Wednesday, 4 February 2015
Department of Finance
30. To ask the Minister for Finance further to Parliamentary Question No. 220 of 16 December 2014, if he will indicate if, notwithstanding the commercial independence of Irish Bank Resolution Corporation at the time, his Department endeavoured to query the reason such a large loss to the State, amounting to over €100 million, was permitted to happen in the sale of the company concerned (details supplied); if not, the reason his Department was not concerned that such a large loss had occurred when the clear objective of IBRC was to maximise the return to the State; and if he will make a statement on the matter. [4700/15]
For clarity's sake, the sale of Siteserv occurred prior to the Special Liquidation of IBRC, under the previous board and management of IBRC.
As already indicated to the Deputy in Parliamentary Question No. 220 of 16 December 2014, notwithstanding the State s ownership of the bank at the time, it was a matter for the board and management of IBRC to determine and implement all commercial decisions in their organisation.
As set out in the Relationship Framework, which governed the relationship between the State and IBRC at the time, the State did not intervene in the day to day operations of the bank or its management decisions regarding commercial matters which were a matter for the board and management. For the avoidance of doubt, the Relationship Framework ensured that IBRC continued to operate as an independent operator in the market, albeit on a work-out basis only.
Under the Relationship Framework, IBRC were obliged to consult with the State in respect of any proposed decision that was within the ordinary course of business but which met certain financial thresholds; the sale of Siteserv did not meet these financial thresholds, therefore it was solely a matter for the board and management of IBRC at the time. Notwithstanding this position, my officials did take an active interest in the running of the bank through their interaction with the management of the bank at the time.
I am aware that KPMG Corporate Finance and Davy Corporate Finance were engaged by Siteserv to run a joint sales process to sell Siteserv which was in severe financial difficulties and was unable to service or pay back its loans to IBRC. The sales process was initiated by Siteserv and overseen by a subcommittee of the Siteserv Board. The sales process involved two stages and IBRC was briefed after each stage.
The Board of Siteserv, as advised by KPMG Corporate Finance and Davy Corporate Finance, recommended the successful bid as representing the best return for IBRC. I am advised that the Board of IBRC at that time were satisfied that this was the case.