Today in the pressMonday 06 July 2009 10.50
DISPUTES BEFORE THE COMMERCIAL COURT SOAR TO RECORD LEVEL - A record number of litigants will seek to have cases heard this week in the Commercial Court, which was set up five years ago to fast track multi-million euro business disputes, writes the Irish Independent. Today's applications will see a major claim against businessman Harry Crosbie and Point Village Development Limited, the company behind his €850m Point Village project; and attempts to sue Dublin-based Thema International Fund plc, which invested with disgraced US "Ponzi Prince" Bernard Madoff. Since the beginning of 2009, the number of new disputes seeking entry to the court list has averaged between six and 10 new cases every Monday morning. But today a record 20 new applicants will ask Mr Justice Peter Kelly, who heads the court, to admit their cases. AIG Life (Ireland) is one of three separate applications by parties over the Madoff investments. Last week US District Judge Denny Chin gave Madoff the maximum prison sentence of 150 years for masterminding a massive fraud that robbed investors of $64.8billion. The Commercial Court, which became operational in January 2004, heralded a new approach to commercial litigation in Ireland. It was set up to send a message to the world that Ireland is a good place to do business and resolve costly disputes.
REVENUE INQUIRY IDENTIFIES 200 TRUSTS - The Revenue's special inquiry into trusts has already identified 200 trusts and offshore structures that it intends to examine closely. The structures were identified through the examination of banking and other financial information relating to clearing accounts held here by foreign banks, and received as a result of High Court orders. In an update on its inquiry to the Irish Times, the Revenue said the identified structures are located in Guernsey, Jersey, Switzerland, Liechtenstein, Cyprus, the Isle of Man and the Cayman Islands. Persons with trusts which control undeclared income have until September 1 next to inform the Revenue that they intend to make a disclosure under a scheme which limits penalties, prevents public disclosure and secures immunity from prosecution for those who avail of it. The scheme applies to irish and offshore trusts.
SECURITISATION REINVENTED TO CUT COSTS - Investment banks, including Goldman Sachs and Barclays Capital, are inventing schemes to reduce the capital cost of risky assets on banks' balance sheets, in the latest sign that financial market innovation is far from dead, says the Financial Times. The schemes, which Goldman insiders refer to as "insurance" and BarCap calls "smart securitisation", use different mechanisms to achieve the same goal: cutting capital costs by up to half in some cases, at the same time as regulators are threatening to force banks to increase their capital requirements. BarCap's structures involve the pooling of assets from several clients into a secured financial product that can be sold on to other investors and rated by a credit rating agency, potentially reducing the capital allocated against the assets by between 10% and 50%. These new mechanisms are in some respects similar to the discredited structured products, which were widely blamed for fuelling the financial crisis. But the schemes' backers argue there are two significant differences. First, they involve the securitisation of banks' existing assets, rather than of new lending. Second, bankers argue that the new products do not disguise the transfer of risk.
BANKERS BATTLE TO AVOID 50p TAX ON BONUSES - City accountancy firms are putting proposals to investment banks that would see high-earning bankers avoid the full impact of the new top rate of income tax on their bonuses, writes the London Independent. The accountants Grant Thornton are believed to have contacted clients offering ways of cutting employees' tax contributions by as much as 40%. There are other accountancy firms offering similar services and the fact that the service is being touted in a year that will see some bankers receive huge payments after a busy few months in the City is likely to cause consternation at the Treasury. It comes in the week that Alistair Darling will publish his White Paper on banking reform, much of which is expected to concentrate on the way bankers' bonuses are paid. The Chancellor said in an interview with The Independent last week that many bankers needed to be "brought back down to Earth". He followed that comment over the weekend by saying that "we need to learn lessons from the financial crisis in which banks behaved in a kamikaze manner and the regulatory system failed'.