Saturday 29 October 2016

Accountants in fees bonanza after bust

Some firms earn €150m in fees from State appointments to troubled firms and to offload Nama developers' assets

Published 19/07/2015 | 00:00


Accountants have reaped millions in fees for winding up, managing or selling off debt-laden companies and assets for the State, making them the big earners of the bust.

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New figures show the Central Bank has spent €1.8m from its own resources on sorting out just three troubled financial institutions.

In addition, the state-owned National Management Agency has paid receivers' fees of €76.6m to 68 accountancy firms in four years.

Meanwhile, Finance Minister Michael Noonan has paid €71m in fees to accountancy giant KPMG for 23 months' work liquidating the former Anglo Irish Bank, IBRC.

The scale of the fees will focus attention on one of the few professions poised to prosper during the bust, with rates as high as €400 an hour.

The IBRC's special liquid- ators, Kieran Wallace and Eamonn Richardson, who are senior partners at KPMG, cost €295 an hour. Others on the team are paid at lesser rates of €260 an hour for directors, €230 an hour for associate directors, €190 for managers, €165 for supervisors and senior accountants and €95 for junior accountants.

Mr Wallace's fee is still over €200 less than what he sought in 2010 after he was appointed examiner of the Capital Bars group. At that time, he sought an hourly fee of €560, but the High Court ruled that it should be cut to €375.

The total cost of liquidating IBRC up to December was €151m. The actual liquid- ation fees paid to KPMG came to €60.6m and the massive legal fees and other costs of selling off the bank's loans and assets amounted to €90.4m. The accountancy firm won the contract after a tender process.

Nama has proved to be the biggest employer of receivers. According to figures provided by Mr Noonan, 68 firms shared €76.6m in fees paid by the State's bad bank in the last four years.

In the first six months of this year, Nama appointed nine firms to carry out 16 receiverships, agreeing fees of €308,000.

New figures released to Fianna Fail finance spokesman Michael McGrath show that five accountancy firms have earned receiver's fees between €5m and €10m working for Nama since its inception in 2010.

Grant Thornton earned €10.1m in fees for 35 receiverships; KPMG was paid €8.7m for its work on 37 receiverships; Duff and Phelps, formerly RSM Farrell Grant Sparks, earned €6.5n for 25 receiverships; Mazars got fees of €5.94m for 22 receiverships; and PwC earned €5.65m for 14.

Other big earners were Deloitte (€4.9m in receiver's fees); Baker Tilly (€4.9m); Ernst & Young (€4m) and BDO (€2.79m).

The Central Bank's spending on professional fees was smaller but no less significant.

The transfer of Newbridge Credit Union to Permanent TSB after it was over-exposed to developer loans cost the Central Bank €772,779 in fees. The bank spent €761,976 on fees when it moved in to liquidate finance house Custom House Capital.

Quinn Insurance, founded by former billionaire Sean Quinn, was placed into administration in 2010 after the Financial Regulator raised concerns over how the business was being run.

The process cost the Central Bank €336,920 while more Grant Thornton fees - €2.8n in 2013 and €2.6m in 2012 - came out of the business.

Opposition politicians have criticised the Government for agreeing to pay professionals working on time-consuming projects by the hour.

Mr McGrath said there needs to be a rigorous value-for-money assessment of professional firms by the State.

"In some cases the level of fees being earned by receivers and other professional advisers has been extraordinary," he said.

"Despite persistent calls for greater transparency in respect of how fees are set, it can still be extremely diffi- cult for any person needing accountancy or legal services to make an accurate assessment of what they are likely to pay."

Mr Noonan has pointed out that the fees paid to receivers and liquidators are taken out of the asset, but ultimately, the cost is borne by the taxpayer because it eats into what remains for the State.

Fees charged by receivers, liquidators and others involved in the winding-up or management of indebted businesses and companies have raised eyebrows for years, but the professions have come in for particular comment since the property crash led to an explosion in their business.

Five years ago, High Court judge Peter Kelly intervened to cut a €425 hourly fee charged by an examiner appointed to Residence nightclub by 16pc, in line with public sector pay cuts.

Sunday Independent

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