Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

I wish the Minister of State, Deputy Calleary, well in his new and very important role.

As we know, the IBRC had been created to wind down Anglo Irish Bank and the Irish Nationwide Building Society, which had been nationalised and the citizens acquired a huge debt of approximately €35 billion. In 2012, the troika was still in town; the austerity programme was under way; the national debt had ballooned; new taxes such as the universal social charge, USC, were introduced; some people lost their homes and businesses and there was a lot of fear and distress. IBRC had allowed Siteserv to sell itself and it was assisted by Davy and KPMG. Mr. Robert Dix, who was a non-executive member of the company, was appointed as chairperson of the Siteserv sales committee. As chairman of the sales committee, he was described as a key decision maker, yet he travelled to Switzerland with Mr. McFadden to spend a week with Mr. O'Brien on a fitness holiday which was described as a boot camp. The attendance at the boot camp just four days before Mr. O'Brien's company was given exclusivity, was not disclosed to the Siteserv board. This was judged to be deliberate by the commission, which stated Mr. Dix gave untruthful evidence to the commission. It went on to say he was not impartial in his role as chairman of the sales sub-committee. Exclusivity, according to the commission, favoured Mr. O'Brien in the bidding process. The commission deemed this to be one of the most important decisions in the course of the Siteserv transaction and it conferred a significant advantage on Mr. O'Brien. Despite the fact that Mr. O'Brien's company's second round bid was reduced by €3 million, the reduction was not disclosed to the IBRC, which seems extraordinary. This non-disclosure was deemed to be deliberate and the decision to do this was made by Mr. Dix. The commission found that Mr. Harvey, the CEO of Siteserv, concealed significant financial interest in the O'Brien bid from the board. He also concealed from the board the fact that he had passed confidential information about the Siteserv sales process to Mr. McFadden, who in turn passed it on to Mr. O'Brien's adviser. The CEO and some of the directors of Siteserv were aware of Mr. McFadden's role in relation to the entry of Mr. O'Brien into the Siteserv sale process. The report states:

These undisclosed negotiations led to the extraordinary situation in which Mr. Harvey, as CEO of a Plc, and Mr. McFadden (the two co-founders of, and major shareholders in, the Company) negotiated a 15% shareholding in Mr. O’Brien's new company without anyone in the Company or the Bank being aware of it – even though the process was monitored by the Board of Directors of Siteserv, the Sale Sub-Committee, two sets of corporate finance advisers (KPMG and Davy), the Chief Financial Officer...the Company’s solicitor (Arthur Cox), a representative of IBRC [and] the Bank.

It really looks like they ran rings around them. One wonders why questions were not being asked when that transaction was being discussed. Even more incredibly, the bank agreed to receive a fixed amount of €44.3 million in full repayment of the Siteserv debt. This allowed surplus cash to be paid as bonuses to directors of the company rather than a further reduction of Siteserv's huge indebtedness to the bank. It would be obscene for those who manipulated the sales process to the point where the commission described it as "not commercially sound" to retain those bonuses. The bank must demand the return of the bonuses. The leaking of a key confidential document by a person in Davy who was running the process, and who is now a very senior official in the Department of Finance, cannot be ignored. Was that known or declared in advance of his move to the Department? We need to hear from the Minister on the issue and what action he proposes to take.

I note Mr. Dix, who is so prominent in this report, who withheld a letter with a lower offer from Mr O'Brien, after he was awarded exclusivity, is a director of one of the companies the Government is currently doing very lucrative deals with for long leases of social housing. We cannot see the same people emerging all of the time, even at this point. The payment to shareholders in the context of such large write-downs was beyond controversial and the payment could have been reduced had IBRC asked Davy for an updated analysis on the performance of Siteserv. That resulted in a direct loss to IBRC and, by extension, the State.

The year 2012 was when Siteserv, together with its subsidiaries such as Sierra - later to become GMC Sierra - was bought. I refer to GMC Sierra because it started preparing to bid for contracts to install water meters, with the company hiring water meter specialists in mid-2011. People had accepted so much following the crash, it was only after water charges were introduced that they started to take to the streets in significant numbers. Having taken part in most of these protest marches myself and talked to people along the way, it was clear this was about more than water charges: it was a breaking point. There was a feeling that all the pain was being felt by ordinary people, while another cohort of people were gaining from their misery. So much for us all being in this together. I began looking into this and it led me to Siteserv and its subsidiary, GMC Sierra, one of three companies appointed to manage the installation of water meters across six regions. I make no apology for constantly banging that drum by all the means available to me and doing my best to make sense of all the material that was coming my way. I believe that at all times I acted in the public interest. While all of the information I received did not prove to be correct, I believe it was given to me in good faith.

In April 2015 I received a heavily redacted response to a freedom of information, FOI, request. This response escalated the issue. Here is a flavour of what it contained. It stated: "The Minister is very concerned with how a large number of transactions have been handled over the past number of months and this has led the Department to question the effectiveness of the CEO and the current Management Team." It included quite a bit about Siteserv. What was the basis for the Department coming to those conclusions? Were there further complaints to the Department like the one that some of the bidders made to it about Siteserv? If the Cregan commission is wound up, we need to hear from the Minister and the Department about what was the basis of it, because there are lessons to be learned. There should be a sharing of information between Departments in that regard.

Ms Ann Nolan from the Department of Finance gave the following evidence to the inquiry:

The relationship with the Bank was unquestionably more strained than the relationship with the other banks in which the State had invested despite the fact that there was no material difference between how the relationship with the Bank was managed by the Dept. vis-à-vis the other banking investments of the State (AIB, Bank of Ireland and Irish Life & Permanent)...The only rationale I can offer is that the Bank resented being accountable to its sole shareholder, confused independence with lack of accountability...[The report goes on.]

During the time I was raising issues around the transaction I talked to a lot of people and business culture in this country was repeatedly raised with me. I had no doubt there was an aching desire by many business people for wrongdoing to be exposed and dealt with appropriately. People wanted a business culture that was fair. They told me that they did not mind fair competition but they wanted an honest process, and they wanted to be assured that was the case. It is depressing to read the view of Anchorage, the other second-round bidder for Siteserv, which had increased its final round bid. It said that the sales process was not conducted in a neutral fashion. It is clear from the report that it was more than keen to acquire Siteserv and perhaps to further invest in Ireland. It believed the process was "rigged" and described Ireland as a "banana republic". Anchorage was not the only bidder with concerns.

The Commissions of Investigation Act was an attempt to provide for inquiries that would substantially reduce the legal costs. Mr. Justice Cregan insisted that there was a need for legislation to enhance his powers, and bespoke legislation was passed by us in this Oireachtas to provide for that. This had the effect of turning this inquiry into a tribunal, but behind closed doors, with 42 individuals or organisations gaining legal representation at the inquiry, as of 2019.

Indeed, the Taoiseach did suggest that different types of inquiries may be needed for different types of wrongdoing but we really need to catch this in real time without getting to that in the first instance. Where inquiries have to be held in retrospect, it is essential that they are independent, timely and cost-effective. We in the Social Democrats looked elsewhere for solutions and believe an independent, anti-corruption agency with strong powers, including the power of arrest, is required. When researching this, the example we used was the model we found in Queensland in Australia but that is not the only model we can look at. We need to look outside this jurisdiction at how other countries do things to find good examples of models we can introduce here.

This is a very sizeable document. I nearly went blind reading it in the last week. I hope that when the commission finally reports in relation to the other transaction we will have the opportunity to have another debate on how we will deal with these issues into the future.

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