Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Deputy Catherine Murphy for raising the issue. I am grateful to have an opportunity to place some information on this matter on the record of the House.

On 15 March 2012, the board of IBRC met and approved the sale of Siteserv. Under the relationship framework that was in place between the Minister for Finance and the bank at that time, which had been place since July 2009, the board of IBRC was required to engage with the Minister for Finance on certain key issues, which included "any material acquisitions, disposals, investments, realisations or other transactions, other than in the ordinary course of Anglo Irish Bank's banking business."

It should be noted that this relationship framework did not include any specific monetary thresholds which would trigger mandatory consultation with the Minister for Finance. It should also be noted that at the time the ordinary course of the bank's business was to conduct an orderly run-down of the bank. As such, IBRC's efforts, as a secured lender, to maximise the recovery on its loans to Siteserv was considered to be in the ordinary course of business. For that reason, and under the relationship framework in place at that time, IBRC was not required to consult the Minister for Finance on this matter in advance of making the decision to approve the sale of Siteserv.

Upon receipt of critical representations following the transaction, Department of Finance officials inquired about the transaction with IBRC management as part of their regular engagement. Following initial discussions, they agreed with IBRC's chairman and CEO, on 31 May 2012, that they would review the transaction involving Siteserv in greater detail to better understand the decisions taken and the impact these decisions had on the process and the final recovery for the bank. Through this review, which took place on 11 June 2012, Department of Finance officials were concerned that IBRC had decided to allow Siteserv to control the sales process rather than itself acting in a primary role in this transaction. This decision appears to have given rise to a number of other subsequent actions which could quite reasonably be considered to have caused a reduction in the bank's recovery on the Siteserv exposure. These included the exclusion of potential trade buyers from the sales process, the fact that legal advisors to Siteserv also acted for the purchaser, and the making of a payment to the shareholders of Siteserv. In light of these concerns, the shareholding management unit of the Department of Finance recommended that the chairman of IBRC commission an independent review of the transaction, and this was included in a briefing note to the Minister for Finance prior to his meeting the chairman and CEO of IBRC.

On 25 July 2012, the Minister for Finance met IBRC's chairman and CEO to discuss concerns regarding this transaction which were raised with him by Department of Finance officials following their engagement with IBRC management. The chairman and CEO gave strong assurances that the transaction had been thoroughly assessed by the IBRC board and that the management and board of IBRC were satisfied that the transaction was managed in the best manner possible to achieve the best result for the State, including the decision to allow Siteserv to control the sales process. At this meeting, the chairman and CEO further confirmed and provided assurances, with regard to the specific concerns previously mentioned, that trade buyers had been excluded due to the potential damage to Siteserv's competitive position that might otherwise have arisen; that the legal advice was provided by two different teams within the law firm concerned, and that appropriate Chinese walls were in place between the two teams; and that the payment to shareholders was necessary to ensure a vote in favour of the deal.

To help prevent such concerns regarding the quality of decisions taken by IBRC management from arising in the future, the Minister for Finance requested that a further meeting take place between the former Secretary General of the Department of Finance, John Moran, and the then CEO of IBRC. A meeting took place in August 2012 at which this matter was further discussed. At that point, and at all other points mentioned above, the transaction had been concluded and no further action could have been taken.

Notwithstanding the fact that a revised relationship framework and operational protocol had been put in place on 29 March 2012, it was decided following John Moran's meeting with the then CEO of IBRC in August 2012 that a senior Department of Finance official would be seconded to IBRC to explore opportunities for deleveraging with a view to maximising the recovery for the taxpayer. This had the additional benefit of supporting the management team while also providing greater oversight, given that a number of matters within IBRC at that time raised concerns with Department of Finance officials. The secondment of Neil Ryan to IBRC commenced shortly thereafter, in October 2012, and he took up his role as the bank's new head of market solutions.

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