The Ibrc Commission on the Siteserv sale shows that there is still a lack of efficient, fair and timely methods to investigate allegations of corporate misconduct. It took him seven years and more than 10 million euros to find that Ibrc had acted properly in the sale of Siteserv.
His commission report also concluded that businessman Dennis O’Brien received no preferential treatment from his bank regarding the interest rate on his loan.
The report uncovered “unacceptable practices” of individuals associated with Siteserv and was critical of former CEO Brian Harvey. He also explains how Ibrc, the founder of Harvey and Siteserv, was not informed that Niall McFadden would own a sizeable stake in the new entity that acquired the company. increase.
The report recommends referrals to Ibrc’s Special Liquidator, the Board of Revenue, ODCE and the Central Bank. But it’s hard to see where much of it actually ends up.
Ibrc’s decision to approve the sale of Siteserv to Denis O’Brien in good faith was based on misleading and incomplete information provided by Siteserv itself. (O’Brien was not found to be part of the misleading practice.)
The problem here is that Brian Harvey, Siteserv’s former chief executive officer, did not tell the bank all about bonuses in regards to borrowing from Ibrc and holding shares in the entity looking to buy the company. .
He is confident that he will not be the first or last businessman to mislead a bank about his own personal financial situation or the situation of the company he is about to sell.
But the lack of transparency and Harvey’s withholding of information contributed to taxpayer losses. It made it a public good. Ibrc is funded by taxpayers and in this case the company could have received around €8.7 million more than it realized.
The extent of the “fraud” by some parties attached to Siteserv may or may not be illegal. That’s for others to decide. Still, it took seven years to unravel the full story of what happened.
What happened at Siteserv is a poor reflection of Irish business culture. But is it worth seven years and more than 10 million euros for him to find out?The answer to that question is not clear.
In the Commission of Investigation method, witnesses are entitled to be informed of everything said about them by other witnesses as the investigation progresses, not just at the end of the process.
In some ways it is like conducting a court hearing in private, but with all the rights that the court process conferred on an individual.
In 2019, the costs of the six courts established between 1997 and 2006 were estimated at over €340 million. The 11 commissions of inquiry established since 2004 have cost around 28 million euros.
Commissions of inquiry seem to be a more cost-effective way to conduct investigations. The Ibrc Commission was due to proceed with an investigation into another 37 transactions that occurred in the crash year, in which outstanding loans totaling €1.88 billion were written off.
The Siteserv model included Ibrc debt write-offs of approximately EUR 100 million. No one knows what the €1.88 billion loan write-downs will entail, given that the great injustice in this case involved a very different narrative than what prompted the investigation in the first place.
Likewise, investigating its size and cost is not just a “fishing expedition”. The government now moves to end the commission. Judge Cregan noted in 2020 that it is impossible to determine whether some transactions are commercially sound without obtaining documents, statements and evidence that would be difficult for a bankrupt company or a company in another jurisdiction.
The potential further fraud that could be discovered and cost taxpayers money is certainly worth considering. Cost is not the only issue. There is also the question of whether it can be done realistically.
Courts are expensive and too long. However, they create a level of fear that can deter future wrongdoing.
Commissions of inquiry should be cheaper and faster. If it’s neither, and it doesn’t act as a deterrent, then something needs to change.
Governments have to start over when it comes to finding new ways to investigate businesses.
A tale of two housing markets
Two contrasting stories here and in the UK housing market show just how volatile the sector is.
Dublin-based Cairn Homes reported a very strong first half profit this week and continues to generate strong orders for new homes. In July he increased from 1,750 to 1,988 in September.
Meanwhile, in the UK, a survey by the Royal Institute of Chartered Surveyors (RICS) showed the sharpest drop in inquiries from new buyers since 2008 last month.
Realtors expect home prices to be broadly flat over the next year, but are optimistic for now. The decline is due to the prospect of a recession, higher mortgage rates and lower living standards.
The situation in the UK was highlighted when Liz Truss took office as prime minister as the pound fell to its lowest level in decades against the dollar.
Truss plans a £150bn (€172bn) energy assistance package at a time when the country’s current account is in deficit at 8 per cent of GDP. financial timesTruss is on a massive financial gamble.
Deutsche Bank forex analyst Shreyas Gopal wrote in a memo titled “The Pound Sterling Crisis” that large, underfunded and untargeted tax cuts and spending pledges could set off alarm bells for global markets. said to be sexual.
He said investor confidence cannot be taken for granted. Under the truss energy scheme, energy suppliers are required to pay large sums of money and are asked to sell to customers at below cost.
The spending promise comes at a time when Truss is talking about “small government,” but actually pledging billions of dollars into the pockets of householders who can afford to pay the bills.
Given that high energy prices could last for years, there is a real danger to Britain’s finances and economy.
The economic bad news continued to spread in the retail sector when Primark owner ABF issued a profit warning as weaker disposable income led to lower-than-expected earnings next year. This is where the energy crisis really starts to affect work.
Ireland has a strong economy but is facing a crisis with a huge national debt. No job losses have yet been seen and the economy remains at full employment. But some companies are looking to cut spending, and multinationals, especially tech companies, are choosing to freeze hiring. In the housing market here, as in the UK, higher interest rates and lower living standards due to rising inflation will hit the market.
Still, industry figures predict that housing demand won’t really falter, and continue to point to about 10,000 fewer homes being built than the market needs this year.
Demand for housing is likely to continue, but if a severe recession hits, it will be difficult to see how prices will continue to hold at current levels.
Largest ever containership boom
The incredible global boom in the shipping industry seems to be coming to an abrupt end. Analysts predict that in just three years, the container shipping sector will be as profitable as it has been in the last 60 years.
Maritime research group Drewry estimates that the industry as a whole generated $7 billion (€7 billion) in operating profit in 2019 and $26 billion in 2020. Earnings last year he reached $210 billion and this year he is projected to reach $270 billion.
These gains have been described as “once in a lifetime,” but they’re probably even rarer than that. This shows where the money has gone in this inflationary crisis. Fuel costs in the industry are skyrocketing, but the enormous demand and supply shortages of containers are in a position to push prices higher.
Rising costs and a slowing economy will cause this particular bubble to burst starting next year. With money earned in such a short period of time, no one cares what happens now.
