Catherine Murphy (Kildare North, Independent) | Oireachtas source

We are often told that a week is a long time in politics and I can attest to that on this particular issue. I welcome the debate and the establishment of the commission of investigation, although I still have concerns about some of the terms of reference and I will deal with those in what I have to say. Twelve days ago I made a speech in the House which, apparently, rattled a few cages. I do not regret making the speech but I regret the fact that I felt I had no choice but to make it. The review that had been established was not fit for purpose. The Bill I was introducing sought to extend the role of the Comptroller and Auditor General to include IBRC in its terms of reference so that office could do the review. What I was looking for was an independent investigation and I am pleased we are getting to the point where we are going to get that, albeit in a different way.

There were a lot of references in the last few weeks to the media as the Fourth Estate, which refers to the fact that the media constitute one of the four pillars that makes up our democratic society. Access to information is essential for the health of a democracy. It not only informs but acts as a checking function to ensure that people in prominent positions are kept accountable. Indeed, one must at this stage consider that the extent of media ownership is an issue in this context. There can be no denying that the events of the last few weeks have most certainly highlighted a chilling effect on Irish public discourse and the threat of litigation which hung over the shoulders of journalists and editors. We know that in the last 12 years, 24 separate litigation cases have been taken by Denis O'Brien against publications and individual journalists in the State. With the notable exceptions of Broadsheet.ieand The Sunday Times, the response of the media to the most recent attempt to silence them was to take the safe option and not risk possible annihilation by deep pockets and large legal teams. The effect was to deny people their constitutional right to know what was said in their national Parliament by their elected representatives.

The clarification by the court six days after my speech was welcome and it has allowed media outlets to publish or broadcast without fear, which is what they should have been able to do always. For Mr. O'Brien or his lawyers to say that he never intended to interfere with Dáil privilege or the right of journalists to report on privileged statements is belied by the fact that his legal team specifically wrote to media outlets following my speech instructing them not to report it and to remove any reporting of it. They also wrote to me telling me I had breached an injunction by using privilege, so his intention was to stop privilege. That seems very clear to me.

In the same letter, Mr. O'Brien makes some serious allegations, including accusing me of knowingly using stolen information, stating that my information is materially inaccurate and claiming that I thought my interpretation of the public interest was to be favoured over that of the High Court. Let me put a few things to bed now. First, I have no knowledge of any information provided to me as having been stolen. Second, I wish to be very clear that I fully believe that the information provided to me was provided in good faith in the public interest and I have absolutely no reason to believe that it is anything other than accurate. Short of going in to IBRC and pulling out the original file, which I am not permitted to do, there is little else I can do to triple-check my information. Third, my interpretation of the public interest is very clear. I believe the public interest in revealing such matters lies squarely where there is a disadvantage to citizens to the benefit of some powerful interests. As Michael McDowell outlined in his excellent piece inThe Irish Timeson 30 May, the Irish people saw the absurd reality of Mr. O'Brien's spokesman accusing me of peddling lies while citizens were restricted from hearing or reading what I had said. How can that result in a balanced media that is informative in the way it should be in a functioning democracy? Dáil privilege is a necessary right, and I accept - as does every other Deputy - that it comes with a responsibility.

How did we get from the flawed review to a proper commission of investigation? How did these infamous missing minutes suddenly appear? It seems an uncanny coincidence that the minutes of the meeting of 15 March 2012 were found in the same week that the Government decided on a full commission of investigation. There is significant new information in those minutes and I wish to focus on three points, some of which have been mentioned already.

We have been told in the media on several occasions by the chairman of IBRC, Alan Dukes, that an individual, Mr. Woodhouse, was removed from any dealing with the Siteserv sale. We were told that this was because Mr. Woodhouse would have been the subject of a conflict due to his management of the accounts of Denis O'Brien, Siteserv and the CEO of Siteserv. The minutes show that not only was Mr. Woodhouse in attendance at that significant meeting, but he actively participated in the discussion regarding the sale of Siteserv.

The second issue I wish to mention is that we have been told all along, including in replies to parliamentary questions, some of which have been clarified tonight, that the loss to the State from the Siteserv deal was €110 million, when in fact the minutes show that it was €119 million. According to the minutes, this was €10 million in excess of the current impairment provision. In other words, it was €10 million more than they were prepared to lose, yet somehow they went ahead with that deal and there was a loss of €119 million. I fully accept that there were always going to be losses. Who made the final decision? The question as to who made the final decision needs to be investigated. In the information pack sent to prospective bidders for Siteserv in November 2011, it was outlined to bidders that they should assume that the company would be acquired on a debt-free and cash-free basis, yet I have had strong information, which I have put on the record of this House previously, that when Siteserv was sold to Island or Millington there was €10 million on the balance sheet, in a combination of cash and debtors. This is another significant issue that must be inquired into. If it accounts for the excess loss of €10 million then it raises even further concerns about the sales process. If potential bidders were assuming it was cash-free, then the information they were provided with was inaccurate and may have resulted in some of them underbidding.

From some of the research we have done, I know the bank had extended a credit line of about €10 million to the company in the months prior to the sale, but we are still unsure whether that credit line was actually taken up. That may well lead into what was on the balance sheet.

The third issue arising from the discovered minutes relates to the specific purchase price paid for Siteserv. The amount paid for the company is recorded in the minutes at €48 million. When the payment to shareholders is accounted for, the figure decreases to €44.3 million. We have been told all along that it was sold for €45.4 million and that this included the payment to the shareholders at just short of €5 million. I have been told by several sources that it was not the highest bid and that an approach was made to Island to increase the bid. I want the inquiry to investigate whether that did in fact happen and whether similar approaches were made to other bidders. If not, there is an issue of importance to be investigated.

When I met with the Minister yesterday I highlighted that my main concern was that the investigation should not end at the so-called prom night, 7 February, and that it should extend into the time when IBRC was in liquidation. I accept that the investigation might be curtailed, as there are many issues, and I acknowledge the changes in the terms of reference. However, I am concerned that it does not go far enough, for exactly the same reasons that Deputy Doherty outlined. It is more than just the individual transactions; there are other issues requiring investigation. The verbal agreements are referenced in some of the documents I have seen. It may be disputed whether these are actual contractual agreements. I have concerns that if the terms of reference are strictly adhered to they will not provide for that.

The purchaser of Siteserv was already significantly indebted to IBRC. We know that on 7 March 2013, one month post-liquidation, he wrote to the special liquidator seeking to reschedule his outstanding loans for a further three-year period. We know that he claims to have been allowed a similar extension by virtue of a verbal agreement he claims he had with the CEO of IBRC. We also know that according to IBRC the credit committee had never approved such a provision or a previous agreement, yet Mr. O'Brien maintains it was in place and he requested that the special liquidator be made to honour the verbal agreement. I ask the Minister to clarify that aspect of the terms of reference in advance of any vote taken in the House.

We know that the credit committee met on 23 May 2013, two months after Mr. O'Brien's approach to the special liquidator. At the time the outstanding balance owed to IBRC by Mr. O'Brien was in the region of €325 million. It is worth asking why someone so heavily indebted was allowed to make significant purchases from IBRC rather than being asked to pay down his outstanding loans. An article in the UK edition of The Sunday Timesin January 2012 showed that in 2011 and 2012 IBRC refinanced some of Mr. O'Brien's loans and increased its security stake in some of his investments. It seems illogical that in the same period he should have been allowed to purchase other assets such as Siteserv.

I refer to an article inThe Sunday Timeslast week written by Justine McCarthy and Mark Tighe.

7 o’clock

It stated that one of the central allegations made by Ms Murphy is that there were, as she says, unorthodox verbal agreements between Mr. O'Brien and IBRC. This statement - by Denis O'Brien's spokesperson - had accused Ms Murphy not merely of being factually inaccurate but of deliberately lying to the Dáil. As a Deputy it is difficult to imagine, in the political context, a more serious allegation. Indeed, this piece goes on to state that in the 2013 letter the judge refers to in his judgment records Mr. O'Brien himself asserted such a verbal agreement. The point here is that some of the documents I am referring to relate to the special liquidators era, hence the need for the period to be covered in the terms of reference in a much more comprehensive way.

In recent days, the chairman of IBRC, Mr. Dukes, has made much of the fact that the Central Bank conducted a review prior to July 2012 and apparently found there were no problems. Contradicting that assertion, however, is the relevant piece from the freedom of information documents from inside the Department of Finance, which states:

We are concerned that the Central Bank report compiled on the transaction vindicates their position. To be clear, we are concerned with a number of decisions taken by the bank in relation to this transaction.

These concerns were specified by the officials as follows: the decision to allow for the sale process to be run by Siteserv's advisers; the decision to exclude trade buyers from the process; the timing of the exclusivity period when there were other bids outstanding; and the payment of €5 million to existing shareholders. The Department then asks - remember this is after the Central Bank review of the Siteserv transaction - whether IBRC is satisfied that the transaction represented the best commercial outcome for the bank, and stated that it wanted an independent commercial assessment completed in respect of the transaction. It was not until I received, under freedom of information, a copy of the July 2012 internal Department memos, that we learned the Department officials were expressing serious concern over the effectiveness of the CEO and the management team, and that they had serious concern over the way a number of large transactions, including the Siteserv transaction, had been handled. It was at that time, in July 2012, that the Department officials recommended to the Minister that the chairman, Mr. Dukes, be instructed to conduct a full, independent review of the Siteserv transaction. That never happened.

While the war raged between the Department and the IBRC management team, on prom night, the night IBRC was suddenly and hurriedly wound down, the Minister, Deputy Michael Noonan, came into the Chamber and stated:

I wish to emphasise the reason these steps are being taken is entirely distinct from the performance or direction of the board or management of the IBRC. I wish to acknowledge, with much appreciation, the significant efforts the directors and staff of the IBRC have made to the stabilisation and maintenance of value in the IBRC.

Notwithstanding much of the very good work that did happen in IBRC, we were entitled to know that there was a dysfunctional or fractious relationship on that night. I believe it was an error not to have given us a very clear understanding that there was a difficulty. Reading the Minister's comments, there is no other conclusion one can draw but that everything was absolutely fine. Clearly, we know since then that it was not.

Another significant issue that raised its head in some of the early reporting of this controversy, but which has since been replaced by other developments, is the share activity of Siteserv prior to its sale. Various sources of information have told me there was a lot of activity at the time it was being sold, although it was not very public that it was being sold. When I went to look at how to actually make a complaint about this, I got the run-around. I wrote to the Irish Stock Exchange, which advised me it was not within its remit and that I should talk to the Central Bank. I wrote to the Central Bank, which told me it was outside its remit. I then wrote to the Office of the Director of Corporate Enforcement, whose reply came back to me today that it does not appear to come within the remit of that office. Somebody has to have some responsibility for that because otherwise, there is no point in having the legislation if there is not the means of enforcing it. We do not need to wait for an investigation to reveal this; we can see already that there is a doubt.

I want to make it very clear that I do not doubt, and never have doubted, my sources, because people have been questioning me about that. In my speech on 28 May, I referred to loans held by Mr. O'Brien that were due to be repaid in full in 2011-2012. We know they were not repaid in the timeframe. Effectively, once the agreed term had expired, those loans were in default and they were callable on demand. IBRC's own terms and conditions allowed it to charge default interest rates, yet it chose not to do so in this case.

Many sources have come forward, both before and since the speech I made at the end of May, to say they had personal experience of both performing and non-performing loans. They told me they were treated very differently from what they are hearing in this regard. The questions for the investigation are whether the appropriate interest rate was applied to each borrower, whether it was fair and whether it was in keeping with what other borrowers were paying or what IBRC could have been charging. I recall the Irish Nationwide Building Society mortgage holders and the way in which they were treated. They feel even more aggrieved at this stage.

We should not need inquiries to learn some lessons about how to answer parliamentary questions. The Opposition and the Government have a role, as do Government backbenchers. We need to be respected and to be able to get the information that allows us to do our job. There was lot of criticism of the Oireachtas in the pre-crash era in regard to people not asking difficult questions and about group-think. If we are to rebuild trust in politics, we must be allowed to do our job. There has to be a shift in culture and practice to allow that to occur at both political and administrative levels.

I cannot conclude without thanking Anne-Marie McNally and Eoin Wilson from my office, who worked on this issue for months on end and went above and beyond the call of duty. I want to put on record my deep appreciation of them and I think they will be very pleased if this investigation does justice to some of the work they have done. As regards the terms of reference, I am very happy that the investigation is being set up. I am generally happy with the terms of reference, although I think there is a significant and concerning issue, which has to be addressed, in respect of what the transition covers. It has to cover more than just transactions. That would be my major outstanding concern, and I hope the Minister will be able to address it.

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