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Two Circuses And A Fiasco

Posted on: July 7th, 2008

GREAT to hear Richard Nesbitt of Arnotts on Marian Finucane’s brilliant RTE show on Sunday. Richard was agitated by last week’s column here about Greencore, the one that fingered the food company’s auditors Pricewaterhousecoopers. Insiders tell me Richard was keen as mustard to rubbish my unremarkable piece.

Remember? PWC failed to spot a €21m hole in Greencore’s accounts. Hardly a trivial matter.

Richard is a well-heeled pillar of the business establishment. A bit prickly, he found the piece unacceptable: it added nothing to the argument; it had no “nexus” (whatever that means). According to Richard, it was a load of old bull.

Probably right. A pity, though, that his criticism did not include a little declaration of interest: that his own auditors are none other than the same PWC. Last year, Arnotts paid them €128,000 in fees.

I hope PWC are doing a better job on his heavily borrowed Henry Street store than they did at Greencore. With property values plunging, it will be interesting to see if PWC question the recent upward revaluations in Arnotts’ balance sheet. CBRE, the guys who revalued the properties in 2007, are now calling some city centre retail properties’ values down by 50 per cent.

Richard is a part-time businessman who has taken plucky risks with the family company. He has embarked on a super-ambitious Dublin property play, known as the Northern Quarter Project. Richard doubles as a successful tribunal barrister, representing — among others — the sober AIB. Arnotts’ principal bankers in this new adventure are the more colourful Anglo-Irish. Hopefully he will not soon wish that he had stuck to the day job.


AND speaking of PWC, the same outfit just happens to have another topical gig. They audit the accounts of one of two deeply troubled companies holding AGMs this week. There should be fireworks at the RDS, Ballsbridge, at 10am on Tuesday when Bank of Ireland chairman Richard Burrows tumbles in to defend an appalling year. Go along, for your only chance to challenge Ireland’s big bankers. Lob a few questions at Richard. Like:

1. Explain the share price fall from €18.65 to €5.18. Why have B of I shares performed so much worse than AIB’s?

2. Foreigners are fleeing B of I shares. Last week they were turning down a yield of 12 per cent. Is there a hidden grenade in the balance sheet or will the dividend be cut?

3. Can the chairman guarantee that a rights issue will not be inflicted on the shareholders to bolster the balance sheet?

4. Why did the bank have to pay over the odds in a recent fundraising round?

5. How much of the BoI’s loan book is secured on tanking property prices? How many customers are sunk in a negative equity trap?

6. How many 100 per cent mortgages has the B of I given out?

7. How can the top boys in the bank accept bonuses of as much as €1m after such a dismal year? If the answer is the usual nonsense that the bank offers “competitive” packages to retain key staff (!), ask Brian Goggin (€3m better off) and Denis O’Donovan (€1.7m) to spell out all the jobs that they have turned down.

8. Why are PWC being retained as auditors after the €21m Greencore debacle?

9. Did chief executive Brian Goggin, a Lisbon Treaty fan, really write to staff urging them to vote in the referendum?


EVEN more spectacular is the prospect of a post mortem at the C&C AGM on Friday in Dublin’s Westbury Hotel. Shareholders in C&C have not exactly been mugged, but it must feel like that. C&C bet the bank on cider sales in the UK. The bank is collapsing. Quiz the chairman, Tony O’Brien, about the downfall of a once-proud company.

1. C&C shares have been total dogs. They have fallen from a peak of €13.90 to €3.12. Why have no heads rolled?

2. Will this AGM mark a swansong for the diminished chief executive Maurice Pratt? Has his “position” been considered by the board?

3. Has the board approved Maurice’s plethora of outside directorships, including the chair of HBOS (Ireland) and Brown Thomas. Does the board judge these a distraction or do more external interests keep him out of harm’s way?

4. Mr Pratt urged the nation to vote “yes” to the Lisbon Treaty. Does the chairman believe that his intervention was a major factor in the referendum defeat? Is he jinxed?

5. Last year ‘s results have been explained by the bad weather. It was raining for much of last week. Does this mean that C&C is sunk for another year?

6. Competition from Scottish and Newcastle in the UK seems to have surprised the directors in 2007. Is competition a new concept?

7. In 2007, C&C bought back 17.7m of its own shares, wasting €140m. Why should shareholders renew this power to the board at the AGM?

8. Tony O’Brien, currently C&C chairman , was president of IBEC. Maurice Pratt was president of IBEC. The current president of IBEC is Maxol’s Tom Noonan. Has he been approached to take a top job at C&C?

9. Another of Pratt’s excuses for the disastrous 2007 results was the “smoking ban in UK pubs”. Were the C&C directors alone on God’s earth in not knowing this was in the pipeline?

Fás Fiasco

THIS column has taken years of flak for knocking FAS. Every questioning article has been met with protests, obstruction and obfuscation from the state training outfit. Now we know why. The sacred cow has been exposed by the searchlight of a few brave politicians. And a series of anonymous letters.

Last week — thanks to Fine Gael TD Leo Varadkar — it emerged that a senior FAS official was paid a €10,000 bonus while under investigation. FAS has money to burn. And it has burned it. Taxpayers’ money. European money, too. They even paid a million too much for a website. God willing, the European hit squads will now ask where their money went, too.

FAS was recently given a lash by the Comptroller and Auditor General for its lavish ways with taxpayers’ money. Suddenly it seems that the C&AG was only scratching at the surface. An enquiry into strange activities at FAS began in November 2004. Last week, the problem remained unsolved. No conclusions, little action either. Nothing happens fast at FAS — with one exception. It fritters away its €1bn budget with speedy abandon.

On what? Well, on bonuses for staff under investigation for a start.

Public sector cuts will be announced this week. Brian Lenihan could start by slashing the FAS budget in half. Five hundred million could be saved at the drop of a hat. Maybe even more, but it is difficult to find up-to-date figures from FAS. Typically, its last accounts cover the period ending way back in December 2006. I have seen a copy of the internal report on FAS. It does not make pretty reading.

If half the allegations are true, FAS behaves more like a political slush fund than a state agency.