Irish Water’s 2015 annual report

Irish Water’s 2015 annual report is out. There’s lots of interesting bits in there.

Irish Water’s total liabilities grew from €890m in 2014 to €1.44bn in 2015.

Irish Water borrowed lots:

Net debt grew from €324m to €890m.


The number of people paying bills in the 4th cycle cratered. Here’s a graph:

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Here’s the breakdown:

Operating costs:

A note towards the end:

Lee Buchheit bondholder email to Department of Finance

In today’s Sunday Business Post, Jack Horgan-Jones interviewed New York lawyer Lee C Buchheit. Buchheit is known as one of the world’s experts on sovereign debt crises. As the article says, he’s “the guy who governments fly in to tell their creditors they won’t be getting their money back”.

In 2010 the Irish government secretly called in Buchheit’s expertise. It was kept secret, according to the article, because if word got out, the markets would know Ireland planned to burned bondholders. In correspondence published for the first time below, Buchheit is shown to be aiding the Department of Finance with drafting legislation that would have allowed for the burning of bondholders.

Buchheit was asked if it would have been possible to restructure the liabilities of the Irish bank to keep the estimated €9bn liabilities from migrating to the shoulders of the Irish taxpayer.

“If you ask me, the answer has to be yes. Come on. We’re not children. The markets are not children. If they think they can jockey the official sector into paying them out, of course they’ll do it. But if they don’t think it’s happening they will restructure. They’ve done it all around the world, forever.”

Thanks to the Sunday Business Post for making the documents available.

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IBRC/Siteserv investigation terms of reference

Here are the terms of reference and further details of the KPMG investigation into IBRC deals of greater than €10m.

ECB agrees to review Trichet letter release

In light of comments made by ECB Governing Council member Patrick Honohan in the book on Brian Lenihan I recently resubmitted my request for access to the letter that had previously been refused to this blog by ECB President Mario Draghi.

I see today RTE is reporting that MEP Sean Kelly has also been seeking access to the letter.

On October 7, I sent a new access to information request to the ECB, again seeking the letter. We said:

…In a previous appeal to the EU Ombudsman and to Mr Draghi, access
to this document was refused. However new information has now come
to light.

It was reported this week that ECB Governing Council Member Patrick
Honohan has contributed to a book in which he outlines information
related to the contents of the November 19 letter. In the book he

“The Troika staff told Brian in categorical terms that burning the
bondholders would mean no programme and, accordingly, could not be
countenanced,” Dr Honohan writes. “For whatever reason, they waited
until after this showdown to inform me of this decision, which had
apparently been taken at a very high-level teleconference to which
no Irish representative was invited.” –

In light of the fact that an ECB council member has chosen to
publicly express the views being argued by the Troika at that time,
it now appears – given that the eurozone has not collapsed – that
release of the letter is not in fact a threat to the stability of
the eurozone. I can no longer see any reason why it should not be
released immediately in the public interest.

Yours faithfully,

On October 15, the ECB responded. They said:

Dear Mr Sheridan,

As you will be aware, the ECB President mentioned in his communication to
the European Ombudsman in March this year that the Governing Council
made a commitment to re-evaluate the disclosure of the letter dated 19
November 2010 from Mr Trichet to Mr Lenihan at a “more advanced stage of
the post-programme surveillance”. The completion of the so-called
Comprehensive Assessment (CA) exercise by end-October would provide such
an opportunity to review the stance taken to date on the disclosure of
this letter in light of the outcome of the thorough review of the largest
banks’ balance sheets.

Against this backdrop and in view of the fact that the Governing Council
in all likelihood will re-evaluate the disclosure of the above-mentioned
letter in the course of November, I wanted to check with you whether it
would be acceptable for you that we keep your request on hold until
this reassessment has been concluded. Should it turn out, for whatever
reason, that such a re-evaluation could not be feasibly undertaken during
next month, I would, of course, inform you accordingly and we would
proceed with the formal assessment of your request in line with the ECB’s
Decision on public access to ECB documents.

Please let us know if the above is agreeable to you.

Many thanks & best regards,
Roman Schremser
Senior Adviser
DG Secretariat

I responded that I am happy to wait until November 30, 2014. We will see what happens.

Review of Certain Matters Relating to Bord na gCon

The Department of Agriculture today published the Indecon report into the financial mess at Bord na gCon. Worth a look.

Document – Flynn's court action against NAMA in New York

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Above is the house at the address (300 Ridgeview Drive, Palm Beach, Florida 33480) given by developer John Flynn as part of his case against the National Asset Management Agency (NAMA), in court documents filed on December 20. NamaWineLake and Paul Williams at the Indo have both mentioned the filing.

The judge in the case is Lewis Kaplan who was previously a judge in high profile Guantanamo and Gambino family cases.

Obviously NAMA and its staff have denied (or will deny) the allegations made, and members of NAMA’s board (including some of the people named in the complaint) made a vociferous defence of the Agency at a Public Accounts Committee hearing the same the day the complaint was filed in New York. No documents have yet been filed by NAMA in relation to this case, but I will post them once they are available.

At the PAC hearing the head of NAMA Brendan McDonagh said there is a:

“carefully orchestrated operation . . . to damage Nama”. “It’s designed to damage Nama and undermine its credibility with taxpayers of this country.”

The full document is below:

Is this IBRC's Statement of Affairs?

This comes from an anonymous Twitter account – @QuinnAnglo – so all the usual provisos apply.

The tweeter in question claims this document to be the Statement of Affairs of IBRC before the liquidation of the company in February 2013. It includes a list of creditors (though not depositors – as Noonan intervened on that one).

The Statement of Affairs was handed over to the Department of Finance recently and took some 8 months to produce. Some hedge funds are investigating if the bank’s insolvency was contrived and are considering taking legal action.

The account has been mentioning it to various journalists on Twitter:

The list of creditors is hard to read but contains some interesting names.

Of course that’s on the basis that the document is real. I asked the anonymous Twitter account if the document is real and got this reply:

Here is the document:

Was the guarantee a panicked decision?

It has been a common narrative since 2008 that the decision to guarantee the banks was a late night decision, taken perhaps in the heat of the moment for fear of the entire banking system collapsing if we did nothing (or acted on a set of alternative proposals provided by Merrill Lynch).

However in another tape released by Tom Lyons and me yesterday in the Sunday Independent this narrative is somewhat dented. In the days prior to the guarantee, and in a phonecall likely made between September 24-26, 2008, John Bowe from Anglo spoke to a senior official in the Central Bank.

Bowe: …[The Regulator has been asking]’So when are you going to run out of money’? And this is our best guess as to how these things unfold.
Official: Right.
Bowe: Making assumptions obviously contractual stuff is rolling off and then we’ve made assumptions around the customer stuff. And that, that if you like gives us a point of time which is, which is Monday.
[Silence] Official: That, that by Monday you will be out of collateral?
Bowe: By Monday, we would, yeah, exactly.
Official: Ok, em.
Bowe: We will be out of cash and collateral.

Anglo were projecting they would run out of money on Monday, September 29, 2008, and if they survived Monday via money market funding they said they would certainly be in trouble on Tuesday September 30, 2008. How well prepared was the Department of Finance for this eventuality? How did they factor this news in, if at all? How panicked was the decision to guarantee?

This information is by no means a smoking gun, but it does add to our understanding of events that week.