Investigation into IBRC and Siteserv rumbles on slowly and expensively

When then minister for justice Michael McDowell introduced legislation in 2004 to establish new commissions of investigation, he told the Dáil that several new features would “ensure more timely and cost-effective” inquiry into matters of significant public concern.

Back then, tribunals and other public inquiries were costing the State €47 million annually and McDowell believed that the final bills could run to hundreds of millions of euro.

Under pressure to rein in such costs, he promised a new form of investigation that would be cheaper and faster. Justice and accountability would be better served by quicker results, McDowell said.

On the question of speed at least, the Commission of Investigation into Irish Bank Resolution Corporation (IBRC) has not yet met such objectives. Still, the ultimate judgment on its work must await publication of final conclusions and whatever spills out from that.

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The inquiry was established in 2015 to examine the affairs of the former Anglo Irish Bank, concentrating on big loan write-downs that were made in the financial crisis that led to the bank’s nationalisation and then its liquidation. The collapse of both Anglo and Irish Nationwide Building Society – which were merged into IBRC – is estimated to have cost the State a total of €36.4 billion.

When the inquiry was established no fewer than 38 transactions were in focus, with an aggregate €1.88 billion write-off, the first being the €45.4 million sale of building services group Siteserv to a Denis O’Brien company. That transaction was subject to intense political controversy after Social Democrat co-leader Catherine Murphy made claims in the Dáil about Mr O’Brien’s dealings with IBRC.

Unrealistic goal

Although there was some anticipation at the outset that the IBRC inquiry could furnish a final report by the end of 2015, that was never realistic. But the prospect of an investigation into a single transaction dragging on for years and years cannot have been the intention.

Mr Justice Cregan circulated his draft findings on Siteserv to witnesses for their review, six years after the work started. Dozens of people are involved. Publication of a report with definitive conclusions therefore seems unlikely before 2022, 10 years after the original deal.

What is more, another 37 transactions fall within the inquiry’s remit, though the judge has questioned whether it is feasible to progress them. In an interim report one year ago he acknowledged facing “significant, if not insuperable, difficulties” in relation to discovery and witness statements linked to 28 borrowers incorporated or resident outside the State.

Citing the Siteserv inquiry, he said: “The commission is aware, from statements in the Dáil and articles in the media, that there is some concern that, if the commission were to pursue its investigation into all other 37 transactions in the same way, then the commission could be in existence for many years and could cost many millions of euro to the Irish taxpayer to complete its investigation.”

That, of course, is already the case in relation to Siteserv. Taoiseach Micheál Martin has said costs may yet exceed €30 million, and the Dáil has heard claims that the final bill could reach €70 million.

In his interim report the judge said “over 500,000 pages of documentary evidence, over 100 witness statements and over 250 days of evidence (running to over 40,000 pages of transcripts)” were under examination. “This is a time-consuming and laborious task.”

Anglo’s ghosts

Now the crunch finally looms. At issue primarily are draft inquiry findings that the Siteserv deal was not sound commercially. After years of hearings, that is the judge’s considered view. Again, it is only with final publication that the strength of such findings can be measured and the performance of individuals assessed. Still, it seems inevitable right now that the provisional conclusions will be challenged in forthright terms when key witnesses make submissions to the judge. Judicial review proceedings are also a possibility, something that would further prolong the affair.

At root, according to multiple sources, is the judge’s draft conclusion that €8 million more could potentially have been realised from the Siteserv sale if it had been organised differently. That assertion is likely to be challenged by witness, particularly as it embraces a projected value on a deal not done to sell the company to another bidder. Critics of the draft report argue that the sum in question represents a notional amount lost to the bank that is dwarfed by the costs of the inquiry.

With some 1,000 pages for dissection in the report, that is not the only point of contention. So there is some distance to go yet. Anglo is long gone but its ghosts go on and on.