Sunday 21 January 2018

Hope for best from limp inquiry

Richard Curran

Richard Curran

THERE is little point at this stage in banging on about the banking inquiry we should have had. Multiple errors were made in the handling of the aftermath of the banking crisis that have deprived citizens of the kind of inquiry they deserved.

Unfortunately, we are where we are on this one now. Some details of the banking inquiry we are going to get emerged during the week as the Cabinet gave the green light for this rather late, limp effort.

It will be an Oireachtas inquiry with its obvious legal and intellectual limitations. It will have some new powers and may well end up focusing a lot – probably too much – on the run-up to the State bank guarantee in September 2008.

We now have to ask ourselves not so much what we want from this banking inquiry, but what we should reasonably expect to get.

Here are the positives:

* It will be public and televised. This will enable people who have collectively forked out €64bn on the banking collapse to view, listen and weigh up the explanations provided by witnesses, from politicians and regulators to bankers and civil servants.

* For the first time, it will provide a platform for those in charge back then to give their account of what happened. It should allow us all to reach better-informed conclusions about the mistakes that were made and to learn from them.

* The committee may well uncover new information by way of discovery of documents and provide a mechanism to put that into the public domain.

Here are the limitations:

* The terms of reference may be narrow to cater for speed at the expense of being comprehensive.

* It looks like being staffed from the Oireachtas committee members who will fail to bring enough breadth and depth of expertise.

* Many of the documents handed over to the previous banking commission on the basis of anonymity, under Peter Nyberg, will not be available and will have to be sought again. The new probe might not get them all.

* It is likely to be bogged down in legal argument and regular trips to the courts to face challenges.

* It may drag on, and will end up dealing with issues in 2015 that happened in 2006 – nine years earlier.

* Many of the key witnesses might not show, claiming illness, old age or saying they could not be expected to remember details of events from so long ago.

* It will be very complicated, and the public may simply tire of its minutiae after a while, especially if it drags on.

* The consistent response from politicians, regulators and bankers will be that they firmly believed the soft landing would happen. An unquestioning belief in that fallacy will allow them to present themselves as co-victims who simply got it wrong.

* It is unlikely that key people such as former ECB head Jean-Claude Trichet will attend, which would deprive us of a valuable and relevant insight.

* Prominent customers may be overlooked by the inquiry. It would be very helpful to hear evidence from those who borrowed tens of millions. They could shed further light on the modus operandi of the banks at that time. It would also provide an insight into the attitudes of the mid-ranking executives who lent the money and earned massive bonuses on loans that were never repaid.

McFeely should be banned

PEOPLE up and down the country will feel a deep sense of anger at the news that disgraced former property developer Tom McFeely is trying to raise finance to get back into the property business.

But imagine how the families of those who bought McFeely-built apartments in Priory Hall feel, and in particular Stephanie Meehan who lost her partner, father-of-two Fiachra Daly, to suicide in the aftermath of that appalling scandal.

Many property developers who behaved greedily, irresponsibly or plain stupidly during the boom have gone abroad to reinvent themselves as "consultants" in places including the Middle East, Africa and the United States.

In some cases, it is their wife or other "family money" that has given them a chance to bring what they believe are their unique skills to foreign lands.

In McFeely's case, he appears to be eyeing the British and Irish property markets and – as reported in this newspaper today – is even suggesting to prospective backers that he has the inside track on various projects and loans held by Nama.

This is particularly galling, and an affront to everyone who picked up the tab on his loans.

McFeely should not be allowed to act as a director of a company again. It is also vitally important that Nama adheres to its protocols of not selling troubled assets to their original borrowers. And where outsiders purchase loans from the agency, it must ensure the original clients are not remotely connected to the deal.

Taxpayers have lost billions on these ill-conceived follies and, as we now know, some people have lost their lives.

Bord Gais: its debt is key

DID Bord Gais do a good deal when it paid €300m for the wind-farm assets of SWS in 2009? It looks like it over-paid, but we may be about to find out when the business is privatised in the coming weeks. At the time the State company also took on €250m of debt, giving the SWS wind business an enterprise value of €550m.

Minister Pat Rabbitte last week published some detail of the bill required to facilitate the break-up of Bord Gais, whereby the gas network will remain in State hands, but the rest will be sold.

Price tags of around €1bn to €1.5bn have been touted. The question is, how much of the €2.2bn of Bord Gais debt will be apportioned to the business being sold off? This will affect the amount of money that actually goes into the State coffers from the sale.

If half the debt (€1.1bn) goes with it, then the buyer would need to value the business at €2.1bn for the State to receive €1bn.

Recent wind-farm assets have been sold for €1.5m per mega watt of operating capacity and €172,000 per mega watt of undeveloped planned capacity. Those figures would value the entire Bord Gais wind division at about €300m.

When the sale price is announced, the amount of debt left with the State-owned gas network company will be a key figure in determining whether the taxpayers are getting a good deal.

Sunday Independent

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