Watching Where The Millions Go?

[Bud Wiser]

In yesterdays Irish Independent there was an article by a Finance Editor in which he quoted the outgoing Ombudsman as having concerns about large associations that have no experience in the financial industry being taken for a ride by investing in perpetual bonds that were near enough to worthless. Enfield Credit Union (yes, it would take the Royals to fight back) brought a case against Goodbody Stockbrokers based on the fact that they did not understand the intricacies of perpetual bonds - nor do I.  The bottom line was that Goodbody  Stockbrokers had to pay out €35M in compensation to Credit Unions.

But the question is, have any other associations, thinking they were doing the right thing, took a gamble and invested members or associations money thinking that here we go, we are in the big time, lets run with the advice of Davy or Goodbody.  Incentives to invest in shares are often pure hype and nothing more.  Robbie Kelleher, well know former Dublin senior footballer is often on RTE News/Morning Ireland as spokesman for Davy Stockbrokers.  I want to make it perfectly clear that I am making no disrespectful suggestions regarding Mr Kelleher whatsoever but I ask the question:

What if Central Council gave a million to a club to match fund new playing pitches and clubhouse that would take place over a two year period and thinking, like the credit unions did, that they could make a quick buck it was wrongly invested and lost, what would happen?  Have we a rule/contract that says  'this money is precisely for the development as follows'?

Say for example €1.6M is given to an association for the benefit of players and the executive happen to hear * Mr Kelleher on the wireless and based on what they are hearing they invest half the 1.6M and come up with the same results as the Credit Unions?  If Central Council have not got a prohibitive clause to prevent reinvestment of funds that are specified for a particular project or welfare program then does anyone think they need one.

Does anyone know any clubs or associations that have made such investments?  If you do they should be referred to the Enfield Credit Union outcome because if the settlement was 35 Million Euro it is the strongest example of Case Law I have ever seen or heard about in this country in my life and if any association, GAA or Non-Gaa were unfortunate enough to be taken in when times were good then they might, just might be able to recover some of their losses that may have put them close to being out of business.

* With reference to Robbie Kelleher, Robbie is well known for his achievements with Dublin footballers as are Keavney, Hanahoe, Paddy Cullen, Brian Mullins, Kevin Moran etc.   It is an unwritten rule in GAA circles that we support our own when possible and in turn we often seek support from each other.  We drink in the GAA pub in the village, we meet in the gaa pub when we go to matches so before anyone comes along questioning my reference to Mr. Kelleher the point I am making is that it would be easy for any GAA man or committee with control of the purse strings to think it a reasonable idea to make an approach to someone like Mr Kelleher in a similar investment company anywhere in the country and I simply make the reference because it is standard practice for any insurance company/investment company to use a high profile person for high profile sales.

Put more simply. If there is a rule that all GAA funds are lodged in deposit accounts, and that neither the clubs or the banks, or whoever the allocation is made to, have authority to invest those funds in similar bonds like what happened to the credit unions then there is nothing whatsoever to worry about and this post is totally irrelevant.

[T Fearon]

Had a lot of dealings with Davys, even got an invite to their big official opening of the Belfast office (held in the plush Merchant Hotel no less) back in 2007. At that do were some big hitters (including some of Ireland's richest people who were invited to speak, and they had nothing but praise for Davys, one now a multi millionaire more or less said he still wouldn't have an ass in his trousers only for Davys). Even chatted to one of the Davy family and he seemed like a dead on guy.

In fairness I always found Davys to be honourable and they were the ILCU's recommened option in terms of financial advisors. They weren't chancers in any way and had a considerable and proven track record and any advice they gave was always impartial and independent, there was certainly no aggressive touting for business

Incdentally one of the younger lads told me about a the night after work they went out for a few scoops with Robbie and for some reason the famous Mikey Sheehy free against Paddy Cullen in the AI Final  was being shown repeatedly on tv in the bar. They couldn't stop tittering as Robbie did his best to ignore it all.

[Bud Wiser]

In fairness I always found Davys to be honourable and they were the ILCU's recommened option in terms of financial advisors.

Of course they are honourable, all stockbrokers are, because the risks they take are taken with other peoples money. They wine and dine people to make big announcements to hype up shares.  Look at Michael O'Leary and the hype he does? People on wireless and papers being asked every other day, "What person in business do you admire most" and the answer inevitably comes, "Michael O'Leary".   Michael O'Leary my arse, if you owned 180,000 euro of shares in his company this time last year they are worth about 30,000 euro today.  Then, having left you with no arse in your trousers he wants to take seats out of the planes and make you stand so that everyone can see you have no arse in your trousers.

The GAA is a multi million euro association and the real question I raise is that, lets say within a golden circle, an incentive was given for say a million to be invested in bonds and it was undertaken only to realise a year later that it was all going to end in tears is there:

(a) An instruction from HQ that such investments can not be undertaken by county boards and clubs, and
(b) Will the GAA have control over private companies whom they provide grant funding to for purpose of player welfare to prevent the possibility of an entire grant allocation going down the tubes like what happened Enfield Credit Union?

[orangeman]

In fairness I always found Davys to be honourable and they were the ILCU's recommened option in terms of financial advisors.

Of course they are honourable, all stockbrokers are, because the risks they take are taken with other peoples money. They wine and dine people to make big announcements to hype up shares.  Look at Michael O'Leary and the hype he does? People on wireless and papers being asked every other day, "What person in business do you admire most" and the answer inevitably comes, "Michael O'Leary".   Michael O'Leary my arse, if you owned 180,000 euro of shares in his company this time last year they are worth about 30,000 euro today.  Then, having left you with no arse in your trousers he wants to take seats out of the planes and make you stand so that everyone can see you have no arse in your trousers.

The GAA is a multi million euro association and the real question I raise is that, lets say within a golden circle, an incentive was given for say a million to be invested in bonds and it was undertaken only to realise a year later that it was all going to end in tears is there:

(a) An instruction from HQ that such investments can not be undertaken by county boards and clubs, and
(b) Will the GAA have control over private companies whom they provide grant funding to for purpose of player welfare to prevent the possibility of an entire grant allocation going down the tubes like what happened Enfield Credit Union?

Chances are that Dessie and co will sit down with Robbie and co to explore potential investment opportunities for the new found fortunes.

Buddies ??

[T Fearon]

Bud, anyone with half a brain, even in the good times would surely only invest in a product where your original capital as a minimum was guaranteed. If not then the investor(s) derserve all they get.

In any case back in the good old days, smart people availed of the relatively high fixed interest rates when investing, therefore there was really no excuse, apart from greed, for anyone going wrong at all.

[Main Street]

What if Central Council gave a million to a club to match fund new playing pitches and clubhouse that would take place over a two year period and thinking, like the credit unions did, that they could make a quick buck it was wrongly invested and lost, what would happen?  Have we a rule/contract that says  'this money is precisely for the development as follows'?

For a sports capital grant already approved, the club has to swear a legally binding oath to either use the money for purpose or repay it.

[T Fearon]

Any experience I ever had with match funding operated with the sponsor needing to see that the body being sponsored had their portion, to be match funded, up front and in the bag.

[Bud Wiser]

Ok, points taken by old half a brain here but standard interest rates do not apply on a gamble and back in the good old days I saw an investment company lose a few grand of their customers money by gambling it on the stockmarket to make a quick few bucks for themselves.  They didn't, and then what did they do? They gambled more of their customers money and more of the rest of their customers money until the threesome were sitting around a table one day looking at each other and realizsed they were finished.

So the point I am making is that there should be a control on all financial committees in the GAA to prevent speculative investments no matter how good intentioned they may be or how great the enticement may be. I am not saying there is boys going around knocking on club house doors and asking do you want to come out and play find the lady but if Stockbrokers can get to regional Credit Unions it is equally reasonable to expect them to seek out other organizeations like GAA clubs who could have large amounts on deposit for building projects.  Mind you, an investment company are well within their rights to do so, it is up to the investor to make up his/her own mind. 

[T Fearon]

Bud I agree. Of course all organisations should have finance committees who should report and gain approval from full committees/boards before investing in anything.

My experience with Davys went as far as presenting them with a portfolio of current investments once a year and getting them to run their eye over it for validity and to advise if it was optimum use of excess funds.

I can only speak from my experience but their advice was always sound and I never ever felt any hard sell coming from them, so I guess the pressure must have been coming from unscrupulous credit unions. As I said before Davys were the preferred stockbrokers recommended by the Irish League of Credit Unions itself.

[muppet]

Kyran McLaughlin is the Deputy Chairman of Davys stockbrokers.

Since 1997 he has been a Director on the Board of Ryanair.

He was also appointed the Chairman of the Elan Board of Directors in 2005 having been a director since 1998.

http://business.timesonline.co.uk/tol/business/article519851.ece

Last Tuesday, more than 20 weeks into the insider trading case being fought between DCC and Fyffes at the Four Courts, it emerged that McLaughlin, deputy chairman of Davy, will not be called by DCC to give evidence.

Fyffes is suing DCC and its chief executive Jim Flavin, claiming that they had insider information when DCC's 10.5% stake in the banana group was sold for €108m in 2000.

Given his key role in the affair the news was totally unexpected. The broker has been accused of acting on both sides of the deal. It was McLaughlin who called Flavin on January 27, 2000, "out of the blue" to say that there was demand in the market for DCC's 10.5% shareholding in Fyffes.

Following embarrassing revelations about personal tax issues, McLaughlin was forced to step down as a director of Davy in 1999. McLaughlin might have looked out of the game but then Ryanair, a company he had helped bring to the stock market, appointed him to its board. The airline "couldn't care less" about his Liechtenstein trust, the company said.

McLaughlin has also had first-hand experience of controversy at Elan, where earlier this year he was appointed chairman. When the drug company was embroiled in accounting controversies in 2002, no flak was fired in non-executive director McLaughlin's direction. The Davy boss was unofficial capital market representative on the Elan board, but he bore no responsibility for Elan's off-balance sheet financing activities.

[Bud Wiser]

Like I say, Davy or Goodbody or any stockbroker are not responsible for what people invest, it should be up to the investor.  As for those who run Credit Unions I have to look no further than 300 yards from my front door to see how over 3.5 Million went AWOL in two years. See here:
http://www.irishtimes.com/newspaper/finance/2004/0625/1086274509329.html

I can't type here how this happened but Hennesey Brandy in large doses had a lot to do with it. So my conclusion is that money should be put in a deposit account as soon as we get our hands on it and leave the investing to the high flyers.

[T Fearon]

Having managed a credit union for five years all I can say is that the investment process in ours was ultra conservative and in line always with the written policy underpinned by a simple principle...that the original capital invested must always be guaranteed as a minimum return. I am aware of no credit union in he north who lost money through reckless investments.

Therefore those credit unions who lost money didn't do so on account of Davys or any other stockbrokers but on account of reckless Boards of Directors who should have been held to account by their members at AGMs (CU members elect Boards and have every opportunity to ask questions at AGMs etc). By the way every Credit Union has on its Board, one or two members who fancy themselves as the next Michael O'Leary or Richard Branston, but they are usually reigned in.

Of course in GAA organisations, money should only be placed on deposit or in fixed rate interest bearing accounts at the best possible rates, and no risks whatsoever taken.

[Bud Wiser]

Of course in GAA organisations, money should only be placed on deposit or in fixed rate interest bearing accounts at the best possible rates, and no risks whatsoever taken.

Aha, now we have reached some kind of agreement, money should only be placed on deposit or in a fixed rate interest bearing account at the best possible rates.

But is there a rule there from Central Council that says that funds, accumaulated from ordinary decent people either through club membership or Lotto draws or grants, should be kept in a deposit interest bearing account and not speculated in any type of investment bond or on the stock market.

My thinking, and purpose for the thread is that there is not.  So lets say there is 1.6 Million Euro in a biscuit tin under Padraic Duffy's  feet and it is to be divided among the players at the end of the year and he gives it to the GPA and he says, right lads, ye give it to them instead.  Now, say they think that by investing it for a year they will make more, and don't forget bigger bankers and better thinkers thought the same a year ago, and say then they end up with just enough to buy Paul Galvin a pair of jeans, what happens then?

Boards of Directors who should have been held to account by their members at AGMs (c* members elect Boards and have every opportunity to ask questions at AGMs etc). By the way every Credit Union has on its Board, one or two members who fancy themselves as the next Michael O'Leary or Richard Branston, but they are usually reigned in.

Held to account ?  The only holding on the fella in my Credit Union was holding him up at the bar.  He would give George Best, Gazza, Richard Harris and about ten like them a run for their money any time of the day from 10am onwards. There were people coming from Lucan, Mulhuddart, and for miles away to be handed money and not one red cent of it has ever been recovered and yer man is not "too bad" on the drink now and has a new job.  If it were me or you we would be in jail.

(Memo to Bud Wiser)
Q3. for the GPA Meeting.  "This year you celebrated your 10th Anniversary, in the last ten years have you ever invested funds in investment bonds or in stocks and shares through a Dublin Stockbroker and is it part of your companies Memorandum and Articles of Association that you can do so?"

[Hardy]

I think you have a good point, Bud and it's one people should consider for a motion for their AGMs.

Not that I'm concerned about what the GPA do with the money we give them. As far as I'm concerned we've already squandered it at that stage. I'm thinking more in general terms to give clubs a framework for money management and protection as well against any temptation to be creative with funds.

[orangeman]

Bud,


so what if the GPA make investments in stocks / shares / pyramid selling / lotto / the horses ( Bertie made good money from the horses !!!  ) ? They're a separate commercial organisation and should be entitled to do whatever they feel is best with the money ?


Surely ??

Once the money is handed over to the GPA, it's no longer the GAA's.