Wednesday 13 December 2017

Ministerial interference in company law is a real concern

Donal O'Donovan

Donal O'Donovan

ANGLO watchers have yet another oddity to chew over. This time it's news that neither depositors nor borrowers will be named when a statement of affairs is belatedly prepared for the bust bank.

The names might have been expected in a routine document that is prepared by all companies that go into liquidation.

However, Finance Minister Michael Noonan has intervened to make sure that neither set of names will appear.

The secrecy will have conspiracy theorists in conniptions. It does not help that the statement of affairs is being prepared seven months late – thanks to an earlier ministerial order.

There are usually no qualms about naming debtors and creditors when such filings are prepared by bust companies.

The idea behind a statement of affairs is that the directors draw up an exhaustive list of its assets and debts just before the point of liquidation.

Access to the document allows everyone involved to clearly see their place in the queue of who gets paid and how that ranking has been arrived at.

It allows basic calculations to be done about what level of debt will actually be paid back.

And there is a strong argument that such transparency goes a long way to assuage doubts about the legitimacy of a liquidation.

Such transparency won't be there for Anglo – despite it being the most calamitous corporate collapse in Irish history.

When its statement of affairs is finalised, we'll see how much is owed to the bank, just not by whom.

We'll know how much it held on deposit, but not whose money it held.

Transparency has been sacrificed to protect the privacy of the bank's customers.

There are solid arguments as to why the exception has been made in this case.

A company statement of affairs is not a published document; in most cases, it is only ever available to those directly affected by a company collapse.

In Anglo's case it is not realistic to believe the document won't make it into the public domain.

On the other hand, the €30bn cost of shutting Anglo remains the single most costly aspect of the bailout.

Many among the public will be concerned by both the secrecy and even more so by the constant ministerial tweaking of company law to facilitate the bank's closure.

That final aspect of the case, and the lack of public debate, should be the real cause for concern.

Indo Business

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