In May 1993 when Bertie Ahern was Minister for Finance there was a very curious scandal.
The Government sold its 30.4% stake in Greencore to investors for £70m. £100m was raised around the same time from a sale of the Government’s stake in Irish Life.
Greencore management had supported the idea of selling shares to US investors Arther Daniels Midland, but a decision was later taken by Ahern to sell the shares on the open market, and British and Irish institutions. It was said that Ahern could not convince his cabinet colleagues (the Labour ones) of the merits of the ADM investment.
The 25.4 million shares were placed on the stock market by Davy Stockbrokers.
But a couple of weeks later, it emerged that the Directors of Davy had themselves bought shares in Greencore to the tune of £19m. Four companies directly associated with Davy and four of its directors acquired 4.5m shares of Greencore at a cost of £12.4m. A further 2.5m shares worth £6.9m were held on their behalf by British investment firm SG Warburg.
Two million more shares were sold to an account in Bank of Ireland Private Bannking held by three Davy directors – Brian Davy, Kyran McLaughlin and Tony Garry. Another two million were sold to Gandon, a financial services firm in which Mr McLaughlin, Mr Davy and Mr David Shubotham have a combined 18% stake. Smaller amounts were sold to Corder investments a company owned by Mr McLaughlin and to a Davy pension fund.
Mc McLaughlin denied suggestions that the arrangement with Warburg constituted any sort of a share-support operation, or that Warburg had covertly warehoused the Greencore shares on behalf of Davy.
As a result of the scandal, the ISE suspended Greencore shares, which had been placed the previous Friday at 275p. Half of the 16 British instituional investors pulled out after the scandal. The ISE said the market was misled by the share sale announcements made by Greencore and the Department of Finance. Albert Reynolds even threatened that Davy would never again be involved in a Government share sale. The Davy Directors refused to resign as a result of the scandal.
See the Oireachtas debate.
Bank of Ireland (who owned Davy) later agreed to aquire 10m shares in of the Government’s stake, should the shares go unsold.
Earlier that year, in January 1993, a cheque for £5,000 from Davy Stockbrokers was lodged into the B/T account, sworn by four bank officials as standing for the “Bertie/Tim account”.
Did you know… bonus.
At the very same time as this scandal the Broadcasting Authority (Amendment) Bill was making its way through the Dail. The bill removed the advertising cap put on RTE by Minister Ray Burke in 1990.
It was later found that Burke had taken bribes to introduce that legislation.