Businessman Sean Quinn has claimed it is “truly appalling” that taxpayers may be forced to pay over €600 million for the takeover of his insurance wing.
The penalty, which looks likely to be covered using a special tax, is expected to be demanded under a deal by Anglo-Irish Bank and US insurer Liberty Mutual to buy the entrepreneur’s Quinn Insurance.
It is understood the bill could run to €620 million under the State’s Insurance Compensation Fund and take a decade to repay.
Mr Quinn, who was stripped of his business empire over a near €3 billion euro debt to Anglo, has today criticised the plan.
His losses include Quinn Insurance, which has been in forced administration since last year.
“It is a truly appalling admission by the administrators of enormous damage they have caused to one of Ireland’s most successful companies in just 13 months,” he said in a statement.
It is understood that the takeover will only go through if company losses are not forced on the buyers.
The Department of Finance said it has not received an application from administrators to sanction the sale of Quinn Insurance to the Anglo-Liberty Mutual joint venture.
But Minister for Finance Michael Noonan has suggested twice in recent weeks that the deal may involve the insurance fund being tapped.
In his statement, Mr Quinn claimed that the once hugely lucrative insurer has seen its turnover fall by two-thirds in administration. It also claimed costs have soared.
He said these losses will have major implications for the State and for insurance competition generally.
“This is totally unnecessary and counterproductive,” Mr Quinn said.
“We have maintained throughout the past 13 months that the appointment of administrators to Quinn Insurance did not have a legal basis and was a major commercial mistake considering that the company had €1.1 billion of cash and property assets valued at €400 million at the time of appointment.
“We voiced our concerns repeatedly that it would eventually have huge negative knock-on implications for jobs, competition and the State.
“This now unfortunately appears to be coming to pass.”
The administrators declined to comment. The deal is expected to be finalised in the next few weeks with regulatory approval in another three and a half months.
Company accounts, which will also detail the extent of losses and affect of administration on policy numbers, will also be published when the deal is made public.
Quinn Insurance was put into administration as the true extent of the Quinn family’s losses on failing Anglo share deals came to light.
It also emerged that the insurer was not meeting regulatory requirements to hold enough cash in reserve to meet a sudden influx of claims based on the number of policies it held.
The €620 million shortfall is expected to be made up by the Government through the Insurance Compensation Fund and passed on to taxpayers through a 1 per cent or 2 per cent levy.
The fund, which covers customers of all insurance companies to make sure they get paid, has been called on twice. In the 1980s Allied Irish Banks’ insurance arm ICI hit the rocks and also when the PMPA company collapsed.
In related news, protesters who occupied the Quinn Group’s headquarters today said they fear for jobs in the company without Sean Quinn at the helm.
The demonstrators staged a sit-in at the building in Derrylin to highlight their support for Mr Quinn in the wake of the decision by Anglo Irish Bank to remove the company founder from the organisation.
The protesters, who wished to hand in a letter raising concerns for the future of the group, reportedly only left the scene following a message from Mr Quinn asking them to do so.
Protester Padraig Donohoe said the removal of Mr Quinn only served to put the future of jobs in the company in jeopardy: “We feel there are going to be a lot of jobs lost.”
He told the BBC it was the historic mismanagement of Anglo Irish Bank that was to blame for the crisis.
Underlining support for Mr Quinn in the area, and highlighting concerns for the workforce in the future, Mr Donohoe added: “He’s the man who created this business 38 years ago, he’s the man who gave 6,000 jobs to this area.”
Anglo has appointed accountants KPMG to take control of the Quinn family shares in the business.
The bank said it was owed an enormous amount of money by the Quinns, which they were not in a position to repay, despite Mr Quinn’s claims he had a strategy to repay the money.
Employees have been told there are no plans for any job losses at the insurance firm.
PA