AN INQUIRY EXAMINING the sale of certain loans by IBRC needs more time, more resources, and legislative change in order to proceed with its work.

An interim report published this evening has identified a myriad of problems that have hit the investigation into the sale of IBRC (formerly Anglo Irish Bank) loans where there was a loss of at least €10 million to the taxpayer.

The examination of up to 38 transactions, six of which involve write-offs of over €100 million, has effectively stalled after the commission’s chairman, Judge Brian Cregan, concluded that he does not have sufficient legal powers to proceed.

The government said this evening it would now consider the report and consult with opposition leaders and officials in a bid to come up with solutions.

Cregan said that once given more resources and legal powers, he may be able to investigate the 12 largest transactions, involving write-offs totalling €1.3 billion, within 18 months to two years.

But he said the investigation on the whole could take “several years”. The commission had originally being tasked with reporting before the end of the year.

• Read: What on earth is this Siteserv story all about – and why is it back in the news?

What are the problems?

The commission says that IBRC’s special liquidators, KPMG, have asserted a duty of confidentiality over all documents related to the bank that have been submitted to the commission.

Wanderley Massafelli / Photocall Ireland Wanderley Massafelli / Photocall Ireland / Photocall Ireland

The Department of Finance has also asserted confidentiality over many of the documents it has submitted.

Privilege has also been asserted over legal advice received by both the Department of Finance and KPMG.

Meanwhile, professional secrecy obligations imposed on the Central Bank and the Irish Stock Exchange will prevent both bodies from disclosing certain documents, the commission says.

The commission has broadly recommended legislative change in this area in order to give it necessary powers to enter the documentation into evidence.

Terms of reference

Problems have also been identified with the commission’s terms of reference, with a number of changes recommended.

The commission says at present it is unable to determine if loan write-offs were commercially sound. This is because the legislation that sets this standard was not in place at the time some of the write-offs were given. The report states:

To hold the directors to a standard which was not in place at the time they made their decisions would be a breach of their constitutional right to fair procedures.

The commission also says there were no “standard applicable interest rates” for the loans subject to the investigation.  It also wants a clarification that it is not required to investigate any aspect of the business of Irish Nationwide prior to its merger with Anglo.

The commission is also seeking clarification as to the intended meaning of the term ‘capital loss’.

Siteserv no longer exists

Eamonn Farrell Eamonn Farrell

The interim report also notes that Siterserv, which is at the centre of the most controversial transaction, was dissolved in August. As a result, a company which no longer exists cannot be investigated.

However, the commission says Siteserv’s liquidator has indicated they are willing to apply to the courts to restore the company.

Cregan, who is the sole member of the inquiry, has also asked that a second person be appointed to the commission, having identified a small number of conflicts of interest that are likely to arise.

The appointment of one or more persons would also shorten the investigation “significantly”, the report says.

Timeframe

Catherine Murphy Leah Farrell Leah Farrell

The commission says that once the legal issues are resolved it is proposing to investigate the 12 largest transactions, including six involving write-offs of more than €100 million and six involving write-offs of more than €50 million.

The combined total write-offs of these transactions is €1.3 billion or around 68% of the value of the total number of transactions (38) being examined.

The commission says that a proper consideration and investigation of matters laid out in terms of reference will “take several years and will result in substantial costs”.

As a result, the commission says it is not possible to make an accurate assessment of the time required to complete the investigation.

Social Democrat TD Catherine Murphy, whose investigative work sparked this controversy, said that from her initial reading of the interim report the judge had concluded that the inquiry is “essentially unworkable”.

Read: Pearse Doherty isn’t allowed to ask Enda any of these questions