Siteserv Deal – The Overview: Siteserv was a company that owed IBRC €150million. One of its subsidiaries is Sierra. Sierra was one of the companies that went on to win the largest water metering contract. In early 2012 a sales process commenced and a number of entities made bids. The bidding process was controversial with 1 of the bidders – Millington, insisting on an exclusivity period and the exclusion of trade buyers. In March 2012 it was sold for €45 million – IBRC only got €40 million of that – the rest went as a cash incentive to the Shareholders of the company. A number of the other bidders went public and claimed they had been prepared to pay higher prices and the bidding process was flawed. One initiated a complaint to the Competition Authority & the director of Corporate Enforcement. A complaint to the Dept. of Finance was also made by an unknown bidder. On foot of this complaint, the DoF commenced a review of the transaction. Officials from the Dept conducted this review and reported back to the Minister.
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The review threw up some serious issues and FOI documents show that the officials repeatedly expressed serious concern about how the transaction had been handled: “We have concerns with the quality of some of the decisions taken” There were a series of meetings between officials and IBRC senior management culminating in a meeting between the Minister, the CEO of IBRC Mike Aynsley & the IBRC Chair Alan Dukes. In a PQ reply, the Minister said that at the meeting it was agreed “that the transaction had concluded and there was nothing that could have been done.” In a later PQ it transpired that following on from that meeting, the Department actually seconded an official to the Board of IBRC and within 6 months the IBRC was wound up in the very rushed ‘prom night’ On prom night, the Minister went out of his way to say that he was hugely appreciative of the management team at IBRC: I wish to emphasise that the reasons these steps are being taken is entirely distinct from the performance or direction of the Board or management of the IBRC. It is simply compelling in the larger public interest to now take this action and the Government has made its decision on that basis alone. I wish to acknowledge, with much appreciation, the significant efforts the directors and staff of IBRC have made to the stabilisation of and maintenance of IBRC.” The FOI documents reveal internal Department memos that show an extremely fractious relationship between the management of IBRC and 2
the Department and the Department had serious misgivings about the effectiveness of the CEO, Mike Aynsley, in particular: “We are concerned at the number of very large transactions that have been poorly executed under the direction of the current CEO. The performance of management in executing these transactions raises the question of the effectiveness of the CEO. “
The Concerns: There were a number of concerns that I raised in PQs and FOI docs show that Dept. officials raised many of the same concerns during their review of the Siteserv transaction. The internal memo from the Dept. states: “We have serious concerns in relation to the execution of this transaction...” o Why did the same legal firm, Arthur Cox, act for both buyer and seller? o Why did Davy run the sales process when they were also advising 5 separate shareholder of the Siteserv board? o Why did the Shareholders get a €5million cash payment when the company was getting such a huge write-down on its debt to Anglo? o Why were trade buyers excluded from the sales process? o Why was an exclusivity agreement entered into when there were other bids outstanding? I also have other questions, that are not contained (or maybe are not visible) in the redacted FOI documents which I raised in the Dáil:
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o Richard Woodhouse, an alleged acquaintance of Denis O’Brien – who was Head of Specialised Asset Recovery at IBRC, also managed the Siteserv account Siteserv CEO Brian Harvey’s personal borrowings with IBRC Denis O’Brien’s Borrowings with IBRC o As I said in the Dáil: I am concerned about the potential conflicts of interest that may have arisen. Brian Harvey, the CEO of Siteserv, as a shareholder, received a personal lump-sum of €800,000 as a result of the sale to Millington. The FOI docs show that the Dept. had concerns with a number of ‘other large transactions’ and I know need to know what those transactions were and who benefitted from them Why did Mike Aynsley and the Board of IBRC resist the implementation of the new relationship framework until 2 weeks after the sale of Siteserv? What was Alan Dukes, the Public Interest Director of IBRC, role during these transactions
The Relationship Framework: There was a relationship framework that was designed to govern the interactions between the State and the bank. The original one was a
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2009 framework that was quite lenient. In 2011 the Troika insisted on a new, more stringent Framework and it was to be in place by end 2011. There were significant delays in implementing that framework – the conditions of which would have ensured that IBRC would be required to consult with the State for any transaction exceeding €100m. Negotiations on this implementation were ongoing during the Siteserv transaction & IBRC had been told to act as if the new framework was in place. They did not. They chose to operate under the 2009 framework. The FOI docs show that IBRC CEO Mike Aynelsy & the Board resisted the implementation of the new framework until the Siteserv deal concluded. The Siteserv deal concluded on March 17th 2012, the new framework came into place on March 31st 2012. The FOI docs state: “Given current strained relations with IBRC’s Senior Management Team, it is likely that IBRC will react negatively. It is likely that IBRC will attempt to engage directly with the Minister to alter the framework. It is conceivable that members of IBRC’s senior management team may resign rather than operate under such a framework.”
Conclusion: There are serious, unanswered questions and for the sake of Transparency it is imperative that a full, independent review into this – and the other large transactions referred to in the FOI docs – is instigated.
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Every day, Irish citizens feel the brunt of Anglo and the other banks in their pocket. They deserve to know who benefited from it’s transactions and they need to be certain that a company was not positioned in such a way as to go on to win the lucrative Irish Water metering contract.
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