited
IRG Holdings Public Limited Company (not wholly owned)
Quinn Group Limited (not wholly owned, is parent of parent)
Quinn Quarries Limited
Quinn Windfarm Limited

Quinn Quarrying and Concrete Limited has one subsidiary called Quinn Lite Pac Limited.

Quinn Cement Limited has one subsidiary called Quinn Cement (NI) Limited

Sarcon (No. 159) Limited has one subsidiary called Quinn Barlo Limited.

Quinn Investments Sweden AB

This company has multiple wholly owned subsidiaries, and not wholly owned subsidiaries. All except the last are registered in Sweden. These are:

Bashkort AB (Bizens-Park Ltd Liab Comp and Quinn Acquisition Sweden are subsidiaries, both registered in Russia)
Quinn Acquisition Sweden AB
Quinn Assets Sweden AB (Nedacin Limited (Cyprus) is a subsidiary, which itself has subsidiary in Russia called Striotlend)
Quinn Building Sweden AB (Carcer Management Ltd (Cyprus) is a subsidiary)
Quinn Development Sweden AB (DC Property SRO (Czech) and PZP Komplet AS (Czech) are subsidiaries)
Quinn Holdings Sweden AB (Quinn Holdings Ukraine (Ukraine) is a subsidiary)
Quinn Hotels Sweden AB
Quinn Interests Sweden AB (Quinn Emlak Yatrim Insaat ve Ticaret AS (Turkey) is a subsidiary)
Quinn Investments 1 Sweden AB
Quinn Investments 2 Sweden AB
Quinn Investments 3 Sweden AB
Quinn Investments 4 Sweden AB
Quinn Land Sweden AB
Quinn Logistics Sweden AB
Quinn Management Sweden AB (Kilfallon (Cyprus) is a subsidiary)
Quinn Park Sweden AB
Quinn Retail Sweden AB
Quinn Services Sweden AB (Samonaca Holdings (Cyprus) is a subsidiary)
Quinn Silver City Sweden AB
Quinn Way Sweden AB (Krostein Investments (Cyprus) is a subsidiary)
Quinn Windfarm Holding Limited (IE) (Mantlin Limite (GB) is a subsidiary)

That gives you a flavour of the of subsidiary (not necessarily wholly owned) companies in the Quinn Group. You might wonder about the structure (Irish and British companies with subsidiaries in Sweden with subsidiaries in Russia) and the mentions of Russia, Cyprus, Czech Republic and Turkey.

Just recall what Quinn was buying during the boom.

In case you missed the drip feed over the past year, that’s the total estimated figure so far (including impending recapitalisations) given by you, the citizen, to the banks – AIB, Bank of Ireland, Anglo Irish, INBS and EBS. It could end up being more. Remember that the State is borrowing money, or taking money from the National Pension Reserve Fund, in order to pay for these recapitalisations.

€27 billion rolls off the tongue doesn’t it? I am working with a friend on a visualisation of this amount, which we hope to publish soon.

Simon Kelly has a few classics in his column on the back page of the Sunday Tribune‘s Business section this week.

He writes about the DDDA in broadly positive terms. There are a few laughs in there, including…

The local authority planning system causes daily damage to Ireland and this damage is far in excess of the final cost of the DDDA. I forecast reform here shortly because Nama will not put up with the rubbish that developers had to deal with over the years from the planners.

Eh. It’s not quite clear what exactly Mr Kelly means by “rubbish” but to me it seems is he suggesting the planning system was overly regulated and restricted during the boom years, which caused developers hassle. If so; seriously, Mr Kelly?

What do you make of it?

Either way; reform is predicted because of Nama, not because lack of reform. Not because the culture that lack of reform allowed prevail. The culture which is, you know, one of the main reasons there is now a need for a Nama.

Further on in the piece…

The private sector has the incentive of profit, whereas the public sector has the incentive of self interest. These look the same but are very different. The profit motive drives activity and creativity, whereas the self-interest motive drives inaction and maintains the status quo.

Profit; not equal to self interest, says Simon Kelly. Public servants not driven by profit; a bad thing, says Simon Kelly.

The private sector makes decisions and takes action whereas the public sector delays decisions, and actions, for fear of scrutiny in the future.

“Scrutiny, can’t be having have that when it comes to planning and development in this democracy. The less the better. Have I said a public oversight body should be scrapped yet?”

The best stuff is nearer the top though – where Mr Kelly does say a public oversight body should be scrapped. The following paragraph, which I’ve split into four below, is the best part…

The DDDA was given its special planning powers to facilitate the fast-track development of the IFSC and the docklands area. It was given these powers because the local authority planning system was and still is dysfunctional.

Translation: The Government wanted to attract financial services multinationals. It thought it could so with a well-serviced hub in which international companies paying minimal amounts of tax could then base their HQs – or a few desks they could call HQs for tax purposes – so they gave the DDDA powers to allow planning which could develop this. In short, the Government were not prepared to invest in reforming the dysfunctional planning process, so they decided to bypass it, that’s why the DDDA was given these powers.

Try explaining to CitiBank that it cannot build its new headquarters because a local resident has an objection to the building.

Translation: The locals are plebs, try telling Citibank they’re not.

It is in the context of this stupid right of objection that DDDA was formed. We needed a professional planning authority, not subject to An Bord Pleanála, and that is why we got the DDDA.

Translation: It’s stupid to allow plebs a say. An Bord Pleanala – tasked with ensuring infrastructural and physical development is open and sustainable – slows stuff down, so we needed to ignore them and get professionals in, and that’s why we got the DDDA.

Before we hang it, let’s reform the planning system and implement a professional system to replace the current political one.

Translation: Before we hang the DDDA let’s reform the planning system that we ignored during the boom in giving the DDDA the powers under which they fucked up, and replace it with a planning system more like the DDDA. There’s no important financial services companies even half-considering Ireland anyway now, so we have time to do it!

Nonsense from Kelly.

Neil Callanan’s piece on the same topic and the same page, is in stark contrast.

Last week I wrote that the interview with Anglo chief executive Mike Aynsley in the Irish Times to me marked a shift in the PR strategy underlying the bank recapitalisation/nationalisation schemes. David McWilliams yesterday talked about it in similar terms. I warned that the next week would see a miasma of news and spin, and so it appears to be coming to pass with several speeches planned this week around the issue.

Today we are given page one stories all about the impending banks scheme. While all of them cover it, it was Emmet Oliver’s lead in the Irish Independent this morning that struck me most. Headline:

Accept my deal or quit, Lenihan to tell bankers

Let us get this very straight. Many commentators and economists argued a long time ago that nationalisation should happen early, and if it didn’t, it would happen eventually. Now this is coming to pass. As Constantin writes:

Since May 2009 I have consistently supplied estimates as to the eventual state ownership in both AIB and BofI. Depending on various scenarios:

* assumed Nama haircuts,
* the actual current risk weighting on the loans being transferred,
* share price at the time of announcement and the willingness of the banks and the Government to recognize future expected losses on the loans not transferred to Nama

RVF approach to valuing AIB and BofI balancesheets suggests that at the end of the current crisis, the state will outright own around 85-90% of equity in AIB and 50-60% in BofI. This eventual outcome, for political reasons, will come in two stages:

* post-Nama injection of capital (with AIB placing around 60-70% of its equity with the State and BofI placing around 40-45%), plus
* second stage recapitalization to correct for continued deterioration in the books over 2010-2011 (adding another 20-30% of equity for AIB and 10-15% for BofI)

The problem with this two stage recapitalization is that the taxpayer will end up paying three times for the same equity:
Having injected €7 bn into two banks at the time when they were worth less than €2.5 bn for the entire lot,

* we are now be left on the hook for some €20 bn worth of largely worthless loans – to be purchased at ca 30-40% discounts (against the real market discount of 65-90%),
* plus €7-8 bn in fresh capital post-Nama
* plus the margin of ca 10-15% for further deterioration in non-Nama loan books (requiring another €7-9 bn of fresh capital).

Thus the Irish state is now likely to use up to €20 bn to buy up equity and loans from a bank that is currently worth around €1.5 bn… In the world of finance, even the most reckless bankers never managed such margins.

Now without personalising this against Mr Oliver (and the headline would have been written by a sub), what part of this particular story is positive? When was Mr Lenihan screaming “Iceland!”, what was the Government’s view 12 months ago on de facto nationalisation? How much has all this waiting cost us? Does anyone remember the last 12 months?

When you use sentences like “Finance Minister Brian Lenihan is going to seize control of the country’s biggest bank, and tell its top executives to leave if they cannot work under the new regime”. Eh?

Add in words and phrases like “uncrompromising” “momentous” “pump” “state of the union” “uncompromising” (again) “forced” “fall on their swords” and you would be left with the impression that the Government knew exactly what it was doing all along. Sadly this was never the case.

A bit like backdating the NAMA values arbitrarily to November 2009, when prices have fallen significantly since then. Backdating the values has likely cost more to the State than the entire public sector cuts will save the economy this year. But remember, in September Mr Lenihan said we were very near the floor:

No, nowhere near it. We do have “further to go down, and further and further and further”. Even Friends First agrees prices will fall nationally another 10% this year.

And do not forget how the system reacted to the letter by economists nearly 12 full months ago.

OVER THE last number of months extraordinary changes have occurred in the Irish banking and financial scene. We believe that we are now at a critical stage in Irish economic history and that it is crucial that the Government take the right course of action to deal with the problems in our banking sector.

The banking system is widely perceived to have seized in terms of lending, and whether correct or not this perception needs to be addressed. We believe that the correct action to take now is nationalisation of the banking system, or at least that part of it that is of systemic importance.

Their professionalism was called into question, and they were vilified for railing against the prevailing views. And how do you go back on all that and nationalise now? You make it sound as if you’re taking on the evil bankers.

Deflection I guess, is a good remedy.