Minister for Finance Simon Harris “unequivocally” controls PTSB and has put the bank’s board “in a straitjacket”, a minority shareholder who is fighting to stop the bank’s acquisition by Austrian lender Bawag has told the High Court.
The Minister, who currently holds a 57.5 per cent stake in PTSB on behalf of the State, has benefited from “special, incredible rights” since the State paid €4 billion in 2011 to acquire a 99.2 per cent stake in the bank, “disapplying any rule of law imaginable” in the process, Piotr Skoczylas told Judge Michael Quinn.
PTSB’s “board cannot move a muscle unless the Minister approves it”, Skoczylas told the court, although “he has graciously allowed day-to-day control” to be operated by the bank’s executives.
Skoczylas is one of four PTSB shareholders – who the court heard own a combined 0.00287 per cent share of the bank – objecting to a “scheme of arrangement” to sell PTSB (Ireland’s third largest domestic bank) to Bawag for €1.6 billion – or €2.97 a share.
RM Block
Skoczylas briefly questioned the constitutionality of the Minister’s status as PTSB’s majority shareholder.
“Everybody is acting on the basis that he is selling his shares lawfully,” he told the court, but “the legality of the ownership of his shares is subject to ongoing litigation”.
That issue, he said, was currently being considered by the Court of Appeal and he indicated a possible intention to refer it to the Supreme Court.
“I’m aware of the existence of other litigation,” said Judge Quinn, “but I have plenty to focus on in this case alone.“
Skoczylas described the arguments made by Kelley Smith SC, for PTSB, as “incongruous and grotesque” and said she had “failed to deliver ... [a] certain amount of respect” towards him required, given he is a former director of the bank.
He said Smith’s comment that he and other litigating shareholders own a combined 0.002 per cent of PTSB was “an attempt to belittle us” and “completely irrelevant legally”.
He said he was once “one of the largest shareholders” of the bank, before “the Minister removed me as a director”.
He argued the Minister for Finance enjoys additional rights not held by ordinary shareholders because the State has entered into contractual agreements with the bank. This resulted in unequal access to information during the consultation process upon the announcement of Bawag’s offer, he argued, and therefore the scheme should not be sanctioned.
He further argued a deed of partial release related to the Minister’s shares must be taken into account when sanctioning the scheme of arrangement, as, under that, the shares were released on the same day (as the deal was approved by an egm of shareholders) and further demonstrate the Minister’s special status as PTSB’s majority shareholder.
“These special shareholder rights” must “play a critical role in the court’s decision”, Skoczylas said.
Later in proceedings, Skoczylas claimed “the minister is currently placing his shares with Bawag now”, prompting Lyndon MacCann SC, counsel for the Minister, to object, saying there “is not a scintilla of evidence” of this taking place.
Skoczylas subsequently noted that MacCann’s fees in this hearing “are paid by me as a shareholder”.
“I have no idea whether or not this [sale of shares] was invoked”, he said. However, addressing Judge Quinn, he added: “I don’t have to prove to you, or anyone else, that it was.
“The threshold is so low that I simply have to prove that the right [to do so] exists,” he said. “Irrespective of whether or not it was invoked, what matters is the right.”
The case continues.
