Can we have the truth, PLEASE?

Dear Minister Noonan,

Now that we have officially been told by Moody's that our banks are junk, is there any chance that you might break with the tradition of your predecessors in office and start telling us THE TRUTH?

Frankly, we, the Irish people who are struggling to make ends meet, would like to know once and for all what the REAL situation is. We are sick and tired of relying on foreign entities like Moody's, S&P, ECB & IMF in order to discover what goes on in our own back yard. 

Further to my posting below from last Thursday, I would like to share some more correspondence with Fine Gael. This might serve to refresh your memory and that of your senior colleagues. It is rather surprising that you had chosen to completely deny that I had had any dealings with Fine Gael.

---------- Forwarded message ----------

From: 

Date: 11 June 2010 09:11

Subject: Re: Update

To: 
 
Hi N.,


Thank you for the update.

I look forward to hearing from you if/when there are any further developments....


Regards,
 

On 10 June 2010 16:48, N wrote:

Hi ...,

Deputy X [of Fine Gael, WB] has been in touch with the Financial Regulator, and set out the concerns raised at the meeting on the matters which do not appear to have been addressed. I understand that these concerns are being followed up by the Regulator who has promised Deputy X a reply in due course.

I gather that the Regulator may be contacting you directly in order to garner more information. Perhaps you could let me know if you have received any more information since then.

Regards, N. 

Whistleblower.IRL@gmail.com 

"Accounting procedures flatter UniCredit Ireland’s performance" - Sunday Business Post, 17 April 2011

By Kathleen Barrington 
If I asked how much your house was worth, you probably couldn’t tell me for sure.

You might guess it is worth half what it was worth at the peak of the boom.

Or you might fear it is worth even less, as there is a house on the road quoting half the peak price and it still hasn’t found a buyer.

There is no reliable indicator of what the market price of houses currently is.

The Permanent/ TSB ESRI index is based on too small a sample, while data protection laws prevent estate agents from disclosing transaction prices even if they were minded to do so, although Friday’s distressed sale auction by Allsops has partially helped fill the information gap.

Things aren’t much different in the world of high finance. Many bankers don’t really have a clue what once-valuable assets are now worth, as the assets rarely trade (and when they do, the prices they fetch aren’t necessarily disclosed on a stock exchange).

Bankers may also fear trading those assets as the price they would achieve might be so low as to do damage to their balance sheets and force them to raise new capital.

This is the case with asset backed securities, particularly those securities backed by mortgages of doubtful quality. It is also true of sovereign bonds issued by countries with big deficits as well as corporate bonds issued by institutions that are under stress.

Many European financial institutions still carry these troubled assets on their books.

That is why, three and a half years into the credit crunch, many banks are still struggling with the legacy of the collapse in market confidence which began in August 2007.

Take, for example, the accounts of UniCredit Bank Ireland plc, a subsidiary of Italy’s largest bank, UniCredit.

UniCredit’s Irish operations are pretty substantial with total assets of €23.7 billion at the end of 2010.

Many of those assets include the complex financial instruments that have proven difficult to value ever since the credit crunch hit.

UniCredit Bank Ireland has, by its own admission, endured a difficult period for liquidity, and was among the banks that availed of emergency amendments to accounting rules introduced in October 2008 at the height of the financial crisis.

The Irish subsidiary, which is based at the International Financial Services Centre (IFSC) in Dublin, reclassified about €3 billion of assets in 2008.This meant that those assets did not have to be valued at market prices which were then in turmoil.

UniCredit Ireland continued to avail of this accounting treatment in subsequent reporting periods.

The bank did it again in 2009 and then also in the 2010 accounts, which were filed in the Companies Office in recent weeks.

Writing in the annual report, chairman Ronan Molony said the significant turmoil experienced in 2008 and 2009 continued in 2010, culminating in Ireland accepting the bailout in November.

This had a negative affect on UniCredit Bank Ireland’s funding costs.

However, Molony reckoned the bank had produced a ‘‘satisfactory’’ result for the year, taking into account the ‘‘considerable market headwinds, recording a net profit after tax of €89 million compared with a net profit after tax of €131 million the previous year.”

But the notes to the accounts reveal that the continued use of the emergency accounting treatment flattered the company’s reported profit figure by €63 million in 2010.

The reclassification is permissible under the emergency accounting rules which were introduced at the height of the crisis. In the case of UniCredit Bank Ireland, the reclassified assets are now described as ‘‘loans and receivables’’, whereas previously they were described as ‘‘held for trading’’.

If they were still described as ‘‘held for trading’’ they would have to be written down to their current market value, which would dent the reported profitability of the Irish subsidiary.

Elsewhere, the accounts show that there was a €344 million reduction in the value of certain assets which were available for sale during2 010.However, this reduction has been written off against shareholders’ equity rather than to the profit and loss account, a move which accountants say is entirely legitimate, but which also flatters headline performance.

It is true that UniCredit’s performance at group level continues to appear stellar when compared with the performance of our own Irish banks.

In March, UniCredit reported fourth quarter net income of €321 million, down from €371 million a year earlier after provisions more than doubled to €472 million.

The bank generated full year profit of €1.3 billion, down 22 per cent from a year earlier.

But there are concerns that the bank’s expansion into eastern Europe, and elsewhere, may lead to greater loan losses in future, which would require the bank to raise new capital. This has been reflected in a fall in UniCredit’s share price over the last few years.

The shares closed at €1.71 last week, compared with €5.06 in August 2007 when the credit crunch began.

UniCredit has been under particular pressure ever since the banking foundation Cari Verona, one of its largest shareholders, declined to take part in a rights issue at the height of the credit crunch in 2008.

UniCredit then controversially accepted funding from the Libyan dictator Muammar Gaddafi’s Libyan Investment Authority.

The decision to accept those funds contributed to the loss of shareholder confidence in UniCredit chief executive Alessandro Profumo, who was ousted last year. It has proven even more embarrassing now that Gaddafi’s own people are in open revolt against his rule.

There have been repeated suggestions that UniCredit may be forced to raise new capital either through asset disposals or fundraising.

Among the assets that might be disposed of is Pioneer Investments, its IFSC-based fund management division.

It just goes to show that in this global financial crisis, a road that leads to Rome may well also lead back home.


http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=THE-INSIDER-qqqs=themarket-qqqsectionid=3-qqqc=3.7.0.0-qqqn=1-qqqx=1.asp


www.kathleenbarrington.blogspot.com




E-mail:   Whistleblower.IRL@gmail.com

Noonan sends report on bank crisis to Gardaí and DPP - Irish Times

Minister Noonan, following a recent headline in the Irish Times (quote below) may I presume that you will be asking the DPP (Director of Public Prosecution) to investigate the conduct of UniCredit Ireland as well?

Should you require further information, please see Village magazine's December cover story:

Still waiting for the truth from the regulator 

http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

PS

I was rather disappointed to receive the email below which you had sent last November. The person whom you sent it to has contacted me via my blog. Pity you can't remember the complaint you had made about my conduct on the phone with your secretary when I called to follow up on a meeting I had had with one of your prominent colleagues. 

--------- Forwarded message ----------

From: Michael Noonan <michael.noonan@oireachtas.ie>

Date: Tue, Nov 23, 2010 at 5:12 PM

Subject: Re: Are Fine Gael complicit in covering up a whistleblower's report?

To: ........

Dear M.,
Thank you for taking the time to write to me. Unfortunately I have noknowledge of the case you mention and I can assure you that Fine Gael isnot complicit in a cover up of any banking irregularities and I have notbeen contacted by this whistleblower.

Best wishes.

Michael Noonan TDFine Gael Spokesperson on Finance

The Irish Times - Saturday, April 2, 2011

Noonan sends report on bank crisis to Gardaí and DPP

SIMON CARSWELL, Finance Correspondent

MINISTER FOR Finance Michael Noonan has referred the Nyberg report into the banking crisis to the Garda, the Office of the Director of Corporate Enforcement and the Director of Public Prosecutions.
This is the first time a report on banking practices in all the guaranteed lenders has been submitted to the Garda, the DPP and the ODCE. A Department of Finance spokesman confirmed the report had been referred on the advice of the Attorney General. The Minister received the final report from the Nyberg commission of investigation on March 22nd and referred it to the Attorney General.
The commission, led by the former senior Finnish civil servant Peter Nyberg, spent six months investigating the banking crisis, examining Anglo Irish Bank and Irish Nationwide Building Society in particular. Mr Nyberg was asked to investigate corporate governance and risk management at the six Government-guaranteed institutions from January 1st, 2003, to January 15th, 2009, when the decision to nationalise Anglo was taken.
The inquiry focused closely on lending practices at Anglo and Irish Nationwide to examine why they incurred much heavier losses.
Mr Nyberg did not name any individuals in his report, which was commissioned by former minister for finance Brian Lenihan.
It followed two reports into the causes of the crisis last year by Central Bank governor Patrick Honohan and banking experts Klaus Regling and Max Watson.
The Central Bank plans to examine bank directors’ records in the run-up to the crisis and, if necessary, launch formal investigations to suspend or prohibit individuals from involvement with finance companies. The head of financial regulation
Matthew Elderfield said on Thursday that he would write to bank boards to give directors an opportunity to decide whether they wanted to go through that examination process.
The ODCE and the Garda are already investigating issues relating to Anglo including:
● the €7 billion deposits between the bank and Irish Life and Permanent which made Anglo look healthier than it actually was over its September 2008 year end;
● the secret share deal in which it made loans of €451 million to 10 customers to buy a 10 per cent stake held by Seán Quinn;
● the concealment of loans to former chairman Seán FitzPatrick over an eight-year period;
● an €8 million loan given to a director, Willie McAteer, to prevent his Anglo shares being sold on September 29th, 2008; and
● the content of financial and public statements in 2008.

http://www.irishtimes.com/newspaper/finance/2011/0402/1224293651818.html

Whistleblower.IRL@gmail.com

Mr. Elderfield, I am impressed by your recent statements. Will actions follow words?

I was greatly encouraged when I read these two recent headlines, I wonder is this the dawn of a new era of financial law-enforcement in Ireland? 
Only time and actions will tell.

Irish regulator says Anglo's senior bonds at risk 

By Carmel Crimmins and Huw Jones

LONDON | Wed Apr 6, 2011 7:19am EDT

(Reuters) - Ireland may try to impose losses on senior bondholders in two defunct lenders if they need more capital, the banking regulator said on Wednesday, potentially putting the country on a collision course with the ECB.

The Frankfurt-based European Central Bank, which is helping keep Irish lenders afloat, is opposed to Ireland hitting senior bondholders with any losses in case it sparks contagion within the euro zone, exacerbating the bloc's debt crisis.

Matthew Elderfield, head of financial regulation at Ireland's central bank, said the government accepted the ECB view that it should not impose losses on senior bondholders in the country's four remaining lenders, but Anglo Irish Bank and Irish Nationwide, which are being wound down, were being viewed differently.

....While concerns about the sector's level of capital should abate over the next 12 months, Elderfield said the process of shrinking their assets and improving their funding base would take much longer. "That is a project that will take years."

Elderfield said he will be far more intrusive in the banking sector in future. In particular, there will be regular checks on how much liquidity or cash-like assets banks have to ride out short-term turbulence in markets...

 http://www.reuters.com/article/2011/04/06/us-ireland-banks-elderfield-idUSTRE73529B20110406

EU Banking Waits on a Knife-Edge - Wall Street Journal

By GEOFFREY T. SMITH, 7 APRIL 2011

 Whisper it softly, but… is that?… can it be?… a light at the end of the tunnel of Europe's banking crisis? 

The answer may yet be: "No, it's an oncoming train of disorderly sovereign default," but the news flow has, at the very least, stopped getting worse, and in some quarters is improving beyond any reasonable doubt.

...

Everything about the methodology suggests this was the action of a new broom sweeping clean, unencumbered by the need to protect political and boardroom reputations. (Quite the reverse, in fact:Ireland's regulator, Matthew Elderfield, has announced plans to re-examine the fitness and probity of every single bank director in the country.) 

http://online.wsj.com/article/SB10001424052748704101604576246911146923784.html

My e-mail address is:  whistleblower.irl@gmail.com

Something I would like to share from the Golem XIV's blog:

Sunday, 27 March 2011

An interesting week ahead

This is going to be an interesting week.

The Irish are now openly saying they want to make the Senior bond holders take some of the bank losses. That is most definitely not in the European Financial Class's game plan.  Neither France nor Germany nor the UK will like the sound of it. Because for senior bond holders read their banks, big funds and insurance companies. 

This was always about bailing out other nations' banks and any restructuring of who takes what losses will simply make that clear. We will simply get to see which banks in which countries suddenly have to raise cash or get another bail out.  Not only would it be a very public humiliation but it would also tell the world which banks were weakest. Given that banking is almost entirely based upon lies this would not be a good outcome for them.

Of course the obvious answer is for the big European players to use the ECB to quietly and confidentially buy up those bonds and make all Europe's tax payers pay by a more indirect and less democratic route.  The problem is, while it prevents a convulsion and a nasty leak of raw truth in the short term, it doesn't undo the real damage.

The real damage is that IF Ireland sticks to their threat nearly all possible outcomes for the Big Banks become very bad.   Which, providing they have the balls, puts Ireland in a very strong position.

If Ireland goes through with forcing Senior Bond holders to take their share of the losses, then it will be revealed that it was the big banks who were being protected at the expense of ordinary people all along. A whole new season of banker bashing would open. 

It would also mean people in other countries who are being told day after day that they 'have no choice' but to impose even greater 'austerity' measures or that they 'must' have an IMF/EU 'rescue' package imposed upon them and accept whatever punitive terms the IMF/EU see fit, might decide they too are going to simply call everyone's bluff and say 'no'.

Even the possibility of such a contagion of rebellion would be quite sufficient to induce another credit crunch of banks refusing to lend to each other.  Because who would know which banks would be affected next if Portugal or Hungary or even Spain or Italy were to start talking about their senior bond holders?  That kind of uncertainty is what stopped banks lending to each other the first time.

So Ireland doesn't even have to go through with it. They need only engender a worry that they might.

Equally bad for the Big Banks and the financial class/senior bond holders, is if he ECB bails them out and buys the bonds. Because once that happens for Ireland, after all the adamant proclamations that it would never happen, then who is going to believe that Portugal or even Greece, couldn't force the same concession? Or Spain? 

Then it becomes a political nightmare. Merkel is already wounded. If it looks to her domestic enemies that she is further losing control then the fragile Franco/German unity, such as it is, will collapse.  The UK will not hold it together.

And here are some of the comments:

Golem XIV - Thoughts said...
An audit of the debt is a brilliant thing to push for. It cuts to the bone aginst bank confidentiality and will thus be resisted to the last in those countries like Ireland and the UK whose banks have the most to hide.
All the mosre reason to push for it. And if the major paritres and their leadership will not back it then we simply need a new party and a new leadership.
I don't want the big society. I want the honest society.
28 March 2011 17:44


Pat Flannery said...
Simon Coveney, the new Irish Minister of Agriculture who made the most recent "burn the bondholders" remark, is a co-constituent of Michael Martin the leader of what is left of the ousted Fianna Fail governing party. I have no doubt that Coveney's remarks to the media on the weekend were fully approved in advance by Kenny's Cabinet.
It was good politics to have Coveney become the Fine Gael spokesperson on this because his Cork constitency is ground zero for the old kiss-ass Euro-compliance of Michael Martins Fianna Fail versus the new self assertiveness of Fine Gael.
The simple reality is that if the Europeans do not burn the bondholders the Irish will burn the Europeans. Cork is known as the "Rebel County". It took the lead in the War of Independence against the British in 1921 and will take the lead against the banksters and their corrupt politicans.
28 March 2011 18:34

Whistleblower IRL said...
@Pat Flannery
I wish I could share your enthusiasm for Fine Gael's alleged appetite to go after the "banksters" as you call them, but I'm afraid my experience thus far prevents me from doing so. The reason is simple, here is a quote from an email I received from the office of one of Fine Gael most senior deputies:
"Deputy X has been in touch with the Financial Regulator, and set out the concerns raised at the meeting [a meeting between the Deputy and myself, WbIRL] on the matters which do not appear to have been addressed. I understand that these concerns are being followed up by the Regulator who has promised Deputy X a reply in due course."
I received this e-mail in JUNE 2010. I'm sorry to report that NOTHING was received from the distinguished deputy since then. It took until November last year before the issue was raised in the Dail (Irish parliament) by Joan Burton of the Labour party. UniCredit is still laughing loudly at the charade that is Irish banking. I know, the IFSC is a small place.
Here is another interesting point in question: why can we not get the truth about the hasty sale of Anglo's Austrian operation shortly before the parent bank in Dublin was nationalised? Kathleen Barrington of the Sunday Business Post has repeatedly raised the issue; as recently as last February she approached Anglo-Irish, now headed by Alan Dukes - a dedicated Fine Gael man, for replies. Alas, silence prevails.

Here is Barrington's most recent article about Anglo Vienna:

"How FitzPatrick sent a €600m deposit book waltzing to Vienna"- 

http://kathleenbarrington.blogspot.com/2011/02/how-fitzpatrick-sent-600m-deposit-book.html

@Golem
Re your comment of "I want the honest society." - my impression is that the 'burn the bonholders' game is simply a poker game in which political leaders are trying to see who can hold out the longest in not having to tell their electorate the truth. Frau Merkel certainly does not want to have to explain to every German taxpayer why they will have to continue cough up money for the bail-out of HRE/Depfa. Enda Kenny would much rather have us, the Irish public, believe that the source of all evil are those nasty continental Europeans, rather than have to instigate proceedings against Irish politicians and senior civil servants who have let criminal 'banksters' get away with it. The liquidity regulations over which I resigned in 2007 clearly state a possible penalty of FIVE years in prison for failing to adhere to liquidity requirements. The entire Irish banking system almost collapsed in Sept 2008 as it had run completely dry of liquidity. Who is to blame? No one. Who is paying for it? Everyone.

Ulster Bank employees are running around Ireland (North and Republic) telling all about their fantastic year-end results for 2010; they all seem to happily ignore the fact that had it not been for the UK tax-payer bailing them out, none of them would have jobs. RBS is Ulster Banks' parent bank...

Merkel and Kenny and their respective domestic banks are just an example for what has happened all over Europe. There are some clues to solving the mystery - notice how the the bailout of HRE/Depfa makes perfect sense through the eyes of Deutsche Bank shareholders, or have a look at the mock arrest of Anglo-Irish bank's ex CEO and the subsequent tapes that appeared in the public domain not too long after. 

Regards,
WhistleblowerIRL
UniCredit Ireland's EX Risk-Manager

PS
Links to all relevant official debates and regulation documents can be found on my blog.
28 March 2011 20:01

Golem XIV - Thoughts said...

Hello WhistleblowerIRL,

Good to hear from you. I agree that leaders are seeing if who amongst them can manage not to tell their citizens anything by forcing other countries to be their fall guy. Perhaps I am too naive to hope that some country can start a rebellion that brings the entire game down.

And yes the HRE/Depfa nightmare does make more sense when seen from Deutsche's position. Germany was and is protecting its own TBTF banks and then trying to blame Ireland to cover the truth.
28 March 2011 23:34

http://golemxiv-credo.blogspot.com/2011/03/intersting-week-ahead.html?showComment=1301338877662#c2491083511589693588 

On a somewhat different note, but not unrelated, I strongly recommend reading Golem's piece about the notion of 'Regulation'. The pertinent examples used are the themes of Atomic Energy and Finance.
http://golemxiv-credo.blogspot.com/2011/03/who-do-regulators-work-for.html

Thoughts on the day before the Irish election

Having met with key people at Fine Gael, Labour and the Green Party, I am keen to see if any of them will follow up on their commitment to reveal the truth behind my story once the elections are over. The lack of appetite for the truth by the ousted Fianna Fail (FF) party is plainly obvious.

Fine Gael are the undisputed front-runners of this election. They are keen to restore Ireland's credibility in the international financial markets. The leading Fine Gael politician whom I have met with is undoubtedly a person well versed in dealing with people of great power and influence. 

Whilst the UniCredit subsidiary in Ireland that I resigned from in 2007 was relatively small by comparison to the Irish retail banks, my story invokes cardinal questions in relation to the bank guarantee of September 2008. It also sheds an alarming light on the independence of the Irish media.

This is a quote from a comment I posted this morning on two Irish political forums:

"From a very personal perspective, I would like to know why every journalist from the "Independent" news group has vanished into thin air as soon as they discovered the name of the bank that I resigned from in 2007.

The issue of my resignation from UniCredit Bank Ireland was raised early last year in the Seanad and late last year in the Dáil and in the Austrian parliament. The Irish Times has written about it, the Sunday Business Post has written about it, Village magazine wrote a cover-story about it, even the German Süddeutsche Zeitung has written about it. SILENCE still from the 'Independent' news group and from RTÉ - our national and similarly 'independent' broadcaster. The answer to this mystery is simple and is hardly surprising; it is to be found in the board-rooms of INM and UniCredit Ireland. UniCredit Ireland's chairman at the time of my resignation was "Professor Brian Hillery, one-time FF TD for Dun Laoghaire, current chairman of Independent Newspapers..." - quote from Village magazine.

Here is the link to the article in Village magazine:
http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/

I resigned in order not to incriminate myself. We were breaking liquidity regulation by 1,900% (YES, one thousand and nine hundred percent). The Financial Regulator knew about it and did nothing. The regulation stipulated a possible 5 year prison sentence for violations of the law. However, even though a sweeping bank guarantee was required in Sept 2008 due to the fact that ALL the Irish banks ran completely dry of liquidity, not a single Risk Officer has been charged at any of the banks. We, the Irish taxpayers are footing the bill. What did the Financial Regulator do about it? He re-issued the regulation in 2009, making sure to cite Banking Acts as far back as 1942, but never mentioning the fact that this was law in Ireland in 2007. Problem solved, no-one is guilty. 

For the links to the relevant debates and articles, please visit my blog at:
http://whistleblowerirl.blogspot.com/

PS
If the name UniCredit sounds familiar to you, it might be because 7.5% of it is owned by Libyan state authorities:
http://uk.reuters.com/article/2011/02/21/libya-protest-unicredit-idUKLDE71K2B820110221

I wonder how the clients, shareholders and employees of UniCredit and its subsidiaries - Pioneer, HVB, and Bank Austria are feeling these days about contributing to the wealth of a sovereign that has been mercilessly killing its own citizens."

 I can be contacted at whistleblower.irl@gmail.com. 

Financial Regulator tells the Sunday Business Post about further investigation of UniCredit Ireland

Kathleen Barrington reports in today's Sunday Business Post (Sunday, 09 Jan. '11) that the Irish Financial Regulator responded to her recent queries by stating that:

"Earlier this year [2010], following queries raised by a number of sources, the Financial Regulator commissioned a third party report on liquidity issues which at our direction specifically examined allegations of persistent liquidity breaches.  This was concluded in October 2010 and confirmed an earlier supervisory assessment that a single overnight breach had occurred.   In light of the most recent reports on this matter, we have initiated a further internal review of the file to determine whether any further action is appropriate in light of a risk-based assessment of the August 2007 breach.   If any party has specific information they wish to draw to our attention in this matter it will be treated on a confidential basis. "

Really ?!? If the Financial Regulator has been so eager in recent months to  further investigate this matter in order to discover the truth, why is it that no attempt was made to contact me? Senator Norris, who raised the issue in the Seanad (Senate) last February has been in regular contact with me. Surely, had the Regulator, or the Minister of Finance, wanted to find out more details about the continuous liquidity breaches at UniCredit Ireland, they could have troubled themselves to contact me via Senator Norris? He did provide Minister Lenihan with the relevant details eleven months ago.

Did the Regulator bother asking Deputy J. Burton to get in touch with me following her question to Minister Lenihan in parliament last November? 

For someone seeking the truth, the regulator seems to be suffering from an acute lack of curiosity.

Furthermore, have these recent investigations been able to answer any of the questions that I put forward in my previous posting? The questions are available here:
http://whistleblowerirl.blogspot.com/2010/11/open-letter-to-deputy-joan-burton.html

PS I

I will post a link to the Business Post article as soon as it becomes available on-line. In the meantime, readers living in Ireland, please show your support for the Business Post and the Village magazine who have played an instrumental role in shedding light on the corners that the Regulator would have much-proffered to keep dark, by buying the printed versions.


PS II (12 Jan. '11)
The Sunday Business Post article is now available on-line at:
http://www.thepost.ie/themarket/new-probe-into-liquidity-breaches-53862.html