bank guarantee, banking inquiry, cabinet meetings, ciarán lynch, fianna fáil

Banking Inquiry 2014

It has been a bruising couple of weeks for the embryo banking inquiry. First the Government put the ball in its own net with its shambolic handling of the nominations from the Seanad. Then Fianna Fáil raised fresh doubts about its efficacy, after the party said the committee setting up the inquiry had received legal advice putting cabinet deliberations out of bounds.

That all played to the Fianna Fáil narrative which holds that no-one is keener to see a robust banking investigation than Micheál Martin but that the Government is going about it the wrong way. Cue headlines claiming the inquiry would be hamstrung, and could not now get to the bottom of things.

The reality, though, may be a little different.

I am told that cabinet meetings are indeed subject to constitutional confidentiality, but that the advice was surprisingly positive in related matters. For instance, it seems committee members were told that memos to cabinet from government departments are compellable, as are detailed decisions made by ministers. More interestingly, it seems that any briefings to cabinet by consultants or officials, or bankers for that matter, are too, as the constitutional definition of a cabinet meeting is quite a narrow one.

It seems the view is that only ministers can participate if a meeting is to be given cabinet status. The interpretation taken from that advice led one committee member to observe that “if there’s a waiter in the room then it ain’t a cabinet meeting”.

So, it may be that the more ministerial meetings there were, the more documents there will be for the inquiry to examine, and if there is not a paper trail, more witnesses to examine. Committee members on all sides agree that they will be able, for instance, to quiz the senior bankers and all involved in those early morning meetings ahead of the guarantee.

So what time span will it focus on?

Fianna Fáil wants a remit that stretches well beyond the bank guarantee and includes actions taken by the present Government. Others want the investigation to examine matters stretching back, as one member put, to the day the Chinese invented banknotes. Speaking to those involved, the sense is that the time available will limit the time examined.

Oral hearings begin in January 2015 with a November deadline. That is pretty constrained, and may mean that the inquiry will be defined by when the banking crisis began and, more problematically, by when it could be said to have subsided. That is a difficult call given that you and I are still feeling its effects.

And finally will it be a bonanza for the Law Library? Well, there will be work for lawyers, but I am told those who reach for their learned friends will not get their costs that easily.

The argument here is that if the inquiry cannot make adverse findings against you, why would you lawyer up in the first place?

The first hurdle for committee chair Ciarán Lynch, though, is to sort out the tricky issue of the time span and the issues to be scrutinised. However, with Fianna Fáil digging its heels in and already crying foul, that might not be so simple.

Sir Antony O’Reilly, AIB, Justice Peter Kelly

Sir Antony O’Reilly, AIB, Justice Peter Kelly

The sun yesterday streamed in through the glass ceiling of Court Number 1, but for Sir Anthony O’Reilly, dark clouds were already starting to gather.

Mr Justice Peter Kelly took 40 minutes to deliver his judgment, but it could be summed up in one word: No. He refused the former billionaire’s application for a six-month stay on €45 million of judgments obtained against him and his companies by AIB.

Bernard Dunleavy, Sir Anthony’s counsel, had clearly realised what was coming early on in the judge’s delivery. Chin in hand and solemn-faced, he absorbed Mr Justice Kelly’s words, staring straight ahead as the judge brought down the curtains on his client’s near 40-year reign at the top table of Irish business.

Sir Anthony, who was at his home in Deauville in France and not present in the court, had clearly instructed his lawyers to make one last plea in the event of a defeat.

Immediately after the judgment, Mr Dunleavy was on his feet and asked if Mr Justice Kelly would give his client a short stay, even until Tuesday.

A four-day delay, said Mr Dunleavy, would allow Sir Anthony to hold talks with his other banks over the planned orderly sale of his 750-acre Castlemartin estate, which could be scuppered by AIB’s victory.

The stay of execution, the barrister argued, would also allow Sir Anthony time to consider a possible Supreme Court appeal against the decision.

Mr Dunleavy said his client would “be prepared to fly back in from France over the weekend” for talks with all of his banks if only he could get a short stay. The judge hesitated, and asked AIB’s counsel, James Doherty, to respond.

The bank’s lawyer said it would “create too much uncertainty”. Mr Justice Kelly looked set to knock back Mr Dunleavy’s request, when one of Sir Anthony’s solicitors charged up the court and whispered in Mr Dunleavy’s ear.

The barrister told the judge that if the short stay were awarded, Sir Anthony would even commit to immediately inform AIB if any of his other banks started to move on him.

It was last gasp, desperate stuff. Unfortunately for Sir Anthony, it was also to no avail and Mr Justice Kelly refused. Sir Anthony’s fate was sealed.

Harry Crosbie, High Court, Summary Judgement, Recievers, Banks, Loans

Harry Crosbie, High Court, Summary Judgement

The High Court has ruled Nama is entitled to €77 million summary judgment orders against businessman Harry Crosbie.

Mr Justice David Keane ruled today Mr Crosbie had failed to show any reasonable prospect of a bona fide defence to the Nama claim such as would entitle him to a full court hearing of the claim.

In those circumstances, he ruled Nama is entitled to summary judgment but adjourned final orders for a week to let the sides consider his ruling.

Nama moved to enforce the €77 million loans after Mr Crosbie failed to disclose substantial assets to the agency when first asked to do so, the Commercial Court was told during the summary judgment application last month.

A letter sent by solicitors for Nama in August 2012 said full and complete disclosure was a requirement of Nama’s January 2012 Memorandum of Understanding with Mr Crosbie and his “lack of candour” in dealings with Nama was “simply not acceptable”, especially when Mr Crosbie and related companies collectively owed Nama more than €420 million.

Nama was terminating the memorandum, reserving all its rights and wanted Mr Crosbie to take various steps, including resigning directorships of companies and sell various properties, the letter saud.

Mr Crosbie had argued Nama was effectively trying to bankrupt him and it was not entitled to summary judgment. He argued Nama was bound by an agreement set out in a letter of August 24th 2012 relating to management and disposal of assets and liabilities of Mr Crosbie and companies connected with him. Nama obtained some €35 million from the sale of assets under that agreement but and was now seeking to resile from aspects of that agreement, he said.

That alleged agreement was the basis for Mr Crosbie’s defence to summary judgment and he argued, on foot of it, he was entitled to a full plenary hearing. Mr Crosbie also rejected claims by Nama he misled it as to whether he had unencumbered assets.

Under the August 24th 2012 agreement, Mr Crosbie, his wife and son resigned as directors of several companies and Nama agreed to release charges and any claims by it concerning Mr Crosbie’s home at Hanover Quay, Dublin or the home of his son Simon.

The businesses of two companies were also to be transferred to Simon Crosbie for “nominal consideration” subject to sale of sites in Dublin Port, with proceeds to be given to Nama. Harry Crosbie was also to sell property in Dublin Port to Dublin Port Company.

The agreement also provided, without prejudice to Rita Crosbie’s claim to full ownership of a property at Eze, France, Mr Crosbie would try to sell a 50 per cent interest in that within 18 months. The agreement stated Nama would not object to the proceeds of sale being used to discharge Mrs Crosbie’s debts relating to her house in Wexford.

Mr Crosbie was to arrange for sale of three apartments in Villefranche sur Mer, France and for his 45 per cent of the sales proceeds to go to Nama. Nama was also to try and settle Mr Crosbie’s debts with KBC and ABN AMRO banks. The agreement also stated Nama has no interest in the property or business of Cafe H.

In his judgment today, Mr Justice Keane found the letter could not be construed as establishing a reasonable prospect of bona fide defence to the claim for summary judgment. The letter could not be read as meaning Nama had relinquished its entitlement to call in the loans or to seek a money judgment, he said.

Nama’s claim arises from personal debts of €55 million of Mr Crosbie and his guarantees of the liabilities of Shoal Trading Ltd and Ossory Park Management Ltd (OPML). The agency took over AIB loans of Mr Crosbie and his companies in 2010.

It is not seeking judgment concerning other sums due under a separate €353 million facility for development of the Point Village. Recourse for the €353 million is limited to assets provided as security, plus an additional personal recourse amount.

Nama appointed receivers in April 2013 on foot of an unmet demand for repayment under the loans and guarantees. Earlier this year, it served a further demand on Mr Crosbie seeking payment by March 17th last of €77 million.