Sinn Féin finance spokesman Pearse Doherty,
It is important to point out at this juncture that I am not making any allegations of wrongdoing or incompetent governance at IBRC. And I have no wish to pre-empt or pre-judge in any way the findings of the proposed inquiry.
What we do have at the moment are facts.
There are things that we know took place.
The conclusions we may draw from them are for another day.
This is about asking legitimate questions and the facts on the ground serve to inform those questions.
So in this regard, it is important that we know the facts, and that the facts are put on the record in order to help to frame the terms of reference of this investigation.
….If I may I’d like to give some examples as to why managerial decisions and client relationships need to be covered by this inquiry, not just up to 7 February 2013 [the end date of Commission’s investigations] but beyond.
Only last week, in IBRC board minutes released by the Minister’s department, we saw that Richard Woodhouse, who managed Mr. O’Brien’s loans with IBRC, was present at a meeting where the sale of Siteserv was discussed. The former chairman of IBRC said that Mr. Woodhouse played no part in the decision-making process around the sale of Siteserv.
In recent days, a series of documents have come into my possession which help to give a more complete assessment of issues relating to IBRC, Siteserv and related matters.
Back in 2012, the eventual owner of Siteserv had an agreement with IBRC whereby the bank “would receive 92.02% of all Digicel dividends in excess of $50 million as part of a loan repayment agreement.
There was a once-off dividend distribution of $300 million dollars in 2012. The bank received a scheduled payment of 150 million euro, which equated to 65% of the dividend distribution.
The balance was then used by the owner of Siteserv to pay down a Bank of Ireland facility which had been used to fund the Siteserv deal. This was all approved by the IBRC’s Group Credit Committee.
In other words, we seem to have the terms of a loan agreement with IBRC being used to pay down a loan related to Siteserv but with another bank.
And there are other documents I have seen which lead me to ask legitimate questions of the way that IBRC was being run in the public interest.
For example, in the documents I have seen I have seen letters and documents which outline details of this individual’s loans with IBRC, with four different proposals.
In a letter dated 7th March 2013, this individual requested approval for a proposal to repay his facilities over a 3 year period with scheduled capital repayments.
The request was discussed by the Case Team with Special Liquidators of IBRC. On 17th March, an email was sent to this individual which advised that facilities could only be extended for up to 12 months, and only then if it was considered beneficial to do so in the context of asset protection and enhancement.
This was rejection No. 1 for the borrower.
On 26th April 2013, this individual requested a formal approval to extend his facilities for 12 months to 30th June 2014 with no capital repayments.
On 20th May, the Group Credit Committee approved a 12 month extension subject to a €100 million capital repayment on or before 30th November 2013.
This was a de facto second rejection of the individual’s proposals.
On 21st June, the individual in question responded with a proposal for a one year extension on his loans with a capital repayment of €100 million in November 2013.
This was rejected outright by the Group Credit Committee on 4 July 2013.
Rejection No. 3. The loan facility was expired at this stage.
With no new agreement in place, and with his loan facility expired since 30th June 2013, it appears that this individual faced the possibility of having his loan sold to a third party.
In August, the individual met with the Case Team and at this meeting the documents say he made it clear that he had a verbal agreement with Richard Woodhouse and Michael Aynsley which pre-dated the liquidation of IBRC.
The individual said that this verbal agreement allowed him to repay his loans over a three-year period beginning in 2012.
It was his view, and the view of his lawyers, that this verbal agreement still stood, even though the bank was now in liquidation.
In September, the individual and his advisor met with the Special Liquidators at which they made it clear they would not commit to any capital repayment for a 12 month extension.
Although it is not clear from the documents I have seen as to the exact date of the following, the documents also say that the individual made it known through his “advisors that he was not prepared to enter the process of having his loans sold on with an expired loan facility and so was likely to issue protective legal proceedings seeking an order for specific performance which would require the Bank to honour the alleged 3 year term on his facilities.”
The individual made a fourth proposal to IBRC on 10th October 2013 for a 12 month extension with no capital repayments which was according to the document I have, it was approved on the 14th November 2013.
This was for a loan of in excess of €315 million with a margin interest rate of 3%, amounting to €10 million per annum.
The bank and special liquidators concluded that it was regrettable that it was not able to achieve consensual agreement from the borrower to maintain the expected repayment schedule by delivery of a further €100 million capital repayment given the impending loan sale and the Bank’s inability to extend facilities beyond 12 months.
How does a bank in liquidation create what is essentially a new €315 million loan which its group credit committee had rejected just a number of months earlier?
Why didn’t IBRC place a call on the now expired loan?
How did the verbal agreements between certain managers prior to liquidation outweigh the decision of the Group Credit Committee?
From documents I have seen it appears that IBRC’s former chief executive, Mike Aynsley, along with Richard Woodhouse, made a verbal agreement with Denis O’Brien to give him an additional three years to pay off his loans with the bank.
This is the same Richard Woodhouse who was present during the discussion of Siteserv.
It is clear from the documents I have seen that Mr. O’Brien did not want his loans to be sold on to a third party but instead wanted a 12-month extension in order to work out the loan himself.
All of this apart from Siteserv took place after 7 February 2013 and because of this would not be covered by the terms of reference as presented this evening to the House.
Minister, this is just one example why the terms of reference need to be expanded in to the timeframe of the liquidation and KPMG.
This is a €315 million that is extended and is the same as issuing a new loan being issued on the basis of an apparent verbal agreement despite its rejection on three separate occasions by the Group Credit Committee of a version of the same proposal?
How is this not relevant to the inquiry?
Pearse Doherty, Sinn Fein TD for Donegal South West