The commission of inquiry into Irish Bank Resolution Corporation seems set to examine Sinn Féin claims about Denis O’Brien’s huge loans with the institution. Many months could now pass before any findings are made. But is there a swifter way of settling the matter?
The question arises as to whether the Department of Finance was ever told anything of IBRC’s arrangements with Mr O’Brien after the institution went into liquidation in February 2013. Such data – if indeed the department holds it -- might very well clarify what went on if it was published. This is no small point.
The claims by Donegal TD Pearse Doherty centre on the period in 2013 when IBRC was already under the direct control of special liquidators Kieran Wallace and Eamonn Richardson, each of KPMG. They have been under formal instruction from Minister for Finance Michael Noonan to provide routine reports on their work since the moment the liquidation was set in train.
Such reports must take in the “management” of IBRC assets. Internal data -- released to The Irish Times in response to a Freedom of Information request -- suggest the liquidators’ engagements with the Minister and his department generated no fewer than 1,447 pages of records in Merrion Street within months.
To be clear, the liquidators have rejected Mr Doherty’s Dáil assertions about Mr O’Brien’s “alleged extension of credit facilities” as “wholly inaccurate and misleading”. For his part, however, Mr Doherty has exercised parliamentary privilege to claim Mr O’Brien received a €315 million loan extension on November 14th, 2013, after his fourth approach to IBRC since the liquidation began.
So where does Mr Noonan fit in the picture? The key here is the very nature of the IBRC liquidation. The essence of it is that the Minister has formal oversight of the process – as distinct from the courts or a committee of inspection, as would be the case in a regular liquidation.
Thus detailed ministerial instructions were issued to the special liquidators and published indeed on the eventful night in February 2013 when the Anglo promissory notes were finally scrapped. Not only do the instructions set out a long list of duties in relation to the closure of IBRC. The liquidators are also required to keep the Minister fully in the loop at all times.
After all, the instruction said the liquidators “shall prepare and submit monthly reports (or more regularly as the Minister may require in writing) to the Minister in relation to the management, valuation and disposal of the assets of IBRC and the costs and expenses incurred by the special liquidator in connection therewith”. They were also required to provide “such other information or reports” in relation to the winding up “as the Minister may from time to time require.”
The liquidation was and remains a mammoth undertaking, necessitating the termination of costly financial arrangements between IBRC and the Central Bank and valuation and sale of numerous IBRC assets. The liquidators were also empowered to lend funds to existing customers where they considered such lending to be necessary to maintain or preserve the value of the IBRC loan asset in question.
Given the extraordinary volume and complexity of the work under way in the liquidation in 2013, it seems fair enough to speculate that IBRC’s dealings with Denis O’Brien were not exactly highest priority for the liquidators. Mr O’Brien is at the centre of attention now. But he was not at the centre of the liquidation itself. Yet Mr O’Brien is still a major -- and controversial -- figure in Irish affairs. Whatever the actual state of IBRC’s engagements with him, he was certainly no ordinary customer.
It is true, of course, that official banking policy rules out intervention by the Government in day-to-day management and commercial decisions in State-supported banks, including in relation to lending. But that’s not the point. While divisions between the Department of Finance and the IBRC’s pre-liquidation management team have come to light, the winding up of the institution was set up a way to ensure a constant and detailed flow of data to Merrion Street from the liquidators.
In November 2013 I applied to the Department of Finance under the Freedom of Information Act for monthly and any other reports from the liquidators. The minutes of any meetings between the Minister or department officials and liquidators and any briefing documents prepared for such meeting were also sought.
The department refused to grant the application, citing commercial sensitivity and the State’s financial interests, and later it refused an appeal. Last January Peter Tyndall, the Information Commissioner, refused a further appeal.
But a simple list of department files, released within the initial response to the request, points to a high degree of contact with the liquidators. Each of the 10 monthly reports between March and December 2013 ran to about 100 pages. Minutes are cited for 54 meetings between the department and the liquidators in that period and for three meetings between the Minister and the liquidators.
In Mr Doherty’s disputed account, of course, this was the very time in which Mr O’Brien was seeking a new lending arrangement with IBRC. We must recall here the liquidators’ assertion that the Sinn Féin TD’s intervention “does not reflect the facts of this case or the position taken by IBRC’s credit committee.”
The conflict is clear. What is not in doubt, however, is that the department has access to a large amount of official data about the wind-down. Moreover, the Minister can seek clarity on IBRC’s engagements with Mr O’Brien if he wants it.
Arthur Beesley is Economics Editor