ACC Bank, Department of Finance, Marie Mackle, KPMG, A and L Goodbody Solicitors, Kevin Knightly

ACC Bank, Department of Finance, Marie Mackle, KPMG, A and L Goodbody Solicitors, Kevin Knightly

ACC Bank

ACC Bank has promised to focus on loan recovery, and in particular to pursue Cowboy Builders who continue to profiteer from the very assets that they had put up as collateral for loans that have for a very long time been toxic. The bizarre situation has arisen due to the fact that Cowboy Builders have been able to drag out court proceedings for up to 5 years and during this time of uncertainty they have been able to pay a small rent to the Receivers and continue to profit from assets that should long since have been recovered by the Banks.

Kevin Knightly is leading the charge to ensure that all out-standing loans are satisfied by means of recovering assets held by Cowboy Builders and Developers.

Mr Knightly added: "ACC Bank has remained at the forefront of loan recovery activity in the Irish market. We will continue with our approach to loan recovery but do not need to be a fully licensed bank for this purpose."

Department of Finance

She was a lone voice at the heart of the Department of Finance, warning about the dangers of the overheating property market, but those warnings were ignored.

She now no longer works at the department, but one of those who strove to keep her warnings quiet has just become Michael Noonan's most senior official.

In April 2012, the Sunday Independent introduced the name of Marie Mackle to the country as the whistle-blower who had sought to alert the powers that be, including then minister Brian Cowen, about how the crash was coming.

Oireachtas Banking Inquiry

"I paid the price for being a whistle-blower," she claimed in an official submission to a review panel into the department after her predictions came to pass. She is however to be a star witness at the upcoming Oireachtas Banking Inquiry. Several members of the inquiry have this weekend said she is a witness they must hear from.

Derek Moran has this month been appointed by the Government as Secretary-General of the Department of Finance.

Back in 2005, Ireland was a country in the middle of a property boom. The nation was addicted to cheap money and, based on the belief that prices would keep on rising, demand exploded. The arrival of 100 per cent mortgages and a raft of property-related tax breaks poured fuel on the fire that would two years later destroy the country.

Officially, at the time, the Department of Finance and its then minister Brian Cowen lionised the success story of Ireland's property boom. They said the boom was based on sound fundamentals, a rapidly increasing population and full employment. "There is no reason to believe that any of the fundamental driving factors are about to go into reverse," Cowen said many times in speeches at the time.

However, top-secret internal emails and documents seen by The Irish Observer revealed that Mackle's isolated courageous voice within that department was screaming for the madness to stop. But the warnings were ignored and erased from public statements by senior officials, including Moran.

These secret emails show how her crucial warnings to her superiors, throughout 2005 and 2006 - at the height of the boom - that Ireland was heading for an economic crash were erased from public statements made by Cowen and the department.

Time and time again, always basing her observations on reports from bodies like the ESRI, the OECD, the IMF and the Central Bank, Mackle drafted warnings for her bosses, who noted her objections countless times, to dismiss them.

More alarmingly, the documents catalogue beyond doubt how Mackle's warnings were systematically removed and erased from draft answers to Parliamentary Questions from opposition TDs, who had begun to ask questions about the government's reliance on property-based taxes.

Mackle began raising concerns that Ireland was facing a property crash in January 2005.

The assistant principal officer began to say that evidence from various bodies like the IMF, the OECD and the Central Bank warning of great risks "deserved attention".

A month later, in an email, which was copied to Derek Moran, Mackle again noted her concern about the risks of a housing crash, but conceded that her section head ultimately had the call on what is to be included in the final reply.

"I felt it should acknowledge the risks to the housing market. However, I am new to the area. As head of the section you decide what goes into the final reply and obviously I must do as directed," she wrote. None of her concerns was contained in the final official replies given in Cowen's name, which remain on the Dail record to this day.

In 2006, Mackle's objections became more pronounced. A clearly frustrated Mackle called into question Cowen's "soft stance" on the threat of a crash. "I have difficulties with the line taken on debt, for reasons clear in the CB report. While personal views can't appear in a PQ, the minister appears to perhaps be taking a softer line than the CB on debt."

Mackle produced an alternative reply which she said "is more trenchant but has a zero chance of being passed by the department." In May 2006, an extraordinary series of emails were exchanged around the formation of a reply to a priority question from then Fine Gael TD Paul McGrath.

Again Mackle raised concerns. One email exchange between her and bosses, including Moran, showed clearly how her concerns were ignored and vanished from the official replies and how she was forced to adopt the "official position" which she totally disagreed with.

"Two replies have been drafted. The first contains material which is as close as I can get to the official position. The second represents what I perceive to be a more accurate reply but may be unacceptable to the department. I have serious doubts and reservations about the past official position on the housing market," she wrote starkly. She reiterated her concern in an email to one senior official.

The official replied: "The first reply is acceptable . . . the second reply with reference to consideration given to broadening of the tax base is not appropriate from the tax side."

It is clear that Moran was becoming annoyed at her persistence and delivered a put down to her saying that he did not want a series of emails from her, but just one email per question. "For future reference I want only one reply to each question. . . (official). Answer is okay with me. . ." Moran wrote.

A month later, Mackle was instructed by Moran to issue a highly positive statement extolling the virtues of the broad consensus that there would be a "soft landing" in comparison to her by now well-voiced concerns. "Go back to them and say this 
. . . the large increase in new housing supply will restore equilibrium to the market 
. . . There is a broad consensus amongst commentators that the most likely outcome for the housing market is a 'soft landing'. The government continues to run a prudent, stability-orientated budgetary policy . . ." Moran said to Mackle.

Wright Commission

In November 2010 she prepared a 22-page report for a departmental review group into what went so badly wrong inside its Merrion Street walls. In a dossier for the Wright Commission, Mackle said she felt she became an isolated and alienated figure within her department for attempting to speak out.

A spokesman for the Department of Finance said this weekend that Moran was merely reflecting the view of then minister Brian Cowen.

"It is not Derek's view, nor is it Marie Mackle's view; it is the position of the Minister. So the answer has to reflect the position of the minister," the spokesman said. The IRISH OBSERVER has confirmed this weekend that Marie Mackle has since left the department. She did the State some service.

KPMG, Kieran Wallace, Nationwide Building Society, Sinn Fein, Pearse Doherty TD

KPMG Kieran Wallace

Former Irish Nationwide Building Society director Terry Cooney has written to the finance, public expenditure and reform committee to express “surprise” at the response of KPMG, the special liquidator of the society, to questions by its members. They concerned how the decision was taken not to sue its former auditors, also KPMG.

The special liquidators of Irish Nationwide, which was merged into IBRC, are KPMG accountants Kieran Wallace and Eamon Richardson. The collapse of Irish Nationwide cost the taxpayer €5.4 billion in part because of systemically poor lending practices.

Mr Wallace and Mr Richardson were questioned at the committee last month by Pearse Doherty of Sinn Féin on whether they had a conflict of interest working for KPMG as both liquidator and former auditor, and on what grounds the decision was taken not to sue the accountants as auditors.

McCann FitzGerald’s advice

KPMG told Mr Doherty the previous board of the society had taken this decision based on the advice of law firm McCann FitzGerald. It said it planned to “shortly be announcing a different arena for managing the litigation [relating to INBS] . . . [And] that independent group can make a decision on whether it feels it necessary to include KPMG.”

Mr Cooney’s letter, written by his solicitors Noel Smyth and Partners, stated it wished to draw the “attention” of the committee and Mr Doherty to the previous board of Irish Nationwide’s extensive relationship with McCann FitzGerald from 2001 onwards. The letter suggests to the committee KPMG as special liquidator did not adequately explain to its members how McCann FitzGerald had previously advised the society under its then chief executive Michael Fingleton on many matters, just as KPMG did.

“Our client was somewhat surprised with the response of the liquidator, Mr Wallace, to the question raised by Mr Doherty,” Mr Cooney’s letter dated March 14th said. “We are instructed that McCann FitzGerald have been advising the board of INBS since 2001 and have not just been advising the new board since 2009 . . .

Previous roles

“We are further instructed by our client that McCann FitzGerald, solicitors, were heavily involved in various aspects of the INBS’s due diligence and the demutualisation process from 2001 right up to 2009, and of course are now the same solicitors advising the liquidators, Mr Wallace and Mr Richardson.” KPMG also acted for the society in preparing it for demutualisation and sale.

Mr Cooney asked Martin Groves, clerk of the committee, to “bring this matter to the attention of the committee.”

A spokesperson for McCann FitzGerald declined to comment on how it dealt with potential conflict-of-interest issues in relation to Irish Nationwide.

“The firm do not comment on client matters, and there is nothing further to add on this,” it said. A spokesman for KPMG, also declined to comment.

Bank Resolution Corporation, Minister for Finance, KPMG, Economy, Finance

Bank Resolution Corporation, Minister for Finance, KPMG, Economy, Finance

Nearly €8 billion worth of loans held by the Irish Bank Resolution Corporation on properties in the United Kingdom and Germany are to be put on the market in late October, though markets doubt that they can be sold.

Minister for Finance Michael Noonan imposed a cap on the discounts that can be offered by KPMG Ireland to potential buyers – a 4.5 per cent discount in the calculation of future cash-flows, or just a 2.32 per cent discount across all loan asset valuations.

Market doubts

However, private equity funds, hedge funds and property investors, according to the London-based CoStar News, have so far expressed doubts about the planned sale, which could leave Nama having to take the loans on board if they cannot be sold.

Investors point to the failure to sell Allied Irish Bank €120 million Project Pivot book of Irish loans last year, even though it was put on the market with a 60 per cent discount. Neither of the two bids that were finally entered went above that reserve.

The loan books now due to go on sale in late October or early November include a €6 billion portfolio of British commercial loans, and a €1.5 billion mostly German portfolio, though the particular loans included have not yet been chosen.

The London property market is being buoyed by an influx of foreign investment, though lower-quality shopping centres in regional British towns and cities are regarded as not being attractive to investors, unless the price is right.

However, the UK portfolio will include some choice British properties, including a half-stake in the leasehold of the Whitgift Centre in south London, which is currently subject to a £1 billion redevelopment.

Timetable

Meanwhile, it will also include the Royal Exchange in London, which was bought by Anglo Irish Bank’s private banking division in 2005 during the height of the boom.

Under the timetable set by Mr Noonan, KPMG is expected to have all its sales or transfers completed or agreed by the end of this year, though the legislation includes the caveat “or as soon as practicable thereafter”.

Nama is reluctant to take loans on board at a higher book value than the market believes, although if it subsequently does manage to do so then it may do at a price that would have attracted private buyers.

Valuation

KPMG’s Kieran Wallace and Eamonn Richardson appointed Savills, Jones Lang LaSalle, Allsop & Co and CBRE last month to value the IBRC’s €7.88 billion portfolio of UK commercial property loans loan book.