Srinivasan Devrajan

JUNE 2016 The day before Brexit, Permanent TSB shares soared amid speculation that the 75%-state-owned bank may eventually merge with another lender. Shares surged by 10 per cent though they had fallen by more than half since the government sold shares last year. Michael Noonan said: “The share price has been under pressure for a myriad of reasons”. He listed some of them but failed to include the important legacy issue of under-paid depositors. After the vote for Brexit, Davy Stockbrokers reported: “Brexit has clearly heightened the uncertainty around the timing and price of the sale of PTSB’s residual UK assets, delaying the bank’s normalisation”. The shares had sunk by around another quarter. If the bank ever merges, its partner may have to address legacy issues that just might create significant liabilities. RECENT OVERCHARGING Meanwhile in June the bank consented to Joseph Wallace, a mortgage holder from Mahon, Co Cork, being discharged from his bankruptcy after it overcharged him interest. Wallace claimed he would not have had to go bankrupt, after being unable to meet repayments on his home, if he had not been overcharged. He told the High Court he only learned of the overcharging after becoming bankrupt. The outstanding mortgage at the time of Wallace’s bankruptcy was around €326,000 with €75,000 arrears, his barrister told the court. However, the actual amount, without the overcharge, was around €284,000 with €52,000 arrears. Wallace was charged interest at a rate of 4.5 per cent when he was entitled to 1.5 per cent. David Hall of the Irish Mortgage Holders Association welcomed the judge’s decision and said his organisation was in discussions on behalf of a number of other people in similar situations who had cases pending. In 2014 the TSB shareholders challenged the constitutionality of laws permitting the bank’s €4bn recapitalisation by the State. The matter was referred to the European Court of Justice. Another headache. THE ENORMOUS PRECEDENT From 1958 to 20 February 1993 TSB Bank, a forerunner of Permanent TSB, did not disclose the basis of calculating interest in its application form for new accounts, in the notice of interest rates in its branches and in the daily newspapers – with a view to ‘defrauding’ most depositors. The bank was convicted and fined £1000 for breaching the Consumer Information Act 1978, as a result of a private prosecution by me, after the aptly named William Fagan refused to prosecute. Mere days after the convictions and fines, the bank started paying everyone the full advertised rate. DISCOVERY OF ‘FRAUD’ In April 1990, I had opened an Investment account with TSB Dublin, lured by its offer of significantly higher interest than other banks. Ten months later, I lodged a bank draft and enquired as to when the draft would attract interest. I was shocked to find that interest was paid from the 21st of any month on the lowest monthly balance. I closed the account in January 1991. Two months later, I wrote to the bank requesting a copy of the rules Swindle at TSB 2016, and 1958 to 1993 Victims of Windle-stopped-Swindle never reimbursed £339m leaving PTSB open to possible claims by Srinivasan Devrajan Depositors or their successors who held a deposit or investment account with TSB Dublin or in Cork and Limerick Savings Bank between 1958 and 20 February 1993 are invited to contact the author July 2016 1 5 of the bank and whether interest was calculated on a daily basis. The bank sent me a cheque for about £62 on an ex-gratia basis, without prejudice. Smelling a rat, I sued the bank in the High Court. On 2 September 1992 TSB settled with me, out-of-court, for £30,000 and a commitment that I did not inform other depositors that they had been ‘defrauded’. As part of answers to interrogatories raised by me, the bank conceded that the accounts were “not strictly investment accounts” though that is precisely what they were called. Six months later I launched a private, criminal action against TSB. ORDINARY AND CUSTOMARY PRACTICE OF BANKING The ordinary and customary practice of banks and building societies in the State is to pay daily interest on deposits. MODUS OPERANDI OF THE ‘FRAUD’ ON MOST DEPOSITORS FROM 1958 TO 1993 TSB Dublin and Cork and Limerick Savings Bank ‘defrauded’ most depositors from 1958 to 1993 by not paying the clearly and categorically advertised interest on savings and investment accounts. The banks tricked depositors by not disclosing, in the application forms for accounts and in newspaper advertisements of interest rates, the following material information: 1. Interest was calculated on the lowest monthly balance (Rule 18 certified under the Act of 1863) 2. Monies could be held for up to 60 days (from the 21st of any month to the 20th of the second following month) without earning any interest, regardless of the sum of money lodged or withdrawn. 3. Money earned only 11/12ths of the clearly advertised rate, except for deposits lodged or withdrawn on the 21st day of any month. CENTRAL BANK OF IRELAND AWARE OF THE ‘FRAUD’ Dr Michael Casey, Senior Adviser to the Central Bank, advised by letter dated 6 March 1990 to TSB Dublin and Cork and Limerick Savings Bank that they should publish the gross and compound annual rate of deposits so that depositors could make an informed choice between the rates offered by different banks. The Central Bank knew that TSB was advertising Compound Annual Rate 1/12th higher than in fact paid, in breach of the Trustee Savings Banks Act 1989 section 27 (1), as is evident from the letter of Dr Casey which stated: “While we understand that the TSB’s traditional method of crediting interest to deposits might lead to some difficulties with expressing annual interest rates, we feel that these should not be insurmountable”. This is a subtle acknowledgement of the fact that the advertised annual interest rates were what most people would call fraudulent. The question arises on whose behalf Casey felt surmounting was needed. It was certainly not

A controversial proposal to de-zone lands for a data centre in county Wicklow has been defeated by local councillors. The successful motion to retain the zoning was proposed by Councillor Pat Vance. According to the council chief executive and the Department of the Environment the zoning of the lands at Newtownmountkennedy, was “piecemeal and random.” However, a proposal to de-zone the lands was roundly rejected by councillors at a meeting on Monday 4th July in the latest twist in a story which has even seen unsubstantiated allegations of malfeasance directed at members and officials of the council and other state agencies over recent years. As reported in Village, the manner in which the attempts by businessman, Brian McDonagh, to develop a data centre on the Newtownmountkennedy lands have been obstructed are nothing short of extraordinary. McDonagh and his brothers first obtained permission to build a data centre on the 81-acre site on the edge of the N11 at Kilpedder, Newtown in July 2010, but fell victim to unwelcome manoeuvres by members and officials of Wicklow County Council, An Bord Pleanála and the National Roads Authority when they sought to proceed with the development. When they first applied for permission to develop a business park on the site in 2008 it was zoned for business, science and technology but within months their lands were de-zoned to agricultural use while lands immediately on the other side of the N11 were zoned for industrial use under a new Local Area Plan. When they threatened the council with legal action over the de-zoning the McDonaghs were invited to a meeting in the Ramada Hotel in Wicklow by then chairman of the council planning committee, Pat Vance, where it was suggested that a proposal for a data centre on their lands would be considered favourably. In July 2010, the council granted permission to their new company, Ecologic Data Centre (EDC) to build a data centre but this was met with an appeal against planning by the National Roads Authority (NRA). After some bitter exchanges, the NRA withdrew its objection but not before serious financial costs had been incurred by the McDonaghs. In the Spring of 2011, An Bord Pleanála upheld an objection to the proposal from a local landowner but this was subsequently overturned when the McDonaghs proved in the High Court that the board had not acted fairly or properly in the appeal process. In a landmark decision, the Supreme Court upheld the decision following an unsuccessful appeal by ABP the following year. Since then Brian McDonagh has been forced from control of the company due to the accumulating financial difficulties caused by the incessant delays to the project. He is advising new owners on an energy recovery and data centre project. Meanwhile, other data centres have been sprouting up around the country in places that do not compare in terms of road, traffic, power and fibre optic access with the Newtown site. His experience including the bizarre manner in which his site was first zoned, then de-zoned and re-zoned again is the subject of one of the series of complaints concerning the administration of local government in county Wicklow that were sent to former environment minister, Alan Kelly and are still under consideration by his successor, Simon Coveney. Others include the manner in which various lands were acquired under compulsory purchase orders and others zoned at Charlesland, county Wicklow to the benefit of developers Sean Mulryan and Sean Dunne and their joint venture Zapi Ltd. The role played by Councillor Vance, who met privately with the two developers in advance of crucial planning decisions for the major residential scheme near Greystones in 2002 and 2003 are the subject of other complaints by local auctioneer, Gabriel Dooley. Last month, Vance was cleared of any wrongdoing after a lengthy investigation by the council ethics registrar into a complaint by Dooley that the councillor had failed to mention a house he acquired at Saran Wood in Bray in January 2003. The ethics registrar determined that Vance and his wife Mary had merely guaranteed a mortgage taken out with AIB. She accepted that the purchaser of the property was their son, Peter Vance, who is an employee of the bank. In her report the registrar, Helen Purcell, said she was unable to obtain the original mortgage for the property at 15 Saran Wood during her year-long investigation but accepted the veracity of other conveyancing documents describing Peter Vance as the purchaser. He sold the property in his sole name to a third party in September 2015. By Frank Connolly

The foundations of the historic St Mary’s church on Dublin’s City Quay are in danger of being undermined by the construction of a giant office block on its neighbouring site, according to local residents. The site is being developed by Targeted Investment Opportunities (TIO), a consortium of Bennett Construction, Oaktree Capital and NAMA (a public agency). On 5 July parishioners claim that they were “shocked”, during devotions, by vibrations in the church. During a visit by local people and Village that same day significant vibrations from pile-driving on the site could be clearly felt in the central aisle. Lawyers for the developers deny this. The work was stopped later that day to allow for consultations between solicitors for the church and the developers. The development also threatens to block light that now comes through the diamond-glazed windows on the side of the church closest to it. Light on one side of the church will be entirely blocked. While permission for site clearance has been given, work has started – led by two large piledrivers – on foundations for the offices. It is unclear if this has been authorised.The developer denies that its work has or will damage church property and claims that the works carried out so far have not triggered the need for a commencement notice under buildings regulations. In May An Taisce complained that work had started in breach of conditions under planning regulations, requiring submission of a construction management plan and landscaping plan before the work started. According to St Mary’s Parish Association Chairman, John Nolan, the work has already seen interference with the door to a long established right of way improperly blocked by the contractors, though the developer’s lawyers claim it is in fact a cul de sac. He claims that cracks on the internal walls and ceiling of the church have only appeared since the work started in recent weeks. Nolan, who runs the Dublin Stevedores company and is a native of the area said that the Parish Committee was not aware of the scale of the development intended on the neighbouring site and that the works have already had a serious impact both on the church property and on the children of the primary school on Gloucester Street. “We do not object to an office development on the site. In fact, we welcome it as it has lain derelict for a long time. However, we are concerned about possible damage to the church property, the blocking of a doorway and a right of way on the side of the church and the manner in which the construction work has affected churchgoers, residents and children in the school”, Nolan said. The St Mary’s primary school which adjoins the Church had to be evacuated during examinations in late June due to the construction work, while a child was hospitalised after it was alleged that he fell into a hole dug by the builders on the site. An Taisce originally objected to the planning application to Dublin City Council, based on the scale of the nine-storey office and its impact on the church, a protected structure located in a conservation area. “St Mary’s is a protected structure and in considering a planning application the council is supposed to look at its special character and the impact on its setting of any such development”, Ian Lumley of An Taisce told Village. Following an appeal by An Taisce of the council’s May 2015 decision to grant planning, a Bord Pleanála inspector recommended that the scheme should be cut back by three storeys on its western side adjoining the church so protecting light access to the building. However, the recommendation was rejected by the Bord and permission for the full development was upheld later last year. An Bord Pleanála contended that it could not adjudicate on the blocking of light into the church as that is not a planning matter. Following the visit to the site on 5th July, the developers agreed to suspend pile-driving for six days. In a letter written in response to a detailed complaint from church solicitors, Mason Hayes and Curran, on the same day, A&L Goodbody, solicitors for TIO, claimed that its client had complied with all planning conditions and building regulations but conceded: “However, as a gesture of goodwill and at a significant cost and inconvenience our client agrees to postpone these works until Monday 11th July 2016 to allow your client to take technical advice…..subject to you, your client, its architects and engineer agreeing to meet with our client, its architect, its engineer and us on or prior to Friday 8th July, 2016”. It is not clear if it is now applying for a commencement notice. Aesthetics and history are now in the hands of the law. By Frank Connolly

The spectre of strict border controls surfaced during the UK referendum on membership of the European Union (EU). Certainly, it was part of the ‘Project Fear’ tactic of the Remain campaign. It has also struck a chord with many in communities on the border. However, this ignores the historical fact that controls were at their tightest after 1973 when both states on the island were members of the EU. For a generation most traffic had to pass through about 20 fortified military checkpoints on the border. Those passing through usually had to produce identification. Long waits were common. Prolonged and unpleasant searches were also common, particularly of young males whose names indicated they were Catholic. Small roads across the border were open from 1922, long before either state was in the EU. For a generation after 1973, during EU membership, at least 192 were closed. Farms were divided, with farmers having to do round journeys of up to 30 miles to gain access to fields a hundred yards away. Every single road on the Border between Leitrim and Fermanagh was closed. Border towns were strangled economically. Kiltyclogher in Leitrim is half a mile from the border. Historically, it was the market town for a large part of West Fermanagh. However, the three roads leading into Fermanagh were closed, leaving the nearest legal crossing a dozen miles away. Six of its eight pubs have closed down the years. The population has fallen by approximately 50% since the 1960s: it can no longer support a GAA team, or the secondary school it once had. Clones in Co Monaghan was for a long time the market town for much of South Fermanagh. Much of that trade continued after partition. For a generation after EU accession in 1973, five of eight roads into the town were either blocked or had permanent military checkpoints. As a result, in 20 years the population fell by over 33%. There are at least a dozen closed businesses on its principal thoroughfare, Fermanagh Street. Counterintuitively, the pro-Brexit Democratic Unionist Party (DUP) has been strong in saying that free movement of people across the border has to continue. Currency is another area where differences between North and South have developed since EU accession. Before 1979 there was currency union: it was possible to use the same notes and coins from Bushmills to Baltimore. That changed after 1979. In border areas sterling and euro notes, and frequently coins also, are both accepted. That is not the case further away. Moreover, there are great problems with bank payments, with heavy charges levied on cheques. Another strengthening of division is that since both states joined the EU, there has been a reduction in free movement for students, with fewer Northern students coming South. TCD historically educated significant number of Northerners, most notably from Protestant backgrounds. Their numbers are greatly diminished. There were only 160 Northerners there in the academic year 2014-5. UCD also used to attract many Northerners. Its numbers have held slightly better, with 229 in 2014-5. Dundalk Institute of Technology (IT) is approximately four miles from Co Armagh, thus within walking distance for a fit student. On most recent figures, it only had 17 Northern students. Letterkenny IT is only 17 miles from Co Tyrone. It only had eight Northern students, according to the most recent figures. Clearly, on some counts, division has thrived, even without Brexit. An element of moral panic surrounds the whole vote. Certainly, there was a significant right-wing racist element. However, what was most notable was the exposure of the political elites as out of touch with those they purport to represent. In the North, the majority voted Remain. However, being the North, there was a sectarian element to it. Forty-four point two percent voted to leave the EU. That indicates that a majority of Unionist voters followed the DUP’s lead to do so. Seven of the North’s 18 constituencies, all majority Protestant, voted for Brexit. However, North Down, the second most Protestant of the North’s 18 constituencies, voted Remain. So did the majority Protestant constituencies of North Belfast and East Derry. There were divisions, however. The majority of the Ulster Unionist Party was pro-Remain. The two People Before Profit Assembly members called for a Leave vote, from a left-wing perspective. The annual Conference of the Northern Ireland Public Service Alliance (NIPSA), the largest public-sector union, also voted in support of withdrawal. There was a significant Leave vote among the Catholic community. Many were embarrassed to come out publicly on this, given its perceived connections to right-wing Unionism. While the Sinn Féin leadership was enthusiastic, the party base was much less so. This was another u-turn, the Party having opposed membership and opposed every previous referendum in the South. Significantly, the electoral machine did not swing into action to mobilise Remain support. Gerry Adams has referred to voters who were driven by a traditional desire to generate difficulties for England. In West Belfast, the imperative to vote is part of the culture. This time, it had the lowest turnout in the UK, at 48.9%. The constituency is 80% perceived Catholic, and 25% voted leave. From a constitutional point of view, the vote will not have an immediate effect on the North. However, in the long term it will. It has strengthened calls for Scottish independence. Scotland is a significant part of Unionist-Loyalist identity. Not only did many come from Scotland during the Plantations, but there has been movement before and since. Presbyterianism is the largest Protestant denomination. Scottish flags used to be common around the 12th of July. There has been a growing interest in Ulster-Scots culture. On a day-to-day basis, Glasgow Rangers Football Club was a major part of identity for many young people. Before its implosion, and removal from the Premiership, buses left every sizeable town in the North for games every Saturday. It now seems the momentum towards Scottish independence will be unstoppable. The UK state will be at an end. The effects

The charging of another former NAMA official with the leaking of confidential information has added to the already significant pressure on the agency’s chairman and chief executive and on finance minister, Michael Noonan, to concede an independent inquiry into its activities. Paul Pugh (56), from Clontarf Road in Dublin, is charged with disclosing confidential information contrary to Section 7 of the 2009 National Assets Management Agency Act. Detective Garrett Lynch of the Garda Bureau of Fraud Investigation told the District Court that Pugh provided information about McCabe Builders (UK) Ltd to a named individual at Connaught and Whitehall Capital UK Ltd in June 2012. John McCabe was one of Ireland’s top-rung developers until he crashed with debts of more than €230 million in loans and guarantees being taken over by NAMA. McCabe built the Abington development for the rich and famous in Malahide, in north Dublin. His wife Mary hit the headlines in February 2013 after a receiver was appointed over her €150,000, 8.5 carat ‘Brussels sprout’ sized diamond ring and other jewellery when she failed to discharge some €20m in judgments obtained by the agency. NAMA claimed that Mary McCabe with an address at Rath Stud, Ashbourne, County Meath owes it the proceeds from the sale of a €20m property in Park Lane in 2012. John McCabe previously featured as a member of the Maple 10, one of the ten customers of Anglo Irish Bank who purchased a 10% stake in the bank from Sean Quinn in 2008 in a desperate attempt to save the rapidly collapsing institution. Paul Pugh is now accused of leaking information about McCabes’ distressed assets while he worked with NAMA. On the day of his arrest on Thursday 23rd June, Wexford TD, Mick Wallace told the Dáil that Pugh was “an individual who came onto our radar long before now”. Pugh is currently listed as a director of Connaught and Whitehall Capital Ltd. (not the UK entity named above) with an address at Santry in north Dublin, along with Swiss-based Irish businessman, Michael Maye. His arrest follows the conviction of another former NAMA employee, Enda Farrell, who recently received a two-year suspended sentence after pleading guilty to a number of similar offences of passing confidential information from NAMA to external interests. While these incidents have been embarrassing for NAMA chairman Frank Daly and chief executive Brendan McDonagh they are in the halfpenny place compared to intensifying controversy over the 2014 sale of the agency’s Northern Ireland loan book, Project Eagle. Only an extraordinary U-turn by Fianna Fáil saved the government, and Noonan in particular, from acute discomfort when a motion by Wallace calling for a Commission of Inquiry into the Project Eagle purchase and sale was defeated in the Dáil on 29th June last. Only days earlier, Wallace had been personally assured by Micheál Martin, of his party’s support for the motion, not surprising since it was almost word for word identical to one unsuccessfully put by Fianna Fáil before the house last November. Clearly, the unwritten or at least unpublished agreement between the two largest parties precludes supporting dangerous motions which might force Noonan to explain why he authorised NAMA to proceed with the €1.241 billion sale to US fund Cerberus despite information that the tender process had been compromised by “fee arrangements” involving key players connected to the agency in Northern Ireland. In early 2014, Noonan was informed that another US fund, Pimco, had disclosed to NAMA that it had agreed to make payments totalling €15 million to a number of people who assisted it during the tender process including Frank Cushnahan a former member of the agency’s Northern Ireland Advisory Committee (NIAC). It subsequently emerged that Stg£7m had been lodged in relation to the Cerberus deal by solicitor Ian Coulter then a partner of Belfast firm, Tughans, in an Isle of Man account. At least some of it was intended to go to a senior politician or party in Northern Ireland. Cushnahan was to receive some £5m from the deal. Cushnahan also operated out of the Tughans’ offices in Belfast city centre. As reported in Village over recent months, this sensational revelation, first made by Wallace in the Dáil in June 2015, contributed to the decision of Peter Robinson to announce his resignation as first minister and leader of the DUP last Autumn. Gareth Robinson, son of the former DUP leader has also been implicated in the affair. Sinn Féin leader Gerry Adams made a complaint to the New York state comptroller who called in Cerberus to answer questions about the claims of side-payments linked to the sale. Since then Cushnahan and Ronnie Hanna, the former head of asset recovery at NAMA in Dublin, have been arrested and put on police bail after their arrest in Northern Ireland as part of the investigation by the British National Crime Agency into the purchase of Project Eagle. Investigations by the Securities and Exchange Commission of the US Department of Justice and the Law Society in Belfast are also underway. Hanna resigned from NAMA in late 2014, six months after the sale to Cerberus, and returned to Belfast where he was previously an executive with Ulster Bank. The new Northern Ireland finance minister, Máirtín O’Muilleoir, has also provided fresh information to the Stormont finance committee about the role of one of his predecessors in the affair. Former DUP finance minister, Sammy Wilson, nominated Cushnahan for the NIAC job and, according to the latest information provided by O’Muilleoir, also proposed that former Anglo Irish Bank official, Neil Adair be appointed. At the time, Adair was registered as a shareholder of PBN Holdings, one of Nama’s largest debtors in Northern Ireland. Adair has claimed that he was unaware until late 2015 that he had been nominated for the role on the NAMA advisory committee. During the debate on the Dáil motion in late June, Wallace repeated his claim that Hanna met senior Cerberus executives on the eve of the tender being awarded, in early 2014.