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#1 2010-01-25 04:29:55
- David
- Member
Matheson Ormsby Prentice
Stretching the meaning of what it means to be a charity
JOHN McMANUS
Mon, Dec 21, 2009
BUSINESS OPINION: Want to hear a seasonal parable about the business of a charitable trust?
It’s Christmas, the season of goodwill and all that. It’s also the time of year when various charities hit us for a donation. One charity that will not be looking for any money off you this year – at least not directly – is the Medb Charitable Trust.
You may not have heard of it, but it’s a fine organisation, on paper at least. Its aims, according to its articles of association, are the relief of poverty, deprivation and distress; the advancement of education; the advancement of religion; the support of schools colleges and hospitals and other “other objects of charitable nature”.
And the Medb Charitable Trust is no nickel-and-dime outfit although it appears to have fallen on hard times recently. Its last set of accounts, for the year to the end of December 2008, show that it had accumulated losses of €543,820, as a result of some accounting adjustments and the payment of unspecified donations of €231,836. But rest assured, no carol singers will be calling to your door in the next few days holding out a bucket marked “Medb Charitable Trust” for you to throw a few coppers into.
No, the Medb Charitable Trust has much bigger ambitions. Along with two other low-profile Irish charitable trusts, it has decided to get into high finance. Through their wholly owned subsidiary Burlington Loan Management they have acquired the rights to some $1.2 billion (€0.84 billion) of debt owed by Iceland’s defunct Glitnir bank.
And who is helping the charities in this noble endeavour which puts traditional fundraising methods such as selling Christmas trees in the shade? Two kind-hearted souls by the names of Conor Bastable and Michael Herzog who work for a secretive New York-based hedge fund called Davidson Kempner.
Presumably sometime in the not-too-distant future. the Glitnir money will start to roll into the Medb Charitable Trust and its two sisters. It’s a heart-warming tale and the only unanswered question is when are we going to see the Medb wing of the National Children’s hospital because, given the sums involved and Mebd’s stated aims, that is the sort of giving we must be talking about.
Well, the people who can answer that are the directors of Medb: Anthony Walsh, Turlough Galvin, Chris Quinn, William Flynn, James Scanlon, Tara Doyle and William Prentice. If you have never heard of this noble band, here is clue: they all work for Dublin law firm Matheson Ormsby Prentice.
Starting to get the picture? Here is another tit-bit contained in the accounts of Medb Charitable Trust: Medb Charitable Trust Limited is exempt from corporation tax, as it is classified as a registered charity.
Yes dear readers, I am afraid its true. Medb is not some publicity-shy philanthropic organisation bent on good works. It is merely part of a complicated structure put in place by Matheson Ormsby Prentice on behalf of Davidson Kempner that takes advantage of Irish legislation to maximise profits and reduce risk in a very large international transaction.
Disappointing isn’t it? But before you get too angry, you have to bear in mind the other side of the argument. Kempner Davidson is going to do its Icelandic bank debt arbitrage deal anyway. And they have a choice of jurisdictions in which to do it. Matheson Ormsby Prentice, through ingenuity, came up with a way that makes Ireland the most attractive jurisdiction. In the process, it has earned some fees for itself and the bank that will provide administrative services to the structure.
These fees equate to jobs or parts of jobs. If you have ever wondered what Ministers and the like mean when they talk about the export of financial services being one of the few things we are still good at and likely to help the economy grow; then Medb is what we are talking about.
It is a powerful counter argument, particularly in the current climate. But it’s not that simple. Irish charity legislation and tax law is being used in a fashion for which it manifestly was not intended for. It may be legal in the strict sense, but what is being done is symptomatic of a wider ill which played its part in the catastrophe that is the collapse of the Irish banks and Anglo Irish Bank in particular.
One of the more alarming aspects of the events at Anglo was the extend to which individuals felt that a legal opinion to the effect that something was legal absolved them of all ethical obligations and moral responsibility for their actions. It also, in many cases, brought about the co-operation, or at least acquiescence, of others, such as the Financial Regulator, who should have shouted “stop”.
This is not to say the structure involving Medb is in the same sort of territory. But the basic point applies. The whole edifice rests on Matheson Ormsby Prentice’s view it is legal to avail of charitable status in this way and presumably the Revenue Commissioners have accepted this. One can presume the regulator, in so far as it has a role, is happy.
But something is fundamentally amiss here. If – as appears to be the case – we need a tax-free vehicle to underpin tax structures which make Ireland attractive for big international deals, then we should be upfront about it and legislate for one.
If we don’t, and instead continue to debase the notion of charity by using vehicles like Medb, we are perpetuating a business and ethical culture that has done us no favours, to put it mildly.
© 2009 The Irish Times
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#2 2010-02-01 02:27:07
- David
- Member
Re: Matheson Ormsby Prentice
Further evidence, it appears, that Irish legal firms are engaged in grotesquely dubious manipulation of Finance statutes to bolster fee income.
Weapons firms run for cover in Ireland to avoid paying tax
Mark Hilliard and Ken Griffin
FIVE of the world's leading weapons manufacturers have based multi-billion-euro companies in Ireland in order to avoid tax.
Despite the size of these Irish-based operations, which in 2008 alone had a total of €6.34bn on their books, they have just two employees registered in Ireland.
A Sunday Tribune investigation has found that in the same year the companies had a combined turnover of €724.7m with profits amounting to €387m, but paid less than €375,000 to the Irish state, an effective tax rate of 0.09%.
Ireland's low tax regime, which charges just 12.5% in corporation tax, has made this country the ideal location for many multinationals to base themselves in order to maximise profits.
The eight Irish subsidiaries identified are shared between Boeing, BAE Systems, Thales, Raytheon and United Technologies Corporation (UTC), all major players in global weapons production.
Between them they produce some of the most feared and deadly armaments available including nuclear submarines, fighter jets, helicopters, missile systems and other modern weaponry.
One of the firms uses an Irish-registered homeless charitable trust to shift debts off its balance sheet – debts accrued in 2001 as part of a €1.3bn refinancing operation.
The companies established here have been described as "mere front operations" by tax expert and Forbes columnist Richard Murphy.
Jim Stewart, a senior lecturer in finance at Trinity College Dublin, and an authority on taxation, said that while Ireland cannot be defined as a tax haven, it has many of the characteristics including "low corporate taxes, light touch regulation and ease of incorporation".
Christian Aid has criticised the situation, saying that such behaviour has its effects on third world countries.
"An effective tax regime, where multinationals pay what they owe, and tax authorities efficiently collect what they are due, would see developing countries ultimately move away from an over-reliance on aid, to a sustainable and predictable source of revenue," said the group's Sorley McCaughey.
January 31, 2010
© www.tribune.ie
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#3 2010-02-20 06:16:44
- David
- Member
Re: Matheson Ormsby Prentice
His Excellency Mr Herman Van Rompuy
President of the European Council
Council of the European Union
Rue de la Loi 175
B-1048 Brussels
RE: ARTHUR BEESLEY European Correspondent for the Irish Times
February 12, 2010
Your Excellency,
Please refer to the opening paragraphs below of a recent report published in Ireland.
>>>
Fri, Jan 29, 2010 © 2010 The Irish Times
Government does not back EU plan for co-ordination
THE GOVERNMENT has asserted domestic primacy over economic policy in the face of repeated calls for deeper co-ordination from top officials in Brussels, among them European Council president Herman Van Rompuy.
In a submission to the European Commission for talks on the parameters of the EU’s new 10-year economic plan, Dublin shows little appetite for measures that would bind the Government to targets set by EU leaders in the union’s new strategy.
After calls from the incoming commission for an injection of “spine and rigour” into the monitoring of policy, the Government has declared in a submission on the plan to the EU executive that it wants to avoid an “overly-burdensome” approach.
>>>
I beg your indulgence in order to bring a few additional matters to your attention.
Ireland has nationalized a bank called Anglo-Irish Bank. It requires that degree of intervention because property developers, speculators and other “undisclosed” clients cannot pay back large loans. Sadly, virtually all other Irish financial institutions are similarly afflicted.
However, Anglo-Irish Bank is singularly culpable of practices that were dishonest and probably fraudulent.
NAMA, the National Asset Management Agency, is being engineered to acquire EU loans/bonds to put liquidity into the Irish economy and clean up these discredited balance sheet issues.
This is a reasonable undertaking provided it performs that task, specifically that task and no others that are deceitful or covert.
Anglo-Irish Bank and NAMA are now clearly two parts of Ireland Inc. This means that they are owned by, but more importantly “covered” by the Irish state. Ultimately, I suggest, this sequence of liability rests with officials in Frankfort.
However, the Revenue Commissioners in Ireland, another pivotal division of Ireland Inc., appear to refuse to act diligently and transparently in the interests of the Irish state.
It is necessary to substantiate that assertion.
Irish officials in Revenue register and thereby extend certain legal privileges to charities. In recent weeks it has been discovered that some of Ireland’s registered charities own (shelter) certain financial service entities. These entities have been shown to be engaged in volatile manipulation and speculation related to bank debt. Icelandic bank Glitnir has claims to meet in this respect as does Anglo-Irish Bank.
These financial entities and their trading tactics are well down the scale that validates transparency.
Obviously, this reminds me of the submission made to the European Council by Irish officials, wherein they rejected your “overly burdensome” accountancy standards.
Moreover, several of the Directors of these financial entities, owned by registered charities and therefore eligible for certain legal privileges, are Irish. It is extremely difficult to determine whether -ultimately- these charities will represent the interests of the speculators, etc, who claim to be unable to pay back bad loans to financial institutions in Ireland. Recovery aid from the EU is therefore at risk of becoming misdirected.
To any fair minded person this represents far from satisfactory governance.
Furthermore, the NAMA project requires the participation of a private stakeholder: a Special Purpose Vehicle.
As a consequence of the peculiar legal maneuvers disclosed above, it is possible that the owners of this SPV equity in the recovery mechanism could be the charities and their “unrecorded” stakeholders.
In other words, the SPV may very well serve the interests of the non-performing borrowers who ignited the crisis.
Mr. President, many complex questions and critical decisions are pending. These are being made excruciatingly difficult as a result of the lax approach to regulation and transparency that persists in the administration of Ireland's financial affairs.
I suggest that EU intervention of the scale required to stabilise the Irish economy cannot proceed efficiently without imposing independent audits, before during and at the winding up of the NAMA project.
Without, as you advocate, the enforcement of “spine and rigour” the peculiarities that are endemic in Irish governance conventions will obstruct the outcome that the EU desires and needs.
Of the many media reports I have on file related to these issues, one is very informative. The report lists some of the 64 Irish law firms that have been retained to assist NAMA.
Matheson Ormsby Prentice and A.L. Goodbody feature on that list as they are very prestigious firms, located in the IFSC.
These two firms, as disclosed by the Irish Times and the Sunday Tribune, are instrumental in the manipulation of Irish law with respect to registered charities. Their sheltering of very volatile speculation in bank debt must be repudiated.
In conclusion, I warmly congratulate you on your recent election as the first President of the European Council. Please be assured that many citizens in Ireland commend your efforts to bring stability to the millions of families who now rely upon your judgment and leadership.
Sincerely,
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#4 2010-03-18 06:25:15
- David
- Member
Re: Matheson Ormsby Prentice
ThePost.ie
Nama finds banks took solicitors’ letters as security
14 March 2010
By Ian Kehoe and Richard Curran
Banks routinely accepted undertakings given by the solicitors of property developers as the sole security on loans worth hundreds of millions of euro, the National Asset Management Agency (Nama) has discovered.
The problem was so widespread on the loans of the ten biggest developers that it has emerged as a significant issue in determining the legal titles held by the banks on properties underpinning large-scale loans.
Nama has told the banks that they must procure the proper security over the assets involved and it has reserved the right to pay the banks nothing for loans where a serious anomaly arises over the security or title on the properties.
Nama will reduce what it pays the banks on loans where there is ambiguity.
The issue arose in a High Court case earlier this year, when it emerged that AIB had loaned €550 million to companies controlled by developer Liam Carroll with only a solicitor’s letter of undertaking as security. Nama has now discovered that this was a widespread practice.
Sources said that banks were now going to the solicitors of their developer clients and asking them for documentation that the banks should have held when the loans were first issued.
With the first tranche of property loans due to be transferred to Nama shortly, the board of Nama has been forced to notify the Minister for Finance, Brian Lenihan, that issues have emerged during the due diligence over the level of security held by the banks. It is expected that the diluted nature of the security will be one of the key reasons why the discount that Nama pays the banks for their loans will be significantly higher than the estimated 30 per cent.
‘‘I am advised by Nama that issues have arisen during the due diligence process regarding the quality of legal title and related matters. Clearly this justifies the thorough and detailed due diligence process undertaken by Nama," Lenihan said in a statement.
A number of institutions, including Anglo Irish Bank and Irish Nationwide, have drafted in extra lawyers in an effort to resolve the problems over securities. In many cases, they are discovering that the institution only has a second, third or fourth call on an asset.
A number of banks have already threatened legal actions against the law firms which worked on the titles. A number of alleged negligence cases are expected to come before the courts in the coming weeks and months, as the Nama process unfolds, according to reliable sources.
© Thomas Crosbie Media 2010.
Notwithstanding that "issues" have arisen "regarding the quality of legal title and related matters"??? CRIMINALITY is the issue. Thankfully, a number of institutions have drafted in EXTRA lawyers to resolve the ambiguities arising from.... life in the Republic of Blackhall.
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#5 2010-08-10 11:02:02
- David
- Member
Re: Matheson Ormsby Prentice
Tangled tale of how mysterious machinations of Quinn and Anglo helped seal each other's fates
Fri, Jul 30, 2010 Simon Carswell
c The Irish Times
A gradual series of facilities extended to Quinn left the family owing Anglo €2.8bn, writes SIMON CARSWELL Finance Correspondent
FORMER Anglo Irish Bank chief David Drumm used to remark privately to colleagues that it was the only time he saw Anglo chairman Seán FitzPatrick left speechless.
In September 2007 – when Anglo was still enjoying the spoils of the property boom – the bank’s board felt it needed to check rumours that businessman Seán Quinn had secretly amassed a large, indirect stake in the bank.
The board agreed that Drumm and FitzPatrick should meet the Fermanagh man to address this.
At a meeting in the Ardboyne Hotel in Navan, Quinn informed them he held a large stake in Anglo through contracts for difference (CFDs), amounting to about three times the level the two bankers had thought.
FitzPatrick was gobsmacked, and together with Drumm he notified the rest of the board.
The bank – in close consultation with the Financial Regulator – set about trying to press Quinn to unwind his position, which it believed would destabilise the bank due to its exposure to a single, large investor at a time of growing financial volatility.
The true picture of Anglo’s difficulties in resolving this substantial exposure is emerging this week from internal BANK RECORDS seen by The Irish Times
It is a pity the web version of this report does not include the insert that reprints the true copies of these bank records.
Top left dated 22 July 2008 is an email from Matt Moran to David Drumm. In it he refers to a summary of all our legal advice on the transaction which we are have got from MOPs.
Matheson Ormsby Prentice it appears was the source of legal advice which is at the center of a very tangled and expensive mess. A tangle that the fraud squad is trying to untangle. One wonders how often detectives might wish to speak to MOPs staff.
Recently MOPs received from the Department of Finance an agreement to appoint an assessor to determine the worth of the Anglo Irish investment they manage for a entity called called Lambay, which is "owned" by a charity. (see above) Those shares were floated on the Luxembourg exchange, apparently that was a poor decision. Officials in Finance were under a discrete threat, it seems, to appoint this assessor to value Anglo Irish bank shares.
So, what sort of expertise does this firm supply to NAMA? Overvalued? Sure, that fits the NAMA model!
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