Claim: top civil servant had 'inappropriate level of contact' with tycoons
Paddy McKillen complains to Michael Noonan of Secretary General's informality and familiarity in dealing with Barclays
Published 07/04/2013 | 05:00
THE most powerful civil servant in the Department of Finance is at the centre of controversy this weekend and under pressure to explain a series of emails in which he discussed with a key representative of the billionaire Barclay brothers their efforts to buy the loans of Irish property tycoon Paddy McKillen from the IBRC.
Had that deal gone ahead, it could have resulted in a loss of several hundred million euro to the Irish taxpayer.
The Sunday Independent has seen copies of correspondence between the department's Secretary General, John Moran, and Richard Faber, a key representative of the Barclays, in which their efforts to acquire the debt of Mr McKillen from the bank are discussed.
Having only recently caused a national furore with his incendiary remarks that the number of home repossessions in Ireland was "unnaturally low", Mr Moran now faces serious allegations from Mr McKillen of engaging in an "inappropriate level of contact" and of exhibiting "inappropriate informality and familiarity" with the representative of the Barclays, the hugely wealthy owners of The Daily Telegraph with whom Mr McKillen remains locked in a titanic struggle for control of Coroin, the company behind the world-famous Claridge's, Connaught and Berkeley hotels.
Central to the Belfast-born businessman's charge against the Department of Finance chief is a chain of email correspondence between Mr Faber and Mr Moran and with his officials, in October 2011, at a time when the Barclays were attempting to buy Mr McKillen's loans from the IBRC.
Mr McKillen is alleging that the "tone and content" of this correspondence from Finance Minister Michael Noonan's most senior aide represents a clear breach of both the Civil Service Code of Standards and Behaviour and the 1995 Ethics in Public Office Act.
In one email sent on October 28, 2011 – a copy of which has been seen by the Sunday Independent – Mr Moran told Mr Faber that if he felt he was "not making the right progress for whatever reason with the IBRC", his colleagues, Michael Torpey and Danny Buckley, "remain at your disposal (as of course do I if you are unable to reach them)".
Responding to Mr Moran's message that same day, Mr Faber wrote: "Dear John, Thank you for getting back to me, and I am very grateful for your offer of support if required."
Contacted for comment on the matter last night, a spokeswoman for Mr McKillen told the Sunday Independent: "Mr McKillen is demanding a full explanation from the Department of Finance regarding what appear to be informal, supportive communications between the department and Richard Faber, a director of Ellerman Investments Limited, a company owned by the Barclay brothers.
"This documentation has only recently come to light following an application under the Freedom of Information Act, and suggests a surprising level of co-operation between the Government and English competitors of Mr McKillen.
"This relationship is in stark contrast to the hostile stance taken against Mr McKillen, an Irish citizen who has created numerous jobs and paid significant sums in taxes, together with other extensive contributions to the Irish economy.
"Mr McKillen believes he is entitled to, and is seeking, full and complete disclosure of all communications of this nature."
Separately, the Sunday Independent can confirm that Mr McKillen's request for an explanation was made directly to Finance Minister Michael Noonan in a letter sent by his lawyers on March 8 last.
A copy of that letter, which has been seen by this newspaper, shows that Mr McKillen's solicitors expressed their concern that the Department of Finance Secretary General John Moran and his senior staff "have not conducted their affairs in an open and transparent manner or impartially but have, in fact, engaged in inappropriate communication with Mr Faber on matters of the greatest importance to Mr McKillen".
Mr McKillen's lawyers allege in the same letter that this gave rise to a "legitimate concern" that they could be in breach of the civil service's Code of Standards and Behaviour, and of the 1995 Ethics in Public Office Act, which specifically obliges senior civil servants to conduct their affairs in accordance with the principles of fairness and transparency.
Commenting specifically on the matter of fairness, they noted what they considered to be a "stark contrast in tone and content" between the Department of Finance's correspondence with the Barclays' representative, Mr Faber, which they said showed "an inappropriate level of contact, and an inappropriate informality and familiarity", and its communications with Mr McKillen, which they said had been "conducted on a strictly formal basis as normally expected of correspondence emanating from senior government officials".
It is understood that Mr McKillen has requested that the Finance Minister confirm if it was "normal practice" for senior civil servants to make themselves "readily available to assist" those who were seeking to acquire the "performing loans of Irish taxpayers with Irish banks".
Asked yesterday if the Finance Minister had considered the allegations that were now being made against Mr Moran, a spokesman for the Department of Finance declined to make any comment on what he described as "correspondence received between the department and private individuals".
Asked for comment on the content of the emails, which had been sent between the Department of Finance's Secretary General and the Barclays' representative, Richard Faber, the spokesman said: "The department of finance would encourage any investor who is interested in purchasing assets in any of the covered institutions to bring forward proposals. The objective is to maximise the return to the Irish taxpayer by ensuring that all such proposals are considered."
Efforts by the Sunday Independent to contact Mr Moran directly at both his Dublin home and his office at the Department of Finance were unsuccessful. Calls to Mr Moran's mobile phone, meanwhile, rang out before going to his voicemail.
Had the Barclays been successful in their efforts to secure control of even a portion of Mr McKillen's debt from the IBRC, the costs for both the Belfast-born businessman and the Irish taxpayer could have been significant.
One source with an intimate knowledge of the matter told the Sunday Independent yesterday that the IBRC had decided against selling even a small portion of Mr McKillen's loans to the Barclay interests, for fear that the billionaire brothers would call those facilities in immediately, and in the process damage the bank's ability to recover the maximum amount possible from the Belfast-born property investor for the State.
Estimating the potential loss to the Irish taxpayer, the source said: "The bank would have taken an immediate hit on Claridge's and the other London hotels.
"Looking across McKillen's overall borrowings, the total loss to the State could have easily come in between €150m and €200m."