Thursday 23 March 2017

Taxpayer once again in the firing line as Quinn-Anglo dispute heads for the courts

AS the country teeters on the edge of default, bailed-out Anglo Irish Bank and broke tycoon Sean Quinn are beating a path to the Four Courts to sort out their €2.88bn difference of opinion.

Mr Quinn and his family want the courts to remedy the perceived unfairness of the way their Quinn Group and insurance company were seized after a share gamble on Anglo went disastrously wrong.

And Anglo wants the court to step in to force the Quinns to meaningfully engage in ways to sort out the family's massive outstanding debts to the state-owned bank.

Both sides have legitimate grievances, but slogging them out in court is madness. It's too early to call who would win the many potential court cases, but we already know who'll lose -- the down-trodden Irish taxpayer.

Anglo's legal costs would be funded by the State. And worse, any money going to the Quinns' lawyers is money that isn't being used to pay down the family's €2.88bn debt.

The country has far more to gain if someone can get Anglo and the Quinns in a room and knock some heads together.

Mediation doesn't usually come into play in disputes such as these, but given the high stakes involved and the almost complete absence of trust on both sides, there's an argument for drafting in someone such as Peter Cassells to see if common ground can't be found.

The first thing a mediator would realise is that both sides still have some carrots to offer to appease the other party without doing undue damage to their own causes.

After spending more than three decades building up the multi-billion euro Quinn Group, there is a case to be made for allowing Mr Quinn to hand over ownership of the group while keeping his dignity intact.

There may even be a case for allowing him to have some 'figurehead' role in the group (though not in the insurance company).

Many of the Quinn Group's thousands of staff are fiercely loyal to their founder and would be more likely to row in behind the new ownerships structure if Mr Quinn was on board.

Many of the Quinn Group's trading partners also hold Mr Quinn in huge regard, and anecdotal reports suggest they have been pulling orders in protest at his treatment.

Goodwill

There are good arguments for keeping Mr Quinn out of the insurance company, where he has severely blotted his copy book with regulatory authorities, but the same doesn't necessarily hold true for the Quinn Group.

And if Mr Quinn can add value, it's hard to see why Anglo would object to keeping him involved in the Quinn Group, particularly if that concession could foster some goodwill and help resolve the wider debt issue.

Another carrot Anglo has to offer is allowing Mr Quinn to remain in his house, unpalatable though it may seem to some struggling mortgage holders who fear losing their far more modest homes. Despite its grandeur, Mr Quinn's Cavan mansion is of little use to Anglo -- demand for 20,000sq ft houses on the Cavan border is pretty muted.

Letting Mr Quinn remain there would be a relatively cheap way to build bridges and would give the tycoon an incentive to play ball with the bank, something that seems to be lacking in the current dialogue.

Mr Quinn has plenty to offer the bank as well. The bank would love for him to publicly ask all Quinn Group workers and customers to row in behind the new owners.

Misguided local protests such as cutting power cables and blocking entry to Quinn premises would stop, and the workers and new owners could go forward with a shared vision that would see the group prosper.

The bank would also love if the Quinns would engage meaningfully on the outstanding debt.

If the family volunteered details of everything they own and owe, it would save Anglo a hell of a lot of manpower and it would save the taxpayer some hefty forensic accountancy bills trying to establish the facts.

Everyone has the right to due process, and the Quinns and Anglo are fully entitled to take their grievances to the Four Courts, but that doesn't mean it's the right way forward.

The Quinn saga has already proved horrendously costly for the Irish public, who will pay about €600m to an insurance fund and suffer losses of more than €1.4bn on Quinn debts to Anglo.

Expensive lawsuits that could take years to resolve -- years when potentially damaging uncertainty will hang over the Quinn Group and insurance company -- should only be embarked on as a last resort.

Indo Business

Promoted articles

Also in Business