The Irish Independent reports that Taoiseach Brian Cowen yesterday re-ignited the golden handshake controversy by admitting former FAS chief Rody Molloy was given a €1.1m payoff without threatening legal action.

The startling revelation means Mr Cowen appears to be directly contradicting evidence by Department of Enterprise secretary general Sean Gorman to a Dail committee last week.

His intervention will also ensure the FAS controversy overshadows the closing days of the Lisbon Treaty referendum campaign.

However, the Government claims there was no clash whatsoever between Mr Cowen's version of events and that of Mr Gorman.

Mr Cowen said it was in the interest of FAS and the taxpayer to make the agreement quickly. "I'm not saying that Mr Molloy threatened legal action. There was a discussion going on, and obviously the director general would reserve his position to see if an agreement could be reached," he said.

"There was no legal action threatened," he added.

But Mr Gorman told the Dail Public Accounts Committee last week that "the threat of the courts was hanging over us".

He added: "It was also made clear that, if the individual believed that he was not being treated reasonably, he would reserve his right to take court action.''

The Irish Independent last night asked the Department of Enterprise if Mr Gorman agreed with Mr Cowen's version of events, but there was no response.

Normally, civil servants do not comment publicly.

The Government boosted Mr Molloy's departure package on three fronts:

• He got a four-and-a-half years' top-up to his pension, worth €1m extra.

• This also boosted his tax-free lump sum by €30,000 to €333,000.

The Irish Independent also reports that investment fund managers have voiced concern to the European Commission, the Department of Finance and the Financial Regulator about plans to regulate the industry.

The Irish Funds Industry Association (IFIA), which represents investment funds operating in Ireland, is alarmed by a number of proposals in draft legislation to regulate the hedge fund and private equity industries. The fund management industry here employs 12,500, and concerns are growing about the new regulations.

Recent analysis from think-tank Open Europe found that the proposal to regulate both the hedge funds and private equity firms could cost the sectors between €1.3bn and €1.9bn in compliance costs in the first year, and up to €985m every year subsequently.

Mats Persson, Open Europe research director said: "The proposal comes with a huge cost: it will hurt the EU's competitiveness, lead to more protectionism and mean less investment in European firms, at a time when more is desperately needed."

According to IFIA figures, there are 42 fund administration companies and 19 trustee and custodians operating in Ireland. One of the issues with the legislation is that it would put severe restrictions on fund managers who could be forced to cut back on their business, raise costs or take their business elsewhere. For example, most of the IFSC's customers are based in London and if managers were to move their business to a non-EU location it would have a devastating effect on the IFSC, said one source.

Another observer said it would appear that the Alternative Investment Fund Managers (AIFM) is attempting to change the fund management investment model -- the same model that allowed Dublin to emerge as a financial centre.

Concerns

The sectors directly employ an estimated 40,000 in the EU and 18,000 in the UK.

Joanne Segars, the chief executive of the UK's National Association of Pension Funds, has also written to Charlie McCreevy, the European Commissioner responsible for the draft, outlining its concerns.

"We are convinced that the directive, as currently drafted, will reduce the investment options available to investors. This will both reduce investment returns and increase risk," said Ms Segars in a letter to Mr McCreevy.

The Irish Times reports that major Irish retailers are positive about the future for the sector despite the drop-off in consumer spending, according to research published today.

A survey of major players in the clothing, fashion and general merchandise sector by PricewaterhouseCoopers (PwC) found that 57 per cent of respondents rated their outlook for the sector as either neutral or positive.

Building on this positive outlook, 54 per cent said they are planning store expansions in the next 12 months, while 15 per cent said they are looking at merger or acquisition opportunities.

Despite the positive sentiment, PwC notes that the sector still “has some way to go to recovery”.

The latest figures from the Central Statistics Office show that year-on-year retail sales were down by 15 per cent in July, but there were some signs of a slowdown in the decline as sales were up 0.2 per cent on June.

Commenting on the figures when they were released earlier this month, Alan McQuaid, chief economist with Bloxham Stockbrokers, said rising unemployment was being reflected in negative consumer sentiment.

“Although there has been some improvement in sentiment regarding future prospects, albeit from historically low levels, which may provide some support for consumer demand, it is unlikely to outweigh the effect of the decline in disposable incomes,” said Mr McQuaid.

The key challenges that retailers said they were facing were maintaining margins, responding to consumer demand, increasing indirect costs such as rent and rates and lack of available credit.

The vast majority of those surveyed (86 per cent) said the overall cost of doing business in Ireland is too high.

“Retailers have a lot of cost embedded in their business but now they are looking at what are the good versus the bad costs,” said David McGee, director of PwC’s advisory business. “Good costs are those which are adding value and the consumer wants to pay for.”

The survey was carried out at a networking event that PwC held last week for the retail sector. Respondents were either managing or financial directors of the retailers.

The accounts show that McAfee Ireland had retained losses of €71.8 million and a deficit in shareholders funds of €67.5 million.

The company’s auditors, Deloitte, note that because there is an excess of liabilities over assets, the convening of an extraordinary general meeting of the company may be required. The auditors’ report is dated September 17th last.

McAfee would have been liable to pay corporation tax of €1.76 million on its pretax profits. It utilised tax losses of €1.9 million and other allowable expenses to reduce its tax bill to €175,929. In 2007, it paid corporation taxes of €664,800.

For both years the accounts show that employment grants of €108,000 were received.

Revenues of €229.4 million were generated from EU countries during the period in question with non-EU countries contributing €94.3 million.

Cork is McAfee’s headquarters for its operations in Europe, the Middle East and Africa (EMEA) and is also the point through which all orders for the EMEA and Asia Pacific regions are processed.

Functions carried out include finance, procurement, localisation, order processing and customer care for its network of resellers.

The company provides a range of security software to deal with viruses, spam, malware and to filter web traffic. It sells both to businesses and home users.

The accounts show that an average of 163 staff were employed during 2008, up from 144 in 2007. Despite this, the bill for wages, social welfare contributions and pension costs fell from €9.1 million in 2007 to €7.4 million last year. A spend of €7.3 million was incurred on product research, up from €5.9 million the previous year.

Last Wednesday McAfee announced it would create an additional 120 sales jobs in Cork with support from IDA Ireland.

David Quantrell, the company’s president for the EMEA region, said he was confident the jobs would be filled by January.

“We’ve done a lot of pre-work on profiling the kind of skills that are around,” said Mr Quantrell. “I think in Ireland in general there is a good technical skills base that has been built up over the last 10-15 years.”

He told The Irish Times that 11 sites in Europe had been considered before Cork was ultimately chosen for the investment.

McAfee Ireland is a single-member private limited company.

It is owned by McAfee European Holdings Limited, which is registered in Valletta, the capital of Malta. The ultimate parent company is McAfee Inc, a Californian company quoted on the New York Stock Exchange. It has more than 5,500 staff and had revenues of $1.6 billion in 2008. Formerly know as Network Associates, it claims to be the world’s largest dedicated security software firm.

The Irish Examiner reports that Bord Gáis is investing almost €280 million in a gas storage facility in Northern Ireland and is in talks about a similar facility at Kinsale.

This is according to the company’s chief executive John Mullins, who said it is also investing over €1.5 billion over the next five years in wind energy, which will provide "a lot of jobs".

The group is one of the main contenders to buy the wind energy operations of the Bandon-based SWS Group, currently owned by ION Equity.

Bord Gáis obtained a licence from the Department of Enterprise, Trade and Investment (DETI) in Northern Ireland, effective from September 2008, to carry out geological and geophysical studies, including seismic studies to determine the feasibility of underground storage in the North. It expects the results of these studies in six months.

Bord Gáis has formed a consortium with Storengy (a company of GDF-SUEZ) and they will pool their expertise to carry out the investigations, while Bord Gáis is also working closing with Star Energy in the Kinsale field.

"There is an opportunity to convert the Kinsale field into storage," said Mr Mullins, who is campaigning, along with the Cork Chamber, for a Yes vote in the upcoming Lisbon referendum.

"If you look at the history of foreign direct investment in Ireland since 1973 we have actually created something like 300,000 jobs," he said.

He added that being part of Europe has been "absolutely phenomenal for people in Ireland".

"The idea that the Lisbon Treaty is going to bring the minimum wage down to €1.84 is downright rubbish.

"Nothing in the Lisbon Treaty says that the minimum wage should be set by a group of MEPs or a group of commissioners.

"No Irish government would ever consider that as being an option for the Irish nation," he said. He also claimed that the No campaign has been "disingenuous" about the economic facts and he said that if the country votes No, Ireland will be viewed as a Euro-sceptic nation.

"People look at Ireland with its economic issues and say, why would a country with these issues not want to be part of a stronger Europe? A No vote would give an erratic message about Ireland," he claimed.

The Financial Times reports that last year as the UK banking system teetered on the brink of collapse, the UK’s financial regulators were desperately casting round to find a white knight to rescueBradford & Bingley, the mortgage lender.

The obvious candidate was Santander, which bought Abbey for £9.5bn in 2004 and had just snapped up smaller mortgage lender Alliance & Leicester for £1.26bn.

The fact that Santander was being touted as a possible saviour was testament to the remarkable journey the Spanish bank had undertaken since it first entered the UK in 2004.

Back then few people had heard of Santander and questioned how successful the Spanish would be at turning round its new acquisition Abbey National.

Since then Santander has surprised its critics. It slashed Abbey’s cost base, trained its staff to sell a broader range of products to existing customers, and installed Santander’s in-house computer system, known as Partenon, which made it easier to cross sell products to its customer base.

António Horta-Osório, Abbey’s chief executive, also started to shrug off Abbey’s legacy as predominantly a mortgage and savings bank to take on the UK’s biggest banks in areas such as current accounts, mutual funds and business banking.

Revenues have risen 5-10 per cent between 2005 and 2007 and the bank’s 705 branches have been spruced up and marked with the Santander logo.

But it was the credit crunch that really threw up opportunities for Santander to consolidate its position in the UK through its acquisitions of A&L and B&B’s assets.

Santander was one of the few banks in a position to do deals because the Spanish bank had little exposure to investment banking, had a strong capital base and a wide geographical presence.

In the UK, Santander had long coveted A&L which gave it an additional 250 branches plus a foothold in business banking – something that would not have been achieved with an acquisition of a more specialised mortgage lender.

But at the time of the crisis last September, Santander was not looking for any other deals. It told the regulators that it was not interested in rescuing the whole of B&B but would be prepared to consider buying certain assets such as the branches.

Santander engineered a deal in which it made a £612m purchase of the deposits and branches of B&B. The rest of it was nationalised, leaving the bulk of its risky buy-to-let loan book with the taxpayer.

With the A&L and B&B deals, Santander had become one of the top savings institutions in the UK with £114bn in retail savings. Picking up B&B’s branches meant it had 1,286 branches, giving it 10 per cent of the branch network in any area.

It also had 13 per cent market share of mortgages and 10 per cent of retail deposits, as well as 12 per cent of bank accounts and 9 per cent of personal loans.

But the B&B acquisition was important because it gave Santander access to retail savings which it could use to fund future loan growth at a time when rivals, which had relied more on wholesale funding, were struggling to lend to customers.

This year, Santander said it had taken one in seven new mortgages in the UK as it reported a 30 per cent rise in first-half profits at its UK operations to £790m.

Anxious customers worrying about where to place their savings also recognised Santander as a haven. The net flow of deposits into A&L, Abbey and B&B in 2008 was £6.9bn – double that in 2007.

Santander had feared that after its acquisition of B&B it could see an outflow of deposits from the bank branches. B&B’s stock of deposits rose by £1.1bn after its acquisition. The acquisition of B&B’s savings book bolstered Santander’s UK balance sheet because 75 per cent of all loans were financed by retail deposits rather than more volatile wholesale funding.

Gross mortgage lending was £10.8bn in the first half, giving it an estimated market share of 16.3 per cent.

Santander said it was on track to cut £180m of costs from its acquisition of A&L and that it would reduce its combined workforce by 1,900 this year.

It has scored a number of notable successes. In the first half it opened more than 500,000 new bank accounts – up 24 per cent on last year and it was on track to achieve 1m openings by year-end.

Other areas such as investment sales rose 34 per cent on last year compared with a wider market decline of 23 per cent and there were also small business loans up by 13 per cent.

Mr Horta-Osório said that when the Spanish bank entered the UK in 2004, public awareness of the Santander name was 20 per cent. By last year it had climbed to 80 per cent helped by Santander’s sponsorship of the British Grand Prix and partnership with Formula One champion Lewis Hamilton.

The FT also reports that US financial regulators are working on new rules aimed at helping banks avoid the sudden funding withdrawals that doomed Bear Stearns and Lehman Brothers, officials say.

The deliberations represent a deepening of the US regulatory response to the financial crisis. In recent months, regulators have focused on making sure banks have sufficient capital to withstand the kind of financial shock that hit them last year.

Now, regulators are considering proposals to prevent banks from growing overly dependent on short-term borrowings – as was the case with Bear and Lehman. The idea behind the discussions is that capital alone is not enough to prevent a run on a bank that depends on the overnight markets for funding.

“Capital is critical, but liquidity enhancement is a necessary piece of the puzzle,” said Kevin Bailey, deputy comptroller for regulatory policy at the Office of the Comptroller of the Currency, which regulates national banks. The proposals being discussed would require banks to operate under new measures – or ratios – gauging their dependence on short-term funding and their susceptibility to market shocks.

One ratio would compare a bank’s assets to its stable sources of funding, such as deposits or longer-term unsecured debt. This would help regulators determine whether a bank is too dependent on short-term borrowings.

Another ratio would compare borrowings to easily sold assets – measuring, in other words, how quickly a bank could unwind its positions were it to lose its access to short-term market funding. The ratios would come on top of guidance on liquidity issues proposed by banking regulators in July. Those proposals were part of a global effort to address bank liquidity.

The focus on funding reflects a growing recognition on Wall Street that banks became too dependent on cheap overnight borrowings in the run-up to the crisis. “If a high percentage of liabilities is funded in the short-term market and that market ceases to function, capital doesn’t mean much,” said Dino Kos, a former official of the New York Federal Reserve Bank, who now works for Portales Partners, a research firm.

As banks became more dependent on overnight funding, said Mr Kos, there also was a “degradation” in the collateral posted to secure borrowings.

Instead of pledging easy-to-trade Treasury securities, for instance, banks used highly rated but hard-to-value tranches of securitised pools of assets – including subprime mortgages. When investors lost faith in the ratings on these securities, their values plunged.

The conditions created “a perfect set-up for a run” on the banks, said one senior Treasury official. “Suddenly, there was no collateral that counterparties would accept.”

Regulators have tried to come up with measures to gauge funding risks in the past but have struggled to devise reasonable formulas. For example, assets that are “readily marketable” one day can quickly become difficult to sell. Some bankers also believe that it is more important to focus on the nature of their borrowings than on their easy-to-sell assets. At the same time, some regulators worry higher capital requirements could lead to unintended consequences – pushing banks, perhaps, to take greater risks so they can earn higher returns on equity.

The New York Times reports that the startling disclosure of a secret Iranian nuclear facility late last week shoved the results of the G-20 economic conference here off center stage.

That was hardly surprising, since the conference was intended as a stay-the-course session affirming the promising early results of coordinated efforts to revive the global economy. And it was nothing new in the career of Treasury Secretary Timothy F. Geithner, a principal architect of those policies who is among the least prepossessing figures in an administration of large personalities.

Before taking the Treasury job, “I had spent most of my life trying not to be on television,” Mr. Geithner said in an interview in Pittsburgh. Indeed, results so far suggest that is where he does his best work.

After stumbling in his transition from backstage player to out-front crisis manager, Mr. Geithner has since quieted critics inside and outside the administration at a time when health care and foreign policy challenges increasingly command the headlines. But with the economy still hovering between recession and recovery, multiple tests of his judgment and political dexterity lie ahead.

A Shaky Start

Mr. Geithner made his professional reputation over two decades of behind-the-scenes government work that began in the Reagan-era Treasury Department. His profile rose considerably last fall as president of the New York Federal Reserve, when he joined President George W. Bush’s Treasury secretary, Henry M. Paulson Jr., and the Federal Reserve chairman, Ben S. Bernanke, in the frantic effort to prevent financial collapse.

His public struggles began when Mr. Obama chose him as Treasury secretary. First he survived a confirmation controversy over unpaid taxes; later he drew fire for comments about Chinese currency policies that some analysts considered too blunt.

Mr. Geithner’s shaky initial rollout of a plan to help banks clean up so-called toxic assets generated calls for his ouster. Rahm Emanuel, the White House chief of staff, grew concerned enough about Treasury’s performance that he escalated his own involvement in the department’s affairs.

As it happened, the toxic asset plan’s signal contribution was the announcement itself; the increase in market confidence it engendered all but obviated the need for financial institutions to use it. Meanwhile, signs that economic growth is resuming have eased the sense of crisis surrounding Mr. Geithner’s work.

The economic “message” meetings in Mr. Emanuel’s office have slowed from daily to weekly. The administration’s immediate domestic priority is health care, while foreign policy challenges with Iran and the war in Afghanistan have gained fresh urgency.

Aides say the president never lost confidence in Mr. Geithner, who was born two weeks after Mr. Obama in August 1961. Mr. Emanuel said Mr. Obama values the same quality in Mr. Geithner that he values in himself: the ability to “stay calm and focused and dispassionate in a storm.”

Tempering Populism

Conservatives continue accusing Team Obama of dangerously expanding government control over the economy, from Wall Street to Detroit. But some Bush White House veterans credit Mr. Geithner with tempering the populist impulses of other Obama advisers.

One example: the administration has resisted calls, domestically and from G-20 allies like France, for specific dollar limits on executive compensation in the financial industry. “He’s doing as good a job as he can under the circumstances,” said Lawrence B. Lindsey, once Mr. Bush’s top economic adviser.

Such praise only fuels those on the left who cast Mr. Geithner as a tool of Wall Street interests for having rebuffed their calls to nationalize troubled banks.

“Progressives have been disappointed,” said Robert L. Borosage, director of the Committee for America’s Future. But he added, “I don’t think we see a lot of distance between Obama and Geithner.”

Mr. Geithner proved that point by successfully pushing for Mr. Obama to reappoint Mr. Bernanke, his close ally in the battles of the last year. The decision was fraught because a leading alternative was the National Economic Council director, Lawrence H. Summers, Mr. Geithner’s onetime mentor in the Clinton Treasury Department. Staying put in his current job, Mr. Summers will remain as a rival to Mr. Geithner for influence over administration economic policy.

The president’s decision to impose tariffs on imported Chinese tires, which Mr. Geithner opposed, showed he does not win every argument. Over the next year, he will face a raft of new fights over financial regulation in Congress, deficit reduction, and when to roll back Washington’s economic interventions.

That rollback may be the toughest strategic choice, pitting inflation fears against persistently high unemployment. Kevin M. Warsh, a Fed governor, warned in The Wall Street Journal last week that “policy likely will need to begin normalization before it is obvious it is necessary, possibly with greater force than is customary.”

His early public battering largely behind him, Mr. Geithner sounded sanguine last week. “As long as I feel confident we’re making the best decisions among a set of options,” he concluded, “I feel good.”

The NYT also reports that the big American drug maker Abbott Laboratories plans to announce on Monday a deal worth about $6.6 billion in cash to acquire the prescription drug unit of the Belgian company Solvay and take sole possession of their shared cholesterol drug venture, two people close to the discussions said on Sunday.

The deal, set at 4.5 billion euros, also includes a provision for up to 300 million additional euros, or $440 million at Friday’s exchange rate, in future payments that would be linked to product milestones from 2011 to 2013, the people said.

In acquiring Solvay’s pharmaceuticals business, Abbott, based near Chicago, will take sole possession of the TriCor cholesterol pill, which it was sharing with Solvay and had more than $1.3 billion in sales for Abbott last year. Abbott will also acquire sole rights to Trilipix, a new cholesterol treatment approved by the Food and Drug Administration last December and marketed as TriCor’s successor.

Abbott will also acquire Solvay’s drugs for hypertension, hormone replacement and neurological and other conditions.

While most of the world’s mergers-and-acquisitions business has been dormant during the recession — until recent signs of life like Walt Disney’s $4 billion purchase of Marvel Entertainment and Kraft Foods’ unsolicited bid for Cadbury — cash-rich drug makers have been on buying sprees this year.

That includes Pfizer’s $68 billion deal for Wyeth in January, a deal that helped break a logjam of possibilities stalled by the credit freeze. In March, Merck paid $41 billion to acquire Schering Plough, and Roche paid $47 billion to buy the remainder of Genentech.

For Abbott, the Solvay deal is but one of a series of deals this year. And other potential buyers in the hunt for acquisitions include Bristol-Myers Squibb, Johnson & Johnson, and Eli Lilly and Company, according to a Sept. 17 report by analysts at Credit Suisse.

Pending health care legislation in Congress is not considered a deterrent for pharmaceutical acquisitions, because the drug makers are expected to do well in whatever emerges from Washington. The industry has a potentially winning political argument that its drugs prevent disease and save medical costs. And the industry stands to benefit from the addition of tens of millions of Americans to the ranks of the insured, under a health care overhaul.

Solvay put its drug business up for sale this year. The unit last year accounted for 28 percent of Solvay’s billion euros in revenue. Although the drug revenues have helped fill gaps in Solvay’s chemicals and plastic businesses through the recession, analysts say the company is now looking to expand in other core areas, probably chemicals.

Abbott outbid Nycomed of Switzerland for Solvay’s drug business. Abbott had been rumored since July to be a potential acquirer. On Sunday, Solvay set a press conference for 10:30 a.m. Brussels time on Monday (4:30 a.m. New York time).

Abbott had sales of $29.5 billion last year and $5.2 billion in profit, not counting one-time items. Its top product is the arthritis drug Humira, with $4.5 billion in sales.

But future growth projections for other big Abbott products are potentially more challenging, analysts say, with patents expiring on TriCor in 2011, and in 2013 for the cholesterol fighter Niaspan and the prostate cancer drug Lupron. The H.I.V. treatment Kaletra loses patent protection in 2016.

David S. Moskowitz, an analyst for Caris and Company, said the deal would be a good fit for both companies. “It makes sense,” he said on Sunday. The price, slightly less than double last year’s revenues for Solvay drugs, indicates that Solvay’s drug business was relatively mature without a lot of growth potential, Mr. Moskowitz added. “It’s a reasonable price,” he said.

Catherine J. Arnold, senior pharmaceuticals analyst at Credit Suisse, wrote to investors on Friday to say an Abbott-Solvay deal would add to Abbott’s earnings, but that it was “more like financial engineering” by using cash to buy revenues. The deal, she wrote, would increase Abbott’s bet on the cholesterol pills even as TriCor’s patent is about to expire and the company faces challenges getting patients to switch to Trilipix.

Further, Ms. Arnold wrote, it would fail to diversify Abbott’s product line much beyond Humira, which is expected to contribute 35 percent of the company’s sales growth the next three years.

In Ms. Arnold’s opinion, Abbott would be better off pursuing “strategic assets that would provide more access to innovation.” She cited Alexion Pharmaceuticals and BioMarin Pharmaceutical as worthy targets.

The Solvay purchase would be the latest in a series of Abbott acquisitions this year. Two earlier deals focused on eye care companies: Advanced Medical Optics for about $2.8 billion in cash and assumed debt in January, and this month, Abbott said it would buy Visiogen for $400 million cash.

Abbott also announced the purchases of the nutrition businesses of Wockhardt Ltd. of India for $130 million cash in late July, and Evalve, a cardiovascular technology company, for up to $410 million, this month.