Richter criticizes the sale of the building services company Siteserv to Denis O’Brien
A Supreme Court judge heavily criticized the sale of building services company Siteserv to billionaire Denis O’Brien at the height of the state’s financial crisis, saying the deal was “not commercially sound”.
The confidential draft of Justice Brian Cregan’s conclusions was circulated in late July after six years of investigation behind closed doors by a commission of inquiry, but The Irish Times noted the key findings.
Siterserv, heavily indebted to Irish Bank Resolution Corporation, was sold in 2012 to Millington, owned by Denis O’Brien, for € 45 million.
The draft report, it is said in several sources, states that 8 million euros more could have been realized for the state. The judge criticized the manner in which the sale was carried out, as well as the decisions made and the result obtained.
According to the draft report, the sale was fraught with misconduct and inappropriateness, which undermined the integrity of the process. In his draft results, Mr. Justice Cregan also said that frauds had been committed at the bank.
Several witnesses prepare to deny such findings by questioning both the credibility of the conclusions and the basis on which they were drawn. Some are known to be considering legal proceedings to challenge the preliminary findings.
Taoiseach Micheál Martin said the cost of the investigation could exceed 30 million euros and the Dáil has heard claims that the final bill could reach 70 million euros.
The Siteserv deal is the first of dozen transactions involving IBRC, the former Anglo Irish Bank, under investigation by the judge.
The judge has set a deadline for filings at the end of October before producing a final report, which may not be published until next year, a decade after the Siteserv deal. Accordingly, the results are subject to change.
Asked yesterday about the results of the draft and when the final report could be published, the investigation said: “The IBRC Commission is unable to comment.”
The investigation opened in 2015 after Socialist Vice-Chair Catherine Murphy Dáil asked questions about the IBRC’s relationship with Mr O’Brien. Multiple sources said the judge failed to substantiate Ms. Murphy’s key allegations, who did not appear prior to the investigation.
The Siteserv deal was the first of 38 deals related to the now-liquidated IBRC under investigation by the Commission, which included the write-off of nearly € 2 billion in debt, despite Judge Cregan’s questioning his own powers to to investigate against some foreign residents.
The draft says that another 8 million euros could have been realized for the state, including 4 million euros that is on the table in a competing, higher offer from Anchorage, an international fund.
Some close to the sale argued that given the terms of its offer, Anchorage would have tried to cut its final payment. Some witnesses will likely argue that projecting a higher value for a potential Anchorage business is inherently speculative and therefore unreliable
An additional EUR 2.1 million could have been raised by cutting a EUR 5 million payment received by Siteserv shareholders when they supported the sale. Several sources said the judge found that shareholders could have put up with € 2.9 million. The judge also criticized bonus payments totaling 800,000 euros to Top Siteserv managers. This preliminary finding is also to be contested.
There was no comment from Mr. O’Brien on the draft and several other people involved in the transaction declined to comment.