Banking Inquiry: Former CIF boss Liam Kelleher - 'Builders' donations to parties did not influence decisions'
Published 13/05/2015 | 19:53
The Construction Industry Federation never donated to a political party and former boss Liam Kelleher said he did not believe that financial donations to parties influenced their decisions.
Mr Kelleher told the Banking Inquiry that if Government policies were helpful to builders it was because of their pre-budget submissions.
He stressed that every organisation filed these submissions and Ministers then weighed up all the options.
Questioned by Deputy Eoghan Murphy about giving gifts like “corporate hospitality, tickets to a match, a bottle of wine, that kind of thing?” Mr Kelleher said “not in my time”.
Asked by Senator Susan O’Keeffe about “closeness” between CIF members and Fianna Fail, Mr Kelleher replied that he could only speak for the Federation and not individual members.
The Federation treated all political parties equally.
Current CIF director general Mr Tom Parlon said the country had become over dependent on construction in the run up to the crisis and “as leaders of the industry we have to accept responsibility.
“We are acutely aware tens of thousands of people lost their jobs and we want to ensure this never happens again.”
They were being told by all the experts there would be a “soft landing” and “time has shown that approach was wrong.
“We should have taken greater heed of the warnings even if they were going against the mainstream We should have urged caution”, he added.
Mr Kelleher said they had made mistakes “I was part of it and to that extent I apologise.”
Too many houses were built and too much of the economy was dependent on the sector. Construction activity reached “unsustainable levels during the boom”.
Mr Parlon admitted to Senator Michael Darcy that there had been some “shoddy” building in the past but current regulations were very good although they added to the cost.
Regarding NAMA he said the industry has “massive concerns” when it was being set up. The CIF believed now that NAMA was “doing a good job on handling a very difficult role”.
He told Deputy Michael McGrath that despite a 2010 CIF commissioned report which severely criticised NAMA he now personally believed “its as good as it can be”.
It had not become a bailout for developers. NAMA was very tough but fair. If you looked at some of the big projects coming on stream as a result of NAMA investment “that’s very positive”.
Mr Parlon said his group did not realise banks were issuing loans with poor due diligence prior to the crisis and were “shocked” by the extent of non-performing loans when NAMA was set up.
Mr Kelleher explained to Deputy Eoghan Murphy that in the run up to the peak as head of the CIF he had felt “pressure” right across the board, from all political parties. to increase construction.
The belief was that the industry was trying to catch up on deficits that had arisen over many years and all the indications looked good.
He stressed to Deputy Michael McGrath there had not been any contrarian views expressed at CIF board meetings because the focus was very much on the delivery of a high level of projects.
Pat Davitt, chief executive of the Institute of Professional Auctioneers and Valuers questioned by Deputy Pearse Doherty that valuation standards prior to the crash were not “robust”.
There were no national standards, even now, and that was a weakness in the process.
He said however that the methods to calculate values had not changed and always depended on comparable prices on the open market.
In response to questions from Deputy Kieran O’Donnell he said that even auctioneers and valuers could not believe at the time how quickly prices were rising.
Asked if they could have done anything about this, he replied: “how could you stop it?” He said auctioneers and valuers were representing the vendor.
The only thing they could have done was to undervalue and this would have left them wide open to litigation.
He called for the establishment of an advisory National Property Council to avoid future troughs and peaks and said the Property Price Register had been “a great help” as prior to that auctioneers could not disclose a price even if they wanted to.
Mr Gerry Fitzpatrick, Bank Partner at Deloitte Ireland which audits Ulster Bank stressed to Senator Susan O’Keeffe that audits were a financial statement at a point in time. They were “not an insurance policy or prediction for the future”.
The very dramatic situation which developed was something that “couldn’t have been contemplated”. The bank ultimately require a bailout of more than £14bn sterling.
Mr Pat Cullen of Deloitte agreed that an audit was “very much the point in time picture of the organisation” and those were the audit rules.
Mr Fitzpatrick was “absolutely” satisfied that Deloitte had done a good job in the auditing of Ulster Bank at the time.
He had no cause to believe that the bank had withheld any information from the auditor.