It has now reached day 2,129. It has cost an estimated €70 million and counting. It has produced eight interim reports, but not a single final report in any module.

And yet, Taoiseach Micheál Martin has still not given his evidence in front of the IBRC Commission. Nor has the former finance Michael Noonan, or other potential witnesses.

Six years after it was set up, it is still only on the first deal it is tasked with examining – the sale of the utilities and infrastructure company Siteserv to the businessman Denis O’Brien.

The Commission has been granted extension after extension by the Department of the Taoiseach and it now looks almost certain to need another one as it continues its examination of the IBRC, the entity charged with cleaning up the carcass of Anglo Irish Bank and Irish Nationwide Building Society.

The most recent missive from the Commission came on September 18 2020, when it asked to be allowed carry-on until April 30 2021. At that point, it said it would produce a final report on its first module.

With 22 days to go until that deadline, it will take a miracle for the Commission to meet its latest target.

In its September 18 2020 update, the Commission said it would circulate draft reports to all relevant parties for their review in two chunks: one part on December 30, 2020, and the other on February 28, 2021.

After receiving this feedback and considering it, the Commission said it would submit its final report to An Taoiseach on April 30, 2021.

The Commission hasn’t circulated these draft reports yet, although it has received various submissions from interested parties.

So how can it hope to have its final report finished in just 22 days? The answer is it won’t.

Instead, we face more expense and more delay as the secretive Commission carries on its work year after year.

Gaps

The delay in Taoiseach Micheál Martin giving evidence to the IBRC Commission isn’t his fault. He submitted a witness statement a number of years ago and has said he is prepared to appear in front of it. When he eventually does, hopefully later this year, he will be questioned not just by the Commission but also by the various parties involved including counsel for O’Brien as well as the many other lawyers representing the various stakeholders.

Martin will likely be questioned about his interactions or otherwise with the potential source or sources whose allegations helped lead to the establishment of the Commission.

Social Democrats co-leader Catherine Murphy, meanwhile, has declined the opportunity to speak to the Commission and be cross-examined by it and O’Brien’s legal advisors as well as others.

Not having Murphy give evidence to the Commission is a serious gap in the Commission’s work, and it is also understandably frustrating for those under investigation for years because of these allegations, as they won’t get to ask her about them. 

Murphy has, however, submitted a large dossier to the Commission containing a number of allegations. Understandably, Murphy has declined to reveal her sources. The fact the Commission has been unable to get Murphy to appear in front of it and explain in detail the various allegations she has made publicly in the Dáil about the sale of Siteserv and other matters is a serious hole in its work.

Not having Murphy give evidence could well come back to haunt the Commission when, and if, it ever gets around to publishing its conclusions.

Diversions

In May 2015, the then chairman of the Public Accounts Committee Sean Fleming said he feared what would become the IBRC Commission was being given “a blank cheque” when it came to the cost of its investigations. To date, it has cost many multiples of what was envisaged when it was set up in response to what then Minister for Finance Michael Noonan described as matters causing “public concern” about the sale of Siteserv and other issues, while he also acknowledged there was “no evidence underpinning any allegations”.

The period the IBRC Commission has been looking at extends from the former Anglo Irish Bank’s nationalisation on January 15, 2009 until its liquidation on February 7, 2013. This period lasted 1,484 days. The Commission has already run 645 days longer than the lifespan of IBRC, and it has so far examined just one relatively small deal that involved it.

The Commission is still only in the foothills of the Everest-like quest it has embarked on because, after it finishes its report into Siteserv, it then has to look at the relationship between the Department of Finance and the IBRC. After that, it has 29 more deals to scrutinise, plus a review of interest rates charged by the bank. It is also supposed to take a look at anything else it comes across that might be in the public interest.

The Commission has decades of investigating to go if it is allowed by government to continue at its current pace.

As it is, the Commission gives hints in its various public statements just how far it is going in its deliberations. It has so far collected 500,000 pages of evidence, 100 witness statements, and listened to 250 days of evidence (running to 40,000 pages of transcripts).

As it admitted last September, it was still planning to interview more people including Mike Gaffney, a tax expert from KPMG, and two former IBRC executives Karl Cleere and Peter Rossiter.

It said it had faced some issues interviewing Gaffney due to Covid-19. He is believed to be based in Madrid, so interviews with him have had to take place virtually.

Prior to Covid-19 the Commission, according to documents released under freedom of information legislation, didn’t use Zoom. It spent €2,400 on a five-star hotel on a trip to Jerusalem to quiz someone, and it also spent €4,000 on plane tickets flying a banking expert from Thailand to Dublin. Why it couldn’t find a bank expert in the capitals of international finance – London and New York – is, like so much else, something it doesn’t have to explain to anyone.

Its team of experts, meanwhile, continues to grow. In its eighth update, it notes: “In order to assist it in its work in these matters, the Commission has engaged two legal advisers – in trust law and in taxation.”

Why the Commission feels the need to hire experts in trust law and tax is unknown, but it is noteworthy that this is an avenue it only decided to go down last year. Hopefully one day it will explain what this has to do, if anything, with the board and executive of IBRC which it has been tasked with investigating.

The Commission describes reviewing all the documentation it has accumulated as a “time-consuming and laborious task”. The average King James bible has 1,200 pages, so we’re talking about it trying to distill 450 bibles into a single report just looking at Siteserv. It has 22 days left to finish doing this.

Known knowns and known unknowns

The IBRC Commission has so far not interviewed the Taoiseach Micheál Martin, but it is likely to do so this year. Politically, until Martin is interviewed and his evidence mulled over, it will be hard for him to suggest shutting the Commission down. Martin has nothing to hide but if he closes the Commission down, it is possible his opponents will suggest otherwise.

From public statements given in a separate legal action involving O’Brien, we know that Martin met a Department of Finance official called Neil Ryan after the bank was liquidated in early 2015. According to O’Brien’s counsel, this meeting was arranged by Ryan to “give (Martin) some information”.

Ryan has told O’Brien’s lawyers, according to evidence read out in the High Court, that he did not discuss either Siteserv or O’Brien at this meeting which took place in his home.

Whether Martin, who was then leader of the opposition, agrees with the former civil servant in his witness statement, or what else he might have to say when he is eventually questioned, we will hopefully find out in the years ahead as the Commission continues its work.

Martin was right to meet Ryan and hear him out about whatever he had to say.

Ryan, meanwhile, has both given a witness statement to the IBRC Commission and been questioned and cross-examined.

As the IBRC Commission operates in secrecy, it is not possible to comment on the issues, contradictions with others’ evidence, or any curiosities that may have arisen during Ryan’s evidence.

We do know that the then minister for finance Michael Noonan told the Dáil in April 2015 that he seconded Ryan to the bank after a meeting in August 2012 between John Moran, the then secretary-general of the Department of Finance, and Mike Aynsley, the bank’s chief executive, after a Department review had taken place of the sale of Siteserv to O’Brien. 

Noonan said Ryan’s principal role was to help the bank shrink its loan book by selling things off. But he said there were other reasons too: “This had the additional benefit of providing greater oversight while supporting the management team.”

In an April 2015 interview, however, Aynsley recalled things differently. “I actually suggested that Neil Ryan could be a candidate to assist in repairing the relationship hiatus!” he said.

“We had had a number of discussions with the department about the need to improve communication, and it was suggested by them that placing a department person with the bank would assist them in better understanding the issues we were coping with. There was never a suggestion that this was being done as a result of the Siteserv transaction, or to explore ways of deleveraging.”

The relationship between Ryan and the bank’s leadership was mixed. “Unfortunately, the secondment was not successful. The chairman returned him to the department with an explanation to John Moran and subsequently the minister as to the reasons,” Aynsley said in his 2015 interview.

“The bank later agreed to accept him back following a meeting between the minister and Alan Dukes. But he did not attend the office again until after the special liquidator was appointed.”

We know that the relationship between IBRC and the Department of Finance started well but by the end was fractious too. 

This was not always a bad thing. IBRC was still trading as a bank and it had a fiduciary duty to its clients while being mindful of the fact that the state was funding it, and that it had to obey EU and banking rules.

For example, the state, in the form of the National Asset Management Agency, wanted Paddy McKillen, a property investor who was a client of the bank, to sell all his assets, creating big losses for both the developer and the bank.

The bank backed McKillen’s view that, given more time, he would repay his debts in full, which he did – thereby returning the taxpayer hundreds of millions of euro it might not have received. This decision to back McKillen caused some friction with the Department of Finance.

There were loads of other issues between IBRC and the department, but I reference this one because it is in the public domain.

These many other issues are all on the agenda for the Commission to look at, assuming it is allowed to continue into the next phase of its inquiries.

An examination of the Department of Finance’s relationship with IBRC will make the Commission’s investigation into Siteserv seem like a relatively minor deal. It will introduce a brand new cast of characters to be interviewed, cross-examined, and considered.

A whole new context will be introduced, too, that will view the big picture facing the bank and the Department of Finance, which was constrained by European Commission instructions, banking rules, the relationship framework between the bank and the state, client confidentiality, and so on. Siteserv will be seen as a cakewalk compared to this module in terms of the complexity of the issues involved.

*****

At some point, the cost of the Commission needs to be considered. Entire sectors of the economy are crying out for greater financial support, but no such hardship is felt down at the Commission.

It continues to roll on with little information given out about its day-to-day doings or why exactly it is taking so long. The Commission has of course issued eight interim reports, but these are scant on detail relative to its first long-awaited final report.

The Commission has spent considerable sums ensuring that it can operate in secrecy.

Using taxpayer funds, the Commission went to the High Court on December 1, 2017 represented by a legal team led by the formidable Paul Gallagher SC, then a former attorney general, who is now back serving Martin in this role.

The move came after I wrote a 12,500-word investigation for my then-employer, The Sunday Business Post, into the Siteserv deal. The commission quickly applied for injunctions restraining the newspaper from, among other things, publishing any witness statement provided to the commission and any oral evidence given to the commission in a private session.

The paper consented to the application for a number of reasons. The main one was the likely cost of a court action upon an independently-owned title. But also because the terms of the injunction were narrowed by agreement in advance.

But it is abundantly clear that the public deserves to know more about what has happened over the last 2,129 expensive days in a Commission it is continuing to pay for during a time of unprecedented national crisis.

*****

The then Taoiseach Enda Kenny set the Commission up in an ill-thought-through manner that gave it such an overly broad remit that it was obvious from the start it was going to take many years to carry out its work.

The bank had a liquidator in KPMG, which had well-established legal powers to investigate the board of IBRC.

If there were concerns about the perception of a conflict of interest because KPMG in Dublin had audited Irish Nationwide and worked on the Siteserv deal, then the state could have just insisted it bring in a team from London or New York to carry out this aspect of its work.

Instead, under political pressure, Kenny ducked this efficient and cheap option and went for a full-blown Commission.

Kenny is now enjoying his retirement rambling around railways in a documentary series funded by RTÉ. Not all of his former colleagues in Fine Gael are as fortunate.

Former Fine Gael finance minister Alan Dukes was 70 when the commission began. Dukes, who was asked by the state to chair IBRC in its time of need, is 76 today. In the six years he has spent being investigated, not a shred of evidence has been produced against him. 

Former Bank of Ireland chief executive Maurice Keane served as a non-executive director of the bank. He was 74 when the Commission began. He will be 80 in May.

Keane was chair of the risk committee of IBRC at the time the Siteserv transaction took place. Again, nothing in the last six years has been produced suggesting anything other than Keane served the state well when asked.

The rest of the IBRC board and executive, meanwhile, continue to live under the shadow of the Commission. They are in a twilight zone where their reputations have been damaged, but cannot be cleared until it finally gets around to reporting.

There has been lots of chatter since the Siteserv deal was done about people’s holiday arrangements, bonuses, tax affairs, share dealings, co-investments, relationships, dinners, access to printers, weight-loss competitions, and on and on.

This is all great stuff – and worthy, if true, of being reported to the extent it involved a taxpayer-owned bank.

But is a Commission the best way to probe such a diverse range of issues? Where does its remit begin or end? We’ll have to wait and see when its report comes out what it has looked at, what it considers relevant, and what it concludes.

We have little idea what straight or meandering roads the IBRC Commission has taken to reach this point six years on, so it is hard to tell what it has achieved or not achieved.

And we have no idea when it will all end, or how much it will ultimately cost.

*****

The special liquidators of IBRC are preparing their own report into the board of the bank as they are obliged to with any company placed into liquidation. This will cost a small fraction of the cost of the Commission. There is likely to be a surplus of €300 to €400 million at the very end of the liquidation, which might prove useful to the Exchequer. But the taxpayer can only get this money when the liquidation of the bank is completed. This cannot happen until the Commission finishes its work one of these years.

58 days versus 1,100 years

Context is important when considering what is going on in the IBRC Commission. On May 6, 2015, Fianna Fáil TD Sean Fleming told the Dáil what many people think happened with the deal.

“In simple English, Siteserv owed the taxpayer €150 million through IBRC, yet it was ultimately sold for €45 million, which is a loss of €105 million,” Fleming said.

“If that was not bad enough, what happened next is that the shareholders of the company were given another €5 million of taxpayers’ money, bringing the total loss to the Irish taxpayer to €110 million.”

Let’s break this statement down.

Fleming is right the taxpayer took a loss on Siteserv, but this was going to happen no matter what. The fact is that nobody was prepared to pay €150 million for Siteserv because it had borrowed far too much and was on its way to going broke if it wasn’t sold.

The difference between the O’Brien bid and the other final bidder, a company called Anchorage, was at most only a couple of million euros.

O’Brien’s bid was non-conditional, while the other bidder asked for more information, so a decision was made in his favour. 

The difference at most between the highest and the second-highest bid was maybe €2 million.

What if IBRC had insisted trade bidders were invited into the tent?

Perhaps, Siteserv might have sold for more if it had gotten a trader bidder involved. We know that a company called Altrad said it might have offered €60 million for the business.

A decision, however, was taken not to invite trader bidders because the fear was Siteserv would decline in value rapidly and not be able to win new business if news got into the market that it was on the block, so this option was not pursued.

It is not possible to assume the Altrad bid would have definitely materialised at that price had they been in the running.

The final issue is the decision by Siteserv to pay its shareholders €5 million. This decision was based on the advice of Davy that if it didn’t give shareholders something, they might not agree to the deal and vote against it.

In retrospect, perhaps a smaller payment might have secured shareholders’ support. This was a bit of a risk, but let’s say the deal could have been done for €3 million less.

So let’s look then at how much more the taxpayer might have made assuming lots of things and with the benefit of perfect hindsight. There is about €5 million in the balance. This is made up of adding up the potential difference between the O’Brien (unconditional) bid and the Anchorage (conditional) bid. And then adding on top of that, that maybe Siteserv could have gotten away with paying its shareholders a few million less.

So the total loss to the taxpayer is not really €110 million as Fleming contends. There was perhaps €5 million, based on lots of assumptions, that could potentially have been returned extra to the taxpayer.

Now let’s consider the cost of the Commission which has reached about €70 million to date when third-party legal bills are included.

It has cost the state 14 times more so far to investigate how the state may have missed out on a hypothetical €5 million at most.

Now, let’s consider the scale of the state’s investment in IBRC, the combined Anglo Irish Bank, and Irish Nationwide. It comes to €34.7 billion.

One way to understand these kinds of enormous numbers is to consider €1 lost by the taxpayer as 1 second in time.

The €5 million maximum that the taxpayer might have missed out on that the IBRC Commission has investigated so far is the equivalent of 58 days in time using this measure.

The €34.7 billion total that was lost by the taxpayer in IBRC in total is the equivalent of 1,100 years.

One way of imaging how long 1,100 years ago is it equates to roughly when the Vikings first settled in Limerick. Having spent €70 million reviewing the equivalent of 58 days, are we really going to let the IBRC Commission start looking at the remaining 1,099 years?