Caveat: Forget Panama, there’s no shortage of business secrecy at home

If there was an Olympics for business secrecy, Ireland would be near the top of the medals table

 

The Panama Papers (aka leaked files from the law firm Mossack Fonseca) have shone some light on the predilection of certain businesses and the wealthy to flock to offshore havens for a wee bit of secrecy. It is nice and warm there, too.

But if you are Irish and it is secrecy you want, why bother routing your affairs through some faraway land where they probably don’t even serve proper stout? You can have most of the discretion you want right here at home.

Ireland’s set-up for businesses and wealthy individuals can be a veritable secret society. If you really want to, you can hide anything in this State. Be it your sales, your profits, your shareholdings or your court dealings, simply hire the right advisers and they will stash the information away where no sod can find it.

If there was an Olympics for business secrecy, Ireland would be near the top of the medals table. We would surely be in running for a medal for our regime of unlimited companies, which don’t have to file any public financial statements.

Unlimited companies exist in several countries, including the UK. But we have taken it to as an art form in Ireland. By going unlimited, a company can shield its finances from the prying eyes of pesky journalists, competitors and creditors.

The trade-off for this secrecy? Supposedly the owners are fully on the hook for its debts. Yet Irish accountants and lawyers have cottoned on to advise many of their unlimited clients to transfer share ownership to a private limited entity in an offshore location, such as the Isle of Man.

Hey presto, you get all the secrecy of unlimited but effective limited status via the offshore entity. Waste companies, in particular, are masters of the art. So, too, are some companies that deal with sensitive public data.

Speed detectors

Manx

No financial information, no stories, no problem.

Daon is a growing biometric company owned by Dermot Desmond, who keeps a home in Ballsbridge but is tax resident in Switzerland. Daon last year won a public contract to supply passport-reading kiosks at Dublin airport in the zone for US flights. It is also gobbling up contracts to manage biometric data, such as fingerprints and iris scans, for financial companies, including Mastercard.

Dublin-headquartered Daon is an unlimited company, so we can’t see its finances. It is also 99 per cent owned by a Cayman islands outfit. The other 1 per cent is owned by a nominee company, which is in turn owned by two Isle of Man companies.

All of this is perfectly legal and proper in Ireland, even if the company holds public contracts.

When is the last time you went shopping in a major supermarket? Perhaps you felt you paid a lot and suspect the shop makes more profit from you than it should. Well, there is no real way of finding out for sure. None of the major Irish grocers give a full picture of their finances.

Tesco, as a listed company, gives an Irish sales figure, but it doesn’t break out Irish profits, so there is no way of knowing if its margins are chunkier here than elsewhere. The finances of Dunnes Stores, the biggest indigenous retailer, are hidden behind a Byzantine web of unlimited and offshore companies.

Aldi folds its Irish results into those of its British operation, while Lidl isn’t even an Irish-registered company, so it files no accounts here for its grocery operations . SuperValu owner’s, Musgrave, does release accounts, but it is predominantly a wholesaler, not just a retail chain.

As reported elsewhere in The Irish Times business section today, the Irish Financial Services Centre is choc-a-bloc with secretive financial vehicles, the activities of which even our own Central Bank is unclear.

Nama’s secrets

Were we ever officially told the names of the mollycoddled bondholders who held debt in our bust banks? Were we hell.

Revenue Commissioner rulings on taxes due to the Irish people aren’t made public. The Freedom of Information regime is a contradiction of the term.

Then there is the courts system . . .

Attempting to access legal documents in this country and/or to report accurately the evidence of a case is akin to sucking blood out of a marble countertop.The public has no automatic right to documents of trials held in public. It is madness.

So forget Panama. If it’s secrecy you’re after, come into the parlour.

Footnotes . . . Ryanair has hired itself a writer. No, it has not created a laureate position as part of its campaign to morph into a better class of airline. Diarmuid O’Conghaile, who has left Dublin Airport Authority to take up the role of Ryanair’s director of public affairs in July, is a published novelist.

O’Conghaile’s debut novel, published by New Island in 2013, was called Being Alexander. I haven’t read it, but it has received some warm reviews and is available for sale on Amazon.

It is about the tribulations of a weak-willed economist who works for the State’s economic advisory council during the Celtic Tiger boom. Alexander is essentially not a bad person, but he is dislocated from the people who know him. Even his girlfriend thinks he is a little bit odd.

Alexander feels completely unfulfilled and dreams of “escaping to freedom”. Through his acquaintance with some high rollers he encounters through his work, he eventually gets sucked into all sorts of corruption. I don’t know what happens after that, but it sounds like things came to a head at some point.

O’Conghaile has apparently always juggled economics and literary pursuits. A former economist with the State and with the European Commission, he previously studied Kafka in Berlin, according to one article about Being Alexander.

I wonder if he will bring out another novel in the next few years? Perhaps he could set it in the world of aviation, about the exploits of a charming, abrasive, brilliant, but ultimately insecure airline executive who is both likable and irritating. A man who wants to change the world but ends up being changed by it. He could call it “Being Michael”.

I’d buy that book. A few years ago, Iceland – the British frozen-goods supermarket chain, not the country with the dodgy banks – announced a plan to open a swathe of outlets across Ireland. Since then, we haven’t heard a lot from the company.

Checkout, the grocery trade magazine, carried an interesting report this week about Iceland, in which it asked Nigel Broadhurst, the joint managing director, what happened to its plan to open up to 50 Irish outlets.

“We are stepping up our opening programme, with the aim of opening seven to 10 new stores in Ireland during our current financial year to March 2017,” Broadhurst told Checkout. “Opening 50 stores in Ireland remains very much our objective. The challenge, as always, is finding the right sites to ensure that we are successful. It would have been very easy to open more stores, but in the wrong locations, and we have no intention of falling into that trap.”

One wonders if Iceland has missed the boat. Like its pub industry compatriot, JD Wetherspoon, it first hatched its plan to expand in this country when times were tough and the stunned local competition was there for the taking.

Things have perked up a bit here since.

It will be harder for Iceland to cut itself a decent slice of the pie when more familiar supermarkets are at each other‘s throats. But for consumers, the more the merrier.

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