Monday 19 November 2018

Tribunal fiasco: politicians and developers will be paid €100m

Enda admits little hope of return of AIB €17bn; USC cut for 'squeezed middle' will be just 1pc

George Redmond, (90), former assistant Dublin city and county manager leaving court after the hearing. PIC: COURTPIX
George Redmond, (90), former assistant Dublin city and county manager leaving court after the hearing. PIC: COURTPIX
Tribunal letter

Daniel McConnell

The taxpayer will now pay up to €100m in third-party legal costs resulting from the Mahon Tribunal to developers and politicians because of the George Redmond judgment, the Sunday Independent can reveal.

Substantial and previously unforeseen legal costs, running to "tens of millions" will now have to be met by the taxpayer as the full impact of the December 19 Redmond High Court judgment emerges.

A number of politicians and developers - including former Justice Minister Ray Burke, developer Michael Bailey and businessman Joseph Murphy Junior - were previously found to have not cooperated with the tribunal.

In a number of cases, those findings have now been "quashed" on foot of the Redmond judgement. The Sunday Independent has learned that in the days before Christmas, the Mahon Tribunal wrote to parties named in its report informing them that adverse findings against them have been withdrawn "with immediate effect."

Previous rulings refusing the paying of legal costs for those individuals, who include prominent developers and former politicians, have also been overturned. One affected developer alone is known to have amassed legal costs of at least €11m, which will now have to be paid for by the taxpayer.

While the Government had expected to spend €64m on third-party legal costs, that figure could now top €100m, senior Government sources have conceded.

The news comes as Taoiseach Enda Kenny has strongly indicated that Ireland will not receive any retrospective bank bailout from Europe for the 2008 saving of our banks.

Mr Kenny, speaking at a Christmas briefing for political correspondents, ruled out any potential return on the €32bn poured into Anglo Irish Bank and strongly indicated that Government will seek to sell AIB rather than continue to seek EU funds.

"Clearly our banks were in a very different position then, than they are now. The Government's target here is to find out how can you get the best return for the taxpayer?" Mr Kenny said.

"So you have two options here; one is an application for recapitalisation, and that is where Ireland is mentioned specifically in that decision (June 2012), and the other is the second option that has grown now because of the improvement in the bank situation."

The taxpayer is now facing a monumental additional legal bill after the Mahon Tribunal withdrew all adverse findings against Mr Redmond, a former assistant Dublin City manager, in the High Court on December 19.

The withdrawal arose from a settlement in the High Court of his long-running action against the inquiry. Mr Redmond was awarded his costs, which are estimated to run into several million euro.

"Arising from the settlement of proceedings between the tribunal and Mr George Redmond concerning the third interim report the findings have been quashed. Current members of the Tribunal have completed a review of those findings. Accordingly, it is their decision that the said findings of hindrance and obstruction be withdrawn with immediate effect," the December 22 letter from Tribunal solicitor Susan Gilvarry states.

Given the tribunal has withdrawn its 2002 third interim report, which dealt primarily with Mr Redmond, people who previously had costs applications rejected by the tribunal will now have their costs paid by the State.

The latest development also follows Mr Murphy's 2010 Supreme Court challenge which found the Tribunal was not entitled to refuse costs on the basis of findings of obstruction and hindrance made by it against him.

Among those believed to been contacted by the tribunal include some former politicians, Bovale developers Michael and Tom Bailey and Hollystown Golf Club owner Oliver Barry. The Sunday Independent understands more than half a dozen letters were sent out by the Tribunal to affected parties.

The Tribunal letter added that an "order providing for the payment of your costs subject to taxation by the Taxing Master of the High Court has been made". Political concern is growing that the decision may now open the door for a number of other high-profile tribunal figures to recoup the entirety of their legal costs.

Mr Burke's 2004 submission for costs of €10m was rejected in its entirety by the tribunal on the grounds that the level of his non-cooperation with the tribunal had been in breach of his legal obligation to cooperate with and assist the tribunal.

The Department of the Environment said: "The decision of the courts in respect of Mr Redmond is a matter for the Tribunal in the first place. The full findings of the decision will be examined by the department.

There is already a provision in the 2015 estimates for the department in respect of the ongoing costs in respect of the Mahon Tribunal."

Two leading members of the Dail's spending watchdog have said they will demand answers from the Department of the Environment as to the potential costs facing the taxpayer.

John McGuinness, PAC Chairman, said Department of the Environment officials will be called before the committee to explain their response to the fall-out of the Redmond judgment.

Speaking to the Sunday Independent, Mr McGuinness said: "Now that this has been stated by the tribunal, I would be concerned from a public accounts perspective, that we need to now examine the full scale of this. We need to bring in the accounting officer, who is the Secretary-General of the Department of the Environment, and discuss with him the issues and the potential exposure to the State."

PAC vice-chairman and Government TD John Deasy said: "I think the taxpayer wants to see the end of costs in relation to tribunals. The department needs to be asked for an update as to the impact of recent court cases. It needs to be discussed as to how it will minimise costs to the taxpayer. The very least we need to find out what the liability is going to be and where the money is going to come from."

Meanwhile, the Government is considering reducing the 7pc Universal Social Charge (USC) rate for all those earning over €17,000. There is a growing desire to reduce the "penal impact" on those low-to-middle-income earners of between €17,000 and €70,000.

Fine Gael and Labour backbench TDs have increasingly raised their concerns about the need to further reduce the impact of the hated charge ahead of the general election.

The Government is set to use a 'spring statement' to outline its USC plan for Budget 2016, which will then be unveiled next October.

Sunday Independent

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