Category: Corporate

Regulators and rip offs

In the United Kingdom, GMTV has been fined £2 million (€2.853 million) for “widespread and systematic deception” in premium rate phone-in competitions.

In Ireland, it has been revealed that the Electricity Supply Board has been systematically stealing from its customers for years.

The so called regulator was completely unaware of this theft; it was even ignorant of the billing system used by the ESB.

Only customers who challenge the ESB will be repaid, all others will remain victims.

The regulator has promised an investigation but given the pathetic record of so called regulatory bodies in Ireland it is highly unlikely that those responsible will be held accountable.

Dublin – A conduit for dodgy deals?

Until I read the article below in today’s Irish Times I had never heard of conduit funds. As always, however, when I hear the Central Bank/Financial Regulator refusing to make comment I begin to take notice.

A quick Google search provided a useful definition; essentially, conduit activity is simply a tax avoidance mechanism.

Further research led me to this report in BusinessWeek and finally to an RTE report which tells us that Ormond Quay, the Dublin based investment vehicle whose difficulties caused the near collapse of the state bank of Saxony, made a gross profit of €7.99 million last year but paid only €250 in tax.

Ah yes, Dublin, IFSC, tax avoidance/evasion, financial black holes, invisible/ineffective financial regulator – The New York Times got it right when it described Dublin as the Wild West of European finance.

Interesting to note the Central Bank referring to the Financial Regulator as its ‘regulatory arm’.

As my emphasis in the article points out the Central Bank/Financial Regulator are still maintaining their tradition of buck passing, denial of responsibility and secrecy.

Regulator has no role on ‘conduit’ activity

The Central Bank has said it has no role in the regulation or authorisation of highly leveraged “conduit funds”.
It a statement yesterday it said that its regulatory arm, the Irish Financial Services Regulatory Authority, was not responsible for regulating Ormond Quay or the two other conduit funds managed in Dublin by Sachsen LB Europe.
“In relation to Ormond Quay, this so-called ‘conduit’ activity is not regulated by the regulator,” it said. It added that the regulator’s involvement had been limited to ensuring that the prospectus for one of the funds indicated that it was not regulated by the authority.
The bank refused to comment on how and when it became aware of the problems at Ormond which surfaced over the weekend.
It also refused to say whether it was aware of the extent of this type of unregulated activity taking place out of Dublin or if it was concerned about the health of similar Dublin-based funds.
It would not comment on whether it had contacted any of these funds to establish their potential liabilities.
“As part of our regulatory role, the financial regulator is closely monitoring developments in the market at present. We are maintaining ongoing dialogue with regulated firms, and with other regulators,” it said.
The bank also refused to comment on whether it had become aware of the problems through its role as the regulator of Sachsen LB Europe, which is based in the International Financial Services Centre in Dublin.
The Department of Finance referred questions to the Central Bank.
© 2007 The Irish Times

Simple question, straight and courteous answer

I rang the Office of the Director of Corporate Enforcement (ODCE) yesterday to enquire if they intended taking action against Jim Flavin for insider trading in the Fyffes case.

I was expecting a standard response when dealing with a government agency, either a curt statement that such matters were secret or the beginning of a run around that would last months.

Instead I spoke to a courteous and professional woman who took my number and assured me that somebody would ring back in the afternoon.

I was even more surprised when Paul Appleby, the director of ODCE, rang back and in a friendly and helpful manner informed me that they were examining the High Court and Supreme Court decisions before deciding what action to take and therefore couldn’t make any further comment at this stage.

A simple question that received a straight and courteous answer – Impressive.

The price of profit

I see members of the Saudi religious police, officially known as The Commission for the Promotion of Virtue and Prevention of Vice (Echoes of the Inquisition there), are to stand trial for the deaths of two men in custody.

The dead men were accused of the ‘horrendous crimes’ of socializing with an unrelated woman and alcohol peddling.

In February 2006, after criticism of a proposed visit to Saudi Arabia by President McAleese a government spokeswoman said

“The visit to Saudi Arabia by the President represented a clear expression of the values of Irish society and people and also respected the culture of a friendly nation.”

I’m certain that the Government and President McAleese would totally condemn these events in Saudi Arabia but the fact that they admire and support this ruthless theocracy cannot be ignored.

The hypocrisy is all the more odious because the admiration and support is entirely based on business profit.

Here’s what some of our esteemed political leaders had to say about dealing with this ruthless regime.

“They’re not the same kind of open society as we are, they haven’t got the same parliamentary democratic process as us and we have to understand those sensitivities. It would be very wrong of us other than to understand and doesn’t take away from the fact we pointed out areas where there is concern internationally.”

Taoiseach, Bertie Ahern, (Six One News 18th Jan 2007)

“It is also the case that we have to have respect for other cultures and societies in a world of difference. It is all a bit more complex than saying this is just a simple matter of human rights.”

Enterprise and Employment Minister, Michael Martin. (Irish Independent)

“On what basis would we not talk to them? We can’t go around the world judging people,”

Frank Ryan, the chief executive of Enterprise Ireland. (Irish Independent).

On what basis would we not talk to them? Apparently, there is no basis that would overrule the profit motive.

Rumble in the jungle

“Two of the biggest beasts in the Irish business jungle are likely to come face to face at the AGM in Belfast on Wednesday.”

This is how Sean O’Rourke (5th item)described the growing conflict between Denis O’Brien and Tony O’Reilly on the Independent News & Media battlefield.

Giant beasts battling it out in the jungle are wont to cause a lot of shaking and rumbling; who knows what might fall out of the trees.

This battle should be worth watching.

Policeman? Where?

The Office of the Director of Corporate Enforcement published its annual report yesterday. Here’s a little gem hidden away under the heading ‘Investigations Completed in 2006’

Previous ODCE Annual Reports dealt with certain historic problems with respect to AIB Investment Managers Ltd. which caused the Director to examine certain books and documents of the company.

Following consideration of the results of a detailed investigation of the same events by the Financial Regulator and the reported tax settlements in 2006 by a number of the beneficiaries involved, the Director determined that no further action was warranted by him under the Companies Acts.

Because of the secretive language used it’s difficult to be sure but I think this relates to the Allied Irish Banks foreign exchange overcharging and the infamous Faldor scam that benefited a number of AIB executives.

The so called Irish Financial Regulator concluded that the executives didn’t actually know they were part of the scam and therefore had no case to answer. Revenue did a confidential deal on taxes owed and left it at that and now the ODCE has ‘determined’ that no further action is necessary under the Companies Acts.

Ah yes, all nicely wrapped up and not a policeman in sight. Next please…

An innocent among the sharks

There was a great moment on last Friday’s Today with Pat Kenny.

A panel was discussing the latest shenanigans at the Mahon Tribunal and in particular the unreliability of Tom Gilmartin as a witness.

Caroline Kennedy of Kennedy PR thought Tom was a bit paranoid in claiming that somebody in AIB had tipped off Liam Lawlor about a meeting.

“It’s highly unlikely a bank official would do that I would have thought.”

Pat, astonished at her naivety, quickly informed her that banks will always do what’s best for business (Something every ripped off customer knows only too well)

Caroline should have changed the subject at that point but she continued to dig.

“Surely a bank would be bound by a confidentiality arrangement with its client, why would it tip one client off against another.”

Fionnan Sheahan, political correspondent for the Irish Independent came to her rescue this time, telling her that banks are mainly bound by profit maximization only.

What astonishes me is how Ms. Kennedy managed to build a top class PR company without apparently being aware of the widespread criminality within Irish banking.

CRH, disappointed with law enforcement

I see a Polish subsidiary of Cement Roadstone Holdings (CRH), Grupa Ozarow has been fined €530,000 (Sub required)by the Polish Competition and Consumer Protection Office.

The massive fine was imposed because of an attempt to delete information from a PC during a raid by the Polish authorities who were investigating cartels in the cement industry. Yes, €530,000 for attempting to interfere with evidence, no messing there.

In Ireland, interfering with evidence is not seen as a serious crime, indeed, such activity has become an integral and acceptable part of our culture of corruption.

CRH has expressed ‘disappointment’ with the fine. The company was also ‘disappointed’ in January 2004 when the European Court of Justice upheld a €2 million fine for its part in a cartel to fix cement prices across Europe.

Obviously, CRH suffers a lot of disappointment when confronted with law enforcement agencies outside Ireland. But I’m sure the company takes great comfort in the special status it enjoys right here at home in Ireland. Here are just two examples.

Environmental disaster:

Over 100,000 tons of waste was illegally dumped on Roadstone land at Dillonstown near Blessington lakes. It is thought that this waste has contaminated an important regional aquifer which was to be used as drinking water.

CRH have been completely absolved of any responsibility for this major environmental disaster by simply claiming they didn’t know anything about it, and the state is happy with that. The Director of Public Prosecutions, the Environmental Protection Agency and Wicklow County Council have all accepted that CRH has no case to answer.

But all is not lost; the Minister for the Environment has warned that landowners who ‘knowingly’ allowed an illegal dump on their land would be prosecuted. Obviously, this doesn’t apply to CRH because they didn’t know.

Massive tax evasion:

Des Traynor, a notorious criminal and bagman to another criminal Charles Haughey, was also chairman of CRH. Traynor operated an illegal bank from the headquarters of CRH at Fitzwilliam Square, Dublin.

The main activity of this mafia type operation was to facilitate massive tax evasion for a golden circle of ‘very important people’. At least eight board members of CRH were on Traynor’s books.

Of course, when the sleazy operation was exposed everybody, including Traynor’s CRH clients, was shocked to learn of such dastardly deeds going on right under their noses.

Needless to say, none of these important gentlemen have ever been questioned by a policeman, sure they didn’t know.