Inside the world of business
Investigations into Anglo plumbing muddied waters
THERE HAS been much political sparring this week over the pace of the investigations into Anglo Irish Bank by the Garda and the Office of the Director of Corporate Enforcement (ODCE).
It has been 18 months since the inquiries kicked off and difficulties litter the three strands of the complex investigations: Seán FitzPatrick’s hidden loans; the €7.45 billion deposits with Irish Life Permanent; and the unravelling of Seán Quinn’s indirect stake for which Anglo used 10 clients and its own loans to prop up its share price. The complicating factor is that aspects of these issues were known to the Financial Regulator.
Central Bank governor Patrick Honohan reported last month that the unravelling of Quinn’s CFD investment in Anglo was “a major preoccupation” for the regulator through 2008.
Then there’s the revelation in this newspaper today that Con Horan – effectively Pat Neary’s second-in-command overseeing prudential regulation – signed off on a €169 million loan to Quinn for the purchase of his family’s stake of almost 15 per cent in Anglo.
Section 60 of the Companies Act prohibits a company from providing loans to buy its own shares, except where the money is lent “as part of the ordinary business of the company”. Again, this complicates matters given that Anglo is a bank.
The bank’s former management – much vilified for the hole in which the nationalised institution finds itself in – worked intensively with the regulator to resolve the massive indirect Quinn stake. The regulator has since claimed that it was misled by the bank on the sale of 10 per cent of Quinn’s indirect stake to the 10 customers.
The involvement of the authorities muddies the waters when it comes to bringing the criminal investigation to a conclusion. The High Court heard from the ODCE this month that the Anglo prosecution “may take years”.
Rebel ranks swell
One51’s Philip Lynch may have seen off a challenge from the Campaign for Change rebel shareholders led by Gerry Killen, but it was clear from the range of critical voices at yesterday’s agm that it is not just Killen and his associates that have serious concerns about the performance of Lynch and his company.
A number of shareholders who said they had no connection with Killen, and did not approve of his campaign in some cases, nevertheless got to their feet to express concern.
Guy Halifax, a representative of the UK-based Co-operative Group, one of the largest shareholders in One51 and a group devoted to ethical investment policies, professed that his company was “uncomfortable” with the level of disclosure in the accounts. Halifax later intervened to say voting procedures were potentially “not fair”.
Lamenting that events had lent the agm “a tone that suits a tragic loss rather than a celebration”, former Bank of Ireland chief executive Michael Soden was typical of many in the room, saying he had invested in One51 “because of my respect for Philip Lynch” and because he “believed that what was good for Philip Lynch was good for shareholders”. But after a 65 per cent drop in the value of his holdings, he confessed he was “not pleased” with how One51’s top table was being remunerated.
When two non-executive directors – Ivan Yates and Noel Cawley – used the roving mics to address shareholders, they raised more questions. Cawley’s statement that he, as a member of One51’s audit committee, had not been made aware of the patent payments – which he considered “over the top” – was particularly damaging.
While the decision of Lynch, who is 64, to disclose the amount he was paid last year (€1.4 million) was welcomed, it was apparent that the sum was not.
Killen was cast as a would-be “heir apparent” by Lynch, a strategy that perhaps reveals a genuine concern. Polite inquiries about the One51 board’s succession policies surfaced yesterday.
The Campaign for Change may have failed to get its members on the board, but it seems unlikely that concerns about the company will just go away. The onus is now on Yates and the other independent directors of One51 to, at the very least, make good on their assurances of greater transparency in the future.
Easy as 123
At a time when Ireland continues to languish in recession, it’s good to hear that someone is making money. The news that insurance company RSA has acquired 123.ie for €65 million plus an undisclosed earn-out figure marks something for of a coup for 123.
The company has been one of the fastest growing web-based insurance companies in recent years, in particular since entrepreneur Andrew Collins joined the company in 2007. The deal looks set to net its shareholders – Collins, Derek Richardson and 5 per cent share holder Geoff Boyle – a tidy sum. Collins was also the recipient of a multimillion-euro payment following the sale of needahotel.com in 2006.
The sale is all the more interesting in light of the current insurance landscape in Ireland. With two major players, Quinn and VHI effectively up for sale, the future shape of Ireland’s insurance industry is anybody’s guess.
RSA’s acquisition of 123.ie means that RSA is now the second largest general insurance in Ireland – an expansion that may inhibit any chance, or interest it has in acquiring Quinn.
The swift acquisition of 123.ie – the deal was brokered relatively quickly according to RSA – will surely be the envy of the vendors of Quinn.
With interested parties in Quinn set to receive a detailed prospectus this week, the future of one of Ireland’s best-known insurance groups is still far from settled according to sources in the industry. For the stakeholders involved in the Quinn saga, it could be a long wait.
Today
Results are due from Trinity Biotech, while United Drug will issue an interim management statement. Abroad, Kelloggs, Lufthansa and Travis Perkins will all report.
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