Cantillon

Inside the world of business

Quinn Finance Holding - very active for a dormant company

THE QUINN family displayed a somewhat relaxed attitude to the fact that Quinn Finance Holding, a company that stands at the top of a family asset portfolio that stretches from Anglo Irish Bank to Sweden and Russia, has been listed for strike-off.

The chief executive of the VHI, Jimmy Tolan, has called on Seán Quinn to clarify exactly how much has been lost by the family and the Quinn Group through the family’s disastrous investment in Anglo shares.

Quinn himself has spoken of losses of “more than one billion” while a spokesman has describe as “speculative” a report that the loss was in the region of €2.5 billion.

Quinn Group, Quinn’s main trading company which owns Quinn Healthcare, wrote off €888 million over two years and said the investment would have no further impact on the business.

The family group of companies is owned by Quinn Finance Holding, an unlimited company which does not file accounts. Its subsidiary, Quinn Finance, is in a similar position.

The former has failed to file its auditor’s report for 2008 in the time required, and this is why it has been listed for strike-off. The family spokesman described it as a “dormant holding company” and said the document would be filed by the end of the month.

Dormant is not the word that comes to most people’s minds when considering companies that were engaged in borrowing hundreds of millions of euro, from the now nationalised Anglo Irish Bank, so as to buy shares in that bank. Presumably the ongoing inquiry by the Financial Regulator into the matter is not dormant either.

And the next crunch is – oil

What do Richard Branson, George Lee and the chief executive of Total oil have in common? They’re all concerned by the unnerving prospect of peak oil.

“Don’t let the oil crunch catch us out in the way the credit crunch did,” wrote Branson and a raft of other businessmen to the British government last week, while back in Lee’s pre-Dáil days, he made a documentary for RTÉ on the subject, declaring himself a convert to a greener-minded economics.

Oil companies have been accused of underplaying the threat of peak oil to avoid a panic on stock markets, which is all the more reason why comments by Thierry Desmarest, chief executive of France’s Total oil company, last month were noteworthy.

“The problem of peak oil remains,” he told the Davos economic forum, daring to imagine a world in which the energy industry struggles to produce more than 95 million barrels of oil a day.

The “oil crunch” that Branson describes is the sticky situation where the rate of demand for oil exceeds the rate of supply. But global recession has temporarily silenced those concerned by an imminent oil drought: the collapse in energy demand was enough to completely reverse 2008’s spike in oil prices.

After sinking to a low of $32 per barrel in early 2009, the price of crude oil is now hovering around the $77 mark. However, the relatively stronger dollar is dampening those prices. Anyone who believes that the long-term position of the dollar is one of weakness is effectively forecasting rises in household gas bills and petrol pump costs, even before the supply issues are taken into account.

If the actual data on global oil reserves can’t convince governments to prioritise the problem of future energy supply, then perhaps a fresh soar in oil prices will do the job. Branson, as founder of the Virgin group, is especially sensitive to energy prices – soon we may all be joining him.

Loophole fears overplayed

Fears that the Government’s decision to introduce a regime for taxing transfer pricing would hit competitiveness were overplayed, going by the findings of a poll by Ernst Young yesterday.

Broadly speaking, transfer pricing is a practice whereby companies with operations in high-tax jurisdictions sell goods to branches in lower tax countries, from which they are then sold at market rates, ensuring that the bulk of the profit is taxed at lower rates.

The Republic’s 12.5 per cent charge on corporate profits means that it is seen as a beneficiary of the practice, although whether or not this is the case is not clear.

One feature of the largely uncontroversial Finance Bill is a proposal to introduce a transfer pricing regime that brings us in line with our main trading partners, some of whom were “concerned” at our lack of tax laws.

News that Brian Lenihan intended introducing the measure sparked some fears that it could further damage competitiveness by minimising some of the benefits of low company tax rates. Others argued that the measure will not result in the State raising extra money, but could increase compliance costs.

Ernst Young partner Dan McSwiney held a seminar on the issue yesterday, and a survey of the 150 participants gives some idea of business people’s views. Over 90 per cent agreed that it would boost the Republic’s image as a good global citizen and only 6 per cent worried that it could harm competitiveness.

Interestingly, about one-third of respondents did have concerns about complying with, and implementing, the new law, indicating that those who warned that it would increase red tape for no good reason did so with at least some justification.

Today

The Public Accounts Committee will continue its investigation into Fás by meeting officials from the agency and from the Department of Enterprise, Trade and Employment

Results are due from Heineken, Pernod Ricard and Ladbrokes

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