Category: Reports

Those of our readers with an interest in Irish political history, or indeed old enough to remember, may recall the small controversy over Telecom Eireann and a Johnston Mooney & O’Brien site involving such people as Dermot Desmond, Michael Smurfit and JP McManus. The controversy led to the resignation of Michael Smurfit from the board of Telecom.

Indeed, so hotly contested are the contents of this report, that Dermot Desmond went all the way to the Supreme Court in a bid to prevent the contents of the report being read into the record of the Moriarty Tribunal in 2004.

Here is a handy backgrounder from Ted Harding and Kathleen Barrington from 2002:

One of the great controversies of the 1990s, it turned on the purchase by Telecom Eireann of the former Johnston Mooney & O’Brien (JMOB) bakery site in Ballsbridge, Dublin.

In April 1989 financier Dermot Desmond reached an agreement with the JMOB liquidator to buy the site for £4 million. The property was sold to a firm called Chestvale in September 1989. In January 1990 Desmond told semi-state firm Telecom Eireann that the best price he could get for the site was £9.4 million. Telecom agreed to pay this amount.

When a controversy blew up over the sale, inspector John Glackin carried out an inquiry on behalf of the Department of Industry and Commerce. Desmond denied that he had a beneficial interest in any of the companies involved in buying and selling the site.

He rejected all suggestions that he owned a company called Freezone, which was registered in the Isle of Man tax haven. It provided much of the financing for the purchase of the property and received £1.3 million in profit. Glackin’s report, hotly contested by Desmond, found that the financier was among those who made over £5 million from the sale of the Ballsbridge property.

This report has been collecting dust on various shelves for the past 16 years, and thanks to the wonders of the interwebs we are able to bring you the full report:

Thanks to a loyal reader for this:

… or “scoping reports” as they’ve more recently been referred to.

The narrative An Taoiseach and Minister Lenihan are attempting to set appears to be: “this scoping exercise says it was solicitors, bankers and auditors” and “we must focus the inquiry on the areas found to be clearly to blame”. That helpfully excludes policy implementation, i.e. Government. And it doesn’t stand up when reading the actual documents.

A summary of the Regling-Watson report is now available here. The one for Governor Honohan’s report will be completed later.

Honohan:

Domestic policies did not act as a sufficient counterweight to the forces driving this unsustainable property bubble. Bank regulation and financial stability policy clearly failed to achieve their goals. Neither did fiscal policy constrain the boom. Indeed, the increased reliance on taxes that could only generate sufficient revenue in a boom, made public finances highly vulnerable to a downturn. Specific tax incentives also boosted rather than restrained the overheated construction sector. And, with surging labour demand, wage rates in both the public and private sectors moved well ahead of what could protect international competitiveness.

“Published” this afternoon, but still not up on the Department of Environment website. It doesn’t look much different to the leaked version of the report we published back in March.

I asked the Department to email me a copy. 13 attachments, some in Word format, some in PDF. So I stuck them altogether into one PDF, for your convenience:

We have obtained a copy of the three DDDA reports by Niamh Brennan from the Fine Gael press office. The reports have been scanned, OCRd and uploaded and can be searched or download from the interface below.

The reports run to 216 pages, this is the only soft copy available it is therefore possible (but unlikely) that some pages are misordered.

The details were first covered by David Murphy, Business Editor with RTE, this morning.

Fine Gael have accused of John Gormley of a cover-up over the reports. As per The Irish Times: “The reports deal with matters to do with finance, planning and the board’s reaction to these matters. [Fine Gael Deputy Phil] Hogan said the planning report raises questions over the status of planning permission for some of the most well known buildings.”

Amongst the main issues detailed in the report are revelations that the Irish Glass Bottle site was never formally valued. It was purchased by the DDDA and a number of developers and financial entities in 2006 for more than €400m but quickly fell drastically in value. Those involved included Bernard McNamara, who has sued the DDDA claiming they didn’t deliver on promises relating the deal. Sean Dunne was also involved and also took the authority to court over the now-near-abandoned Anglo site. He won his case.

Labour says the issues of corporate governance can be put down to, amongst other things, Anglo – which had an interest in the site through its loan portfolio – having two members of its own board, Sean FitzPatrick and Lar Bradshaw, sitting on the board of the DDDA.

Further issues are also covered relating to the DDDA granting planning permission for structures which could be considered non-compliant and the absence of value-for-money audits being carried out.

DDDAreports

Interesting details available in a finding made by the High Court last week.

KEENAN – v – IARNRÓD ÉIREANN

Mr John Keenan is the plaintiff, he has taken a case against CIÉ/Iaranrod Eireann (hereafter referred to as CIÉ), at present he remains suspended with pay. He is a long standing Labour member, friend of Emmet Stagg and is being represented by Alex White. In the above case he sought “interlocutory injunctions directing Iarnród Éireann to allow the plaintiff to perform his duties… without interference; and restraining the defendant from taking any steps to remove him from his position”. In short, he asked the court to tell CIÉ to lift the suspension with immediate effect.

Mr Keenan was head of human resources when the incidents which give context to the judgement are alleged to have taken place. It should be noted that this judgement has not considered the allegations made by either side in the case, only whether or not the suspension should be lifted.

In October 2007 Mr Keenan was asked by CIÉ’s CEO, Dr John Lynch, to compile a report for the company’s Audit Committee. The report set out the progress made in respect of disciplinary charges issued in the case of an Iarnród Éireann employee, one of the subjects of the then on-going Baker Tilly investigation.

In the last sentence of his report Mr Keenan stated that the losses expected to be detailed by Baker Tilly would “be seven or eight digit sum”. This, he says, triggered “a very adverse reaction” from some in senior management.

[Mr Keenan] says that Dr. Lynch and Mr. Paul Kiely, the chairman of the Audit Committee believed that this aspect of the report jeopardised their positions and that he was told that he was stupid and should have known better than to suggest such high losses in writing to a Board sub-committee.

Mr Keenan continued directing the Cost Audit committee but says in December 2007 there was a direction given that no minutes be kept of meetings of a “steering group” on these matters and that nothing should be kept in writing.

He claimed to the court that at one point he told other members  of CIÉ senior management that Baker Tilly estimated losses could have been 12% of the CIÉ’s annual spend. He said the Chief Executive, Dr Lynch, argued that this estimate was outside Baker Tilly’s terms of reference and wanted it removed. Mr Keenan attempted to argue the relevance of the figure but, he says, Dr Lynch was unmoved. According to Mr Keenan the figure was then reduced to €2.5 million. That was around September of last year.

When published the Baker Tilly Report, as covered in some depth on this blog, detailed €2.6m in quantifiable losses, with a note that the team was “confident further unidentified losses exist within the company”. At the time Shane Ross estimated the true extent of the losses to be €9m.

It’s important, and I again wish to note, that none of the allegations made by either side are found correct or incorrect by the judgement about which I write in this post. They will be considered in a later case.

Mr Keenan also claims that on November 11 2009 the CEO, Dr Lynch, and Richard Fearns, the chief financial officer, relieved him of responsibility for the Cost Audit Unit. He says they did so as they wanted him “off the pitch”. Mr Fearns categorically denies this to be the case and says there was legitimate reason for the change. Mr Fearns believed the Audit Unit would be better handled by the finance section of CIÉ, not Human Resources, of which Keenan was in charge, as it was covering issues of financial irregularities.

It is accepted by both parties that there was considerable tensions between the two at this point.

On December 3rd Keenan was suspended from CIÉ for dereliction of duty. The reason given related to separate case which is now under judicial review in the Equality Tribunal.

The Equality Officer for that case had delivered findings on November 13th which were “very much averse to Iaranród Eireann”. They stated a female employee in the company had been harassed on gender grounds. There were clear implications made which could have damaged the reputations of both Mr Keenan and Mr Fearns.

Mr. Keenan says that having received it personally on 20th November 2009 (a Friday), he took the determination home with him and returned to work on the following Monday, 23rd November. He says that he then took a number of steps in relation to the determination, involving meeting with the Iarnród Éireann solicitor who had dealt with the matter (with regard to an appeal) and also instructed that counsel be briefed. The plaintiff says that he planned to brief Mr. Fearns on this issue at a meeting arranged for 2nd December, 2009. A full meeting however did not proceed as planned.

Mr Fearns contends Mr Keenan had ample opportunity to inform him of the findings and that by not ensuring he did so he was in dereliction of duty. He said due to Mr Keenan’s inaction there was a possibility that the company would be the subject of bad publicity for which it would be unprepared. Mr Keenan states this not to be the case, saying that the details of the cases are not made public for a month after the Equality Tribunal makes its findings.

Mr. Fearn deposes that he informed the plaintiff that he had a crisis of confidence in him as a H.R. Director as he had failed to tell him about this decision and that he should have known what a big issue this would be for the company. He says that he directed the plaintiff to stand aside from his duties with immediate effect, to go home and not to return to work until further notice. He was to continue to be paid his full salary. He was to collect his personal belongings and to hand him the keys of his office.

That was on December 3. Mr Keenan claims that the decision was disproportionate. He implies that the suspension was an attempt to silence him and that the CIÉ pair have been seeking to suppress information and acting in bad faith in dereliction of their duty to investigate alleged fraud.

However, after the meeting with Mr Fearns, Mr Keenan didn’t go home immediately. He returned to his office and made a number of phone calls. Mr Fearns claimed Mr Keenan indicated that he would return to work the following day despite being told not to. Mr Fearns then decided to seal Mr Keenan’s office, close his access to the internal email system and cut off his internet facilities. Security staff were later told – though Mr Fearns says, not by him – to ensure Mr Keenan didn’t return to CIÉ grounds. I’ve been informed that this included the posting of Wanted-style posters around CIÉ facilities.

The judgement says these decisions were “quite radical”.

The CIÉ representatives say following the December 3 incident Mr Keenan contacted employees who had been reporting to him and told them to access email correspondence and make copies. Mr Keenan said this was not “wrong” and that it was part of his duties. They say he procured access to the email account of the personal assistant of the Chief Medical Officer, Dr Declan Whelan, and that he may have authorised access to employee’s bank accounts. Dr Whelan accessing his assistant’s email account was a breach of trust. Furthermore, the defendent (CIÉ) claim Mr Keenan authorised the placement of a tracking device on an employee’s car. Mr Fearns called for an investigation in the matters and said the suspension should remain in place until complete.

Judge John Mac Menamin found that the suspension should remain in place. He didn’t find against Mr Keenan however. He said that allowing him to return to work would be wholly impractical as the level of trust between the the top brass in CIÉ and Mr Keenan had disintegrated completely.

The allegations which gave context to the case will be assessed at a later date.