Gerald Nash (Louth, Labour) | Oireachtas source

The Siteserv report brings us back to the year 2007 and to the calamitous events that unfolded in this country and across the world, events from which we, arguably, have yet to recover. We are still dealing with the fallout. It was in June of that year that Bear Stearns bailed out two of its hedge funds with $20 billion of exposure to collateralise debt obligations as sub-prime mortgages. At that stage Bear Stearns famously said that the problem was "contained". As we know, it later had to be bailed out by the Federal Reserve Board. It was in August 2007 that BNP Paribas blocked withdrawals from three of its hedge funds, with a total of $2.2 billion in assets under management, due to what they termed "a complete evaporation of liquidity". In September 2007 Northern Rock had to receive support from the Bank of England, which led to investor panic and a bank run, and to Northern Rock's subsequent nationalisation.

At precisely the same time that Anglo Irish Bank lent €156.4 million, in tranches over just seven months, to Siteserv to refinance its existing borrowings and to provide debt financing for acquisitions, it became the sole lender to Siteserv. Anglo Irish Bank collapsed and Siteserv was seriously overborrowed. In fact, its debts exceeded the value of its business. Meanwhile, Siteserv's CEO, Mr. Harvey, personally owed Anglo €1.7 million. Its co-founder, Mr. McFadden, who became a Siteserv consultant, was also a significant borrower from Anglo. He was at the receiving end of a €15 million judgment from Anglo in 2009.

Although the specifics of some certain allegations of themselves may not have necessarily stood up, the Cregan report did uncover a series of undisclosed meetings and communications with Mr. O’Brien’s company Island Capital in relation to “management incentivisation arrangements” for Mr. Harvey and Mr. McFadden. This was despite the fact that Island Capital and Siteserv had entered into a confidentiality agreement under which Island Capital had agreed not to contact any Siteserv officers or employees without prior consent.

The report also discloses that Mr. Robert Dix, a Siteserv non-executive director and its senior independent director, at a crucial stage in the Siteserv sale process when second round bids were due to be submitted, travelled to St. Moritz - as we know - with Mr. McFadden to spend a week with Mr. Denis O’Brien and Mr. McFadden on a skiing holiday. On this holiday Mr. McFadden and Mr. O’Brien discussed the amount of shares that Mr. McFadden and Mr. Harvey could acquire in Mr. O’Brien’s new company if Mr. O’Brien’s bid was successful, and they agreed a figure of 15%. As we know, Mr. Harvey later voted in favour of the grant of exclusivity to Mr. O’Brien in his capacity as a Siteserv director without disclosing his agreement in principle to acquire a shareholding in the new company and thus that he had a significant financial interest in Mr. O’Brien’s bid succeeding.

Mr. Dix chaired the Siteserv sale sub-committee meeting assessing all the bids, without ever disclosing his holiday with the successful bidder to either the committee or the board. The report arrives at a judgment that one can reasonably disagree with. On the one hand, it concludes that Mr. Dix’s relationship with Mr. O’Brien, his friendship with Mr. McFadden and his holiday with them both, “would, if known at the time, have given rise to a perception on the part of a reasonable, objective person that Mr Dix was not impartial in his role as chairman of the Sale Sub-Committee”.

On the other hand, the report states that Mr. O’Brien was not at fault in going on this holiday with Mr. Dix and Mr. McFadden, or in relation to any of the other improprieties uncovered. It is perhaps a testament to Mr. O’Brien’s ethical and moral standing that he can continue to behave seemingly entirely without fault even while all around him, for some strange reason, his associates and colleagues are behaving quite improperly.

Judge Cregan found that not only did Mr. Dix’s behaviour give rise to a perception of a lack of impartiality but that Mr. Dix “did not act in an impartial manner in his role as Chairman of the Sale Sub-Committee, but instead acted in a manner that improperly favoured Mr. O’Brien’s bid”. In particular, he found that Siteserv’s decision after two rounds of bids to grant exclusivity to Mr. O’Brien was, from the perspective of the bank, not reasonable and was tainted by impropriety. It is worthwhile listing why. Mr. Dix did not disclose to Siteserv or its advisers or the bank his relationship with Mr. O’Brien; his relationship with Mr. McFadden; Mr. McFadden’s role in advising-assisting Mr. O’Brien in relation to his bid; that Mr. McFadden would benefit financially if Mr. O’Brien’s bid were successful; and his holiday with Mr. O’Brien and Mr. McFadden at a key time in the transaction. The decision to grant exclusivity to Mr. O’Brien was, coincidentally, made just four days after Mr. Dix had returned from his holiday with Mr. O’Brien and Mr. McFadden.

5 o’clock

That decision was one of the most important made in the course of the Siteserv transaction.

As chairman of the sale subcommittee and as director with primary responsibility for execution of the Siteserv transaction, Mr. Dix played a vital role in the decision to grant exclusivity to Mr. O'Brien. The exclusivity decision favoured Mr. O'Brien as it conferred on him a significant advantage over other bidders. Mr. Dix thus acted in a manner that favoured Mr. O’Brien, and did so while not disclosing any of these matters.

Meanwhile, Mr. Harvey concealed from Siteserv, its advisers and the bank that he had a significant financial interest in Mr. O’Brien’s bid. Mr. Harvey also concealed from them the fact he had passed on confidential information about the sale process. Mr. Harvey did not disclose to them that Mr. McFadden had a role in advising and assisting Mr. O’Brien in his bid, nor did he disclose to them that Mr. McFadden would also obtain shares in Mr. O’Brien’s new company if Mr. O’Brien’s bid were successful.

However, above and beyond the ins and outs of this striking narrative, the stark fact is it involves large sums of money that are nonetheless dwarfed by the cost of the commission itself. Under the Commissions of Investigation Act, none of the oral evidence gathered by Mr. Justice Cregan is admissible in any civil or criminal court proceedings. The quid pro quois that the judge can arrive at the truth effectively and expeditiously. Clearly, this has not happened. Instead, reading the report is like examining a long-buried time capsule that includes a story from long ago.

These investigations do not serve a useful purpose if they cannot be completed in a reasonable time frame and as expeditiously as possible. There can certainly be no question of any further modules along these lines.There are doubts whether any further modules on these lines can occur and they cannot take place unless and until we know what went wrong in the management of this commission. Was it the legislation, the terms of reference, or some other factor? We need to learn from our mistakes instead of repeating them. We need to figure out how we can undertake examinations of issues of public importance in a much more timely and expeditious way. Clearly, the system we have is not serving the public interest given how long this inquiry took. There are other modules on the agenda.

Let us recall how an attempt was made to try to empower the Houses of the Oireachtas to carry out certain kinds of inquires almost ten years ago and the decision was taken by the people. Should we, as part of the Oireachtas, consider better ways of examining matters of public interest than the legislation, the 2004 Act, that was used for this? It is something this House and the committees could usefully examine.

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