Inside the world of business

Whereabouts of money paid to Puga unclear

Yesterday produced yet another astonishing day in the ongoing saga of Seán Quinn, once Ireland’s richest entrepreneur.

Close observers of the Quinn family’s efforts to asset-strip the valuable property group that the State-owned Irish Bank Resolution Corporation wants to seize, will know that Seán Quinn jnr was sent to jail for aiding the payment of $500,000 to a Larissa Yanez Puga, from group finances.

Ms Puga’s bank account had been the subject of a Ukrainian freezing order but yesterday the Dublin High Court was told that order had been lifted, for reasons that are unclear. The current whereabouts of the money was not mentioned.

The court has been told by the family that it engaged Moscow law firm AB to help keep the assets out of IBRC’s grip, but that the firm is no longer following the family’s instructions. The bank, however, says nothing in new documents found in Moscow “suggests discord between the Quinn family and AB”.

The new documents include an email to Aoife Quinn re payments totalling $1.74 million to international group Senat, the payments being the subject of invoices to two Russian property group companies, for legal services.

Richard Woodhouse, for IBRC, said in an affidavit that there was no evidence to show any legal services were provided to the Russian companies. He referred to a press statement issued recently to this newspaper wherein Senat said it was only engaged by the Quinns in relation to actions in Ireland, India and Cyprus. He said the invoices were bogus documents “designed to enable the Quinn family to extract further money” from the group companies.

Senat has offices in Zurich, Vienna, Dubai, and Vaduz (in Liechtenstein). Trips by the Quinns to two of these locations, paid with group funds, featured in the Woodhouse affidavit.

Radio play paints role of economists in boom

Cantillon has found its eyesight fading. Poring over reports takes its toll. As we parse company returns for Ebitda, we are delighted at a rare opportunity to give our eyes a rest and use our ears instead: The Invisible Hand Report is an award-winning radio drama that has caught our attention.

What’s it about then? We asked author John Fleming (a subeditor of this parish). “About 45 minutes,” he replied, when we caught up with him recently exiting an ink cartridge refill shop in a rare moment of leisure.

His play revolves around a consultant economist, who writes sectoral reports for a living. Straddling the Irish economy though both boom and bust, it looks at the corrosive role that reports can play in the wider economy.

“Imagine if Adam Smith’s invisible hand of competition was put to work writing reports for quangos. And that such reports bore false witness to the conditions of supply and demand. And therefore created some of the current hardship,” said Fleming.

The play digs around the damage caused by reports which put an artificially positive spin on the economy.

It charts a consultant economist’s career journey from cold production of made-to-measure reports to a type of remorse. Touching on topics such as white-collar crime and how the professional classes became drunk on success, the play stars Emmet Bergin.

The Invisible Hand Report by John Fleming, RTÉ Radio One, 8.02pm, Sunday, October 21st

Different voices at Central Bank

The speech by Central Bank deputy governor Matthew Elderfield yesterday had none of the provocation that was in the comments of his second-in-command on banking regulation, Fiona Muldoon, in her speech on Tuesday.

Their audiences may have had something to do with it. Elderfield was talking to compliance officers and Muldoon to bankers, and she had an important message to give.

They both have a common theme, however. The banks have been stress-tested and recapitalised for losses; now they have the difficult task of calling time on specific loans and borrowers. This was “an exercise in facing up to losses and modifying loans as necessary”, Elderfield said.

For all the noise about the banks not moving fast enough on restructuring mortgages to help those who can pay but need help and more distressed cases, there are obvious decisions that have been imposed on the banks.

Elderfield made reference to split mortgages and whether the banks should charge interest on the parked part of the debt the borrower cannot afford to repay.

There is no consistency on this approach so far. AIB and its subsidiary EBS are not planning to charge customers any interest on the parked part of the loan, while Bank of Ireland intends to charge the full interest in line with a customer’s original loan deal.

Permanent TSB intends to charge a nominal rate of interest on the warehoused debt as a gesture that the customer still recognises the bank’s original loan deal.

Elderfield said there would be opportunity to compare the different arrangements being offered by the banks and he wants feedback from the public and customers. But is this not something that the Central Bank should lay down clear guidelines on?

Muldoon spoke earlier this week about the banks taking a lead, not the Central Bank, in tackling the mortgage crisis. But the issue of interest payments on a split mortgage seems like an example of something that the regulator should be leading on to get the ball rolling that bit faster.

Besides, the Central Bank will ultimately have to sign off on this.

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