Friday 28 November 2014

AIB hounding of O’Reilly was a 'PR exercise', say leading financiers

Leading financiers question logic of state-owned bank’s move against former tycoon

Ronald Quinlan, Shane Phelan and Maeve Sheehan

Published 29/06/2014 | 02:30

Sir Anthony O'Reilly. Photo: Tom Burke
Sir Anthony O'Reilly. Photo: Tom Burke

THE decision by AIB to secure a €22.6m High Court judgment against Sir Anthony O'Reilly was greeted last night with charges of 'financial terror', bewilderment and anger across Ireland's business and banking community.

While the state-owned bank insisted on taking the case, several well-placed sources familiar with the former billionaire's negotiations with his banks insisted AIB had not advanced its position against him and had made a "huge financial mistake".

Seperately Irish Mortgage Holders Organisation director David Hall said AIB's actions in the O'Reilly case "made no sense" and that the only way of rationalising the decision was to conclude AIB wanted to send a message to all its borrowers. "My own personal impression is that they are sending the message that nobody, no matter who they are, is beyond the reach of the bank," said Mr Hall. "Given the publicity this case is getting, you could not get better advertising if you wanted to keep people in line.

"Imagine if you were an AIB customer and you were a businessman with a €10m debt and you see the bank taking on Tony O'Reilly. How brave would you be now?"

A close friend of Mr 
O'Reilly from the world of finance said: "He owed money to nine banks and he faced up to his stuff. The only bank that came after him was the one owned by the Irish 
Government."

"His assets will now be sold for half their value, leaving the Irish taxpayer to pick up the shortfall," they added.

Former Fine Gael minister and well-known broadcaster Ivan Yates asked why AIB had decided to "precipitate" Mr 
O'Reilly's insolvency.

"It wouldn't surprise me and it would be true to form for AIB to take extra punitive action with someone of a high profile."

Speaking from his personal experience of being pursued by AIB for the recovery of €3.69m following the collapse of his own business, Celtic Bookmakers, Mr Yates said: "Obviously every case is different but to say I found them [AIB] to be disingenuous is putting it mildly."

The Sunday Independent can reveal that such was Mr O'Reilly's determination to honour his debt to AIB, he provided them with a copy of the sales brochure he had drawn up for his beloved Castlemartin Estate, but to no avail.

While one informed source at AIB told the Sunday Independent that the decision to seek a judgment against Mr O'Reilly had not been brought before the board of the bank, another leading figure from the banking world described that assertion as "quite frankly bizarre".

Notwithstanding the harsh-
ness of his treatment at the hands of AIB, Mr O'Reilly is said to be philosophical.

A close friend who spoke to him last Thursday said: "He is well able to 
understand the vagaries of life. In a way this brings out the best in him. There is a serenity in the man that is wonderful to behold.

"After Waterford Glass, he was perplexed. He didn't know why it had all gone wrong when he had done all that could be done to save it. This time round, he's at peace with the world. Only the other day he was speaking to his son Cameron. His son had gotten into trouble at school when he was 14 years of age. Cameron read out the letter his father had written to him at that time which he has kept with him at all times. That letter always brought him [Cameron] comfort."

Another close friend said that in the past his biggest fear was to be seen to be a failure, but now that he has crossed that Rubicon he is at peace.

This weekend, senior figures in the banking sector were questioning the logic behind the AIB move, pointing to the fact that he had few, if any, unencumbered assets left.

A well-placed source at one of Mr O'Reilly's creditor banks said: "There can't be a big pool of unencumbered assets that anyone can go for. I can't see that AIB have advanced their position. Mr O'Reilly's lenders already have security over all his material assets."

"AIB's behaviour is a form of financial terror," said David Hall, head of the Irish Mortgage Holders Association.

Paper-packaging tycoon Dr Michael Smurfit said: "I'm just saddened to see this happen to somebody who has done so much for Ireland. There but for the grace of God go I. I have had my own trials and tribulations during this period. I don't know anyone who hasn't."

Yesterday, Ivan Yates 
said: "The situation is 
that the last few years have been enormously difficult because the banks couldn't throw out enough credit in yesteryear.

"Now they take no responsibility for the consequences of their lending. All the downside is with the borrower. There are many, many families going through these situations.

"There are generations of people in Waterford who should be thankful to Tony O'Reilly for the employment he generated and sustained in Waterford Crystal and the jobs in Heinz that probably wouldn't be in Ireland if it weren't for him."

Contacted by the Sunday Independent, a spokesman for the AIB declined to comment on its actions in relation to Mr O'Reilly.

Sunday Independent

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