In the second part of his business review, Peter O’Dwyer looks back at the highs and lows of the past six months.
Tim Cook called the EU ruling on Apple’s tax affairs “total political crap”
The second half of 2016 was a challenging one for Irish businesses, none more so than the banks.
It brought the news that AIB and Bank of Ireland fared poorly in stress test of their capital strength. From such sobering beginnings emerged more troubling news as the true scale of the country’s tracker mortgage scandal emerged.
A series of announcements by individual banks, admissions before the Oireachtas finance committee and the Central Bank’s appearance before the same body finally provided a sense of the number of tracker customers that had been overcharged. As of now, that number stands at 15,000 customers across 15 lenders. Next year will tell more as the Central Bank’s probe is finalised and punishments meted out.
Ulster Bank will also have some questions to answer in 2017 after serious misgivings emerged over its handling of distressed business customers this year.
So-called vulture funds dominated the national discourse for much of the year after it emerged that the overseas private equity funds were paying nominal sums in corporation tax despite the huge profits they made on Irish assets. In his October budget, Michael Noonan, the finance minister, moved to close the loophole that funds were using.
More encouraging news came in October when Permanent TSB offloaded its remaining UK loan book to Cerberus, the capital management company, in a milestone deal.
The summer also brought significant deals, with two landmark hotels and three of Ireland’s indigenous tech companies changing hands. First, the National Asset Management Agency sold the Gresham Hotel in Dublin to Riu Hotels, a Spanish company, at a tidy profit. Blackstone Group then did something similar with the former Burlington Hotel in August in an €180 million deal with DekaBank, the German investment fund.
In the same month, Fleetmatics, an Irish GPS vehicle-tracking company, was bought by Verizon for an eye-watering $2.4 billion. A month later Intel snapped up Movidius, the hugely successful maker of computer chips, for a reported €322 million. Brite:Bill, a Dublin-based software company, was acquired by AmDocs, an Israeli firm, in a deal believed to be worth between €60 million and €70 million.
Some traditional businesses changed hands, too, including Whitegate, the country’s only oil refinery, which was bought by Irving Oil, a Canadian company, after fears it could be closed or turned into an import terminal.
Then late August rolled around and brought with it a shuddering halt to the upbeat domestic mood that had provided some respite from a world of Brexit and impending Trumpism.
The European Commission had finished its investigation into Apple’s tax affairs and let it be known in no uncertain terms that it wasn’t impressed. A €13 billion unpaid tax bill was promptly sent Apple’s way while the government had the little matter of some acute reputational damage to deal with.
Backed into a corner as the bold boys of Europe once more, government ministers of all hues came out swinging, led by Mr Noonan who said the commission’s ruling was an attack on Ireland’s corporate tax regime.
An appeal was launched accusing the commission of overstepping the mark, impinging on national sovereignty and attempting to rewrite Ireland’s tax rules. For good measure, withering accusations that the commission failed to act impartially, misunderstood Irish and European law and even contradicted itself were included too.
The commission was having none of it. Ireland gave Apple a sweetheart deal and failed to prove otherwise, it said. For his part, Tim Cook, the chief executive of Apple, took the diplomatic approach of calling the decision “total political crap”.
As the year drew to a close, the Web Summit fared well in its new Iberian home of Lisbon after a difficult breakup with Dublin in 2015.
Those still happy to call the capital home brought some much-needed good news as LinkedIn announced 200 new jobs and Voxpro, a Cork-based business outsourcing firm, opened its new Dublin office, creating 400 jobs.
So the year ended much as it began with good jobs news, but the country had been changed fundamentally by a series of monumental developments — both domestic and international.
Read part one in yesterday’s edition