Justine McCarthy: The young emigrate yet the golden circle endures

Four men sat down to dinner at the salubrious In Lain Hotel nestling in the Swiss Alps. One was a billionaire Irish tax exile called Denis O’Brien. Another was his enduring friend and business associate, Paul Connolly. Also at the table was Niall McFadden, a corporate financier whom O’Brien had befriended when the pair became neighbours at the exclusive Mount Juliet golf estate in Co Kilkenny. The billionaire and the financier bonded as boot camp buddies, flying to Kenya and Greece for luxury activity holidays.

By the time of the dinner in Switzerland on January 29th, 2012, McFadden was in a spot of bother to the tune of €30 million worth of court judgments issued against him, after defaulting on debt repayments. With personal bank borrowings of €7 million, he was facing bankruptcy while Siteserv, a utilities company he cofounded in 2004, was insolvent, owing €150 million to the State-owned IBRC, formerly known as Anglo Irish Bank. The company was up for sale. Six parties had bid for it in the first round of the sale process the previous month.

Robert Dix was the fourth man at the dinner table that night. Another business and boot camp buddy of McFadden, he was a non-executive director of Siteserv and chairman of the board’s sale subcommittee. Before joining his three fellow ski-holidaymakers downstairs, Dix received a call in his hotel room from Siteserv’s financial advisers informing him that the second round of offers had been pared down to just two bids. One of them was from O’Brien. The Commission of Investigation into the sale of Siteserv, chaired by judge Brian Cregan, states in its 1,500-page report, following a seven-year investigation costing the public at least €30 million, that there was “no discussion, or reference, to Siteserv” over dinner that evening in the Swiss Alps.

Cregan also found no evidence of impropriety by O’Brien, whose company, Millington, went on to buy Siteserv for €45.4 million. Effectively, the Irish State was out of pocket by €118 million on the original debt, plus being landed with the colossal bill for Cregan’s inquiry. That combined sum could power thousands of Irish homes with electricity and gas for the next year. Yet the monetary loss is not the only startling feature of the Siteserv saga. Most mortals failing to pay their mortgage, for instance, face the prospect of foreclosure and having their home sold without getting any say in the process. Yet here was a company on the rocks and owing €150 million that the bank allowed to manage its own sale. If ever there was proof of one rule for some and another for everybody else, this is it.

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Tax equity is merely a sop as long as Ireland’s economic preferential culture of golden circles continues untrammeled

Modern Ireland loves to laud itself for being tolerant and equal. The Government is forever bragging about the country’s newly minted reputation as one of the most tax-equal states this side of Mars, a claim that deserves closer scrutiny. But what is becoming ever more apparent, as young people pack their emigrant suitcases again in search of somewhere they can afford to live, is that tax equity is merely a sop as long as Ireland’s economic preferential culture of golden circles continues untrammeled. Groundhog Day in this land means the taxpayer forever stumping up for the bill as the golden circle waltzes off.

The Swiss dinner took place just 10 months after judge Michael Moriarty published his final report from the tribunal inquiring into payments to politicians. It contained stark and grave findings. One such was that Michael Lowry, the minister for communication in 1995, had “secured the winning” of a State mobile phone licence by O’Brien. Another was that O’Brien had enriched Lowry by more than €1 million. The High Court judge said these two findings were “demonstrably referable”. The tribunal cost the public €65.5 million.

Lowry still sits in the Dáil, enjoying all the power and prestige of a Government-supporting TD. The Director of Public Prosecutions has decided not to charge anybody for obstructing the tribunal, despite a formal complaint by Moriarty. A year after the tribunal’s findings were made public, the State’s bank signed off on a deal with O’Brien, leaving the people of Ireland, who had already paid €34 billion to bail out Anglo Irish Bank, out of pocket yet again. How is any of that fair or equal?

Not a whisper

Last December, this newspaper revealed that the wealthy O’Flaherty family who distribute Mercedes-Benz cars in Ireland got €1.8 million in State pandemic subsidies and, at the same time, transferred virtually the same sum in the form of a dividend to an offshore account controlled by the family. They were not alone. Other business families were exposed as having done similar. Not a whisper about any of that since. These revelations coincided with the issuance of State letters to some individual recipients of the €208 weekly pandemic unemployment payment for workers informing them that they wrongly benefited and that the money owed would be automatically deducted from their earnings by Revenue.

Every time a voluminous, expensive and long-overdue report of a State investigation is published, the Government laments the cost, mumbles that there must be a better way of doing things and then shoves the report on to a shelf to gather dust

Last year, the Davy stockbroker group was fined a measly €4.1 million by the Central Bank over a bond-trading deal involving 16 of its employees, including its former chairman and its chief executive, and a client who was kept oblivious to their involvement. No individual was charged with any wrongdoing, just as nobody in the banks was prosecuted in connection with the tracker mortgage scandal.

Every time a voluminous, expensive and long-overdue report of a State investigation is published, the Government laments the cost, mumbles that there must be a better way of doing things and then shoves the report on to a shelf to gather dust. There is a better way.

Catherine Murphy, the Social Democrats’ joint leader whose tenacious questioning in the Dáil helped uncover the torrid Siteserv details, and others are hoarse from advocating the creation of a permanent judicial office to investigate serious matters in the public interest. Not only would it be more efficient and nimble than the current system of commissions of inquiry but such an office would signal a narrowing of the chasm that exists between them and us in Ireland’s economic culture. Should it ever come about, tax equity might be more appreciable.