Tag Archives | Golden Circle

Mapping the Golden Circle – excellent research from TASC

TASC, according to their website here is:

an independent think-tank dedicated to combating Ireland’s high level of economic inequality and ensuring that public policy has equality at its core.
Economic inequality is not confined to income inequality, but exists across many areas of the economy – for example, asset ownership, wealth, taxation, health, housing and education.

TASC also has a blog, progressive-economy@TASC, that’s worthwhile subscribing to, for, as they describe it themselves, “an alternative take on the Irish economy”.

Why I’m writing about this now is because TASC yesterday launched what I think is some stunning research on the multitude of cross-directorships that has existed in Ireland over the years. This research proves without doubt that there is in Ireland an exclusive “golden circle” supported by some of Irelands biggest companies, supported also by the state.

Details of the report, Mapping the Golden Circle, can be found here, while the report itself can be downloaded in PDF format from this link.

I think this report is a “must read” to see how rotten corporate governance was allowed become in Ireland over the years – and in many cases is still rotten.

The headline numbers in the report, from the summary linked above is as follows:

In the period 2005-2007, a network of 39 people held positions in 33 of the 40 top private companies and state-owned bodies. Between them, these 39 – referred to as the Director Network in TASC’s report – held a total of 93 directorships.

The 40 companies studied in this report are household names and include Bord Gáis, the Central Bank, AIB, Smurfit, Anglo Irish Bank, Ryanair and Aer Lingus. The total number of directors involved in managing these companies was 572.

Together, these companies employed 310,000 people and had a combined turnover (or equivalent) of nearly €80 billion. They included both private companies and state-owned bodies.

From my perspective, a very interesting insight is provided in the report in section 3.41, dealing with connections between directors on remuneration committees of boards. As highlighted in the report, members of a remuneration committee do not normally set the levels of their own remuneration.

However, wouldn’t it be brilliant if we were buddies and we were both on the boards of two companies. Then say, I was on the remuneration committee for one company, and then you were on the remuneration committee of the other company. You set my pay, and I’ll set yours. Perfect – and not a law of the land broken! From the report:

  • Sean FitzPatrick, Ann Heraty and Gary McCann were members of the remuneration committee of Anglo Irish Bank that set the payment for the chairperson, who was Sean FitzPatrick;
  • Sean FitzPatrick as chair of Anglo Irish Bank, was involved in setting the remuneration of non-executive directors, who included Ann Heraty and Gary McCann;
  • Sean FitzPatrick was chair of Smurfit and was a member of the remuneration committee of Smurfit, hence involved in setting the remuneration of Gary McCann, who was CEO of Smurfit;
  • Sean FitzPatrick was a member of the remuneration committee of Greencore, which set the remuneration of Ned Sullivan, chair of Greencore. Ned Sullivan was also a member of the remuneration committee of Greencore;
  • Ned Sullivan was a member of the remuneration committee of McInerney Holdings;
Check out the report – definitely worth a read.
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What’s a share in Anglo Irish Bank going to be worth?

Back in January 2008 when the government nationalised Anglo Irish Bank, it was announced that an independent assessor would be appointed to determine if there was to be any value at all in the company as it stood at that time.

That would have an impact on the Anglo shareholders of record at that time as it would dictate whether or not they would get anything for their shares – then worth 21.7c, down from a record high of €17.53 in 2007.

The process to appoint that assessor has only started recently, according to this story from the Sunday Tribune – Government to appoint assessor to value Anglo Irish Bank shares.

One can only guess how long that process will take, and how long it will take the assessor to come to their final decision.

If the UK is anything to go by (Northern Rock was valued at 0), and based on everything we’re seeing coming out of Anglo since privatisation, the bank should be valued at 0, and shareholders should receive nothing. A company that makes losses as big as Anglos is surely worth nothing.

However, as you can probably guess, I’m a little sceptical about whether or not that will actually be the case.

The government and the Financial Regulator have jumped through hoops in the past few years to prop up Anglo Irish Bank, and by extension, it’s beloved shareholders.

And it’s those favoured shareholders – particularly the better known ones such as those in the “Golden Circle” and more particularly, the Quinn family and related companies – and their needs, that will probably dictate that Anglo Irish Bank will actually have been worth something when it was nationalised – and thereby triggering a payout by the government to those shareholders in exchange for the actually worthless shares.

But that’s just me speculating.

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Anglo Golden Circle – Final post

I’m getting sort of bored with this now, and I suppose it’s not strictly related to the aims of this site. Based on the searches hitting the website today and over the weekend, I’d hazard a guess that The Irish Times will shortly be naming all the Golden Circle names and that one of the 10 is a government party TD.

With a HT to Gavin, it seems that Senator Shane Ross saw all this coming at least 2 months before the final circle was formed.

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The “Golden Circle” – Ten becomes six

So last week I published this post, Can you identify the Anglo Irish Bank “Golden Circle”? Win €100 for the 10 names!.

I did preface everything by saying that we could have a bit of fun with it, but the response has been unbelievable. Obviously Brian Cowen, Brian Lenihan or Sean Fitzpatrick or Pat Neary wouldn’t have been interested in revealing what they may or may not know for a measly €100, but lots of people were up for the bit of fun.

Based on submitted guesses, the following is interesting:

  • The seven most popular names show up on 75% of the entries received so far.
  • The next two most popular names appear on 50% of the entries
  • Over 50 different names have been sent in in total

It would be fair to say, that when it comes to guessing the names, it’s more “the usual suspects” than “the golden circle”.

Based on news coverage so far, we’ve had 2 people drop out of contention – Fintan Drury and Ulick “they’re all heroes” McEvaddy.

And then yesterday, the Sunday Times claims that it could confirm 4 of the golden circle – Gerry Gannon, Joe O’Reilly, Seamus Ross and Jerry Conlon.

While 3 of those 4 were popular guesses, it was Joe O’Reilly that caught most people out – none of the submissions received included his name.

Interestingly, 2 of the 4 were included in this article in the Irish Independent back in January. I wonder if any of the others are in the golden circle as well.

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Just some thoughts on the Anglo Irish Bank “Golden Circle” deal

It’s a little removed from the normal content of the site, but I was thinking yesterday evening on the implications of the deal allegedly entered into between the so-called “Golden Circle” and Anglo Irish Bank. Given the newspaper coverage, here’s how things are supposed to look at the moment for each of the chosen 10:

  • Borrow €30m from Anglo Irish Bank
  • Buy Anglo Irish Bank shares off the stock exchange – probably at a preferential price (i.e. cheaper)
  • Anglo Irish Bank goes tits up with the the implications that the shares are worth nothing after Government nationalisation
  • Because of the loan conditions, Anglo Irish Bank can’t go after the €75m collateral that the “Golden Circle” had previously offered – so they get to keep their houses
  • It’s now expected that that the €300m in loans will also be written off by Anglo – and now they’ve no debts and get to keep their houses

All very nice and cosy – these 10 unnamed people came to the rescue when asked (by whom we don’t know as of yet – Anglo Irish Bank, or the Financial Regulator, or the Government?). But I think it could get better for the “Golden Circle”:

  • There is a commission working at the moment on assigning an valuation to the shares of Anglo Irish Bank at the time of nationalisation.
  • If that commission comes back and says that Anglo Irish Bank was worth, lets say, 25c per share, at the time of nationalisation, then each of the 10 lucky punters will get a good proportion of their money back (proportion depends on the preferential share price mentioned above)
  • So now, the “Golden Circle” have received cash from the government for the shares that they had originally borrowed money from Anglo to buy in the first place – but because the loans are written off, they don’t have to repay the money, so that money is essentially pure profit.
  • But, it’s profit that they won’t be paying tax on probably. Because they’ll technically have made a loss on the purchase price of the shares compared to the money they’re getting back from the Government, they’ll have a capital loss that they can use to offset against any other profits made elsewhere in their dealings.
  • So, at the end of it all, it’ll really be free money for the “Golden Circle”.

Nice work if you can get it. But this is just my personal speculation on what could happen. There’s a big IF in there – that the independent commission will actually assign a value to the Anglo Irish Bank shares at the time of nationalisation.

A similar situation arose in the UK with the nationalisation of Northern Rock and the decision by the government there was not to pay anything to the shareholders – despite a High Court case. They decided that Northern Rock was worthless at the time of nationalisation – and all shareholders lost out completely.

Here’s where I think we’ll see actually how “chosen” the “Golden Circle” actually will be – at the end of the day, it will be decided (quite wrongly in my opinion) that Anglo was actually worth something on the day of nationalisation.

That will allow my speculation actually come true, and the “Golden Circle” will clean up at the expense of the taxpayer in more ways than one.

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Can you identify the Anglo Irish Bank “Golden Circle”? Win €100 for the 10 names!

I thought we could have a bit of fun with this.

We’re hearing all the controversy at the moment about the so-called Anglo Irish Bank “Golden Circle” of 10 supposedly high-profile Irish business people who were involved in allegedly buying shares in Anglo Irish Bank with money borrowed from Anglo Irish Bank.

This Irish Times news story gives more details:

The Financial Regulator confirmed this week it is investigating the loans given by Anglo to 10 unnamed clients last year so they could take a 10 per cent stake in the bank that was originally part of a holding assembled by businessman Seán Quinn and his family.

Can you guess who these “10 unnamed clients”? Have you any idea who might be inside this “Golden Circle”?

E-mail me here at ValueIreland.com with who you think these people are. We’ll keep your guesses and details private.

The first person to get me the correct listing of the 10 names (obviously, before they’re named publically) will win the cash.

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