Tuesday, May 26, 2009


I was concerned that the dioxin pork scandal was being brushed under the carpet so I was encouraged to hear the Oireachtas Committee's report had issued today. This scandal is a perfect example of a scandal which cannot be buried because the public/consumers need reassurance.

A quick read is not reassuring.

Firstly, the Chairman's preface is as limp as a sausage. Here is an opportunity for the Oireachtas to assert itself and lash who have failed in their statutory responsibility. Above all, the Committee should demonstrate its determination to protect consumers.

Instead, the Chairman blandly repeats that
Consumers were
reassured that there was no immediate risk to health.
and the Committee's concern was the serious difficulties facing the agri-food industry following the contamination incident
Of course, this is the "Joint Committee on Agriculture, Fisheries and Food", not a consumer protection group.

We've come to accept the reality that Oireachtas Committee's cannot investigate individuals so I was not expecting any determination on the feed plant that produced the poison (the report simply notes that there is a Garda investigation).

That leaves a number of major questions which the Committee could answer:

I. How did the licencing / supervisory system not prevent this disaster?
2. Why did all the pigs in Ireland have to be slaughtered when maybe 10% had been fed this poison?

On 1, the main failure is [QUOTE]the food recycling plant at the centre of
the contamination incident had not been inspected at all in 2008 by the Department of Agriculture inspectors and, while holding a permit from Carlow County Council, was not inspected by the Council at all since being issued with its permit in 2006[/QUOTE]

Not inspected at all, at all :eek:

But at least our labs. caught the problem, right? Well, that's what the Committee wants us to believe. Its chronology begins, not with the production of the poisoned feed but with the lab tests.

On Tuesday 19 November 2008, an officer of the Department of Agriculture, Fisheries and Food (the Department) took routine samples, under the national residue monitoring programme, of pork fat from pigs slaughtered at a plant in County Longford, and submitted them for analysis at the Department’s pesticides control laboratory in County Kildare. On Friday 28 November, the analysis results indicated the presence of marker polychlorinated byphenols, more commonly referred to as PCBs. In accordance with standing procedures under the service contract between the Food Safety Authority of Ireland (FSAI) and the Department, the FSAI was advised of these findings at the time.

Hmm... but if the problem was detected in sample from mid-November, why did they go back to 1 September with the destruction of pork?

The 1 September date was chosen on the basis of the information provided by the Dutch authorities.

The only other mention of the Dutch is a statement that on
Friday 5 December, the Dutch authorities, following sight of the Department’s press release, contacted the Department and the FSAI about an independent investigation into the presence of PCBs in pork fat samples originating in Ireland from mid-September.

This is interesting. Did the Dutch only only tell us about the PCBs U]after[/U] we had recalled all pork? Did they leave pork with PCB on their market until we recalled our pork?

So many questions but the Committee ask any Dutch witness. They talked to someone from the European Food Safety Authority but she was not in the loop before we made the recall.

evidence available to the Committee indicated that PCB dioxins had been identified in pork by up to three Member States during September and October, although the country of origin of the contaminated product could not be identified. EFSA was not notified of the test results and no there was no EU-wide recall of product. The Irish decision to institute an immediate and total recall appeared somewhat contradictory, particularly when beef was not subjected to such a recall.
Very confusing and the Committee didn't seem to anxious to dig further.

Here's an appalling vista: not only did the licencing / supervisory authorities fail but

The Committee does make a sensible finding:
Given that the feed chain was identified in the Belgian dioxin scandal as the
source of contamination, the Committee is perplexed by the assessment of feed
production as a low risk enterprise. The feed chain is critical to consumer safety and the
survival of the food industry in Ireland. The Belgian scandal, the BSE crisis and the foot
and mouth outbreak all resulted from inappropriate material being included in animal
feed. For this reason, the Committee considers feed production must be ascribed a higher
level of risk, and a protocol must be established whereby the feed itself is tested

Is it coincidental that this report is published the day after the feed supplier, Millstream, was in court defending an action by a Northern Ireland farmer whose herd was destroyed when they were found to have unacceptable levels of dioxin? Of course, farmers in the Republic needn't bother suing anyone because the taxpayers will, as always, come to their rescue. The Committee did not feel the need to mention insurance. Even if Millstream has insurance, it would be limited to damage directly caused by its feed and would hardly cover the destruction of the national herd.

Saturday, May 23, 2009

NAMA - more scary stories

Watching the unfolding NAMA sage reminds me of that drunk-driving ad a few years back where a small boy is playing football in his back garden when the car comes over the hedge in slow-motion. I can't bear to watch but I can't turn away.

Drunk at the wheel might be a good analogy for our bankers behaviour in recent years. The Indo has what looks like a well-sourced story about NAMA. It leads with the claim that
developers deceived their banks by using the same assets to secure multiple loans from different lenders
. Michael Lynn on a vast scale. Whether the banks were deceived or not, I have a sinking feeling that the NAMA process has exposed a very dark secret: the security on those vast loans is even worse than we imagined.

Despite Michael Somers protestations of ignorance at the Oireachtas committee, NAMA seems to be gearing up rapidly: the banks are working overtime this weekend because they
have been asked to submit a detailed questionnaire on the make-up of development loan books by Monday

B. Lenihan said NAMA would begin operations on a non-statutory basis but how far will NAMA go before it is given a proper legal basis?

The Indo's story is wide-ranging and seems to be well-sourced. One quote in particular leaves me breathless with its arrogance:
Analysts expect the six lenders will have to write down the value of the loans by between 15pc and 20pc before the transfer, resulting in the NAMA loan book being as low as €72bn when it is up and running.

It defies belief that, having admitted that the security on many of these loans is illusory, this analyst is predicting that the taxpayer will pay the banks 80 - 85% of the book value of these loans.

To top it all, the banks are hoping to get paid to sort out their own mess:
Sources confirmed yesterday that a plan under consideration for NAMA includes paying lenders an incentive fee of up to 10pc of the value of loans the agency can recover over the next decade or so.

A stockbroker is quoted as saying that it made
“commercial sense” for the banks to receive an incentive fee. “They have the most knowledge of their own customers and should ultimately be able to extract most value from the toxic loans.”

It also makes commercial sense to pay a ransom to the kidnappers!

We are no longer dealing with law or ethics here; we are dealing with the exercise of power. The banks have us over a barrel but we can fight back:

The developers are Zed and Maynard but the banks want to be Mr. Wolf.

Monday, May 18, 2009

The Department of Finance has a fascinating FAQ document about NAMA.

It asks the right questions but the ambiguities in the answers might explain why Michael Somers told the Public Accounts Committee that he didn't know how this would work.

A fundamental claim is that NAMA will "operate on a commercial basis". What commercial operation would buy these assets, even at a discount, and hold them for years without any guarantee that the borrowers will repay the loans? Another fundamental requirement is to act in line with European Commission guidance.

Here is my summary of the answers.

1.1 What loans will be transferred?
The eligible land and development loans of each bank, but "eligible" will mean whatever they decide.

1.2 Will land and development loans outside of Ireland be transferred to NAMA?

1.3 Will there be transparency in relation to loans transferred to NAMA?
Yes meaning No. Only overall numbers will be published.

1.4 What will happen if individuals or companies who have performing loans do not want their
loans to be transferred?
Don't know - wait for the legislation

1.5 Will some borrowers just stop repaying their loans?
If so, NAMA will chase them.

2.1 What write-down will be applied to loans?
"appropriate write-down", meaning "Don't know"

2.2 Will there be a fair discount or will the banks get off lightly?
Don't know yet.

2.3 Who will be footing the bill for the loans – the banks, the developers or the taxpayer?
NAMA will get a discount (but the buck will stop with NAMA)

3.1 NAMA isn’t a toxic bank – why not?
NAMA will not be taking deposits from the public and will not have a banking licence. NAMA will manage a mix of performing and non-performing loans’

3.2 Do the banks have to give up loans that they don’t want to?

Don't know - wait for the legislation

3.3 Will Anglo-Irish Bank be used as a ‘bad bank’?
No but Anglo will remain as a going concern

3.4 Will Anglo be able to participate in this scheme?
Depends on the Anglo business plan

3.5 How will the write off impact on the banks’ capital ratios?
Yes, replacing loans with Government bonds will help.

3.6 Will the Government be prepared to put more capital into banks, and on what conditions?
To be decided on a case-by-case basis but equity may be taken in return.

3.7 Will the loss of profits not further inhibit the capital position of the banks?
Hopefully, the banks will be left stronger and make profits.

3.8 Will the terms and conditions of a loan transferred to NAMA change?
Not initially.

4.1 Is the Government just bailing out the Developers?
No, just a change of counterparty with NAMA replacing the banks. (But no explanation about how to pursue the developers)

4.2 Will the taxpayers have to pay for the banks’ mistakes?
Depends on level of discount and long-term value of the properties

4.3 How much will this cost the tax payers?
Don't know. €80-90Bn. is the book value of loans. If there is a loss, there will be a levy (but how do we stop the banks passing the levy on to their customers?)

5.1 What effect will this have on Government debt?
Financed by either a Government or NAMA bond.(no further information)

5.2 How will this effect the country’s credit rating?
The bond will increase the Debt/GDP ratio. The ratings agency will decide.

5.3 Can the country afford this?
Ireland has more scope than other countries to increase the level of debt
Give it a few years of double-digit deficits.

Sunday, May 17, 2009

It's too Late Late for RTE

I'm allergic to media hype so I avoided the coverage of the Kenny/Tubridy switch as much as humanly possible short of abandoning the mass media.

Now that the fanfare has died down, I have a few questions:

Why is RTE feeding its own fantasies?

Managing Director of Television Noel Curran said today: "Taking on the mantle of presenting the longest-running chat show in the world and a key entertainment brand for RTÉ is no easy task. We have thought long and hard about who the right presenter is to bring The Late Late Show into its 48th year and its next incarnation: We're delighted to announce that broadcaster is Ryan Tubridy

The Late Late is not" the longest-running chat show in the world". There is an interesting list of long-running US TV series. Many have been going since the 1950's. The Tonight Show, the classic late night chat show, has been running since September 27, 1954 and is still going strong with Jay Leno. (How I wish we had a current affairs programme to match "Meet the Press" under Tim Russert!)

I suppose this hype is partly to generate advertising revenue and, as a licence fee payer, I can't fault RTE there. But stick to the facts boys.

My second question is more significant: what did the Late Late achieve under Pat Kenny? There is no doubt that the Late Late under Gay Byrne was the most important TV programme of its era, hosting many seminal debates on issues of social and political importance and providing a stage for many aspiring talents. Late Late debates had dramatic effect on how we thought about divorce and contraception, taxation and public services, gay rights etc.

What was the most important debate in the Kenny era?

Gay Byrne had a genius for mixing light entertainment with serious discussion. This sugar-coating was a necessary device to introduce topics that traditionally Irish society refused to contemplate. I found the Kenny-era Late Late to be an incongrous mix, jumping from musical interludes, to phone-in competitions, to awkward chats with audience members, and then to a serious discussion. Worst of all were the attempts at comedy.

Final question: did Pat jump or was he pushed?

His announcement seem to come out of the blue, even the Late Late staff didn't hear until the last minute. Did RTE management offer him Monday nights as the price of shifting him or did he want something more serious than the Late Late? Did management believe his court battle with his neighbour had damaged his image? If so, they forget Gaybo's reputation for "parsimony".

Since I first wrote this blog, the Kennys have given an interview to the RTE Guide saying Kathy gave Pat an ultimatum. Maybe, but that doesn't say much for his planned Monday night show.

I also came across a very bitchy comment by a former researcher. It looks like Pat's Late Late will be remembered for low-lights, not highlights.

The mystery is why Pat Kenny, who is an excellent radio presenter and one of the best radio current affairs interviewers, fails so miserably with the Late Late. This article says that, unlike Gaybo who was obsessive, Kenny did not have editorial control of the Late Late. That would explain a lot. I don't imagine Ryan Tubridy will be given any control.

Fiona McCann has a revealing piece in today's IT. The "memorable moments" she recalls were almost all embarrassments for PK. The one exception was Brendan Gleeson's anger at our "health service" and McCann rightly says PK "allowed him space to talk". That was Gaybo's secret: it certainly worked with Pee Flynn and Terry Keane.

The Seinfeld episode was probably PK's low-point because it was so unprofessional. He was lucky that Jerry was in good humour. Look what he did when Larry King was ill-prepared for an interview:

Monday, May 4, 2009

This map from Eurostat shows yields for Government Bonds in respect of EU member States. In this case, being green is not a good thing for us. Look at the company we're keeping! The difference will cost us billions at a time when the State's borrowings are set to mushroom. The countries in beige are benefitting from bonds yielding under 3% - let's see what the NTMA has to offer in the coming months.

Developers' Loans

The scale of the problem facing NAMA is neatly illustrated by this graph, based on figures by Joe Brennan of the Indo.
with indicate that developers' loans account for 58Bn. AIB is clearer the biggest lender but, relative to its scale of operation, Anglo is in a league of its own. Why we are pouring money into Anglo is beyond me. By what measure is Anglo systemic?

Exchequer Returns

The latest Exchequer returns are grim but the tax returns correspond with the Government's projections in the supplementary Budget. No prizes there less than a month after the projections were made. The real test will come next month when the Government is expecting to bring total revenue to €13,494M. i.e. additional €3,400M which is almost twice the revenue raised in March.

The published "Cumulative Profile for Voted Expenditure, Tax Revenue and Debt Service Expenditure" details the Government current expectations (very different from those which provided the basis for the Budget last October). This document assumed tax revenue of €10,124M for the year to end-April, which is very close to the actual outturn of €10,098M.

This document projected culmulative expenditure of €15,633M for the same period. This seems to correspond to the amount of Voted Expenditure in the April returns.

Saturday, May 2, 2009

Criminal "Justice"

I was horrified to read of another travesty of justice by a sentencing judge this week. I started a thread on Politics.ie but I did not expect to hear from the victim's family who gave shocking details of this terrible crime. The information they provide paints a grim picture of their father's brutal murder at the hands of a callous and vicious young man.

The most outrageous aspect of the case, in my view, is the apparent failure of the judge to acknowledge the profoundly unnatural act of parricide. There is more than a hint of J.M. Synge in this story. Is there a Pegeen Mike who would slip a noose around this thug and say
"A strange man is a marvel, with his mighty talk; but what's a squabble in your back-yard, and the blow of a loy, have taught me that there's a great gap between a gallous story and a dirty deed."

A dirty deed is what Thomas Cunningham did when he kicked his father unconscious and left him to die in the garden of their home in Roscommon. He was just 18 at the time of the killing. He was born in England but returned to Ireland two years earlier to life with his father and grandparents in Roscommon.

The jury failed to convict this thug of murder even though he clearly intended to cause serious injury to his father. (Despite the clear evidence that the accused lay in wait for his father, defence counsel is quoted as telling the jury that his client "didn't mean to kill his father")

Judge Paul Butler gave him six years suspended with a €100 bond so this young killer is on his way back to England, free as a bird.

His father's siblings are naturally disgusted. They probably expected something like justice for their brother and now they wonder whether alcoholic fathers are fair game?
His first cousin is Cllr. John Kelly who was Mayor of Roscommon at the time of the "murder". Political connections cannot bring justice for the victims, but they are invaluable to the guilty.

The jury heard that the deceased had been drinking on the day leading up to his death and came home drunk. The defendant was annoyed with his father who had been sent out earlier to buy food.He grabbed his father and punched him outside the house. The deceased fell to the ground where the accused said he punched him twice more and kicked him.The deceased was helped up but fell down again and was left in the garden overnight with a duvet and pillow. He was found dead the following morning.

Of course, this farce would not be complete if the second act (arrest and charge) had not brought its own drama: the evidence of the State Pathologist wasn't ready so the accused was released by the District Court, re-arrested that day and then re-released by the court. No surprise, he skips off to England.

At first, I was inclined to give him credit for coming back to face charges but then I realised there may be a more sordid explanation. I wonder if it is connected with the death of his grandfather just after he fled to England (of course, the grandfather had to go into care when his son was killed and the grandfather died there 4 months later). The grandfather tried to help his son when he was lying unconscious but the thug of a grandson wouldn't help. Now that grandad was dead, there was no surviving witness so this thug could claim that his only gave his dad a couple of kicks and that his head had smashed off the floor when they were trying to lift him up.

Today's Independent gives coverage to the family's reactions.