Sunday, November 29, 2009

Dublin bishops’ cited for priests’ sex abuse cover up since from 1975

2009 11 29_1227_edited-1 The Murphy Commission is the third major State sponsored investigation into child sex abuse in Ireland perpetrated by Catholic clergy.  Its report was made public on Thursday, November 26th.

The first investigation, The Ferns Report, was published in October 2005 and concerned the abuse of children in the Diocese of Ferns.  The second investigation, The Ryan Report, concerned the abuse of children by religious orders, male and female, in industrial schools.

The Murphy Report bears the name of its chairman, Mrs Justice Yvonne Murphy, a Circuit Court judge since March 2006.  She is the wife of Mr Justice Adrian Hardiman, a member of the Supreme Court of Ireland.

The Murphy Commission found that the Bishop Donal Murray, currently Bishop of Limerick but formerly an auxiliary bishop of Dublin did not deal properly with suspicions and concerns that were expressed to him an abusing priest and that his failure to investigate suspicions was inexcusable.  Murray himself, in 2002, accepted that he had not dealt well with the situation.  This case concerned Fr Thomas Naughton about whom sex abuse complaints were filed by 20 people and there are suspicions of additional episodes of sex abuse involving other unidentified people.

Following the publication of The Murphy Commission report there have been calls for Murray’s resignation to which his response has been that at no time did he receive and allegation of sexual abuse but that his inability to determine the truth was attributable to his own lack of skill and experience.

Donal Brendan Murray is 69 years of age.  A priest since May 1966, he was appointed auxiliary bishop of Dublin in March 1982 by Archbishop Dermot J. Ryan at the age of 42 and held this position for 14 years until his appointment to Limerick.  Ryan, along with his predecessor, Archbishop McQuaid and his two successors, Archbishop McNamara and Cardinal Connell have been severely criticised in The Murphy Commission Report for not reporting sex abuse allegations to the Irish police from the 1960’s to 1995.

The publication of the report of The Murphy Commission ought to have promptly triggered the instant and simultaneous resignation from their current post of the surviving bishops and monsignors cited in the report rather than a display of stubborn obduracy in the case of some and silence, evasion and cunning in the case of others. That gesture would have recognised the gravity of the findings, the pain and damage inflicted on the surviving victims, the premature deaths of those who didn’t survive and the need for a response from the Church that attempts to be coherent, comprehensive, credible and effective. It need not necessarily have precluded the reappointment of some of those concerned.  They would then at least enjoy the confidence of their future contribution having been validated in the light of the Commission's findings rather than groping around a grossly dysfunctional organisation whose very survival is threatened.  It would also allow the Catholic Church organisation in Ireland to define its future.

The response that unfolded highlights the lack of personal accountability within the Church. Bishops' are only accountable to the face that smiles at them in their foggy shaving mirror each morning. Their record of obstructively suppressing the details of clerical sex abuse and paedophilia is grotesque but their subsequent posturing in lamentable. Bishops are apparently never fired. Those that depart ‘agree to resign’ and even our Taoiseach and their own colleagues are reluctant to utter a comment that might hasten their departure as if they are respectfully curtseying to a dictator or kowtowing to a despotic ruler.  The Papal Nuncio, Dr Giuseppe Leanza could also allow his voice to be heard beyond to portals of the Dublin diplomatic cocktail circuit where is presence is generally friendly and companionable.  He may consider that his silence is self-effacing and discreet but it is also toxic and contributes to the contagion of the catastrophe.

When allegations of the recurring sexual harassment of seminarians in St Patrick’s College Maynooth were made in the early 1980’s against the Rev Dr Michael Ledwith Vice President of the College by the Senior Dean, Fr Gerard McGinnity (now parish priest of Knockbridge, Co. Louth), these were completely and abruptly dismissed without adequate investigation. The bishops’ response of was to ostracise and demonise the whistle-blower and to promote the target of the accusations to President of the College in 1985, a post he held until he abruptly resigned in 1994 following allegations that he abused a 13 year old boy in the early 1980’s, details of which were set out in The Ferns Report. When Fr McGinnity completed a one-year sabbatical in Rome in 1985 the late Cardinal O’Fiaich told him “the bishops are gunning for you Gerry”. That sentiment has prevailed and Church authorities have never offered Fr McGinnity either an apology, or reparation, in the subsequent 25 years. 

While the commitment to transparency demonstrated by Archbishop Martin is commendable that alone is not sufficient to inspire confidence in a Church that staggers from one catastrophic self-inflicted crisis to another. If the Church in Ireland cannot meet its basic obligations of decency, probity and compliance with the criminal law it will soon cease to exist except as a topic of academic curiosity to a future generation of anthropologists conducting research at interpretive centres that were once church buildings.  The time has arrived to judge the Church by its actions, decisions and gestures not by its vacuous apologies nor its meaningless pleas for forgiveness.

Friday, November 20, 2009

Macedonia makes haste on the road to virtue

Macedonia PM THE Prime Minister of Macedonia, since August 2006, Nikola Gruevski (aged 39), came to Dublin yesterday to promote his country’s candidacy for EU membership and to present its attractiveness as a destination for foreign direct investment. His delegation included the Macedonian Ambassador the the United Kingdom and Ireland, Her Excellency Mrs Marija Efremova.

Macedonia, along with Turkey and Croatia are candidates for EU membership and both must now travel along the tortuous road to virtue before the yellow ribbons of welcome hang from EU Headquarters.

Macedonia achieved its independence from Yugoslavia in 1991. It was the least developed of the former Yugoslav republics in 1991, contributing only 5% of federal output.

Macedonia is slightly over one-third the size of Ireland and has a population of two million. It should not be confused with the ancient region in the north-east of Greece, the birthplace of Alexander the Great, which bears the same name. There has been a dispute with Greece about the name of the Republic of Macedonia arising from duplication that remains unresolved, although trade relations between these two nations has stabilized since 1995 when Greece lifted a 20-month trade embargo.

Unemployment in Macedonia is approximately 34% and almost 30% of the population exist below the poverty threshold. The average monthly wage is €476. The corporate and personal tax rate is 10%. Its GDP is about 10% of that of Ireland ($18.8 billion in 2008).

EU Membership

A progress report was published by the EU last month and it points to encouraging developments under a number of criteria with respect to Macedonia.

Political criteria is sufficiently fulfilled with respect to the conduct of elections, stability of Government and effectiveness of parliament

Some progress is reported in the area of judicial reform and the reform of public administration but further efforts are needed to enhance transparency. Macedonia ranks 71st in the 2009 Transparency International corruption perception index., tying with neighbours’ Bulgaria, Greece and Romania. Further progress is necessary to demonstrate the independence and impartiality of the Macedonian judiciary.

The legal and institutional framework for human rights and the protection of minorities is broadly in place but more refinements are necessary. – including alleged ill-treatment by the Macedonian police and the protection of women from domestic violence.

Macedonia is well advanced with respect to the economic criteria for EU membership and has continued to make progress in the development of a functioning market economy. Privatisation is largely completed but the quality of public spending is giving rise to concern especially in relation to transfer payments in excess of inflation, increased public debt, reduced foreign direct investment.

The capacity of Macedonia to assume the responsibilities of EU membership has improved with respect to issues such as transport, customs, taxation, justice, freedom and security. Less progress has been achieved with respect to energy, the environment, employment and social policy.

Conclusion of EU Commission, Oct 2009

Macedonia has substantially addressed the key priorities of the accession partnership. On this basis, and in view of the overall progress of reforms, the Commission considers that the country sufficiently fulfils the political criteria set by the Copenhagen European Council in 1993 and the

Stabilisation and Association Process. The country has moved closer towards becoming a functioning market economy and has made progress in a number of areas linked to its ability to take on the obligations of membership.

In the light of the above considerations and taking into account the European Council conclusions of December 2005 and December 2006, the Commission recommends that negotiations for accession to the European Union should be opened with Macedonia.

Maintaining good neighbourly relations, including a negotiated and mutually accepted solution to the name issue, under the auspices of the UN, remains essential.

Wednesday, November 18, 2009

Red-neck AIB Mujahadeen jihad designed to humiliate the Government

Bankcentre THE imperial tribal elders’ at AIB failed to fulfil the Government preference to appoint an external candidate to the top job and attempted, through stonewalling,  to bust the salary cap imposed by the Government.  Their smug and conceited attitude was tantamount to economic terrorism and had they prevailed over the Minister for Finance they would have humiliated this nation.

The Chairman of the Remuneration Committee, after being cudgeled into submission,  emerged wearing sandals from from his wigwam today and rattling his worry beads wailed, whinged and moaned in the media about the prospect of their chosen candidate earning reduced remuneration and how the salary prescribed by the Government was an impediment to attracting candidates. 

It is a pity that their chosen candidate didn’t choose to make his brilliance available to the world’s financial markets instead of dealing with an extra €1 billion of bad debts at AIB if he is to be so terribly underpaid and earning less than the plastic bag salesman paid by the State at Dublin Airport.

The gilt-edged genius that led the three Irish banks throughout the property bubby receive €34,807,000 over the five years from 2003 to 2007.

The remuneration of the chief executive of AIB during the property bubble was:

Year Incumbent Salary Total Remuneration
2003 M Buckley €660,000 €1,445,000
2004 M Buckley €775,000 €1,399,000
2005 to 30 Jun M Buckley €430,000 €1,459,000
2005- fm 12 May E Sheehy €520,000 €1,104,000
2006 E Sheehy €860,000 €2,436,000
2007 E Sheehy €916,000 €2,105,000
TOTAL €4,161,00 €10,048,000


The remuneration of the chief executive of Bank of Ireland during this period was:

Year Incumbent Salary Total Remuneration
2003 M Soden €800,000 €1,610,000
2004 M Soden €900,000 €1,318,000
2005 to 29 May M Soden €167,000 €1,594,000
2005 fm 3 Jun B Goggin €911,000 €1,115,000
2006 B Goggin €1,000,000 €2,525,000
2007 B Goggin €1,100,000 €3,998,000
TOTAL €4,878,000 €12,160,000


To complete the profile of those Irish banks that have gouged €11 billion of taxpayers’ money, a gesture, described in the latest Interim Report of Bank of Ireland as ‘significant’ in its case – the remuneration at Anglo Irish Bank is set out below:

Year Incumbent Salary Total Remuneration
2003 S FitzPatrick €494,000 €1,885,000
2004 S FitzPatrick €649,000 €2,346,000
2005 S FitzPatrick €775,000 €2,721,000
2005 fm 22 Sep D Drumm €6,000 €19,000
2006 D Drumm €663,000 €2,354,000
2007 D Drumm €956,000 €3,274,000
TOTAL €3,543,000 €12,599,000

Friday, November 13, 2009

Risk displacement strategy of Irish Hotels Federation is to pimp Irish taxpayers

2009 09 01_0378_edited-1 THE latest posse of knuckle-dragging parasites attempting to loot Irish taxpayers’ are the nation’s  hoteliers’.   Their mouthpiece, The Irish Hotels Federation, want to remove investor risk by slipping their greasy fingers around you tax payments because it has dawned on them that their industry has been an economic basket case since 2002 and they need to eradicate all risk to their investors!  The investors comprise fat cats who opted for tax avoidance rather than taxation.   

***** The Grand Vision  *****

This tale of woe has its origins in 2003 when The Irish Hotels Federation successfully hollered and yelped for tax allowances on capital investment to be spread over 7 years rather than 25 and their wish was granted. There were 42,235 hotel bedrooms in 860 hotels at the end of 2002. The Irish banks sector provided credit of €2,862 million to the hotel sector at that time (equivalent to €67,763 per room, with a loan-to-value ratio of 1.4) . If the capital tax allowances they so desperately sought were granted they intended to add 3,707 bedrooms in 45 new hotels bringing the total complement to 45,942 bedrooms in 905 hotels by the end of 2005.  The new rooms were to generate additional annual sales revenue of €61.85 million, having cost €463 million to construct (average construction cost €125k per room).   Another  important objective was to attract international hotel companies, such as Marriott, Radisson, Hilton, Four Seasons, Westin, Quality Hotels to operate them.

The lynchpin to achieve this was to attract the support of fat cats – high net-worth individuals with high anticipated tax liabilities in Ireland over the subsequent 7 years that could be avoided through the availability of capital allowances on new hotel projects.  If these allowances were not to be granted that “would have serious consequences of the industry as whole”.  The fat cats, the IHF said, would have otherwise invested their abundance outside Ireland and on villas in the Mediterranean.

A hotel building project costing €12 million would attract tax allowances over 7 years worth €4.92 million.  The fat cat would invest half of this, €2.46 million and the remainder would be borrowed with recourse to no other assets that that hotel.  The grand plan was that after 7 years milking tax allowances the property could be sold at multiples of its construction cost.  Unfortunately for those concerned, the property bubble burst.  Many of these hotels never made profit so their capitalised value is also down the toilet.  Therefore, the risk of loss must be passed to the taxpayers’ and ranked higher than welfare in priority. 


The ensuing dilemma

The Irish hotel industry in 2009 apparently comprises 917 hotels with almost, – and, wait for it, 60,000 bedrooms. Approximately €1 billion has been claimed in capital allowances by the fat cats since 2003 and a further €600 million is potentially claimable. While hotel bedroom capacity increased by 42% the brilliant and astute Irish banks increased credit to the hotel industry increased by 188% to over €7billion (equivalent to €116,000 per room – but with a loan to value ratio of 1.88). 

Bed-night demand by overseas visitors increased by 33% to 13,585,000 between 2002 and 2008 . As you can glean –everything is a little out of kilter and urge of fat cats to avoid paying Irish taxes ran somewhat ahead of reality and needs of the market place.  Not enough consumers came traipsing in their hotel doors willing to pay exorbitant prices and tolerate the impersonal  service provided by a badly paid, poorly trained, non-unionised. Eastern European labour force.


Foreign visitor trends

Total bed nights via overseas visitors increased by 15% from 2000 to the end of 2003.  The number of US visitors dropped by 140,000 in 2001 but recovered by 437,000 in 2002 before dropping by 106,000 in 2003.  The main source of growth was from Great Britain – almost one million extra bed nights between 2000 and 2003.  But it was visitors from other parts of Europe that made the numbers expand between 2003 and 2008 – from 2.4 million bed nights to 5 million.

The annual capacity of the Irish hotel sector is of the order of 21 million room nights and the number of beds per room trend has increased.


Cue the Pimps

When the consumers don’t show up to be financially castrated the next category to be raped is the taxpayer.  The Irish Hotel Federation looked into its soul and found the practice of reducing prices, so that they somehow relate to the consumer’s perception of value, is a flawed practice because it leads to market failure. Their pre-Budget submission this year ‘no more taxes but bucket loads of subsidies’.  They want State support to survive the recession caused by the banks who lent them too much money.  The natural consequence of any failed commercial adventure is that they go out business and that’s what these hotels need to realise.  Perish and get lost.

This means essentially that industry revenues are lower because extra transactions do not materialise. “The traveller is becoming more demanding in securing value for money” – their words, not mine.

Pimps’ begging list

Facilitate the closure of 217 hotels built since 2005 containing 15,600 rooms through the following ‘exit strategy’.  They call for ‘a managed process’.

  • If these hotels close, the IHF requests that capital allowances already claimed should not be clawed back from the fat cats by the Revenue Commissioners on grounds that the hotels have been built less than 7 years ago. They argue that allowing hotels to exit without consequences for the investor in terms of the value of the tax allowances would have no financial implications for the Exchequer compared with the situation where these remain open for 7 years”.  There’s insight for you! 

Well, they certainly do have major financial implications.  The Government has decided to save €233 million by cancelling Christmas welfare bonuses.  A €1 billion claw-back could pay the welfare Christmas bonus four times over were the Revenue Commissioners to nail these belligerent bastards to the contingent liabilities.

The want the Financial Regulator (if he’s awake) to oblige Irish banks to recognise bad loans in hotels. But the banks are playing ‘cute whore’. 

They are reluctant to do define a loans as bad because if such a bank asset is not realisable they need to raise more core capital and they are not in a position to do so – hence NAMA

This grand plan could also mean that if a large portion of the extra €4 billion in bank credit provided since 2003 becomes bad, the taxpayer is left with the liability.

  • The want a Hotel Restructuring Fund to arbitrate in situations where currently insolvent hotels are deemed to be (do I construe systemically?) important for the recovery tourism against hotels which maybe solvent currently  but which (wait for this …) “have little or no strategic importance to the development of the Irish tourism product internationally”!  The profitable business may have no strategic importance internationally but some loss-making derelict incompetent ought to be bailed by the taxpayer because he is ‘strategically important’.  What unadulterated crap!

Having written off hotel debts and saddled the taxpayer with them, the parasites reckon that such hotels could be recycled back into the market at low capital cost and this would have long-term implications for competitors so they anticipate that this risk would need to be managed.

  • Next on the list is a High Level Working Group, with large lactating breasts, who might remove hotels from the tourist accommodation sector and operate in sectors that do not threaten stability.  Presumably multi-ethnic brothels, homes for abusing priests, or lesbian nuns might fit the bill here.
  • A Government Loan Guarantee is the next step on the road to risk elimination.
  • Local Authority charges should be frozen to “improve competitiveness” .

Finally, now that all risk has been shoved onto the taxpayer the IHF advocates ‘transparency’.  The morons have apparently been charging different tariffs at home and overseas – ripping off foreign tourists and taking what they can get from the locals.

Wednesday, November 11, 2009

AIB Board need to get off their vain, egotistical, stubborn arses and recruit an outsider as CEO

2009 10 25 AIB HQ AIB have been flying kites about the prospect of its recently appointed Chairman, Dan O’Connor, becoming an executive chairman. O’Connor, who is also a director of CRH Plc since June 2006, became an AIB director in 2007 when the property bubble had burst. He succeeded Dermot Gleeson as Chairman some months ago.

But what would such an appointment mean for corporate governance at AIB and public confidence?  There are three and a half billion reasons why AIB need a new broom in the corner office and these have to do with sweeping away the viral influence and toxic legacies of Mr Scanlon, Mr Mulcahy, Mr Buckley and Mr Sheehy, each of which severely degraded the stature of AIB.  Being systemically important does not imply that those trusted with this ‘importance’ ought to consider themselves immune to the architecture and principles of acceptable standards of corporate governance.

Cadbury Report on Corporate Governance

The Cadbury Report on Corporate Governance was published in December 1992.  There was extreme concern at that time about standards of financial reporting and accountability and this was heightened by the closure of Bank of Credit and Commerce International (BCCI) and the Robert Maxwell saga.

BCCI was closed after major episodes of fraud and manipulation prompting thousands of creditors to sue the Bank of England for failure to properly oversee BCCI. Robert Maxwell drowned in November 1991 when he fell overboard from his yacht, the Lady Ghislaine. which has been cruising in the vicinity of the Canary Islands.  His publishing and media business collapsed as a consequence of fraudulent transaction that he perpetrated, including the illegal use of pension funds.

The Cadbury Report established a code of best practice intended to achieve adequate standard of good governance for all listed companies and those listed on the London Stock Exchange were to be obliged to state if they are, or are not in compliance.


Role of Chairman

The chairman’s role in securing good corporate governance
is crucial. Chairmen are primarily responsible for the
working of the board, for its balance of membership subject
to board and shareholders’ approval, for ensuring that all
relevant issues are on the agenda, and for ensuring that all
directors, executive and non-executive alike, are enabled
and encouraged to play their full part in its activities.
Chairmen should be able to stand sufficiently back from the
day-to-day running of the business to ensure that their
boards are in full control of the company’s affairs and alert
to their obligations to their shareholders.


Separation of Powers

Given the importance and special nature of the chairman’s role, it should in principle be separate from that of the chief executive. If the two roles are combined in one person, it represents a considerable concentration of power.
We recommend, therefore, that there should be a clearly
accepted division of responsibilities at the head of a
company , which will ensure a balance of power and
, such that no one individual has unfettered
powers of decision.
Where the chairman is also the chief executive, it is essential that there should be a strong and independent element on the board.  No such independence has been apparent on the board of AIB, Irish Life & Permanent, Irish Nationwide or Bank of Ireland who have behaved like myopic overfed sheep.  The board of EBS at least jettisoned their deadbeats promptly.


Recent Irish Financial Sector History

It doesn’t take a genius to understand the appalling consequences of concentrated power in two of the six financial institutions that are now standing with their begging bowls at the door of NAMA.

The overwhelming influence of Sean FitzPatrick provided him with an uncluttered platform to do what he wanted with impunity.  The behaviour of Michael Fingleton, at Irish Nationwide Building Society meant that 80% of the business of a mutual society was focused on property speculation and obscene financial self-aggrandisement on a woeful scale.

AIB has an appalling record of corporate governance which ranged from aping FitzPatrick, DIRT evasion, Insurance Corporation of Ireland collapse in 1985, flagrantly overcharging customers’, allegations of share price support for Dana Exploration through a transfer into the widows’ and orphans’ account in the AIB staff pension fund in 1988, personal tax evasion by former chief executive Gerald Scanlan, facilitation of endemic tax evasion by its own customers through illicit overseas accounts, chaotic supervision of its US subsidiary, Allfirst resulting in the Rusnak $691 million FX rip-off during the tenure of former CEO Michael Buckley, .  Everyone remembers the standards of corporate governance by these sycophants when they deferred like 18th century slaves to the whims of their KBI (key business influencer) Charles Haughey and Des Traynor 

I would be astonished if O’Connor is not an individual of the highest probity and virtue but the audacity of the AIB board attempting to subvert the wishes of the Government having stung the taxpayers’ for billions of €, is absolutely unconscionable. The destiny of this business rests with taxpayers’ not shareholders’.  The toxic corporate culture must be exterminated.  The ultimate failure of this brazen culture is in it flaccid impotence to maintain adequate core capital without State intervention and its final act of devastation was to the role it played to inflate the property bubble that collapsed the Irish economy, perhaps for a decade. 

Tuesday, November 10, 2009

Irish construction industry not pivotal to economic vitality

CIF THERE are facets of the construction industry in Ireland that have a most vile and debased legacy.  The 1980’s and 1990’s are littered with episodes of an endemic corruption.  The national planning process became the toy of county councillors’ and squalid developers’.  Their medium, bribes, was the currency of the realm stuffed into grubby brown envelopes, often delivered in the foyer of council offices or in  a local pub, directly after planning votes had been taken.  This was not a victimless crime.  Bad planning decisions meant low, or no, physical planning standards.  Cluttered housing estates and inadequate infrastructure, with partition walls of houses and apartments so thin that one set of neighbours could hear another set copulate, flushing their toilets, or taking a shower in an adjacent house became a common feature of suburban life. The losers were the citizens’ obliged to pay daunting sums for overcrowded, sub-standard residential accommodation. 

The next phase involved massive land arbitrage with fields of thistles in isolated locations trading for millions of € both prior and post the planning permission stage.  Our population started to expand in the mid 1990’s and by 2003 the circumstances that created a property bubble became mature.  The € became the day-to-day currency of Ireland in 2003 and interest rates were set by the European Central Bank.  Its decisions would not necessarily take account of local Irish credit circumstances.  There was no effective regulation and credit leached like a leaking sewer into the Irish economy. The sales of helicopters and luxury vehicles soared.  The badge of success was excess, vulgarity and self-aggrandisement.

We observed prospective newly built slums being released for sale in ‘phases’.  The difference between one phase and another were enormous price hikes based on no other reason that supplies could command it.  The Irish Government picked up higher tax revenues in the form of stamp duties, value added taxes and income taxes from an expanded construction workforce.  The losers’ continued to be the house purchaser who was obliged to borrow unsustainable multiples of a modest wage to fund this madness.  Several banking parasites offered mortgages with a loan-to-value ration of 100%, or more.  The creators of this orgy embraced the lifestyles of the medieval aristocracy – but without a change in personal social status.  Once an ignorant peasant – always a peasant, with or without a silk handkerchief and a booming culchie accent.

Today among Ireland is coming to terms with the debris of this orgy.  Markets are paralysed because there is no natural demand – quantitative, or financial.  The parasites that speak for the industry now want citizens to subsidise trade in non-existent markets.

WHEN I read the pre-Budget deliberations of Philip Crampton (50), Vice President of the Construction Industry Federation, I wondered if these has been prepared by a world-wise Harvard educated economist whose quest for a Nobel Laureate had been callously overlooked, or had it been prepared by an economically-illiterate bucolic peasant with an imagination honed in the Soviet era.  Crampton’s overall thrust is to  “stabilise the property markets”.  But is there  nothing more stable than a frozen, decaying, abandoned corpse?


CIF Shopping List

The shopping list includes a time-limited (presumably of 100 years duration)  tax-credit initiative for first time buyers of their members’ recently constructed, but unwanted, shanty huts built in thistle-choked fields adjacent to the Irish provincial townships’.  That incentive would directly benefit the pick-axe wielding galoots’ who created the property bubble and enable them pay their dues to the CIF so that there are funds to pay the €250,000 per annum salary to its emblematic Director-General.  The State must not induce moral hazard by recreating another phase of the property bubble.

They hold out ‘the prospect’ of the Government generating €1.2 billion in VAT.  But how is it proposed to derive sales of shanty huts for which there is no discernable demand?  That prospect is as realistic as the probability of a 60-year old woman bearing triplets each of mixed race ethnicity.

The CIF also support the abolition of residential stamp duty (simply abandon €400 million -  €1 billion of tax revenue) on second-hand houses – which they admit would not create a specific return to the State but “would underpin the market’s confidence and give home owners greater mobility in line with changing work and family circumstances”.  What inane rubbish!  But would you really expect anything else? 



A ‘time-limited’ tax credit means tax foregone that must be replaced by other taxes or additional debt above the €54 billion for NAMA and the current Irish National Debt of €73.26 billion. 

The October Exchequer Statement profiles an economy with a deficit of €22.7 billion exacerbated by a 16.5% drop in tax revenue.  Does Mr Crampton expect the potential purchasers (and others) to pay higher income taxes or VAT to fund this proposed tax credit? 

The potential of generating additional VAT from a market that is dead would require sales of €5.71 billion (22,840 new houses at €250k each).  This would require mortgage funding of €5.14 billion in an economy where mortgage debt is €148 billion and record levels of unemployment are escalating each week. The banks cannot maintain an adequate customer deposit base to sustain such borrowing and lend to the productive sector of the economy.  They are forced to reduce lending in order to sustain an adequate capital base.

Customer deposits at AIB dropped by €10 billion to €83 billion from January to June 2009.  Customer deposits at Bank of Ireland on 30 September 2009 were €87 billion but only €34 billion of this is attributable to Irish customers’ and the impairment charge on its Irish residential loan book increased by €54 million between March and September 2009.


Negative Equity

Some €52.72 billion of this was lent in respect of 265,000 new houses built while the Irish property bubble was inflating between January 2003 and June 2007.  A further €67.09 billion was lent to purchase 283,000 second-hand houses during this period. 

The retail value of these properties would have been approximately €125 billion if the loan-to-value ration of these loans was 95%.  It was, in practice frequently higher and based on spurious and unsustainable definitions of ‘income’. If the value of these properties has dropped by 40% since 2007 that would represent negative equity throughout Ireland of the order of €56 billion.  

The Bank of Ireland claim to have 21,000 mortgage customers’ experiencing negative equity.  If the €28 billion it has lent in residential loans accounts for 19% of the market is it not likely that it is connected to 19% of the 548,000 houses sold between January 2003 an June 2007?  If so, perhaps as many as 104,000 houses with Bank of Ireland loans are in the negative equity arena.  This, of course, adversely impacts consumer confidence and Mr Crampton’s dreams.


Abolition of Stamp Duty

The stamp duty derived in Ireland from property transactions between 2003 and 2008 was as follows:

Year Stamp Duty from land and property
other than stocks and shares
2003 €1,075,014,734
2004 €1,460,934,182
2005 €2,001,538,417
2006 €2,989,442,013
2007 €2,381,063,507
2008 €1,045,025,016


Last year stamp duty from property accounted for 60% of total stamp duty.  Stamp duty receipts between January and October 2009 were €729,151,000 of which perhaps €437 million is property related. 

Mr Crampton – the bubble has burst and the construction industry is no longer central to Irish economic recovery.  It may have a potential marginal contribution make.  30,000 mortgage holders are in arrears.  There will only be a recovery in this sector when your members provide a product that people actually wish to buy at a location that they desire at a price they can afford.  The galoots with pick-axes, the champagne, the brown envelopes and the helicopters will be humiliated into destitution and clinical insanity - pistol whipped by their voracious greed. 

Asset bubbles are created when the value and price of an asset diverge.  This is characterized in the housing sector when the potential yield from renting a property doesn’t have appropriate correlation with the price of that property – when the anticipated reward is in the form of a capital gain instead of an income flow.   If CIF members cannot deliver product at prices customers can afford they simply don’t have a viable business.

Sunday, November 8, 2009

Pathetic half-year at Bank of Ireland

Bank of Ireland THE Interim Report of the Bank of Ireland for the six months ended 30 September 2009 provides the first public insight into the stewardship of chief executive Richie Boucher, the insider chosen by the Court of Directors, to be chief executive last February.  The results will do little to fortify shareholders or inspire taxpayer confidence either in him, or in the Court of Directors that selected him

A loss of €979 million is recorded.  The level of impaired loans has increased by a whopping 61% from  €3,249 million to €8,571 million – 2.4 times the amount invested by taxpayers this year

The impairment charge on loans and advances to customers increased to €1,787 million (+561%)  for the six months ended 30 September 2009 and compares to a charge of €267 million for the six months ended 30 September 2008. Income declined €273 million from €2,003 million to €1,730 million while operating expenses were €99 million less.

The accompanying presentation includes many expression in pidgin English including the mandatory crap about the ‘challenging operating environment’ .  Do these morons’ ever acknowledge that ‘outlook’s’ are always ‘challenging’.  ‘Challenge’ is the essence of the free market environment.  Competence to challenge effectively and successfully is the elusive ingredient that separates the reassured performer from the fly-by-night chancer.

The leadership of the Irish financial sector are the authors and architects of that operating environment and they are now its pall bearers.  Ego-centricity, insatiable greed and unadulterated hypocrisy are their defining features of those who kicked and mutilated all vital economic organs of Irish society.  They were as content seeing house buyers ripped off over the past five years as they are putting their snouts into the taxpayers’ resources to compensate the venality.

The word ‘challenging’ should be left to Mr Barrington and his colleagues on the board of Aer Lingus while the financial sector could usefully use the word consequences much more extensively instead. The ‘good businesses’ and ‘resilient business models’ of Bank of Ireland are mentioned several times.  But is there anything that is either ‘good’ or ‘resilient’ about these results?  Perhaps the expression ‘delusional’ would have been more honest.

The slogan that really piqued by curiosity was “we are committed to achieving more conservative balance sheet metrics”.  Perhaps someone who has contacted a sexually transmitted disease is just as similarly to say “I am committed to achieving a more sustainable and defensible lifestyle and I promise not to continue infecting innocent people”

The Boucher Legacy

These results are the first instalment of the Boucher legacy. Are any further instalments necessary?

Boucher was in charge of Retail, Republic of Ireland since November 2005 and he flooded the supply and buy side of the property sector with credit.  This Division returned a loss of €655 million against a divisional income of €720 million.  Chief executives in the US and other markets who return results as appalling as these are typically fired before they even reach the public domain.

Ireland accounts for €34 billion of the €87 billion in the Bank.  Loans to Irish customers in the most recent six months totalled €62.4 billion and the total loan book was  €135 billion. 

€28 billion of retail loans were in Irish residential mortgages; €16 billion was lent to the property and construction sector in Ireland; €15.4 billion was lent to the productive small and medium Irish enterprises and €3 billion was lent to Irish personal customers.  In summary – 70% of loans in Ireland were to the property sector and total Irish lending was equivalent to 183% of Irish customer deposits.  Ireland provides 39% of total deposits at Bank of Ireland but accounts for 46% of its loans and advances which are heavily skewed in favour of the property bubble.  That is Boucher’s direct legacy. 

The market capitalisation of Bank of Ireland is in currently in the region of €2 billion.  This compares to the €3.5 billion provided this year by Irish taxpayers to shore up a rapidly eroding capital base.

Bank of Ireland Life actually returned a profit of €57 million in the six months to 30 September 2009.  The person in charge of this was Des Crowley who preceded Boucher as Head of Retail in Ireland.  He has not taken over Boucher’s poisoned retail chalice.


Executive Director Shareholding

There has been a long-standing policy at Bank of Ireland that executive directors would over time build a beneficial share ownership in Bank of Ireland equivalent to 100% of salary.  The following summarises the extent to which this policy has been executed.

Maurice A. Keane

Keane was group chief executive from February 1998 to February 2002.  His total remuneration in 2001-02, his final year of tenure was €955,000.  He owned 1,189,280 shares at 31 March 2002 which were worth €14.75 million at that time.  He fully complied with the policy.

Michael D Soden

Soden was group chief executive from 1 March 2002 until he abruptly resigned  29 May 2004 after it was discovered that he was trawling the web sites of escort agencies in Las Vegas on his office computer.  Soden earned €3.18 million during his two years and two months at the helm.  But his ownership of Bank of Ireland shares only increased from 87,595 to 89,756 and these had a value of €1.22 million when his dreams of good times in Las Vegas were at their most intense.  This would have been equivalent to 78% of Soden’s salary in 2003-04

Brian J Goggin

Goggin had worked at the Bank since 1969 and had high hopes of succeeding Keane only to have his eye wiped by Soden.  He succeeded Soden as group chief executive on 3 June 2004 and held that position until February 2009.  He earned a total of €14.5 million in remuneration as chief executive.  Goggin owned 334,126 Bank of Ireland shares when he got the top job and these were worth €3.5 million in June 2004.  His shareholding increased to 600,260 on 31 March 2008, the last date his shareholding was reported in the annual report, and would have had a value of €5.65 million then but would have been worth €312,135 by March 2009. This shareholding in 2008 would have exceeded Goggin’s highest level of total annual remuneration of €3.998 million - in 2006-07.

Richie Boucher

Boucher only owned 1,906 shares when he was first appointed to the Court of Directors in 2006.  He owned 33,127 ordinary shares on 31 March 2009 after he was appointed group chief executive.  Boucher’s shares are currently worth approximately €66,000.  The porters’ at some of the Bank’s branches probably own more shares.  But what can one presume other than his shareholding is a reflection of his confidence in the Bank?

The two other executive directors own significantly more shares.  Des Crowley owns 128,915 ordinary shares and John O’Donovan owns 108,326 ordinary shares. Boucher’s soon-to-depart counterpart at AIB owns 256,780 ordinary shares in AIB.

Boucher’s remuneration from the time he became a member of the Court until he became chief executive was €3.5 million.

Wednesday, November 4, 2009

The G20 and OECD – ‘an evolving relationship’

2009 11 04_1019_edited-1 THE Secretary-General of the OECD Angel Gurría came to Dublin to present the OECD’s Economic Survey of Ireland 2009 to the Minister for Finance. He was to also hold discussions with the Minister for the Environment, Heritage and Local Government on a pending report Environmental Performance Review of Ireland due for release in 2010. He dropped into the Institute for International and European Affairs at breakfast time this morning to speak of the evolving relationship between the OECD and the G-20 – the group of 20 finance ministers and central bank governors established in 1999 to act as a forum for twenty industrialized and developing economies across the world.  This morning’s  gathering attracted the Ambassadors to Ireland from Germany, Switzerland, South Korea and Croatia.

I’ll begin by using the following table to illustrate the membership of each grouping and where they overlap:









United Kingdom

United States



European Union













Saudi Arabia

South Africa

South Korea


United Kingdom

United States


European Union

European Central Bank


International Monetary Fund


World Bank





Czech Republic














New Zealand





South Korea





United Kingdom

United States


The G-20

The G-20 has progressed a range of issues since being set up in 1999, including agreement about policies for growth, reducing abuse of the financial system, dealing with financial crises and combating terrorist financing. The G-20 also aims to foster the adoption of internationally recognized standards through the example set by its members in areas such as the transparency of fiscal policy and combating money laundering and the financing of terrorism. In 2004, G-20 countries committed to new higher standards of transparency and exchange of information on tax matters. This aims to combat abuses of the financial system and illicit activities including tax evasion.  The G-20 also tries to play a significant role in matters concerned with the reform of the international financial architecture.

The G-20 has aimed to develop a common view among members on issues related to further development of the global economic and financial system and held an extraordinary meeting in the margins of the 2008 IMF and World Bank annual meetings in recognition of the current economic situation. At this meeting, in accordance with the G-20s core mission to promote open and constructive exchanges between advanced and emerging-market countries on key issues related to global economic stability and growth, the Ministers and Governors discussed the present financial market crisis and its implications for the world economy. They stressed their resolve to work together to overcome the financial turmoil and to deepen cooperation to improve the regulation, supervision and the overall functioning of the worlds financial markets.


Role of OECD

Nowadays OECD acts as a facilitator, or hub, for members to compare and analyse policy perspectives, identify practices that can be deemed ‘best’ and coordinate domestic and international policies aimed at social and economic progress.

Gurría contends that new structures, relationships and approaches to coordination are necessary to deal with the prevailing crisis and that the OECD would advocate on behalf of those nations that are not members of the G-8 or -G20.  The world is a series of network and there is a need for international organisations such as his own, IMF, WTO, ILO to cross-pollinate their approach to world issues.

The G-20, he believes, will become the global platform at which to resolve all types of issues, except those with a military facet.  Example of the current agenda include exit strategies for the public intervention into the financial crisis, climate change, jobs, tax havens, elimination of bribery and corporate governance.  Progress, has been commendable in some areas but the capacity to deliver outcomes in many others “is excellent” according to Gurría.  The OECD input is in the form of evidence-based analysis and a facility for countries to stay connected to each other through OECD being an additional channel to support balanced and sustainable growth.

One of the offerings of the OECD is the peer review of member countries across a range of topics – health, environment, governance and others.  Interestingly, the only one of the 30 members that is not peer reviewed is the United States.

The blame for the financial crisis is split between the public and private sectors.  The former taking the hit for failure of regulation and the latter culpable for lack of supervision and ineffective risk management.

The Organisation for Economic Cooperation and Development [OECD] traces its roots to 1948 when the Organisation for European Economic Cooperation [OEEC] to help administer the Marshall Plan, the initiative of the United States Government to help European countries recover after World War II and to repel the threat of communism. It has 30 member countries that accept representative democracy and free markets that since 1961 include non-European states. Chile, Estonia, Israel, Russia and Slovenia have started accession talks to become members. It was founded in France and is headquartered in Paris. It has a budget of €320 million and a staff of 2,500 persons. Its budget is about one third that of FÁS and a similar staff headcount.

Angel Gurria (59), became Secretary-General of the OECD in 2006.  He is a former Mexican Minister for Foreign Affairs and Finance. He has represented Mexico on the board of The World Bank and the International Monetary Fund.

Ireland’s Permanent Delegate (Ambassador) to the OECD in Paris is Paul Murray.

Tuesday, November 3, 2009

Where to now for the Equality Agenda?

equality authority THE Irish Supreme Court has dismissed an appeal by The Equality Authority that women be admitted to membership of Portmarnock Golf Club in County Dublin under the Equal Status Act.  It was a split 3:2 decision.

This issue consumed a great deal of the resources and crusading zeal of The Equality Authority and was seen by some as a litmus test for the future of the equality agenda.

The case made its debut at the District Court in November 2003 who found in February 2004 that Portmarnock Golf Club did breach the Act by excluding women from membership.  The Club’s licence to sell alcohol was suspended for seven days the following May, although the execution of this suspension was deferred until the legal processes had reached finality.

The High Court, in June 2005, overturned the decision of the District Court and supported the Club’s contention that the Equal Status Act interfered with the right of members to enjoy freedom of association.

The Equality Authority appealed the High Court ruling last year arguing that golf is not peculiar to men.  This was countered with the argument that the networking opportunities afforded through Club membership essentially restricted women unduly.

The 2009 budget of The Equality Authority was reduced by 43% to €3.3 million.  The chief executive, Niall Crowley resigned and was replaced by a former principal officer from the Department of Equality, Justice and Law Reform, Miss Renee Dempsey.  She was reported at the time of her appointment of bringing “a wide range of experience across several government departments”.  But perhaps the most vital aspect of her experience is an understanding of the mindset of the sponsoring government department where she previously worked. 

When The Equality Authority awarded €3,500 to a former pupil of Dunmore Community School in County Galway last February on the grounds that he was discriminated against when he refused to have a hair cut, in compliance of school regulations, I felt outraged. An award of €3,500 in response to an exclamation to a young male pupil having a “girl’s hair style” and wanting to be “a trend setter”!  They could have awarded this person €30 million and the basic facts would not be transmuted, so why was any money awarded, I wondered?  I also speculated will the recipient of this award sue every employer or every public institution that is perceived to impede him on the grounds that his hair is long?  If so, that could harm his employment prospects in the current climate.

I believed the time time had come last February for a priorities to reviewed, especially when splashing out taxpayers money is concerned and that perhaps fresh adult supervision at The equality Authority would consolidate that process  I shared my views then with the Secretary General of the Department of Justice, Equality and Law Reform and the Chairman of The Equality Authority.  The position of chief executive had been vacant at that time but was filled following ‘an open, competitive and public process’.  The public profile of The Equality Authority has subsequently been less strident although a ricocheted gauntlet relating to its budget was  been thrown at the annual conference of The Green Party.

Any further change will be a matter for the Oireachtas.  Portmarnock Golf Club can continue to sell alcohol on its premises now that the legal process has reached finality.

Sunday, November 1, 2009

Mortgage and residential meltdown in Ireland

2009 11 01_0964_sherry f THE Irish housing market is dead.  The coroner found that a surfeit of 100% and in some instances 100%+ mortgages combined with loans based on ridiculously small income levels to purchase in thistle infested meadows of Ballygobackwards hastened its demise.

The flies are even ignoring its decaying leprosy-stricken corpse.  Stamp duty receipts of €729 million to the end of October are down almost 49.8% compared to a year ago.

The Interim Results from Bank of Ireland for the 6 months ended 30 September 2009 confirm that of the 196,000 residential mortgages it has in the Republic of Ireland, 21,000 of these relate to properties with negative equity involving a quantum of €731 million.  But just 14 properties were repossessed in the six months to September compared to 5 in the previous six months. Impaired residential loans increased by 49% to €342 million during the reporting period.   

The majority of recent mortgagees are therefore, at best, on life support. bewildered by the force of negative equity and unprecedented unemployment levels, wage cutbacks and a collapse in consumer sentiment. The prospect of massive mortgage defaults and repossessions cannot be ruled out.  The mortgage sector is moribund and the blame for this can be laid, in the first instance, at the door of the Central Bank of Ireland whose impact on the economic wellbeing of Irish citizens has been as robust as that of  Mikado, Kimberly or cocoanut cream biscuits  on human nutrition. 

Torrential rain is falling heavily on the parade of maudlin politicians, buccaneering developers and the predatory clown princes and princesses of the Irish banking sector whose malignant vanity and bonus-hunting culture has metastasized the entire Irish economy for at least a decade.  These preening, duplicitous, preening bastards flooded this country with 100% mortgages and are now out to scavenge flesh off the economic corpse.  The income of the average residential mortgage holder is under €58,000.  The size of the average Irish mortgage is €271,000 – a mortgage-to-loan ratio of 4.7:1.


2009 11 01_0965_edited-1 The Monthly Statistics of September issued by the Central Bank of Ireland reveals that residential mortgage lending for September declined by €14 million and that September was the sixth consecutive month of decline.  However, when one considers that the total value of residential mortgage debt outstanding is close to €148 billion a drop of €14 million is hardly a drop in the proverbial bucket.  Furthermore, a declining trend over the last six months is a function of how derailed the housing market in Ireland has become rather than a mark of prudence and stability. 

Ireland  has been bewildered with the consequences of toxic debts of the supply side of the construction industry and the passage of legislation to create the National Asset Management Agency to deal with this at enormous cost to the Irish taxpayer. But a significant proportion of Ireland’s 480,000 mortgagees are under enormous personal pressure to maintain repayments of mortgages on houses that are experiencing the consequences of crushing negative equity.  The New Year may herald a tsunami of repossessions and mortgage defaults of an unprecedented scale.  An analysis of mortgage patterns through the EU-27 and the 16 members of the euro currency zone illustrates the appalling extent that Irish citizens were thrown to the predatory wolves by their own Central Bank.

Mortgage ‘Liberalization’

Mortgage liberalization was essentially about letting mercenary yahoos take control while the Central Bank scratched its crotch.  The past 20 years was characterized by a very substantial increase in housing credit that was facilitated by ‘innovation’ in the Irish financial sector.  Mortgage lending was traditionally determined by the basics – disposable income, prevailing interest rates and prudent lending practices based on the deposits of savers.

But the Irish financial sector provided additional funding through access to interbank markets and the increased securitisation of Irish mortgages.  The value of Irish mortgages increased 3-fold between 2000 and 2007 as a consequence.

Formal indicative guidelines on bank lending and the allocation of credit to the private sector were ended by the Irish Central Bank from the 1980’s.


Irish mortgage history

Year Outstanding Residential Mortgages
€ Billion
% GDP Mortgages issued
€ Million
1985 6.74 25.8% 880
1990 6.56 17.9% 1,492
1995 11.93 22.3% 2,666
2000 32.54 31.3% 9,004
2005 98.95 61.5% 27,753
2008 147.9 77.1% 15,140









Ireland compared to EU-27


Ireland 2007

Ireland 2009

GDP growth




Unemployment rate








% houses owner occupied



Residential mortgage
average loan per capita




Value of residential loans € Billion




Typical mortgage rate





Ireland and other € countries



Total Residential Mortgages
€ Billion

Mortgages  % GDP

Mortgage Debt per Capita


































































The 16 central banks of the €-zone countries face similar constraints insofar as none of them determine local interest rates.  But Ireland has managed to increase it mortgage debt, per capita, from €5,650 in 1998 to €32,200 in 2007.  Expressed a percentage of GDP, residential mortgage debt in Ireland increased from 26.5% in 1998 to 75.3% in 2007 and will be even higher in 2009 given that GDP will contract and residential mortgage debt has increased by €9 billion since 2007.  The stock of housing units in Ireland has increased from 1,173,000 in 1998 to 1,883,303 in 2007 but many of these are located in remote and inconvenient places in incomplete housing estates.  Does this not suggest utter dereliction of responsibility on the part of the Central Bank of Ireland?

The residential mortgage debt of The Netherlands is equivalent to 100% of GDP.  But the owner occupation rate there is only 54% but this has increased from 43% in 1983.  Like Ireland, Holland experienced a sustained period of house price increases.  This occurred between 1996 and 2001.  Since then prices have risen at a more moderate pace – 4%-5% per annum.

The Dutch authorities introduced a Code of Conduct for Mortgage Lenders in 2007 that has led to a considerable tightening up of the lending criteria by limiting lending at high loan-to-value ratios and putting a ceiling on mortgage-to-income ratios.  Should the Irish Central Bank follow suit, or do they care?  The new Governor will have to transform the Central Bank quickly and successfully if there is to be any chance change for the better.