Pot­holes on the road to ru­ral broad­band,

Sunday Independent (Ireland) - - Sunday Business - RICHARD CUR­RAN

BROAD­BAND should be com­ing to a ru­ral home near you. Just not any time soon. Pe­ter Smyth’s re­port pub­lished last week found that for­mer Com­mu­ni­ca­tions Min­is­ter De­nis Naugh­ten had not sought to in­flu­ence the pro­cure­ment process around the Na­tional Broad­band Plan by hav­ing pri­vate meet­ings with the sole re­main­ing bid­der.

This clears the for­mer min­is­ter of in­ter­fer­ence or wrong­do­ing but cer­tainly does not clear him of naivety and poor judge­ment. Naugh­ten spoke about the saga on RTE Ra­dio One last Thurs­day and showed ab­so­lutely no re­gret about the in­ap­pro­pri­ate­ness of these con­ver­sa­tions with David McCourt of the Grana­han McCourt con­sor­tium.

He held this po­si­tion on the ba­sis that he was en­tirely mo­ti­vated by de­liv­er­ing ru­ral broad­band and he was not privy to sen­si­tive in­for­ma­tion about the process any­way.

“I did not have ac­cess to in­for­ma­tion”, he told News At One. He went on to add that his meet­ings and the furore af­ter­wards raised broader is­sues given that his sole ob­jec­tive was to de­liver ru­ral broad­band.

He sug­gested that it was im­por­tant for min­is­ters to be in a po­si­tion to im­ple­ment de­ci­sions and pol­icy. Well it is, but not by meet­ing pri­vate busi­ness­peo­ple in­volved in a pro­cure­ment ten­der out­side of the for­mal­i­ties of that process.

His ex­pla­na­tion that he didn’t have ac­cess to in­for­ma­tion and there­fore didn’t know any­thing of value, isn’t good enough. It raises the ques­tion of why would McCourt even want to meet him, and vice versa. Per­haps the Irish-Amer­i­can busi­ness­man wanted to have a good chat about Roscom­mon foot­ball.

De­spite ques­tions of mak­ing a po­lit­i­cal mis­take, the process was not com­pro­mised. That is the first hur­dle cleared. Next up is the De­part­ment’s as­sess­ment of the ac­tual bid doc­u­ment it­self. This comes down to two things — de­liv­er­abil­ity and price.

Can this con­sor­tium ac­cess the cap­i­tal and ex­per­tise to de­liver a project of this scale and se­condly what will it cost? Fig­ures of up to €3bn have been bandied about but there are two sig­nif­i­cant costs here. One is the con­struc­tion and roll-out of the net­work and the other is the on­go­ing run­ning and busi­ness costs. If the State pays for a chunk of the net­work to be built but the take-up is poor, who will carry the losses? Pre­sum­ably it will be the pri­vate com­pany. But will there be an on­go­ing op­er­a­tional sub­sidy from the State and will there be any guar­an­tee or un­der­writ­ing of those losses by the State?

We should bear in mind that ev­ery other com­mer­cial en­tity en­gaged in this process has pulled out, from ESB and Voda­fone, to Eir and the State Irish Strate­gic In­vest­ment Fund. It raises the ques­tion of whether this is a com­mer­cial ven­ture at all or if so, on what kind of terms.

We will have to see. Bear in mind that Eir has swal­lowed up the most cost-ef­fec­tive 300,000 houses for fi­bre broad­band and hav­ing passed 200,000 homes so far, the take-up is spec­u­lated to be around 14pc.

Back in the heady days when there were still three prospec­tive bid­ders in this race, the min­is­ter ac­knowl­edged that it would take up to five years for the plan to be rolled out fully. Some of those ru­ral homes tan­ta­lis­ingly close to Eir fi­bre con­nec­tions could have to wait an­other five-and-a-half years for fi­bre broad­band — and that as­sumes there are no more bumps along the road.

Ax­ing of Sin­gle Malt dodge leaves bit­ter af­ter­taste for firms

MULTI­NA­TION­ALS that were a lit­tle too clever by half with their global cor­po­ra­tion tax plan­ning could now find a bit­ter af­ter­taste to the so-called ‘sin­gle malt’ tax avoid­ance mech­a­nism. Re­mem­ber the in­fa­mous ‘dou­ble Irish’? This al­lowed firms to slash their tax bills by us­ing a com­bi­na­tion of Irish and usu­ally Dutch sub­sidiaries to shift prof­its to very low or even no-tax ju­ris­dic­tions.

When the Irish govern­ment closed tax loop­holes which did away with this stunt back in 2015, it also al­lowed a grand­fa­ther­ing mea­sure which en­abled those us­ing it to con­tinue un­til 2021. Some com­pa­nies even had time to put a dou­ble Irish in place quickly and avail of five years of it be­fore the loop­hole shut down.

No sooner had the Irish Govern­ment done this, when an­other loop­hole was con­jured up by tax ex­perts. Ba­si­cally com­pa­nies could still do the same thing, but us­ing Malta and Ire­land. It be­came known as the ‘sin­gle malt’. Chris­tian Aid did a de­tailed anal­y­sis of tax shift­ing mea­sures in 2017 and iden­ti­fied four multi­na­tion­als which had gone for a sin­gle malt. This week Paschal Dono­hoe an­nounced that he had reached an agree­ment with Malta and the sin­gle malt will be no more. The sting in the tail is that there won’t be a fiveyear grand­fa­ther­ing ar­range­ment. The new mea­sures will take ef­fect next Septem­ber.

This means cor­po­ra­tions who thought they were be­ing re­ally smart by shift­ing out of a dou­ble Irish and into a sin­gle malt, will miss out on a good two years of tax ben­e­fits from the mea­sure. If they had stayed with the dou­ble Irish, they could still be avail­ing of it un­til 2021. So, why the five-year grand­fa­ther­ing for the dou­ble Irish then, given the sin­gle malt has been shut down within 12 months?

It could sim­ply show how the in­ter­na­tional mood to­wards these kinds of tax tricks has hard­ened even fur­ther since 2015.

Of course it won’t nec­es­sar­ily mean a flood of cor­po­ra­tion tax com­ing to our shores, but it should mean these com­pa­nies end up pay­ing more to some­body, some­where.

With Ami­gos like these ...

BRI­TISH quoted money-lend­ing op­er­a­tion Amigo Loans is set­ting up in Ire­land. Good news if you need a small loan in a hurry and you are will­ing to pay in­ter­est rates of up to 49pc for it. And you will have to get some­body to go guar­an­tor too.

Amigo might be­lieve it is a cus­tomer’s friend given some pay­day lenders can charge 1,000pc.

It would also point out that it pro­vides loans for peo­ple with poor credit his­to­ries or who have no credit his­tory at all. But bear in mind that last year it took in £210m on a loan book of £666m and made a pre-tax profit of £66m.

Amigo has built a busi­ness model which in­volves tak­ing a risk (al­though is less­ened by se­cur­ing guar­an­tors) but it mak­ing a very size­able re­turn.

Amigo doesn’t take de­posits so it bor­rows some money to lend out and uses cash flow from ex­ist­ing loan re­pay­ments to fund its growth.

In 2016 it had a loan book of £272m and this shot up to £666m within two years. Its founder, James Be­n­amor, to­gether with ex­ec­u­tives and staff made around £327m from the IPO.

The com­pany prospec­tus said there are around five mil­lion credit-im­paired adults in the UK and ap­prox­i­mately 7.5m adults with low credit sta­tus or no credit sta­tus. Take out the two mil­lion who are “heav­ily in­debted” which the com­pany says it does not tar­get and there are close to 10 mil­lion po­ten­tial cus­tomers there.

Bor­row­ers who miss a pay­ment will have a col­lec­tions agent for Amigo en­gag­ing with them within three days. The guar­an­tor is “given the op­por­tu­nity to pay” within 14 days of the bor­rower miss­ing one pay­ment. In the vast ma­jor­ity of cases the guar­an­tor is a rel­a­tive or friend. Be­n­amor ap­peared in the Chan­nel 4 se­ries

The Se­cret Mil­lion­aire, talk­ing to young peo­ple in Man­ches­ter as he drove around in a beat-up Nis­san Mi­cra.

When he re­vealed his real iden­tity at the end of the show he dis­closed that he ac­tu­ally drives a yel­low Lo­tus.

He has claimed to have been an un­ruly teenager who “was tak­ing a lot of drugs, be­came a petty crim­i­nal re­ally”.

Fair play to him for get­ting out of that mess. I am not sure he could have done it on a 49pc in­ter­est rate Amigo loan though.

For­mer Com­mu­ni­ca­tions Min­is­ter De­nis Naugh­ten said he was not privy to sen­si­tive in­for­ma­tion

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