Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak on this Private Members' motion in the name of the Fianna Fáil Deputies. I am very happy the Minister for Finance, Deputy Michael Noonan, is in the House to hear what we have to say directly. I know the Minister will respond in due course as the debate proceeds up to 9 p.m. tonight.

The motion notes that, in 2012, Siteserv owed €150 million to the Irish Bank Resolution Corporation, IBRC, and that it was sold in March 2012 for €45 million; in the process, some bidders were excluded from the sale although they may have saved the taxpayer and State a lot of money; Siteserv shareholders received €5 million at the time of sale; there are genuine concerns about the sale of Siteserv for €45 million by IBRC; and the Department of Finance expressed serious concerns about the sale. The motion acknowledges the huge public concern about this matter; the dissatisfaction that information obtained through freedom of information highlighted a breakdown in trust between IBRC and the Secretary General and other key officials in the Department of Finance; and the concerns about other sell-offs by IBRC. While the Minister has sought to respond to this, our motion specifically condemns the direction by the Minister to appoint KPMG to undertake a review of the transactions in IBRC as KPMG advised Siteserv during the sale and there are public concerns about a possible conflict of interest. As we have said from day one in this debate, we are calling for an independent commission of inquiry to be set up to examine the circumstances surrounding and leading to the sale of Siteserv in March 2012, and other company sell-offs by IBRC, so full information can be obtained in the interest of the taxpayer and the wider public interest.

Essentially, this started off as a business transaction. On 16 January 2012, Siteserv told the Irish Stock Exchange that it was exploring its corporate options. Everybody knew this was code and it was essentially up for restructuring, resale or takeover. Two days later, a company called Better Capital wrote to Siteserv expressing an interest and stating it would be interested in purchasing. It was never contacted, included in the process or asked to make a bid. That is the first difficulty, in that people who were offering to come in, possibly with a decent price, were not even advised of the process. Ultimately, the next Better Capital heard about it was after the Irish Stock Exchange announcement two months later, in March, that the company had been sold. During the course of the sales process, another company, Rutland Partners, had offered €55 million and there are reports that at least two other companies offered amounts greater than the €45 million that was originally offered and ultimately accepted. A key concern is why so many people were excluded from the process who could have reduced the loss to the taxpayer.

In simple English, Siteserv owed the taxpayer €150 million through IBRC, yet it was ultimately sold for €45 million, which is a loss of €105 million. If that was not bad enough, what happened next is that the shareholders of that company were given another €5 million of taxpayers' money, bringing the total loss to the Irish taxpayer to €110 million.

The Minister is the sole shareholder of IBRC. He calls the shots, he owns the company and he directs the directors. Everybody in IBRC was there on his behalf but he was oblivious to what was happening on his watch. He was asleep at the wheel while this was going on and it is the taxpayer who is the loser in all of this. That €110 million has to be borrowed, given we are still borrowing money this year, and it has to be paid back with interest over the years to come because of the loss on that particular deal, which is aside from other losses that have also emerged during this process.

On 15 March 2012, as I said, the deal was done and announced to the Irish Stock Exchange. KPMG, one of the major companies in town, was involved and advised Siteserv on the sale. I will say here and now that I trained as a chartered accountant and qualified with a company that is now essentially a KPMG company. However, I do not like the directive the Minister has given to that company. Many people felt, when it was appointed to that job last Friday week, that in some way KPMG was interested in taking up the job and was willing to do it, despite the conflict of interest. However, it is clear from the ministerial direction issued by the Minister that this is a direction to KPMG, the liquidator. As the Minister has special powers under the liquidation legislation to direct the liquidator to carry out certain functions on his behalf, KPMG is caught having to do the Minister's bidding whether or not it thinks it a good idea. The people in KPMG know it is not good for KPMG to be embroiled in this but they have no option and no say because the Minister has the legal powers in the legislation to direct them to do that.

The Minister has also directed that if there is prima facieevidence of any material deficiencies in the performance or functions of those acting for IBRC, KPMG is to include this in the review and report, and it will also examine the processes, procedures and controls which were operated by IBRC in regard to the relevant write-offs. Finally, to be clear, the Minister directed the liquidator to appoint, with his prior approval, an appropriate independent person to monitor for any conflicts of interest. That has been done and Mr. Justice Iarfhlaith O'Neill has been appointed. However, the fact the Minister had to do that proves he knew there was a conflict of interest issue. He should not have taken this road and I think the road he took in appointing KPMG to do this was the wrong one.

I ask myself why he did it, given this has been a political controversy for some time. First, the Taoiseach came into the Dáil and said he knew nothing about it. Then, he came back a few days later and said we will appoint the Comptroller and Auditor General to examine it. He did not know what he was talking about but we are used to the Taoiseach, when he strays into matters financial, never getting it right. It happens on every occasion, and I refer to another example here last week. He then realised the Comptroller and Auditor General had no legal power to do this. The Tánaiste came in the following day and said she wanted somebody else who was independent to do it. The Minister then came into the fray and said he would get KPMG to do it. Of all the options proposed, foolhardy and all as the Taoiseach's comments were, and light and all as the Tánaiste's comments were, the Minister has actually come up with the worst option of the three of them.

The Minister's press release announcing this stated: "The Special Liquidators are best placed to undertake such a review thoroughly and expeditiously – given their access to all books and records of IBRC [and] the resources at their disposal to conduct such a review."

He essentially said he appointed KPMG because it could do a short-cut. It was working in the bank, could do a quick job and get things over with quickly. He wanted it off the political agenda and asked for any old report. He knew there was a conflict and then had to appoint a judge to try to clarify the issue. Many people will object to the manner in which the Minister chose KPMG solely because it could do a quick job. It is better to get things right. We have always asked for an independent commission of inquiry. I would prefer to get to the truth even if it takes a couple of months longer. The people of Ireland want the truth.

The process the Minister has started is tainted and will be tainted when the report is completed by KPMG on 31 August. It will be tainted when the Minister publishes it and hands it to an Oireachtas committee to consider it further. That process will be tainted for several reasons. He started with a conflict of interest and appointed the wrong people because he wanted a report in a hurry. It is a bad process and he is doing himself a lot of harm by going down this route. Even at this late stage, I would support him if he was to pull back from the measures he has taken in appointing KPMG to do this job.

The Minister has directed the special liquidator to review the transaction that occurred from 21 January 2009 until 7 February 2013, the date of the appointment of the special liquidator. What about all of the deals that were ongoing when it was appointed? What about the deals that were completed before it came in? What about all the deals that have been completed since 7 February 2013 and those transactions in IBRC that have yet to be completed?

As the Minister knows, the House sat until all hours to deal with his emergency legislation. There was some €13 billion in debt on the books of the IBRC on the night the Minister put it into special liquidation. How much taxpayers' money has been written off inappropriately as part of that €13 billion? It was the net amount on the balance sheet after provisions, but I am sure the level of gross debt was in the order of €25 billion. People will want to know not just what was written off prior to the liquidator arriving, but what happened after it arrived and how much of the original value of the loans has been written off.

The Department of Finance has had concerns all along. As bad as the format of the inquiry is, the Minister would not have set it up unless he believed there was something to investigate. These questions must be answered. Some of the questions which have to be asked and answered as part of this process include why there was a surge in share dealing in Siteserv prior to the sale. One of the reasons that has been publically stated is that some of the shareholders in Siteserv also owed money to IBRC. It has a lien on the shareholders because it knew if it passed some money back to the shareholders, it might get some of it back off its loans.

There is a clear conflict of interest between the role of IBRC, those who owe it money and the shareholders in Siteserv. Why were the shareholders paid €5 million of taxpayers' money for an insolvent company? Why were bidders excluded from the process? I do not know what the joke is; taxpayers are not laughing. Taxpayers are paying for that write-off out of borrowed money with interest. The Minister might think it is a joke, but there are people who are paying their mortgages and do not get a penny from the bank. They see one set of rules for those on the inside and another for ordinary citizens. They do not see that issue as a laughing matter. I advise the Government to take this matter seriously.

The longer the Minister laughs at this, the more harm he does to himself. He should not be carrying on the way he is and making a joke of this. Then again, this deal has characterised the Department of Finance. Deputy Catherine Murphy tabled 18 or 20 parliamentary questions over many months, on which she is to be complimented. When the Minister gave an interview, he said she did not ask the right questions. That is no way to run one's business. He said when she submitted the freedom of information request she got the right answers. A senior Government Minister is dismissing, with the back of his hand, the relevance of the national Parliament and saying he will give information from his Department through freedom of information that he will not give by way of parliamentary questions and replies.

He has undermined the Government's claim of a democratic revolution and a change in how we do business. It is the same old story in the Department of Finance, that is, to tell nobody nothing. Deputies should not be forced to go through freedom of information when they ask a question in the Parliament. There is still a culture of secrecy.

I refer to the amendment to the motion. If I was IBRC, I would be very worried about it. It is self-serving and implies that the Department of Finance knew, saw and heard nothing, that nobody told it anything, that it did not ask questions and that it heard about things from newspapers. The Minister, as a shareholder, should have been on top of this. We heard many times about regulators being asleep at the wheel. The Minister was the sole shareholder of the company when this happened and the people expect better from him because he was managing the economy fairly well.

The troika did not oversee this, but it is another example of a difficulty. When the Minister did business of his own, he was not doing the job on behalf of the taxpayer. All of these losses occurred on his watch and after he appointed the special liquidator, further losses to the taxpayer continued to occur. There will be a further writedown of the €13 billion in loans, about which there is no word. The Minister studiously prevented the liquidator or an independent commission, which we would like, from examining what happened to the €13 billion.

The amendment states that Department of Finance officials were not made aware of the details and goes on to state that the Minister received files, but no minutes were included and that the first he heard of the issue was when a member of the public wrote to him about media reports after something appeared in the Stock Exchange. His defence is that he knew nothing. The manner in which he went about this has elements of Bart Simpson, namely, that it is not his fault because he knew nothing. That will not work. People expect more from a Minister for Finance and for him or her to look after their interests and money, and not wash €110 million of their money down the drain. The Minister presided over that. This issue is not going away and the Minister's actions have exacerbated the political problem for himself.

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