WATER CHIEF WHO PROFITS FROM METERS
Head of Irish Water’s parent company owns shares worth €1m in company that makes millions out of water meter contracts
THE CEO of Irish Water’s parent company owns shares worth €1m in a firm that makes millions annually from water meter installation and waste-water contracts.
Ervia boss Michael McNicholas owns 440,707 shares in NTR plc – which makes €2m a year from Irish Water contracts.
Mr McNicholas left his job as CEO of NTR for his current job at the helm of Bord Gáis – now Ervia – in May 2013. But he is still an adviser to NTR, Ervia has confirmed.
Six months later, he sold 352,970 of his
‘He is effectively his own client. That’s just not on’
793,677 NTR shares at €0.92 per share, or €324,732. His remaining shares were worth just over €1m this week as NTR’s share price hit €2.35.
Mr McNicholas, who is paid €250,000 a year, was placed centre stage this week as new water rates were announced in a bid to quell rising protests – appearing on Six One, Prime Time and Morning Ireland in the space of 15 hours.
Asked on RTÉ radio during this PR blitz, why Irish Water CEO John Tierney was not doing the interview, Mr McNicholas said: ‘As a new unity board has been put in place that means there is a single organisation, a single board with responsibility for Gas Networks Ireland and Irish Water, I’m the group chief executive and I’m responsible for both those companies. That’s why I’m here.’
He also took responsibility for the mistakes made by Irish Water – including the requirement for customers’ PPS, which was scrapped this week.
‘We recognise that we have not met the public’s expectation and we have not gained its trust and confidence,’ he said.
But the revelation that he owns shares in a company that makes millions from Irish Water will raise perceptions of a possible conflict of interest at the very heart of Irish Water.
It comes as pressure mounts on the Government, with protests continuing this weekend, in the lead-up to a mass demonstration on December 10.
This is despite a package of measures announced this week which will reduce charges to €60 for a single person household, after State grants, and €160 for all other households – severely reducing Irish Water’s potential revenue. An MoS analysis of projected lost revenue suggests that the utility will be down €141m from a year of full metering – rather than the €21m that Irish Water claims.
A Red C poll last night showed that Fine Gael had taken the brunt of public anger, down four points to 22% with Sinn Féin gaining two points to 22%.
The company also faces the threat of strike, with Siptu sources saying they will ballot for action if Irish Water does not pay contracted bonuses for 2013 and 2014.
NTR – formerly known as National Toll Roads, the controversial West-Link bridge operator – is connected to Irish Water through its 50% ownership of Celtic Anglian Water Ltd (CAW). CAW has contracts from Irish Water for meter installation and waste water worth €4m a year, meaning they are worth €2m to NTR. Concerns about a potential conflict of interest will be heightened by the
fact that Mr McNicholas still sits on NTR’s investment advisory committee. According to NTR’s last annual report, the committee ‘advises the main board on investments, joint ventures, acquisitions and divestments’.
Asked three times this week, Irish Water refused to say whether Mr McNicholas held shares in NTR. NTR also declined to answer, saying: ‘NTR’s policy is to not comment on any shareholding that may be held by individuals.’ The MoS then went directly to Mr McNicholas’s home on Friday evening and twice on Saturday, without getting an answer.
Later on Saturday morning, an Ervia spokesman contacted the MoS to confirm Mr McNicholas’s shareholding. The spokesman said the shares and Mr McNicholas’s ongoing work with NTR had been declared to the board every year since he joined Bord Gáis, adding: ‘The latest disclosure was in Sep- tember – just two months ago.’ Mr McNicholas’s appointment to Bord Gáis was announced in February 2013 and he took office in May. His ownership of 793,677 shares was disclosed in NTR’s 2013, 2012 and 2011 annual reports, after he became CEO in spring 2010.
But as Mr McNicholas was no longer on the NTR board, his shareholding was not included in the 2014 report, making it impossible to verify whether he still held them. Last
night, campaigners for better corporate regulation said best international practice would not allow conflicts of interest to arise or be perceived. Richard Tol, a former ESRI economist who is now professor of economics at the University of Sussex, said: ‘This is absolutely not on. The fact that he is still working in another capacity for his old company essentially means he is his own client and that can’t be.
‘Typically what you would see would be… a cooling-off period of two years before you can move from a client company to a contracting company. In African countries and Asian countries, this is commonplace but not in Europe. Not in the States.’
In recent years NTR and its jointly owned water utility company, CAW, have been anticipating a windfall from Irish Water. Speaking to the MoS in 2011, CAW’s managing director, Mark Driver, was upbeat, saying: ‘It’s water’s time really. It surely is the new gold, the new oil, if you like.’ And in 2012, a year prior to moving to Bord Gáis, Mr McNicholas him-
‘CAW is well positioned to provide those services’
self said: ‘The metering of Irish water opens up opportunities for CAW. Celtic Anglian is well positioned to provide those services.’
In its statement to the MoS, Irish Water said Mr McNicholas had fully complied with the code of conduct for Ervia board members.
‘He has removed himself from any Ervia or Irish Water discussions about commercial decisions regarding CAW contracts. Likewise, in his role on the NTR Investment Advisory Committee… he has not been involved and will not be involved in any discussions about water,’ it said. In its statement, NTR said its Investment Advisory Committee ‘has never discussed any matters relating to its shareholding in CAW or NTR’s plans with regards to water-related investments’.
NTR said Mr McNicholas had been offered ‘a modest remuneration for his advisory work’ and Irish Water clarified that he had not accepted this payment.