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Posts tagged ‘PricewaterhouseCoopers’

Troika consultancies: A multi-million euro business beyond scrutiny!

Berlin – Alvarez and Marsal, BlackRock, Oliver Wyman, Pimco: The names mean nothing to the average European.

But the financial consultancies have played a central role in all the eurozone bailouts and have so far invoiced taxpayers in Cyprus, Greece, Ireland, Portugal and Spain over €80 million.

Their “independent” expertise is used by the “troika” of international lenders – the European Central Bank (ECB), the European Commission and the International Monetary Fund (IMF) – to decide how much countries or banks need to prevent a default.

They are often hired without a public tender, posing questions on transparency and accountability.

They are sometimes hired despite potential conflicts of interest, which arise from links to investment funds and other financial service providers.

The consultancies also hire subcontractors, posing extra questions on who has access to inside information and how they use it.

Aside from local law firms, the subcontractors almost always include one or more of the “Big Four” accountancy companies – Deloitte, Ernst&Young, KPMG and PriceWaterhouseCoopers (PwC).

The end result is a “golden circle” of a dozen or so large firms with a de facto monopoly on handling EU bailouts.

Take Alvarez and Marsal.

The New York-based consultancy earned €2 million for setting up and managing Spain’s “bad bank” in 2012…………………………..

full article at source: http://euobserver.com/economic/122415

PwC & Anglo Irish Bank

sent in to-day

Dear Sir, Mr.McGarry, in his last column, quoted Feargal O’Rourke, head of PricewaterhouseCooper’s tax and legal division in Dublin. Mr.O’Rourke opined on the recovery of the Irish economy. I don’t think Mr.O’Rourke, or anyone at PwC, is in a position to comment on anything to do with the Irish economy. They lost that right when they failed to honour their legal and moral obligation as auditors of Anglo Irish. What were they doing during all those annual audits? How could they not have seen and subsequently reported the shady accounting practised by Anglo? Was it insuportcompetence or collusion? Either way, I hold PwC responsible for dereliction of duty and negligence in its performance. Since Anglo was the catalyst and voracious black hole in our financial debacle, I can’t understand how PwC has not been held to account for their part in Irelands financial meltdown. Sincerely, Paul Maher, Castle Street, Roscrea, Co.Tipperary

Comment:

As a citizen going up as an independent in Wicklow. I can assure you I will  support any measure to bring to justice  any and all who were involved with the Anglo meltdown  and I am just as concerned as yourself. I would hope these people would be removed from all government contracts  until their time at Anglo can be  investigated in Full and any losses incurred by the Irish taxpayers will have to be paid back in full.

Received today 02.03.2011

according to Mr.Feargal O Rourke

Feargal O’Rourke says:

This has just been brought to my attention. There is a major factual error is this post.
PwC neither is, or never was, auditors to Anglo Irish Bank. I hope you will make the appropriate correction

competence of companies that provided information underpinning key policy decisions

Is it time to investigate the competence of companies that provided information underpinning key policy decisions in our financial crisis?

By Namawinelake

Looking back at the financial crisis over the past three years, it is striking that at practically all milestones the information upon which key decisions were made has turned out to substantially wrong, in particular the assessment of the problems in the banks and more specifically still, the losses on property loans.
If, back in September 2008, it was known that the banks’ assets were not worth €500bn as claimed but were worth substantially less, would the Government have campaigned to introduce a guarantee of bank liabilities then worth €440bn? If, at the start of 2009, the Minister for Finance knew of the likely losses in what would later become the five NAMA Participating Institutions, would he have started a recapitalisation programme that may see €80-90bn ultimately taken from State coffers (through borrowing) and shovelled into these black holes? If, at the start of 2009, when Dr Peter Bacon was reporting on the desirability of an asset management agency, he knew that the haircut to be applied to loans would be 60% rather than 30%, would NAMA ever have seen the light of day? It seems to me that these three key moments in our State’s economic history are characterised by the Government acting on poor information. Of course it is to be recognised that information can modify over time and there was a deterioration in the economic environment, both here and internationally, from 2008 which will have affected more up-to-date values. But even taking account of the passage of time, was the information produced by the institutions and external advisers, at such colossal cost to the State, so significantly inaccurate that it is time to investigate the competence of those companies that produced the information?
What prompts this entry is a letter dated 23rd December, 2010 from the current Financial Regulator, Matthew Elderfield, to the Committee of Public Accounts, which has just now been published, in which he encloses copies of the invoices paid in respect of advice received by the Financial Regulator in respect of the Bank Guarantee Scheme and “the discharge of other related supervisory duties”. The invoices are partly redacted by the Financial Regulator to remove the names of consultants and the companies’ banks details for payment of the invoices. The second redaction is understandable but isn’t the identity of the consultants that were seemingly paid substantial sums (€1,000-plus and expenses per day typically) of public interest?
I have extracted the invoices from Matthew Elderfield’s letter for ease of review and they are as follows (sorted by invoice date – click on the description for a copy of the invoice):
DateCompanyAmt (ex VAT)Description
27/11/2008PwC1,670,000Work on six State-gteed banks
31/01/2009PwC1,139,150Work on 5 NAMA banks and JLL fees
19/02/2009Deloitte95,720Review of directors loans
06/03/2009PwC23,415Secondment 11 days Feb 2009
03/04/2009E&Y16,667Secondment Feb 2009
03/04/2009E&Y16,667Secondment Mar 2009
03/04/2009E&Y16,667Secondment Dec 2008
03/04/2009E&Y16,667Secondment Jan 2009
28/04/2009KPMG1,034,080Investigations Mar/Apr 2009
23/06/2009PwC214,480Ref to “Engagement letter April 2009”
30/07/2009KPMG218,219Investigations and “potential ASPs” Apr-Jul 2009
21/09/2009PwC239,310Impairment provisioning INBS
30/10/2009PwC225,750Impairment provisioning EBS
20/11/2009Deloitte196,789″Assistance”
06/01/2010Deloitte56,9992 secondments for 21 days
19/02/2010E&Y87,394″Professional services”
03/03/2010PwC464,500Due diligence
03/03/2010PwC483,100Due diligence
20/08/2010E&Y34,000″Professional services”
6,249,574

There are three invoices of particular interest and they are:
The PwC invoice from 31st January 2009 which includes a charge of €691,250 in respect of “Jones Lang Lasalle Valuations”. And this has continuing relevance for NAMA because JLL’s managing director at the time, John Mulcahy, is now NAMA’s Head of Portfolio Management and arguably NAMA’s most senior property man. It should be emphasised that it is not disclosed on the invoice the remit that JLL operated to when providing their services, so for example they may not have examined loan documentation which, following NAMA’s legal due diligence exercise, proved to be execrable. It should also be stressed that property values continued to drop in late 2008 and 2009.
The two PwC invoices dated 21st September, 2009 and 30th October, 2009 which relate to the impairment provisioning in INBS and EBS. Knowing that the last estimates (in October 2010 – yes, the NAMA CEO did indicate lower estimates last week at the CPA but those are on incomplete loan transfers) of final haircuts for INBS and EBS were 70% and 60% respectively, how competent was PwC’s work in 2009? NAMA’s valuation date is 30th November, 2009 so there may well have been some deterioration in values with the passage of time but November 2009 was only a matter of a few months after the reviews.
A notable omission from the invoices is work on impairment provisioning for AIB, BoI and particularly Anglo. Didn’t the acting Financial Regulator, Mary O’Dea,  think to commission such work? Though on the other hand, given how inaccurate the work appears to be for EBS and INBS in the context of present estimates, perhaps she saved us unnecessary fees.
With NAMA’s acquisition work coming to an end and with yet another review of loans by the troika of Barclays Capital, the Boston Consulting Group and Blackrock Solutions, is it not now time to review the competence of the work undertaken in 2008 and 2009?

source http://wp.me/pNlCf-Xp

PricewaterhouseCoopers (Passing the blame?)

From the Irish Independent today we see that the government were told by  PricewaterhouseCoopers (PwC) that the total amount to bail out the banks was to be 5 Billion and as we know to-day we are looking at approx 90 billion

Who in their right minds would ever employ these monkeys ever again?

Full article below

By Emmet Oliver Deputy Business Editor
Wednesday October 20 2010

THE Government was told on the eve of the banking guarantee that losses across much of the system would only come to €5bn in a worst-case scenario.

PricewaterhouseCoopers (PwC) sent a summary to senior National Treasury Management Agency (NTMA), Central Bank and Department of Finance officials on September 28, 2008, estimating that banks would only have to provide €5bn to cover soured loans, new documents — released by the Public Accounts Committee — reveal.

The figures related to Anglo Irish Bank, Irish Nationwide and Irish Life & Permanent.

The cost of banking rescues is now expected to come to €50bn — and this does not even include the €40bn for the National Asset Management Agency (NAMA).

The bank guarantee scheme was agreed on September 29-30, with more than €440bn in liabilities receiving protection from the State. The latest documents show that officials had very limited knowledge about the banks’ books.

Deposits

PwC said the provision of €5bn would most likely be taken over a three-year period, although if banks were wound down over a gradual period, losses would rise “significantly”.

It added that its summary was based on the books being managed aggressively by an experienced property team.(Sack the lot of them!)

The summary covered Anglo Irish Bank, Irish Nationwide and Irish Life & Permanent.

Together, the three banks were only expecting to put aside €400m in 2009 to cover soured loans. PwC said this was regarded as the “absolute best case”.

The documents indicated that Anglo remained in denial about its true financial position, with the bank expecting profits of €1.1bn in 2009.

Irish Nationwide was expecting profits of €170m before taking any property-related hits.

PwC made it clear that it was providing the summary on request from the Financial Regulator. It described its work at that stage as ongoing and “not complete”.

The documents also that Anglo Irish was in danger of having a shortfall of €12bn by mid October. The loss of deposits was the crucial factor.

– Emmet Oliver Deputy Business Editor

Irish Independent

McInerney’s too optimistic !

0% growth in house prices this year and next, then 2%, 3% and 5% in the following years – that’s too optimistic say the banks : McInerney’s examinership bid to be decided on Monday
namawinelake | September 11, 2010 at 9:27 am | Categories: NAMA | URL: http://wp.me/pNlCf-zp

McInerney, one of the country’s oldest housebuilders, was back at the High Court yesterday in its bid to secure examinership for its Irish operations. It is being opposed by Bank of Ireland and Anglo who together with non-NAMA bank KBC make up €114.5m of the €236m of debt owed by the group. It is suspected that NAMA is behind the banks’ opposition to the examinership though interestingly a report in today’s Independent claims NAMA is neutral even though NAMA has rights to approve bank actions on NAMA-bound assets and has effective control over Bank of Ireland and Anglo’s treatment of the loans? Strange.
McInerney secured an interim examinership on 26th August, 2010 with the appointment of joint interim examiners William O’Riordan and Declan McDonald of PricewaterhouseCoopers over McInerney Homes, McInerney Construction (Holdings) Limited, McInerney Contracting Limited and McInerney Contracting Dublin Limited.. However it will be on Monday next when the company will learn if the courts are willing to grant full examinership which would afford the company protection from creditors for 70-100 days whilst it works through its difficulties. McInerney claim that 100 jobs depend on getting examinership.
Yesterday McInerney outlined its plans to the High Court judge Mr Justice Frank Clarke through the capable senior counsel John Hennessey. It is reported by RTE that the plans projected prices in the State to remain flat for the remainder of this year and next and then for there to be 2%, 3% and 5% growth in the three succeeding years. The equally capable Rossa Fanning represented the BoI-Anglo-KBC banking syndicate and RTE report that the banks claim McInerney plans are too optimistic. RTE’s reporting suggests that this is referring to the price projections.
With inflation turning positive, it would seem plausible that the banks are saying not only that prices in real terms in 2015 will be less than today but that this is an optimistic assessment of the future. And at the same time we have the controller of the banks, Minister for Finance Brian Lenihan claiming we are at the bottom and we have NAMA, whose success is predicated on buying loans at the bottom.

Comment
Well there you have it,
The highest courts in the land and the big wigs of NAMA and the Banks share the view that prices are still in decline and so they calm McInerney plans are too optimistic.
All this in spite their boss Minster of Finance Brian Lenihan, s broadcast view that we have turned the corner, we are at the bottom!
If this is proof of anything it is proof that all of these institutions are spinning lies and can’t even get their stories to mach. McInerney plans are just ridiculous with 300,000 thousand properties lying idle and 70,000 young people emigrating ,the unemployment queue getting bigger every month who exactly does he think will buy this surplus stock ,with the government apparently plotting to tax the family home, with a 600 euro property tax next year This will make us tenants in our own homes overnight if the Greens will have their way !
It is reasonable to assume that next direction for interest rates will be up and we can expect them to top around 5-6% in the next 3 years .How many more people are going to be pushed over the edge with these increases and don’t forget we probably end up with a duopoly in the banking industry as far as mortgage services are concerned. Never mind the current figures for negative equity, if these jokers have their way they will finish off the property market all by themselves !I have no faith in any of these con artistes.

Lies and dam Lies from Brian Lenihan!

Quotes from Brian Lenihan since the bank guarantee:

Source http://www.thestory.ie


photo Machholz

On Breakfast with Newstalk, April 26 2010.

First of all, that’s the position in 2009, Eurostat hasn’t decided it yet, that’s our assesment of how they will decide it, we’ll still argue the toss with them. We have to deal with 2010 yet, but let’s assume that you’re right for a minute and that all the €8bn has to be added on in 2010. Let’s assume that. We won’t be borrowing the money, we’ll be borrowing the money over a period of ten or fifteen years. We’ll actually be up fronting – in accountancy terms – the figure, but we will not in fact be borrowing… – April 26 2010.

Also on Breakfast with Newstalk

Now that I’m the shareholder in Irish Nationwide I will clearly ensure that whatever money is owed by Mr Fingleton is paid by Mr Fingleton. – April 26 2010.

Also on Breakfast with Newstalk

BL: No, no, listen, listen. This not good for the country , and it’s inaccurate. If next year we’re obliged to include the €8bn, the €8bn will not actually be borrowed next year the device of the promissory note means we borrow…

Ivan Yates: No, I know the promissory note is over ten years. You’re missing the point…

BL: No you’re missing the point! This is an accounting device! This is not real borrowing! What the markets look at is real borrowing. Not accountancy devices… – April 26 2010.

Speaking to media…

“The decisive and bold steps we have taken are not popular; and the honest and full disclosure by the Government and its agencies of the appalling mess we have uncovered within our banks has shocked the nation,” Mr Lenihan told the Dail.  “But I do believe that there is recognition among the citizens that the measures we have taken are necessary. And I believe the work of NAMA in cleaning up the banks’ balance sheets and forcing them and their borrowers to face up to their losses is winning the respect of the public.” – April 21 2010,  Irish Independent

“One of the good things about the steep discount, averaging 47 per cent, is that the residential property market will now be stabilised at a realistic level… You can now buy in confidence that the price is realistic.” – April 4 2010, Irish Independent

[Submitted by CO’D]:

The Financial Regulator has advised that all the financial institutions in Ireland will continue to be subject to normal ongoing  regulatory requirements. This very important initiative by the Government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets. As far as the question of ‘moral hazard’ is concerned, it will be a priority for the Government to ensure that the highest regulatory standards and standards of corporate governance apply in all of the institutions concerned including in relation to lending practices to safeguard the interests of taxpayers against any risk of financial loss. – Department of Finance statement, September 30 2008

[Submitted by CO’D]: During Dáil debate on credit institutions and financial support,

Olivia Mitchell (FG): We need to see the terms and conditions to know what will happen with regard to these people. Is there any requirement for the banks to restructure their loans? Will they be allowed to make a massive number of repossessions and have fire sales, driving house prices down further and sending the economy into even deeper recession? Has the Government any plan to deal with this?

Brian Lenihan: This is the plan.

Olivia Mitchell: […] However, we need a return to the banks of old — to the image we had of them as being dull, staid, boring, cautious and careful. We no longer have that image. What is the Government’s plan to create the conditions that will ensure this happens? What will happen to restore confidence in the banking system? If we do not restore confidence in the banking system, what the Minister is doing now——. I do not know what the Minister is laughing at.

Brian Lenihan: I am not laughing. I am allowed to smile. – October 1 2008

[Submitted by DC]: As reported by Simon Carswell in The Irish Times…

MINISTER FOR Finance Brian Lenihan has said the bank guarantee scheme was “a necessary first step” and “the cheapest bailout in the world so far”.

Mr Lenihan said the guarantee was “the cheapest bailout” compared with bank rescues in other countries, including the UK and the US, where “billions and billions of taxpayers’ money are being poured into financial institutions” – October 24 2008

Irish Times…

“We are not rushing into the banks without knowing precisely what the position is in those banks” – Nov 20 2008

During the Stabilisation of Public Finances debate, Dáil Eireann

In the context of any capitalisation the due diligence exercise will yield further information to enable us to do a far more precise identification of risk before we formulate policy on it. I would be reluctant to commit the taxpayer on any issue connected with risk without a full and definitive assessment of the risk in the institutions themselves and we must await this assessment. – Feb 5 2009

Following the publication of Anglo Irish Bank’s 2009 results. Minister Lenihan said he welcomed the increased scrutiny of Anglo as an opportunity to bring openness to the bank…

“which will ultimately allow us to draw a line under past activities”. “It is an opportunity for Anglo to employ a fully transparent approach to addressing the inappropriate activities that took place at the bank and provide comprehensive details to all stakeholders who deal with Anglo and who deal with Irish financial institutions generally.” – Irish Independent, Feb 21 2009

When challenged as to why he was not nationalising banks (at this time the State had already nationalised Anglo Irish Bank and taken a 25 per cent stake in Bank of Ireland and AIB).

“I do really want to scotch the idea that there are huge risks to the taxpayer in the valuation process because we are not nationalising these institutions.” – Irish Times,
May 18 2009

Nama Bill, Dáil Eireann.

NAMA will ensure that credit flows again to viable businesses and households by cleansing the balance sheets of Irish banks. This is essential for economic recovery and the generation of employment. It will ensure that we avoid the Japanese outcome of zombie banks that are just ticking over and not making a vibrant contribution to economic growth. – Sept 16 2009

Nama Bill, Dáil Eireann.

I am not prepared to contemplate the establishment of an entity that has no responsibility or accountability to this House. – Sept 16 2009

Nama Bill, Dáil Eireann

Nothing in the NAMA legislation will result in more repossessions of family homes. – October 14 2009

On the nationalisation of Anglo, during a debate on banking regulation in the Dáil

This decisive step was taken to safeguard the interest of the depositors of Anglo Irish Bank and the stability of the economy. I want to assure the House that this decisive step was taken to ensure the new nationalised bank will collect all debts due from persons who owe moneys to the institution. – Feb 18 2009

In response to written question from Kathleen Lynch

Taking account of the advice received the Government has proceeded with a comprehensive recapitalisation of Ireland’s two main banks and with the nationalisation of Anglo Irish Bank. The Government is also in discussions with the other covered institutions, Irish Life & Permanent, Educational Building Society and Irish National Building Society concerning their respective positions. – Feb 18 2009

In response to a written question from Arthur Morgan

The recapitalised banks have reconfirmed their commitment to an extensive credit package which will help to increase lending capacity to small and medium enterprises by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. The credit package also provides for a €100m environmental and clean energy innovation fund to be established by each bank. All the steps that I have outlined have been taken by the Government to ensure that the public interest is secured so that the financial system in Ireland meets the everyday financial needs of individuals, businesses and the overall economy. – March 26 2009

Written answer to Arthur Morgan

Our approach will facilitate a sustained flow of credit on a commercial basis to individuals, households and businesses in the real economy. – July 8 2009

When questioned on the delays in implementing Nama legislation on Morning Ireland

“We can’t have a lawyers’ bonanza and that is another good reason why we have to get this right.” – May 18 2009

Kicker; written answer to Joan Burton

Arthur Cox solicitors have been engaged by my Department since September 2008 to provide advice in relation to general banking matters including the Bank Guarantee scheme, the nationalisation of Anglo Irish Bank and the recapitalisation of AIB, Bank of Ireland and Anglo Irish Bank. The company was paid €1,628,024 in 2008 and €2,254,263 has been paid to date in 2009. The sum of €5.4 million has been allocated for legal advice for 2009 and an estimate of €3 million has been set aside for legal advice in 2010.

PriceWaterhouseCoopers was retained by the Financial Regulator in late 2008 to assist the Financial Regulator with a review of the financial and capital positions of Irish banks and to enable the Financial Regulator to advise the Government on what action needed to be taken. The work undertaken involved an initial high level assessment of the capital and liquidity levels of the institutions, stress testing of the institution’s loan portfolios over a three year period, and review the valuation of properties held as collateral against the main property loans.

The total fees paid by the Financial Regulator to the company in respect of the work was €3.8 million, which has been completed. In addition, the Financial Regulator has paid €0.84 million to Jones Lang La Salle for financial and property consultancy services in relation to the Bank Guarantee Scheme.

The National Treasury Management Agency paid a total of €7.3 million to Merrill Lynch for investment banking advice up to 30 June 2009. Following a competitive tender process in July, Rothschild have now been awarded the contract for investment banking advice. The NTMA has also retained an economist however the terms of his contract with the NTMA were agreed on a confidential basis. In addition, following a competitive tender process, the NTMA engaged HSBC and Arthur Cox to provide advice in relation to NAMA. – Sept 22 2009


NOTE: I’ve gone through the Dáil record and archives of the Times and Indo, but haven’t listened to radio or TV interviews. If anyone has a bit of time to go back and listen to a Morning Ireland/Prime Time/The Last Word/Whatever interview… t’would be useful.

* a word members of our Government like to use when scripting excuses for the negative outcomes that result from badly implemented policy or regulation. Usually follows “unforeseen”.

If you thought FAS was Bad?

 

Many people might have forgotten that it was our own Mr.Dick Roche, the then Minster for the Environment, Heritage and Local Government who appointed Mr. Donal O’Connor as Chairperson of the Dublin Docklands Development Authority in may 2007

Mr. O’Connor was a Senior Partner of PricewaterhouseCoopers (PwC) in Ireland and was a member of the Global Board of PwC and Chairman of PricewaterhouseCoopers Euro firms Board at the time. He was also a member of the Board of the Irish Auditing and Accounting Supervisory Authority (IAASA) and was Administrator of Icarom Plc – formerly the Insurance Corporation of Ireland.

DONAL O’CONNOR (58)
was appointed Chairman in December 2008 and Executive Chairman in February 2009, having joined the Board of
Anglo Irish Bank in June 2008. He was the Senior Partner of PricewaterhouseCoopers (PwC) in Ireland and was a member of the PwC Global Board and Chairman of the Eurofirms Board. He is a Non-executive Director of Elan Corporation plc and Readymix plc. He is a former Chairman of the Dublin Docklands Development Authority, and a former Director of the Irish Auditing and Accounting Supervisory Authority.

(This is an example of how incestuous Irish business is, and proof that this golden circle is alive and well in Ireland )

One should have known then that this individual was certainly used to the high life at the time and with all the rest of his commitments how was he going to give his full attention to his new posting.

Dick also appointed four other directors to the Executive Board of the Authority. at the same time and they were

* Mr. Donal Curtin, Partner, Byrne, Curtin, Kelly Ltd, Chartered Accountants;
* Mr. Brendan Malone, Partner, Malone Power & Company, Chartered Accountants;
* Ms. Mary Moylan, Assistant Secretary, Department of the Environment Heritage and Local Government – and
* Ms. Niamh O’Sullivan, Partner, Arup Consulting Engineers.
these people are all part of a golden circle that seem to get the plum jobs

For more information on these ladies and gents activities follow link here
http://www.independent.ie/national-news/dockland-chiefs-ran-up-8364600000-travel-bill-2091713.html

Oh Dick, what were you thinking? Was there no control on what there lads were spending?

According to the head of the Oireachtas Public Accounts Committee has described a travel bill of over €600,000 run up by the Dublin Docklands Development Authority (DDDA) as an “orgy of spending”.

Reports in today’s newspapers claim the DDDA splashed the cash on luxury travel, expensive meals and fine wines.

The authority has accumulated losses of over €200m.

Fine Gael TD and PAC chairman Bernard Allen said such a culture of excess has to be curbed.

“I think these people were in a parallel universe,” Deputy Allen said. “At the time they thought that the world was their oyster.”

He said the bill raises major issues regarding the governance of the DDDA, which did not seem to be subject to any accountability.

What are the chances that any of these leaches will ever come before a courthouse?

None what about political accountability, sorry none there neither

We the people of Ireland are left with paying the bill for these high flyers

Who is surprised by this?

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