A COMMISSION OF Inquiry established in 2015 to investigate the sale of building services group Siteserv has found the sale was approved in good faith but was based on ‘misleading’ information.
The Commission of Inquiry was led by Mr Justice Brian Cregan. It was tasked with investigating the 2012 sale of Siteserv by the State-owned Irish Bank Resolution Corporation (IBRC) – formerly known as Anglo Irish Bank – to Millington, a firm controlled by businessman Denis O’Brien.
Anglo had written off €119 million of the €150 million that Siteserv owed and the building services group was sold for €44.3 million.
The Commission’s 1500-page report, published today, concluded that the bank made its decision to approve the sale of the group to O’Brien in good faith, but “based on misleading and incomplete information provided to it by the company”.
In its report, The Commission states that it is possible the bank could have recovered up to €8.7 million more than the €43.3 million it agreed to accept in the sale.
It found that there was a “below the surface” process where certain events occurred in the course of the Siteserv sale process without the knowledge of the bank.
The Commission also determined that the transaction was, from the perspective of the bank, so tainted by impropriety and wrongdoing, that it was not commercially sound.
This finding, the report states, is based on the concealment of Brian Harvey, a Siteserv co-founder, of his “material interest in Mr O’Brien’s bid”. It notes that Harvey was in negotiations with O’Brien, through his advisor Niall McFadden, about a shareholding he would acquire in O’Brien’s new company if the businessman’s bid was successful.
The report concluded he had concealed that he had agreed in principle with O’Brien that he would acquire at least 6% of the shares in the new company.
The Commission also found that O’Brien agreed to pay McFadden a ‘finder’s fee’ for bringing him the Siteserv investment opportunity and for providing him with information about the building services group.
It was agreed that McFadden would be paid by way of 400 shares in O’Brien’s new company Cathkin Holdings. These shares had a value of €480,000.
The Commission concluded that the Siteserv transaction was “not commercially sound in respect of the manner in which it was conducted, the decisions made and the outcomes achieved”.
It has recommended that the Revenue Commissioners and the Office of the Director of Corporate Enforcement should investigate certain matters relating to the sale
The report published today will now be laid before the Houses of the Oireachtas for debate.
In a statement, the government said it accepts the findings of the Commission, and believes that the report “shines a light on unacceptable practices by certain parties during the course of the transaction”.
The Taoiseach is arranging to bring relevant recommendations made by the Commission in the report to the attention of the Department of Enterprise, Trade and Employment, the Revenue Commissioners, the Special Liquidators of the IBRC, the Corporate Enforcement Agency, the Central Bank and the Official Assignee in a bankruptcy case.
Social Democrats TD Catherine Murphy, who raised the claims in the Dáil which led to the investigation, said that the report “is a devastating chronology of the Siteserv deal”. She urged the government to act on its recommendations.
“However, the length of time the Commission took to publish its report, seven years, is evidence that the manner in which public inquiries are undertaken by the State is broken and needs urgent reform,” she added.
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