Quis custodiet ipsos custodes?

While I think that it is generally accepted that Michael Noonan is one of very few ministers to perform quite well in difficult circumstances over the lifetime of our current administration, the decision to appoint KPMG seems at the very least to violate the basic principle that ‘’Not only must Justice be done; it must also be seen to be done.” It has to call into question his judgement as a whole.

The idea behind appointing KPMG to review the disposal of large assets (including Siteserv) was to appease the public (and opposition TD’s) and put the rumours to bed. The appointment of KPMG however has done little to remove any doubt given that accountants from KPMG sat on the board which advised on the sale of Siteserv, not by voting but ‘by consensus’

According to the Dept. of Finance ‘the minister will direct the special liquidators to include in their review and report any transactions which give rise or would likely give rise, to public concerns in respect of the ultimate returns to the taxpayer’ In other words, ‘lads, be honest, were we screwed?’


To get to the heart of this you need to know all the players in the game so here’s a brief summary:


Siteserv- Probably not a company you’ve ever given a second thought to but they are basically middlemen (installers) for a variety of utility companies and they had quite a strong profitable business up until mid-2010 when massively ill-advised Celtic Tiger expansion came back to bite them. As a result of this the company ended up in the hands of IBRC, due to a debt of roughly €150m.


IBRC- The Irish Bank Resolution Corporation was established in 2011 following the merger of Anglo Irish Bank and Irish Nationwide Building Society since both institutions were wholly owned by the State. The IBRC was essentially a zombie bank charged with gaining maximum returns for the taxpayer for a large block of non-performing loans. It was, however, liquidated by an Act of the Oireachtas, which extremely unusually was introduced and voted into law in a matter of hours,  in February 2013, and the liquidation functions (amounting to over €18m) were passed to, no prizes for guessing, KPMG.


KPMG- a huge global player in the fields of accountancy and auditing, who it seems have never been far from controversy:




Kieran Wallace and Eamon Richardson-The two accountants who sat on the Siteserv selling committee from KPMG as advisors, seem from the outside to have stellar reputations and these were only enhanced through the work they did as part of the IBRC liquidation.


Robert Dix- Non-executive director at Siteserv. And a supporter of the Millington groups bid of €45m for Siteserv. Interestingly, Mr. Dix, according to his LinkedIn profile, spent a decade as a partner with KPMG.


Hugh Cooney- Chairman of Siteserv. And of course according to his executive profile on Bloomberg, he is currently a consultant and a company director at………………..FIFA, no not really, KPMG


Walter Hobbs- The ‘independent expert’ appointed to oversee the sale of Siteserv. The joke is running thin at this stage but Walter also spent a decade at KPMG, as a director.


Denis O’Brien- Irish entrepreneur and businessman, often painted as some kind of evil cartoon villain. For the purposes I will stick to the facts Mr. O’Brien was awarded under dubious circumstances, the second mobile phone licence for his ESAT Digifone which he eventually sold for over €300m before starting a hugely profitable telecommunications business in the Caribbean. It is nearly impossible to find a full list of his full business interests but it is hard to imagine any Irish citizen going a week without lining his pockets in some way through his large business interests. For the purposes of this he is behind the steering wheel of Millington, who were ultimately successful in a €45m bid for Siteserv.


So where does the controversy come from?

The sale of Siteserv to the Millington group was concluded in the summer of 2012 however prior to this there were a number of oddities:

  1. There are two groups who bid more than the €45m that the Millington group eventually paid. French company, Altrad and Australian hedge fund group, Anchorage are said to have been willing to pay €60m and €52m respectively.

We honestly believe it was run in a fair and transparent way and the outcome was the best for IBRC and all other stakeholders,”- These are the words of Robert Dix, non-executive director of Siteserv

Again defending the sale he said ‘’There are headline prices. All bids were subject to due diligence, subject to deductions for this type of debt, that type of tax. The price in a sense is meaningless . . . the net figure from [Mr. O’Brien] was higher’’

The much quoted commercial reasoning behind accepting the lower bid from Millington is that it was the least complicated of all the bids with the whole bid and attached conditions amounting to just three pages. For those of you unfamiliar with this, most standard bids for a company a tenth of this size would be closer in size to a fairly decent novel than that of a shopping list.

Another reason given was that Altrad wanted to carry out eight weeks of due diligence, not at all unheard of. If you are spending €60m you want to make sure that you are getting value for money. According to Hobbs, Siteserv did not have the liquidity (cash money) to last the eight weeks required.


  1. Siteserv was brought under the umbrella of IBRC due to debts totalling roughly €150m and was now being sold by IBRC for €45m- meaning a write down of €105m. As IBRC is essentially government (public) vehicle, this is essentially €105m written off the government balance sheet meaning higher taxation and less money to spend on social services.


  1. The IBRC was charged with getting the best value for the taxpayer however in the case of Siteserv, as highlight by TD Catherine Murphy, Siteserv was in essence allowed to conduct the sale itself as it saw fit. The reasoning given for this is vague and baffling at best with the IBRC arguing that not doing so would have created the impression of a distressed sale. Bearing in mind that the company apparently didn’t have the liquidity to survive eight weeks, it is hardly unreasonable to say that it was exactly that. Altrad were offering €60m as their opening bid and given the synergies between the two companies they may have went higher however it seems that they were excluded from the bidding process for unknown reasons. According to Mr. Hobbs, had the deal collapsed over 1,500 people would have lost their jobs and the IBRC (THE TAXPAYER) would be down €45m.


  1. The fact that there was €5m paid in what can only be described as a kickback to Siteserv shareholders. This is one of the most confusing aspects of the deal. In the real world being a shareholder is like playing a game of roulette, if you put all you money on red and it comes up black- you don’t get a refund. Given all the uproar we’ve had about this exact scenario in this country it is hard to believe that the government stood idly by while €5m was paid to gamblers.


  1. The fact that law firm, Arthur Cox, and accountancy firm Davy acted as advisors to both Millington and Siteserv during the bidding process. While Arthur Cox assures everyone that there are processes in place to ensure there was no conflict of interest, we have to imagine how this is possible given that on the one hand you’re trying to get the highest sale price and with the other you’re trying to drive it down.


  1. The fact that the role of the government was excluded from any query.

While there is nothing conclusive it is clear that a truly independent enquiry through the PAC or another mechanism would be desirable. The cross section of KPMG employees, both past and present in both the sale and the enquiry hasn’t so much given the opposition a stick beat the government as it has a bolder to drop on them. I can imagine not only Fianna Fail and Sinn Fein but a group of the rowdier independents will not let this lie easily and will continue to rattle cages on this. Given that Fine Gael are planning to use the economy as their launch pad for the upcoming general election through giveaway budgets and increased spending, opponents would be wise to use this to undermine the judgement of Enda’s most capable deputy.





Leave a Reply

Your email address will not be published. Required fields are marked *