Inside the world of business
Quinn saga highlights role of offshore firms in business
THE INTERIM freezing orders issued on Thursday by Mr Justice Peter Kelly against the family of the bankrupt businessman Seán Quinn was the latest chapter in an ongoing and extraordinary saga.
It is important to remember that the Quinn family has not rejected the claim from the State-owned Irish Bank Resolution Corporation, that it has sought to put beyond the bank’s reach property valued at more than $500 million that the bank is seeking to seize on the basis of legal charges held.
The latest affidavit from bank executive Richard Woodhouse says that annual rental income of $35 million arising from the Russian part of the international property portfolio is not accounted for.
He was silent as to what is happening in relation to the rental income from property in Ukraine and India, but this may bring the figure involved up to $50 million per annum. It is a lot of money that is being lost to the taxpayer.
The latest affidavit again throws up the malign role played in international business by offshore companies. According to Woodhouse, and not disputed by the Quinns in earlier hearings, the family sought to set up a number of offshore companies as part of its efforts and engaged the services of Senat Legal, in Dubai.
It is telling that people seeking to put property over which a bank had claims beyond the reach of the bank would seek to engage the services of a Dubai-based firm and companies incorporated in such places in Panama and Belize.
The international community could do much more to undermine the use of such jurisdictions, given how they are so frequently used to frustrate more developed societies where the rule of law operates more successfully.
Different experience of power for Endesa, SSE
SSE’s agreement to buy the four power plants owned by Spanish group Endesa clears up a question mark of sorts that was hanging over the facilities since last year.
In 2009, Endesa bought four electricity generators, Great Island, Co Wexford, Rhode, Co Offaly, Tarbert Co Kerry and Tawnaghmore Co Mayo for €450 million.
The Spanish group then pledged to spend the same amount again on building modern plants to replace the ageing facilities at Great Island and Tarbert.
However, last year Endesa put the plants back on the market, which obviously raised doubts about its long-term commitment to Ireland.
No bidder emerged. But yesterday, Scottish utility, SSE, announced that it has agreed to buy the plants and continue with the redevelopments in Kerry and Wexford for €488 million.
The price includes both the purchase and the construction of the two new facilities. Given that Endesa paid €450 million to buy the power plants and began construction work at Great Island, it is unlikely to have made any gains here and is probably walking away with burned fingers.
The opposite seems to be the case for SSE, which continues to expand here. That has come at a price. The group entered Ireland with its €1 billion purchase of Airtricity in early 2008. It then bought a utility services business from the ESB, Phoenix Gas in Northern Ireland and then, yesterday, announced the Endesa deal. Its total investment comes to €1.7 billion.
That is a lot of money, but, unlike property developers, energy companies think long-term and invest with the idea that they were get a return over time, which is presumably SSE’s strategy.
Yesterday’s deal marries the “green” supplier Airtricity, with fossil fuel burning generators. It is worth pointing out that Airtricity is the biggest renewable generator in Ireland, with wind farms capable of generating 500 mega watts of electricity, the equivalent of a medium-sized power plant, at full capacity.
It is also worth pointing out that the amount of “green” electricity that any consumer uses is tied to the amount of green electricity on the system as a whole at any one time, and not on the individual supplier.
Purchase of Glass Bottle site back in news
The controversy surrounding the purchase of the Irish Glass Bottle site in Ringsend by the Dublin Docklands Development Authority is set to be ignited again, as the Dáil Public Accounts Committee commences an investigation into the deal.
If nothing else, the inquiry raises the intriguing prospect of former Anglo Irish Bank chief executive Seán FitzPatrick being summoned to appear before the committee, though the possibility of Fitzpatrick complying with the request seems highly unlikely.
The public airing of the debacle, which began this week, also opens up questions about the function of semi-State boards, and the role played by the State.
Despite all the indignant protestations from the various politicians that make up the all-party Public Accounts Committee, it is worth keeping in mind it is elected politicians themselves – through the government of the day – who appoint directors to semi-State boards. Much of the discussion at the public accounts committee hearing centred on the conflicts of interest that existed in relation to Fitzpatrick and Lar Bradshaw’s position on the board, when they were also directors of Anglo Irish Bank.
All eyes will be on the fallout from tomorrows elections in Greece
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