Anglo’s meetings with Finance

Readers might recall that back in November, I published an FOI released to Deputy Joan Burton. She appealed a decision by the Department of Finance to refuse the release of certain documents to the Information Commissioner, and the Commissioner appears to have settled the matter with the Department – resulting in the release of more documents. Joan was kind enough to pass a copy onto me. The Irish Independent reported on the documents last week.

The documents contain the minutes of a meeting between the Department of Finance and Anglo representatives in December 2008. Sean FitzPatrick and Kevin Cardiff were present. At the meeting, Anglo proposed that Standard Life and the Irish Government would help underwrite a rights issue, the draft plan is included in the documents. It also contains a letter from Anglo chairman Donal O’Connor, dated January 15, 2009, where he states:

First, we have considered the funding and the assets and liabilities of the Bank and we confirmthat in the contextof the Government’s commitment the Bank remains solvent. Secondly, while we cannot predict the response of our depositors and other creditors to nationalisation with accuracy, we confirm our belief that, given all necessary support, the Bank can remain a viable institution in the context of nationalisation.

And as late as January 8, days before nationalisation, staff at the Department appeared to be still asking how many branches Anglo had.

Tony,
Further to our conversation this morning, we have offices in six foreign jurisdictions:
1. The UK operations are a branch in accordance with Article 25 of Directive 2006/48/EC. This is usually referred to as “an EU branch”. Partially regulated by the FSA.
2. Germany – as UK. Partially regulated by the BaFin.
3. Austria – as UK. Partially regulated by the FMA.
4. United States – three representative offices in Massachusetts, New York and Illinoislicensed by the Federal Reserve Bank and each State Regulator.
5. Isle of Han – a subsidiary licensed by the Isle of Man Financial Supervision Commission.
6. Jersey – a branch licensed by the Jersey Financial Services Commission.

I also confirm our conversation that we will launch the Mortgage Bank without the Govt Guarantee in place, and once the CEBS rules become clearer on the disclosure for Guarantors we will look to have the Mortgage Bank included.

And it includes this gem from Sean FitzPatrick, on how long it would take Standard Life to do due diligence:

SF Indicated that due diligence would take circa 48 hours. He acknowledged that they need to prove that they can get a substantial part of the funds required and that they need to bridge a credibility gap between Finance/FR and Anglo’s thinking.



Revisiting Rody Molloy's golden handshake

For several weeks starting in late September Rody Molloy’s pension led news reports. I wish to return to it as I’ve some new questions to raise following weeks of fairly frustrating research.

This is a lengthy post. The next series of paragraphs are all context to the whole Rody Molloy pension issue. You may find being reminded of the details useful, if so, read on. If not scroll down and click ‘Continued’ and it’ll bring right into the main subject…

Readers may remember Mr Molloy finished in his role at Fás in strange circumstances following a prolonged period where various questions regarding his excessive expenses, his handling of internal procedures and his general management abilities, were raised.

For a period in September 2009 there was confusion about whether he resigned or had been removed from his position. This would later become important as it would have effected his pension entitlements.

On September 24 the Public Accounts Committee was told he had received a generous pension enhancement valued at more than €1m. Peter McCloone and Sean Gorman spoke of how they brokered deal on behalf of Fás with Mr Molloy, part of which involved him agreeing to resign. Questions were immediately asked about how the deal was negotiated. “There was no question of pals or anything like that”, Gorman told the PAC. They admitted no legal advice had been taken.

As the media pounded on the stunning admission that no legal advice had been sought, ministers desperately attempted to pass the buck. It became clear that both the minister for enterprise, then Mary Coughlan, and minister for finance, Brian Lenihan would have been required to sign-off on the deal. The Green Party quickly distanced themselves from the story, obviously uncomfortable with the deal and how it came about. Mary Coughlan ordered a review into the circumstances surrounding the deal.

Two days after the PAC meeting An Taoiseach Brian Cowen was pushed on the issue. He admitted that Mr Molloy did not threaten legal action during discussions. He said Mr Molloy acted “honourably” by resigning and claimed the enhanced pension fell within departmental guidelines. Prior to this ,in an attempt to excuse the the cost of the deal, ministers had insinuated that Mr Molloy would have initiated a lengthy legal action which would have cost the taxpayer far more than the €1m golden handshake. Nobody (me included) bar one letter writer, seemed to notice that even if this had been the case Fas could seemingly have used the Employment Appeals Tribunal or Rights Commissioner, both of which are inexpensive as they require no legal teams. Even if Mr Molloy had won his case there the maximum award would have been two years salary – about €440,000 – much less than the million euro deal signed-off by Government.

We were the first to question whether Mr Molloy’s pension did in fact fall within the guidelines cited by An Taoiseach when we published them in full on this website. It wasn’t until two weeks later that the print media returned to this element. Several more reports in various media outlets continued to state unchallenged that the deal was within departmental guidelines. Some two weeks later Shane Phelan of The Irish Independent destroyed that myth with a frontpage story about how even senior civil servants in the department didn’t believe the enhanced pension fell within the guidelines. The enhancements should only have been available as part of a contract termination by the Government but Mr Molloy had resigned, as we’d noted earlier on this website.

The new revelations, contained in emails and correspondence seen by the Irish Independent, will come as a major embarrassment to Taoiseach Brian Cowen.

He insisted just weeks ago that all proper guidelines had been followed.

[…] The memos show at least three different Department of Finance officials warned prior to the deal being approved that it fell outside of what was allowed in the guidelines.

In comments made on September 25, he also said formal cabinet approval was not needed for the deal, even though it is now known there was clear advice from within the department that the matter should be referred to the Government.

When asked about the issue three days after the Taoiseach’s comments, Tanaiste Mary Coughlan made no reference to the department guidelines and instead said the legal basis for the deal was covered by the Labour Services Act.

However, none of the extensive departmental correspondence seen by the Irish Independent refers to this act. In fact, notes from negotiations show that those involved were only concerned about two main issues — the terms of Mr Molloy’s contract and what was allowable under the department guidelines.

Guidelines are essentially plain-English versions of legislation.

As part of the review initiated by Mary Coughlan legal advice was sought from the attorney general and thereafter no alteration was made to the pension deal.

Continue reading “Revisiting Rody Molloy's golden handshake”

Times leader on ethics and donations

The Irish Times leader is on ethics and standards in public life today. Good piece. Ending paragraph;

It is not just Fianna Fáil that has behaved badly over ethical legislation and transparency. Because political donations below a certain limit do not have to be disclosed to the standards commission, many donations were set below the limit.. The commission also suspects that large donations may be split up into small amounts to avoid disclosure. Last year, when local, European and byelections were held, not a single donation was publicly recorded by Fianna Fáil, Fine Gael or the Labour Party. This is a disgrace. Ethical standards and political funding mechanisms require fundamental reform.

Interesting bit in bold there.

Parties use various methods to effectively bypass the donations system. We’ve written about this pretty extensively in the past. Two pieces maybe worth re-reading if you’re interested in the topic. This one on a prior Times leader on funding reform which I disagreed with…

One oddity of the current system for donations to individuals is related to declaration thresholds. Despite being obliged to open an account once they receive a donation exceeding €126.97, politicians don’t have to declare full details of any donations less than €643.97 to the Standards in Public Office Commission. This means the bank account, for the purposes of transparency, is effectively useless unless a donation exceeding €643.97 is made. Reducing the declaration threshold from €643.97 to €126.97 while ensuring all transactions below the lower figure are on record anonymously would be beneficial to the transparency of the funding process. This would mean the public could inspect the credit and debit side of the donations account upon declaration and see if there were excessive amounts of donations made for more than, say, €100. If this was the case and SIPO suspected several of these may have come from one individual, SIPO should have the right to inspect the account in detail.

Of course a significant increase in the level penalties imposed against those who breach the above would also be warranted also. That almost goes without saying.

And one of the first posts on this site from way-back-when, when I tended to adopt a more cynical radical tone; Want to bypass our donations system? No problem.

The dreamer in me has been telling for while not the write this post. “Don’t tell the good politicians how the bold ones work the system”, it screamed. The other 99% of me said, “fuck it, they all know about this anyway, it’s whether they chose to work it or not is the question”. So here, dear reader, I tell you how I understand our public representatives can work the donations system…

Pretty much a how-to, that one, but perhaps insightful.

Anglo companies

Since we now own them – I will be buying and publishing the accounts for all Anglo Irish Bank subsidiaries. Many of them have or had Minister Brian Lenihan as a director.

First up is Anglo Irish Asset Finance, 2008 and 2009 accounts. The 2009 accounts contain the now infamous yen loss, Colm McCarthy referred to recently. The notes to the accounts are particularly interesting

Anglo Irish Asset Finance PLC 2008 Accounts

Anglo Irish Asset Finance 2009 Accounts

Fine Gael and O'Flynn

The defence used by The Very Different Party to Fianna Fáil for tapping up a Nama 10 developer for donations is not inspiring.

The main opposition party has long criticised Fianna Fail’s record of raising money from property tycoons, citing a “cosy relationship” between the government party and developers.

Mr O’Flynn is company chairman and managing director of Cork-based O’Flynn Construction, which recently transferred debts approaching €1bn to the National Asset Management Agency.

The party’s finance spokesman Michael Noonan last night said the exclusive fundraiser at the K Club last week was above board, but would not comment further.

“Our fundraising is in compliance with the rules,” he told the Irish Independent.

Mr O’Flynn ‘sponsored’ the 18th hole for the fundraiser for an undisclosed sum. If done through his company the figure will need to be published in the annual accounts. Fine Gael will only have to disclose a figure if the profit from the sponsorship is above the ridiculously high declaration limit of €5037. However, they’ll not be required to provide documentary proof that the gross income minus the expenses for the day resulted in individual or collective breaches or non-breaches of the declarations. Of course, this all means that there will, almost guaranteed, be no breaches of the declaration limit on the day. Thus the undisclosed sum will likely remain undisclosed.

Hell, political parties aren’t even required to publish accounts, despite SIPO and the Council of Europe Group Against Corruption saying it should be a basic standard for more than a decade. So we’ll no little about what sums passed between the party and those in attendance on the day.

In recent years the opposition has taken the moral high ground on ‘legal corruption’ and accountability issues, citing the Galway tent consistently as an example of how Fianna Fáil has been ethically compromised. Yet they rarely if ever attempt to hold themselves above the standard of the “board”.

The SIPO rules were written and implemented under Fianna Fáil. Fine Gael and Labour say they need to be reformed; what’s stopping Labour and Fine Gael from holding themselves to the standards now that they wish to implemented if they get into power? Why not take the initiative and publish accounts, expenses and all donations above a lower minimum limit, as an excercise in transparency?

Politics over democracy, innit?

The Greens have their own standards for accepting donations. Praise deserved. Pity they don’t see fit to publish donations below the minimum declaration limits. All parties accept that the lower limits are too high, as far as I know. So what’s the problem?…

On that topic, I’m still waiting to see the transparency-related reforms detailed in the programme for government. Any news on that lobbyists’ register, Minister Gormley?