What is Siteserv?

Siteserv

is a group of companies owned by businessman Denis O’Brien. They provide services for builders, broadband providers such as

UPC

, and utilities such as Irish Water, for which it has been installing meters.

Why is it in the news?

One of O’Brien’s companies,

Millington

, bought Siteserv three years ago for €45 million, costing the taxpayer €110 million in the process.

How did it cost the taxpayer that much?

Siteserv owed €150 million to the

Irish Bank Resolution Corporation

(IBRC), the State-owned company that took over

Anglo Irish Bank

and Irish Nationwide following the financial crash.

Anglo had lent money to Siteserv to help it pay for a number of companies in Ireland and Britain that it bought between 2006 and 2008. The bank received €40 million and shareholders received €5 million from the sale.

Why did the IBRC accept so little?

Siteserv was struggling with its debt and had little prospect of repaying the money. It and its stockbrokers, Davy, went looking for a buyer in January 2012. They came back two months later with the Millington offer. The brokers said that this was the best on the table. At the time there were few buyers around for Irish companies and properties.

IBRC agreed to accept the €40 million in settlement of its debt, leaving €5 million for shareholders.

Why did the shareholders receive €5 million if the company was so heavily in debt?

They still owned the company. The bank had not appointed a receiver to Siteserv, which would have given it effective control and first call on any money paid by the purchaser. As Siteserv was still listed on the Stock Exchange, its board was obliged to call a general meeting and put the sale to a vote of its shareholders, giving them the final say over the sale.

Who were the shareholders?

Among the biggest were the founders, businessman

Brian Harvey

, who owned 16 per cent of the company and received €800,000, and Niall McFadden, whose Boundary Capital had 9.4 per cent and received €430,0000.

Others included Patrick Jordan, who sold his company, Easy Access, to Siteserv in exchange for cash and shares and held 4.3 per cent, entitling him to €215,000; and Chris Neate, managing director of Sitserv's British subsidiary, Deborah Services, who held 5.1 per cent, which was worth €255,000.

How did Siteserv build up so much debt?

Between 2006 and 2007 it expanded by taking over a series of businesses in Ireland and Britain. It borrowed money from Anglo Irish Bank to help pay for this spending spree. The biggest was British company Deborah Services, for which it paid €57 million in 2008. Another large purchase was Sierra, which now holds the water metering contract. It paid €52 million for this in 2007.

Why has this row blown up three years later?

In fact, Denis O’Brien’ s purchase of Siteserv sparked a controversy at the time.

Shortly after the sale was announced in March 2012, The Irish Times reported that French group Altrad had told Siteserv that it was willing to pay more than Millington for the business. This raised the question of whether the sale achieved the best result for the State and the taxpayers, who were owed €150 million, but only received €40 million.

Siteserv's role in the Irish Water controversy means it has come under fresh scrutiny. Independent TD Catherine Murphy has discovered that Department of Finance officials had concerns about the sale at the time, but there are different versions of what happened next.

Former IBRC chairman Alan Dukes has contradicted the Government's account to the Dáil of how it dealt with the issue. Dukes says that, contrary to Minister for Finance Michael Noonan's statement, the department's secretary general, John Moran, did not raise the issue at a meeting with IBRC chief executive Mike Aynesley at a meeting in August 2012. Aynesley now works in London and Moran is retired.

Is IBRC not being liquidated?

Yes. The Government appointed special liquidators Kieran Wallace and Eamonn Richardson of

KPMG

to the company in early 2013, almost a year after the Siteserv deal was done. Neither had anything to do with the sale.

So where does it go from here?

Noonan has asked the special liquidators to review all deals done by IBRC.