Irish Shadow Banking

 Since the Global Banking Disaster in 2007, Irish Shadow Banking hasn’t gone away you know. The shadow banking system consists of non-banking institutions that include inter alia hedge funds, money market funds, pension funds, insurance companies and to some extent the large custodians such as Bank of New York and State Street. The funding of Shadow Banks is typically associated with the non- banks’ securities lending transactions, use (and re-use) of the collateral they post with banks, etc. Irish Shadow Banking recently entered the public domain, in an Irish Times article describing law firm Matheson’s (formerly Matheson Ormsby & Prentice, Solicitors)  usage of Registered Charities to facilitate the tax avoidance and potentially risky Irish shadow banking activities of global hedge funds and lenders. In recent years there has been substantial growth in Dublin of Special Purpose Vehicles (SPVs) set up by global financial institutions to operate in the Irish Shadow Banking sector. Such SPVs are tax-efficient structures used by financial institutions to house risky assets such as distressed debt instruments or so-called catastrophe bonds, which allow insurers spread risks linked to weather events or acts of terrorism. Dublin has become a mecca for SPVs and similar structures and the Irish Central Bank is endeavouring to comprehend the potential risks Irish Shadow Banking poses to the Irish financial system, after several Economists warned Regulators of their need to comprehend & attempt to monitor their activities vis-à-vis those of High Street Banks. Matheson  offers its international financial clients the use of charitable trusts, which can be registered with the Irish Charities Regulator allegedly to “relieve poverty and distress”, while simultaneously acting...

Asset Tracing Investigators and the Panama Papers.

These disclosures might allow Asset Tracing Investigators to paraphrase John Keats’ ‘Beauty is Truth, Truth beauty, that is all ye know, and all ye need to know’. The records were obtained from an anonymous source by a German newspaper. That newspaper then shared them with the International Consortium of Investigative Journalists (ICIJ). Are these implicated Individuals stating ‘we have done no wrong-doing’, probably because this sounds better that saying ‘we haven’t committed any crime’? The occurrence of this Leak may be some type of auspice on the existence of a great Equaliser or Avenging Angel with a mandate for Natural Justice. It dwarfs previous earth-shattering disclosures of Swiss Banking and HSBC Files in 2015. One-step Removed from mainland UK Mossack Fonseca [MF] is a Panama-based law firm, with strong UK connections that runs a worldwide operation in incorporating limited companies in offshore jurisdictions such as the British Virgin Islands, Cyprus, Switzerland, Jersey, Guernsey and the Isle of Man. Its global network employs 600 staff and extends to 42 countries. The Papers consist of 11.5m files from the database of the world’s fourth biggest offshore law firm, MF. Within these disclosed documents are references to 200,000 companies for which MF acted as registered agents. The British Virgin Islands held in excess of 100,000 such companies.The BVI., population numbers approximately 28000 residents. The contents of the 11.5 million documents, date from 1977 to December 2015, containing nearly 40-years of data. Unsurprisingly there is great alarm in the UK., on the scale of the influence these offshore activities are having, on general economic matters. The information contained within the sensitive files revealed...
Flaws in Tracker Redress Schemes

Flaws in Tracker Redress Schemes

A Conflict of Interest is something that potentially haunts members of the Professions in all democracies. On the Web Site of KPMG., (authors of PermTSB’s Tracker Redress Schemes) reference is made to a recent Wall Street Journal article1 and public comments by the Securities and Exchange Commission’s (SEC) Director of the Office of Compliance Inspections and Examinations, 2 the Financial Industry Regulatory Authority (FINRA) and the SEC are “keenly focused on conflicts of interest” for firms in the financial services sector. Further emphasizing the importance of managing conflicts of interest (COIs), SEC Director di Florio stated that “conflicts of interest, when not eliminated or properly mitigated, are a leading indicator of significant regulatory issues for individual firms, and sometimes even systematic risk for the entire financial system.”A recent Sunday Times article disclosed that KPMG were paid €8.6m by Permanent TSB in 2015 for work on the state-controlled bank’s Tracker Mortgage Redress Schemes [TMRS] and other “regulatory and compliance projects”. The payment, equivalent to a substantial 3% of the accountancy firm’s all-Ireland fee income [of about €300m a year], provides the first glimpse of how a Tracker Redress Schemes scandal will cost Irish lenders millions in fees, on top of the interest refunds and compensation they will have to pay to impacted customers. The emerging Tracker Redress Scheme scandal, is rooted in the unfair removal of low-cost tracker mortgages from thousands of home owners, is also interfering with the banks’ ability to securitise, or offload mortgages as they seek to sanitise their balance sheets. Approximately 90 of the 1,372 customers offered compensation as part of PTSB’s Tracker Redress Schemes have...
Consequential Hedging Losses

Consequential Hedging Losses

Consequential Hedging Losses denial in  cases for mis-sold products, have become center stage, particularly with their ‘Ugly Sister’ – the Banks’ Conflicts of Interest. In 2012, the UK Financial Conduct Authority (FCA) identified failings in the way that some banks sold structured collars, swaps, simple collars and cap products, which are collectively referred to as Interest rate Hedging Products [IRHPs]. The nine Banks involved agreed to review their sales of IRHP made to what are described as ‘Unsophisticated Customers”  since 2001. There is no equivalent Irish scheme in place, although there have been instances of Consequential losses denial in Hedging cases, and related Banks’ Conflicts of Interest.   The full review started in May 2013. The UK banks have nearly completed their reviews, having sent a redress determination letter to 18,100 businesses and paid over £2.1 billion in redress, including £464 million to deal with consequential hedging losses. The nine banks that are reviewing their sales of IRHPs  are: Allied Irish Bank (UK), Bank of Ireland, Barclays, Clydesdale & Yorkshire Banks, Co-operative Bank, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander UK Out of these, four have had major commercial financing operations here in Ireland, but there is no equivalent Scheme in place for negatively affected Ireland-based  commercial Borrowers. To give a perception that outcomes are fair and reasonable, the banks’ review of every case is overseen by an Independent Reviewer;  AIB GB uses its own Auditors –  Deloitte, as an allegedly Independent Reviewer. However on 20th June 2013 Allied Irish Banks, plc. (AIB) announces the appointment of the same Deloitte as Independent Group Auditor. This is a...

FIFA Forensic Accounting; Asset Tracing at the FBI

FIFA., stands for Fédération Internationale de Football Association (translated from French to International Federation of Association Football; Zurich, Switzerland). It also stands for Fraud, Investigations, Fibs and Abuses. Apparently, the series of investigations were initially spurred by the core Forensic Accounting activity of Asset Tracing, in pursuing substantially overdue tax returns. This echoes the US Federal Authorities’  prosecution & jailing of Al Capone for tax evasion in 1931. Interestingly the Judge, at the time, refused to let Al Capone plead guilty for a lighter sentence. 79-year-old Sepp Blatter said that the US arrests and charges – which accused a total of 18 executives of 47 counts of money laundering, racketeering and tax evasion linked to kickbacks totalling more than $150m over two generations – were timed to damage his chances of re-election. Blatter isn’t all wrong and the Investigators from Switzerland and the US aren’t all correct. last week Mr. Blatter stated that “There are signs that cannot be ignored. The Americans were the candidates for the World Cup of 2022 and they lost. The English were the candidates for 2018 and they lost, so it was really the English media and the American movement.” His attack on the US authorities and the British media, which also extended to what he called a hate campaign by European football governing body Uefa, echoes Russian president Vladimir Putin’s claim that the arrests were an attempt to undermine Blatter and de-stabilise the 2018 World Cup. The US involvement in spurring the Swiss authorities to make the initial 7-arrests, raised the issue of the world economic & political power in the shape of...