The National Asset Management Agency has said it has properties worth over €1 billion on the market based on estimated values after adding a further 44 to its list, subject to enforcement.
The new properties include the undeveloped Irish Glass Bottle site in Ringsend in Dublin 4, part of the Dalymount Park site in Phibsborough in Dublin, and the 12th-century Quintin Castle in Portaferry, Co Down.
The properties are assets against which the agency took enforcement action in March.
Nama has 1,195 properties on the market as subjected to enforcement action. The properties to which receivers were appointed in March include residential, development, commercial and agricultural assets located in the Republic, Northern Ireland and Britain.
The Irish Glass Bottle site was one of the biggest purchases of the boom. It was bought in 2006 for €412 million, with loans from Anglo Irish Bank and AIB, by Becbay, a firm owned by developer Bernard McNamara, financier Derek Quinlan and the Dublin Docklands Development Authority. The value of the 25-acre site has fallen to €30 million. It has been named as a possible location of the new National Children’s Hospital
Monday, April 30, 2012
CONSTRUCTION HAS stopped on 90 per cent of ghost estates, leaving many in a dangerous and deteriorating condition, according to the chief executive of the Government Housing Agency John O’Connor.
Just over a quarter of the money made available by the State to deal with safety issues in unfinished estates has been drawn down by local authorities, the annual conference of the Irish Planning Institute heard yesterday.
Developers and banks were allowing some almost complete estates to deteriorate rather than sell at a reduced price, said Mr O’Connor, who heads the national co-ordination team on unfinished development.
The vast majority of developments which had habitable houses were in areas where there was a demand for housing, he added.
Construction activity on unfinished estates dropped by 43 per cent between 2010 and 2011 and work was being done to complete just 244 of 2,066 estates.
This was a significant cause for concern, but an even greater worry was the number of finished but unoccupied houses which, at just over 18,638, accounted for more than half of all the houses in ghost estates.
“We really need to do everything we can to get these occupied,” Mr O’Connor said. “The vast majority are in areas of housing demand and should be utilised.”
He told the conference about a development in Kerry which was substantially complete in 2009 but was left vacant and by 2011, it had become run down to the extent that it was no longer habitable.
In another case, a local authority offered to pay the bank €140,000 for each unfinished unit but was refused. Six months on the houses had deteriorated and the council offered €100,000; it was again refused and now the condition was so bad that a lot of work was needed to make them habitable.
“There is a view that these houses have no value; that isn’t the case. In the vast majority of areas, there is a demand for housing but whoever owns the development isn’t prepared to sell it for what it’s worth today.”
The most important issue for residents was addressing safety on dangerous unfinished estates, Mr O’Connor said. He referred to the toddler who drowned in February on an unfinished scheme in Athlone and said it must never be allowed to happen again. “It is absolutely critical that we do whatever we can to make these developments safe.”
However a senior planner with Limerick County Council said only a small portion of the €5 million allocated by the Government two years ago to deal with the most urgent safety problems in these developments had been used.
Gerry Sheeran said figures showed that local authorities had drawn down only €1.3 million for use on the unfinished estates.
THE head of the agency in charge of completing the State's 2,000 ghost estates has sharply criticised banks for "stupidly" refusing to sell houses to local authorities.
Chief executive of the Housing Agency, John O'Connor, told the Irish Planning Institute's annual conference that instead of selling the homes at reasonable prices, banks preferred to hold the properties as assets on their books.
In one case, a local authority had offered €140,000 for homes in one ghost estate, which was refused by the unnamed bank. A second some months later was also refused, even though the homes were unoccupied and deteriorating.
"There's no point in leaving housing idle," Mr O'Connor said. "One local authority offered to buy a number of unfinished houses to complete a development, but the bank wouldn't agree to the price being offered.
"Six months later the local authority went back, and offered €100,000 per house and the bank wouldn't sell. It's very stupid to have an asset lying there."
His comments were echoed by Declan Taite, a receiver with RSM Farrell Grant Sparks, who said there was often a "huge difference" in the prices people were willing to pay, and amount banks were willing to accept.
This was because accepting a lower price would impact on the bank's balance sheet.
The latest figures show there are 2,066 unfinished developments across the country, made up of almost 37,000 units, of which 18,638 are complete but vacant.
Chris McGarry, planning and development advisor with State bad-bank NAMA, said it controlled about 12pc of all unfinished estates, about 250.
Some 28 needed urgent works, and 15 had been dealt with and work was due to start shortly on the remaining 13.
Mr McGarry said that most of its property portfolio was based in the Greater Dublin Area, meaning it was likely to be developed in the medium-term.
DAN O'BRIEN Economics Editor
According to new research by the Central Bank, Irish house prices were undervalued by between 12 and 26 per cent as of the end of last year.
If correct, property prices could rise suddenly and significantly if the causes of the undershooting in prices were removed.
The main reasons cited for the continued fall in prices are a lack of investor confidence, negative future house price expectations and an uncertain macroeconomic outlook. Additionally, “the requirement for substantial deleveraging within the Irish financial system and the associated issue of mortgage credit availability are also considered as significant reasons for the decline” according to the report.
The bank’s researchers use four separate models to assess property prices. One model found that prices were 26 per cent below what economic fundamentals in the economy would warrant. Two other models found that prices were 16 per cent to 18 per cent undervalued. A fourth model suggested that they were under valued by 12 per cent.
The bank notes the affordability of housing has improved very significantly, particularly for first time buyers.
It also notes that rents relative to property prices have risen back to levels last seen around the turn of the century, a period before the bubble in the property market began to inflate.
Since the peak in 2007, residential property prices have declined by almost half. This decline is one of the largest ever recorded the bank said, basing its comparison of four decades of data from across the Organisation of Economic Cooperation and Development.
Only Japan has experienced a larger decline in prices.
Surveying 10 other international examples of very large declines in house prices, the average duration between peak and trough is six years. The decline in Ireland has been on-going for five years.
The most extreme protracted declines took place from the late 1980s in Switzerland and Japan. In the former case, property prices fell for 10 years, in the later case they continue to fall.
The report notes that just 11,000 new mortgages were issued last year, down from ten times the number in 2006.
Tuesday, April 17, 2012
By Mark Keenan
Friday April 13 2012
A FORMER hospital in Dublin city centre which was bought six years ago by a developer for €30m, has gone back on the market for €3m -- a 90pc price drop.
The sale of a property -- commercial or residential -- for just 10pc of its boom era price is unprecedented.
The huge devaluation of the Hume Street Hospital, just off St Stephen's Green, is likely to reflect on similar commercial properties of the period throughout the capital.
The public offering is in contrast to the sale of many buildings and complexes whose asking prices are kept secret.
The sale property, which comprises six 250-year-old Georgian houses, hit the headlines last summer when thieves climbed to its roof and stripped large amounts of protective lead flashing from the buildings. This allowed rain to run down through it, causing water damage to the elegant 18th century complex. The vandals also took valuable copper piping.
Six of the seven buildings, which formerly comprised the City of Dublin Skin and Cancer Hospital that closed in 2006, are for sale, but not a building to the rear at Ely Place.
Aislinn O Buachalla of Jones Lang Lasalle said: "This building is being priced to sell and we are being very clear about that. The owner wants to sell it. We will be seeking offers over €3m which reflects the fact that the buyer will have responsibilities to these historic buildings and also the substantial investment required to develop them in a manner sensitive to their requirements."
The agents will not confirm who the owners of the building are but have ruled NAMA out of the equation. The complex was bought by developer Michael Kelly in 2006.
Mr Kelly has been operating business centres through his company Glandore Business Centres and last November he was the subject of summary judgment orders requiring him to repay €60m to AIB relating to the hospital. He was listed as being a resident of Eglinton Road in Donnybrook.
Mr Kelly had planned to spend another €20m on top of the €30m purchase price to turn the hospital into a showcase business centre. However, he fell foul of the planning process after being refused a six-storey complex to the rear. The property market crashed at the same time.
Possible use of the historic buildings is as an office complex, a school or college or an elegant corporate headquarters.
The Hume Street Hospital complex will be sold by tender through Jones Lang Lasalle, with the date to be announced in the coming weeks.
The complex is named after Sir Gustavus Hume. In the 1950s the street became notorious as the base of nurse Mamie Cadden, the back street abortionist, two of whose patients were found dead on the street.
A group of investors are to ask the High Court for an order allowing them to redeem their €832,000 loan on lands in Co Tipperary, over which Nama has appointed areceiver.
The investors’ — Joseph Hynes from Gortmore, Rosscahill, Galway, Sean Hynes of Forenaughts, Naas, Co Kildare, and Eugene Hyland, Castletroy, Co Limerick — claim that NAMA’s appointment of a receiver to sites at The Island in Clonmel, in March 2011, has blocked and frustrated their attempts to pay off the mortgages on the properties.
In proceedings against NAMA, IBRC (formerly Anglo), and receiver Eoin Ryan, Mr Justice Feeney yesterday granted the investors permission, on an ex-parte (one side only) basis, to apply next Monday for an order seeking a declaration that they have a right to redeem the mortgages.
Barrister Michael Vallely told the court yesterday that Joseph and Sean Hynes and Eugene Hyland, with the late John O’Dolan, acquired two sites at Avonmore and Cooney, both in The Island, Clonmel.
The investors secured the sites on foot of loans totalling IR£655,000 (€832,000) obtained from the then Anglo Irish Bank in 1999 and 2001.
As part of the deal, each of the investors took out life insurance policies for IR£1 million (€1,270,000) which were assigned to the bank as security over the properties.
They each made premium payments. Mr O’Dolan, based in Galway, who had taken out his life policy with Canada Life, died in February 2009. The other borrowers had continued to meet the loan payments up until May 2009 to allow time for Mr O’Dolan’s life policy to be cashed.
Mr Justice Kevin Feeney was told that in March 2010, the bank informed the three surviving members of the group that the amount paid out on Mr O’Dolan’s life policy came to €536,000 which was credited to the mortgages.
The investors were surprised when the payout from Canada Life was so low as they had expected a payout of the euro equivalent of IR£1m, which would have been enough to redeem the loans. The court heard that no explanation has been given to the three investors why the life insurance payment was so low. In March 2011, the bank informed them the loans had been acquired by NAMA.
Eoin Ryan, of Horwath Bastow Charleton chartered accountants, had been appointed statutory receiver on behalf of NAMA, which meant they could no longer deal with the sites.
The investors met with the bank and Mr Ryan. They told them they wished to redeem the loans and wanted to sell the two sites.
They also sought an explanation in relation to the low amount paid out on Mr O’Dolan’s policy, counsel said.
Following a meeting with the bank in August 2011, the investors claim they were assured they would be given an explanation for the substantial shortfall on the life policy.
Counsel added that documents explaining the insurance shortfall have not been furnished to his clients.
Mr Vallely added that the investors thought that NAMA and the receiver would put the proposed sale on hold.
However, the two sites appeared on the market for sale by the receiver in March 2012, and an offer has been made.
The court heard that as a result of the receiver’s appointment, the investors say their rights to redeem the loan had been blocked and frustrated, and commenced legal proceedings in order to prevent the sale of the properties.
HARVEY NORMAN, which operates 14 outlets in the Republic and a further two in the North, has reported a pretax loss of more than €23 million for the 12-month period ending June 30th, 2011.
The furniture and electronics retailer incurred a €31 million loss in its Irish operations in 2010, and sales on the island fell by 1 per cent, or €1.17 million, last year, it says.
Gross profit margin at the company, which employs 776 people on the island, was up 1 per cent, or €380,000, year-on-year in what the company described as “an extremely competitive retail market”.
A cost-reduction programme brought expenses down by €2.4 million. The company also notes that the number of transactions in its shops increased in the year, and that its market share “in key categories” has also increased.
In documents filed with the Companies Registration Office, the Australian-owned retailer cited stagnation in the Irish property market and the withdrawal of financial support by parent company Harvey Norman Holdings as ongoing risks to its business here.
In their report directors of Harvey Norman (Ireland) Ltd blamed continuing Government austerity measures which have resulted in “structural weakness in the domestic economy, in the retail sector in particular.”
The directors were also critical of “the Government’s recent reversal of its election promise to legislate against upward-only rent reviews”.
They say retail rents across the sector are “badly distorted and do not reflect market reality”.
The company says it hopes to tackle its problems by controlling costs, keeping tighter controls of inventory and optimising margin from its income streams.
Established by Australian magnate Gerry Harvey in New South Wales, Harvey Norman operates 320 stores worldwide.
Mr Harvey was heavily criticised in November 2008 after calling the recession-hit Republic a “basket case”, and likening the savage market slump here to the “return of the potato famine”.
The Harvey Norman Group last year reported worldwide sales of €4.45 billion for the 12 months ending June 30th, 2011. This marked a 1.7 per cent rise on the same period a year earlier.
By Nick Webb
Sunday April 15 2012
Semi-state Dublin Airport Authority (DAA) has exited a disastrous speculative property development scheme it undertook with fallen tycoon Liam Carroll.
In a move echoing the Dublin Docklands Development Authority's catastrophic deal to buy the €412m Glass Bottle site with Derek Quinlan and Bernard McNamara, the state-owned airport operator also tried its hand at property development at the peak of the boom.
Close to €34m was borrowed from National Irish Bank for the development of the Horizon Business Park near the airport. However, when Mr Carroll's property empire blew up in 2009, the scheme hit difficulties. Bank covenants were breached by the joint-venture company Turckton Developments, which wrote down the value of its investment by €17m.
Loan installments due last July were repaid and frantic negotiations saw an extension agreed for the borrowings. This was excruciatingly embarrassing for the semi-state company to have loans that were troubled.
Last January, the Sunday Independent revealed that DAA, Mr Carroll's companies and its bankers, were in discussions over the restructuring of the deal.
New filings last week show that DAA is transferring its stake in the development to Mr Carroll's Zelderbridge firm as it exits the joint venture.
Last week, the DAA declined to comment on the developments and reissued its comment from last January: "The company is a joint venture between DAA and Dunloe (a Mr Carroll company). Its borrowings are non-recourse to DAA. DAA understands that Turckton is currently in talks in relation to refinancing its borrowings, and these talks are expected to be concluded shortly," said the DAA. "Turckton has been a profitable investment for DAA, and DAA expects this to continue to be the case."
DAA was also involved with another property scheme with Mr McNamara to develop a business park at Cork Airport.
The joint venture company Brooklyn has taken a massive €5.3m hit to the value of its investment and has spent close to €31m on the project.
Bank of Scotland, which is a shareholder in the business park, was owed over €23m by Brooklyn Properties, according to latest figures.
DAA boss Declan Collier, who has been at the helm of the semi-state since 2005, is leaving this month to join London City Airport.
- Nick Webb
HIGH COURT: Dunnes Stores -v- Holtglen Ltd
High Court: Commercial Court
Neutral citation number: 2012 IEHC 93
Judgment was delivered on March 27th, 2012, by Mr Justice Peter Kelly.
An arbitration award that Dunnes Stores had to pay a sum of about €20 million to a development company, Holtglen Ltd, which was now insolvent, was upheld by the court.
The arbitrator, Eoin McCullough SC, made an award on October 7th, 2011, in favour of Holtglen Ltd, arising out of a development agreement concluded on June 13th, 2007.
This concerned the development of an anchor store in the Ferrybank Shopping Centre, Co Kilkenny. Holtglen’s loans with the Bank of Ireland were transferred to the National Asset Management Agency (Nama) on October 28th, 2010.
Dunnes had claimed that Holtglen had breached the agreement in a number of ways, and the arbitrator had upheld a large part of these claims. However, he also found that Holtglen had remedied these breaches. Holtglen then counter-claimed for payment of €20,269,732 for work done and Mr McCullough found in its favour. Dunnes sought to set the award aside, claiming a fundamental error of law.
Mr Justice Kelly said that in order for an arbitrator’s award to be set aside, the applicant must demonstrate an error so serious and so substantial or so fundamental that it smacked of injustice, and the court could not permit it to go unchallenged.
The agreement contained clauses providing for staged payments for the construction of the store. It also provided that the developer should ensure sufficient funds were in place during the construction of the works. Holtglen claimed that 85 per cent of the money had become payable.
Dunnes claimed that because Holtglen had become insolvent it was not entitled to obtain payments. Holtglen said such a provision was not contained in the agreement, and Dunnes was liable for payment for the work already completed. Dunnes then sought to amend its claim to include the issue of Holtglen’s insolvency.
The arbitrator stated there was no express positive obligation to be or remain solvent in the agreement, and it would not be appropriate to make such an inference or implication. Insolvency gave the right to terminate the agreement, but did not give the right to claim damages or to refuse to perform other obligations under the agreement.
He therefore concluded he was obliged to refuse the application from Dunnes to amend its claim.
Mr Justice Kelly stated that in interpreting a commercial agreement, a court or arbitrator should seek to give it a commercially sensible construction. Where parties have used unambiguous language, that language must be applied, he said. However, if there was an ambiguity, the court was entitled to construe the contract in the more commercially sensible manner.
The argument made by Dunnes was that it was not obliged to pay for the work done by Holtglen because that entity had become insolvent.
The agreement was directed towards providing Dunnes with an entitlement to terminate the contract if insolvency occurred, so that it could avoid incurring future liabilities. But it did not and could not provide a means by which Dunnes could escape any liabilities previously incurred.
The agreement required Holtglen to construct an anchor store for Dunnes, which was certified as practically complete on June 10th, 2009, but Dunnes had only paid for a fraction of this work. Holtglen’s claim was for work done in 2008 and 2009. The logic of the Dunnes position was that it was not obliged to pay for work carried out and completed.
“The result is wholly unattractive from the point of view of business common sense or commercial reality,” Mr Justice Kelly said.
The arbitrator was not guilty of any error in law in the approach he took.
Mr Justice Kelly noted that on February 13th, 2012, National Asset Loan Management Ltd (Nalm, a subsidiary of Nama) served a notice of substitution, seeking to exercise all rights and powers of the funder of the development company.
In the light of this development the whole issue of the insolvency of Holtglen had become an irrelevance. However, he said he had decided the case on its merits prior to this event.
The full judgment is on courts.ie
Tuesday, April 10, 2012
An Bord Pleanála should be allowed review local authority development plans and even veto council decisions on land rezoning, the country’s planning association has said.
The Irish Planning Institute accepted such a move would mean power being taken away from elected councillors. IPI chairman Brendan Allen admitted it could mean planners and councillors being on a "collision course".
Mr Allen was speaking ahead of an IPI national conference later this month amid continuing concern over elements of the planning process and the issue of unfinished ghost estates around the country.
The recently published Mahon Tribunal report highlighted serious flaws in the planning process spanning decades, and recommended the setting up of an independent regulator to review development plans at local authority level.
Mr Allen said An Bord Pleanála already had capacity to fulfil that function, instead of the Government having to set up "another quango".
Extending the powers of the planning appeals’ board would mean it could carry out a public inquiry during the forming of a county development plan.
It would also mean, he said, the board could reverse a decision to rezone land for residential development, for example, where that land was in a flood plain.
"The majority of land is often zoned correctly but there are anomalies," Mr Allen said.
It would mean power being taken away from planners and councillors. "They might not like it and it could mean we may be on a collision course with them."
Colm McCarthy: State's gigantic portfolio of property and bank loans will be a tough sale - Independent.ie
Sunday April 08 2012
Asked to name the Government's larg-est commercial enterprise, most people would nominate the Electricity Supply Board. They would be wrong, and by a large margin.
The State's biggest commercial exposure, by far, is to the property company Nama. The State has also acquired Allied Irish Banks, Permanent TSB, Irish Life, the Educational Building Society -- merged into AIB -- and an entity called the IBRC, the wind-down vehicle for the former Anglo Irish Bank and the Irish Nationwide Building Society.
This acquisition spree was motivated, not by a desire to extend the State's portfolio of valuable commercial companies but to prevent the financial collapse of the Irish economy. These companies were acquired at enormous cost and only because they were in terminal trouble. The stress on the Exchequer balance sheet has been so great that the credit-worthiness of the State itself has been a casualty.
Whether the measures chosen to stem the collapse of the Irish banking system were sensible and prudent is a debate for another day. Most commentators have by now concluded that costly mistakes were made, starting with the blanket guarantee of October 2008.
But these measures cannot be undone and in the here and now the Government owns a gigantic portfolio of property and bank loans, mainly in Ireland, with liabilities to match. Over the next seven or eight years, the intention is that some units will survive -- AIB/EBS and Permanent tsb will slim their balance sheets and be sold as functioning banks -- while others are to be run down, their assets disposed of and, hopefully, their liabilities retired.
In both cases, the State will be a big seller of property assets and portfolios of bank loans. There is limited capacity to locate buyers in Ireland since the Irish private sector is also weighed down with excessive debt. Most of the State's unwanted holdings of property and bank loans will perforce be sold into international markets.
Indeed there can be no deleveraging of the national balance unless this is done. If the Government is to exit these unwelcome entanglements without further cost, or hopefully with a financial surplus, the priority is to persuade international investors that Ireland is a safe place to invest their money.
The scale of the required sales is enormous. Nama alone needs to dispose of assets carried on its books at almost €30bn. The IBRC has half as much again to dispose of and AIB must somehow shrink its loan book of €99bn substantially, as must Permanent tsb.
Much of this de-leveraging involves property or property-related loans. In total Irish State entities could need to shrink balance sheets, through borrower repayments and asset disposals, to the tune of €100bn in the years ahead. Even at the top of the credit bubble, the Irish commercial property market had an absorption capacity of about €2bn a year.
Nama has a target of winding itself up inside eight years, IBRC is on a similar timescale while the surviving banks are under pressure to slim their balance sheets even faster. The State will be competing with other sellers: the banks still privately owned, including Bank of Ireland, Ulster, National Irish and the wind-down vehicle for Bank of Scotland (Ireland), all have property and loan assets they would be pleased to get rid of. The necessary sales cannot be financed through credit from the banks doing the selling, since this defeats the object of the exercise, which is de-leveraging and balance sheet shrinkage.
The same applies to Nama. Excessive external debt in the overall economy needs to be reduced and this boils down to persuading foreigners to buy the surplus assets whose retention can no longer be financed. You cannot deleverage by lending money to people to buy your surplus assets. Retiring excess debt through asset disposals needs cash buyers, not buyers financed through domestic credit extension.
The task of persuading foreign investors to commit to Ireland on this scale should not be under-estimated. Property and banking assets are for sale at reduced prices in many countries whose international reputations are in better shape. Not merely has Ireland endured a mighty property bubble and near-collapse of the banking system, the State itself has been forced from the markets and into the care of official lenders in the form of the EU and IMF.
The bubble and banking crash has left a residue of unresolved legal disputes and criminal investigations. Separately from the banking disaster and its aftermath, there has been a spectacular insurance industry bust amidst evident corporate governance failures as well as tribunal reports into corrupt practices harshly critical of prominent politicians and business figures. The persons named include two former prime ministers, a clutch of former government ministers and some prominent businessmen.
In the last few weeks, the Central Bank has closed a spread-getting firm; inquiries into the Custom House Capital collapse continue and foreign bidders have been crying foul over the disposal of the Siteserv company.
Had there been no banking collapse, the Quinn Insurance debacle would have been seen as a major financial scandal in its own right and substantial costs have been imposed on the general public. The company lost a large multiple of its capital under the nose of the regulator, assets appear to have been pledged to support borrowing of unrelated companies owned by the shareholders and there had been a history of regulatory infractions.
The IBRC has been fighting court actions in several jurisdictions in its attempts to recover the collateral which backs loans to the Quinn family and its lawyers have alleged that improper attempts have been made to divert assets.
Viewed from behind the desk of an international investor with plenty of options around the world, this is not a pretty picture. The reputation of the country has been damaged and the perception created that Ireland is suffering from an acute outbreak of crony capitalism.
This may be unfair but perception is what matters and the perception needs to be altered decisively if foreign investors are to be re-assured. The sheer scale of the capital inflows required means that portfolio investors new to this country need to be involved on a massive scale. These people are perfectly entitled to be cautious about committing funds to a small country which must appear to them to tolerate a dodgy business and political culture.
In the circumstances the Government must focus on rebuilding reputation and has consciously made this a priority. There are other positives -- the Irish commercial courts are seen as thoroughly independent and quite prepared to find against local interests, including the State, should the law and the facts point in that direction.
But progress has been slow under several headings. Four years after the emergence of the banking crisis, and given clear evidence of malpractice in some banks, there has been no definitive inquiry into their governance and behaviour, in particular no review of bank-by-bank lending policies in the years when the damage was done. Despite evidence in the public domain of insider lending, balance sheet window-dressing and share-support operations in some banks, no prosecutorial actions have been taken.
The referendum on restoring investigative powers to the Oireachtas was lost through a weak government campaign, but a parliamentary inquiry is nonetheless desirable. It should cover the Quinn Insurance affair as well as the banking collapse and should delve further into the failures of regulators and the mistakes made in the policy response. A well-resourced inquiry should be seen as helping to restore the country's reputation.
Selling large property and loan portfolios is a complex business and given the sloppiness of banking practice during the bubble, legal disputes are inevitable. It would help if assets unaffected by such disputes could be disposed of in the most transparent manner available, which is by public auction. The professional bodies could help too, by insisting on over-compliance with ethical standards and conflict-of-interest rules.
When a government must undertake asset disposal on such a large scale, the competence and integrity of the state, its public services and its business culture come under the microscope. Competence requires that best possible prices be secured. Integrity requires that the disposal process is seen to be transparent, fair and above board.
There is no conflict between these objectives: a process perceived as lacking transparency will scare off buyers, particularly first-time investors unfamiliar with the country.
ONE LANDLORD has paid the household charge for 190 properties, it has emerged.
The landlord filled out his form and included a cheque for €19,000, according to the Local Government Management Agency, the body with responsibility for collecting the charge.
If a landlord owns houses and wants to register them online, he has to do each separately, but those who are paying through the post or over the counter at local authority offices have to do so together.
Up to March 28th, some 41 landlords had paid the household charge and each had at least 50 houses.
There are 230,000 more forms that have to be analysed and processed.
The agency’s chief executive, Paul McSweeney, said on each day that they analyse the forms that come in, they receive a “single digit number” of forms with payments for 50 households or more.
However, the collection agency said it would not be able to provide any information as to whether housing associations or tenants associations were behind the multiple payments.
Some 886,000 householders had registered for the household charges by close of business yesterday.
Some 636,000 registered online, 154,000 came through postal applications and some 81,000 were handed in to a local authority.
Mr McSweeney said the fact that 230,000 forms are to be processed does not mean there are 230,000 homes to pay the household charge as many landlords will have multiple homes.
“Obviously there are people out there with a significant amount of property and are liable for the household charge, and because they did not want to incur fines and penalties they paid the charge on time,” he told RTÉ’s Today with Pat Kenny programme yesterday.
Only 13,835 homeowners who registered qualify for a waiver.
In addition, some 8,800 property owners registered online after the deadline on Saturday night and incurred penalties of €10 plus €1 in interest.
He said he was “immensely proud” of how local government staff had coped with the household charge.
“Our operational execution of this has been excellent,” said Mr McSweeney,
“In a very short period of time we built systems and processes from the ground up.”
By Edel O'Connell
Friday April 06 2012
THREE years ago 26 apartments were built in a picturesque spot in the West of Ireland in the hope of fetching €125,000 each.
Yesterday, however, a developer looked on as his ghost apartment blocks, an emblem of a time now gone, came crashing to the ground.
Developer Paul Curley said he reluctantly made the decision to demolish the blocks at Carraig Linn housing estate in Loughrea, Co Galway as he simply could not shift them -- and they had long become an eyesore. The estate was first built in 2009.
Planning had been originally sought for 102 units -- but only 62 of the original planned number of units were started.
Of the 62 housing and apartment units built 14 (21pc) are currently classed as being complete while 49 (79pc) -- including the now demolished 26 apartments -- are currently classed as being incomplete.
The developer says a total of 14 houses are currently occupied on the estate.
Four-bedroom homes at Carraig Linn are currently on the market for less than €170,000.
Mr Curley, who lives locally, said the empty blocks had become a health and safety issue, but said he had not been directed to tear them down by the local authority.
The brickwork was completed and the roofs were half-tiled. Mr Curley said the work on them to date has cost him in the region of 60,000.
The developer has also built a separate estate in Loughrea called 'Oak Wood', which he says is currently at 95pc occupancy.
"The apartments had become an eyesore and there was very little interest in them, so we had to cut our losses," he said.
He said the site on which the blocks were demolished will now be transformed into a green area.
By Charlie Weston and Laura Noonan
Thursday April 05 2012
IT will now be near year-end before the first list of official property sales prices is published, it emerged last night.
The new property register is expected to be a major fillip for the beleaguered homes market -- but the Property Services Regulatory Authority will not now have the data compiled until at least September.
It had originally been expected to be in place by June.
The latest delay in putting the price register in place came as a leading estate agency claimed it was seeing a massive surge in home sales.
Savills said yesterday it had concluded 60pc more property sales in the first three months of this year than in the same quarter last year.
There was now a shortage of second-hand homes in the greater Dublin area, said Savills Ireland director Ronan O'Hara.
He also reported a 400pc rise in viewings in the past three months.
Mr O'Hara added that it was not unusual for 30 or more people to show up for a 30-minute open house view, which he said was reminiscent of a very different market.
"Buyers who have been sitting it out for two to three years renting, waiting for house prices to fall to affordable levels are tired of doing so and want a place of their own," Mr O'Hara said.
Earlier this week Daft.ie said there were signs that prices may be bottoming out in parts of the country.
This news has fuelled some optimism that the worst could be over for the housing market, even if property prices keep falling for a while yet.
But surveys such as those conducted by Daft.ie look at asking prices only -- the actual sale prices of properties around the country will not be known until the register is up and running.
The Property Services Regulatory Authority was first created five years ago, but the commencement order formally establishing it and appointing members has just been signed by Justice Minister Alan Shatter.
Chief executive Thomas Lynch said yesterday the delay was largely due to the fact that the legislation behind it the agency set-up was complicated, with more than 101 sections.
The authority will regulate estate agents, auctioneers and property management agents for the first time.
Estate agents will have to publish advised market value of properties -- and actual sales prices have to be made available.
Ex-president of the Law Society Geraldine Clarke will chair the new authority.
Most consumers are buying their fresh meat, poultry, seafood and dairy products in supermarkets, rather than butchers, fishmongers or other specialist shops, according to a survey.
Carried out by Behaviour & Attitudes for Checkout magazine, the survey of 475 shoppers found a switch towards supermarkets in fresh categories where speciality shops have normally been stronger.
For breakfast meats, 79% of consumers said they purchased mostly from supermarkets, 11% said they purchased mainly from butchers/specialist shops, and 10% from a mixture of both. In fish, 68% purchased mostly from supermarkets, compared to 14% from specialist shops and 18% from a mixture of both.
In whole poultry, 65% said that they purchased mostly from supermarkets, 17% from specialist shops and 18% from a mixture of both.
Categories in which butchers and specialist shops performed strongest included joints of meat, where 43% purchased mostly from supermarkets compared to 31% from butchers/specialist shops and 26% from a mixture of both; and meat portions/pieces, where 53% said they purchased mainly from supermarkets, compared to 27% from butchers/specialist shops, and 20% from a mix of both.
Checkout editor Stephen Wynne-Jones said: "Fresh produce is being increasingly used as a unique selling point for supermarkets, which is having a detrimental effect on local butchers, fishmongers and other specialist stores.
"The onus is on smaller businesses to develop concepts and initiatives to differentiate themselves from their supermarket equivalents, such as promoting local suppliers, or offering a more bespoke or value-led product offering."
The survey found that supermarket purchasing was predictably high in categories such as yoghurt (99%), cheese (96%) and milk (94%).
Martha Fanning of Behaviour & Attitudes added: "Shoppers are under significant pressure to keep their weekly grocery spend under control. The supermarkets are responding with special offers focusing on main meals, with very strong multipack deals on meat, vegetables and fruit. While the specialist stores arguably are active in this area, there is a lot to be said for the convenience of get the bulk of your shopping under one roof."
The survey was conducted for Checkout’s annual ‘Fresh Issue’, due out next week, which profiles the leading producers and innovators across several fresh categories.
Monday, April 2, 2012
Sunday April 01 2012
In April 2009, the National Asset Management Agency (Nama) was created to deal with the impact of the worst banking crisis in the history of this State.
Announced by the then Finance Minister, the late Brian Lenihan, Nama's purpose was two-fold.
Firstly, to rid the busted banks of their toxic development loans and recapitalise them so they could lend again. Secondly, to restore a functioning property market.
"Nama will ensure that credit flows again to viable businesses and households by cleansing the balance sheets of Irish banks. This is essential for economic recovery and the generation of employment. It will ensure that we avoid the Japanese outcome of zombie banks that are just ticking over and not making a vibrant contribution to economic growth," he said.
Its own mission statement said: "Nama will conduct its activities in a way which assists the property market to operate efficiently and in a way which achieves longer- term sustainability."
The recession in Ireland, primarily caused by reckless Irish banks, is now into its fifth year, one of the longest anywhere in postwar Europe.
Three years on from Nama's conception, there still is no bank lending and the property market remains in freefall (latest CSO figures show there have been 53 consecutive monthly drops in house prices and the rate of decline in house values increased in the last quarter).
Nama has fundamentally failed to live up to its core objectives, and this failure has not only prolonged Ireland's worst recession, but risks turning it into a depression.
Worse, because of the continued stagnation of the Irish economy, Nama's projected "profit" targets now increasingly look unattainable.
But why and where has Nama failed?
Many, if not all of the key initial assumptions upon which Nama was founded, have turned out to be inaccurate.
• Far from the modest growth predicted in 2009, domestic Irish economic growth or GNP (the best measure of real activity in Ireland) has fallen sharply, with demand fundamentally depressed.
• The initial writedowns on bank loans taken in by Nama were to be no more than 30 per cent. Ultimately they turned out to be 58 per cent.
• A perceived banking liquidity problem turned out to be a core solvency issue.
• Since 2009, the international economic environment has deteriorated significantly, amid IMF talk of a "lost decade" and lingering concern over the viability of the euro.
• That uncertainty grew significantly because of the ongoing failure of the Irish banks to extend meaningful lines of credit to businesses or homeowners.
• Both commercial and domestic house prices have continued to fall sharply, and are now down 30 per cent since Nama's Loan Acquisition Value date in November 2009.
• Consumer confidence remains at record lows and personal debt levels are spiralling out of control. (More than 146,000 Irish residential mortgages, or one in five, are now either in arrears or have been restructured, and two-thirds of mortgages are in negative equity).
Since all of the initial assumptions pertaining to Nama no longer apply, a total reassessment of its objectives and modus operandi is now urgently needed.
Nama is a unique and controversial entity sitting on 35,000 properties.
In one of the world's smallest countries, it operates the world's largest property portfolio totalling €30.5bn of loans previously worth in excess of €72bn. It is axiomatic that Nama's potential to help or hinder Ireland's chances of recovery are enormous.
The acceleration in the decline in house prices now means that they are falling about 1 per cent a month.
All the time the negative equity crisis is deepening -- it is causing more and more mortgage defaults and suppressing consumer demand.
Therefore, how Nama behaves will determine what happens to property prices, and is critical to Ireland's chances of recovery.
For three years a credit famine has engulfed Ireland.
In 2006, the level of mortgage lending into the Irish economy was €40bn. Last year it was €2bn, just 5 per cent of the 2006 level.
While the 2006 level of lending was unsustainable, the 2011 figure was also unsustainable. Unsustainably low.
Another way of looking at it is how the construction industry accounted for 21.8 per cent of the entire economy in 2006, while it accounted for just 5.6 per cent last year.
In a functioning economy, that figure needs to be up around 12 per cent.
Ireland faces unprecedented challenges.
Yet, despite the loss of most of our sovereignty, there is one major element of our own affairs which we retain control of and which can rescue the country -- Nama.
But that rescue can only happen if key changes to its current policies are made.
Moreover, it is incumbent on those in government and running Nama to drastically alter its game plan given the very changed economic reality we find ourselves in.
In the original legislation, Nama was required to get the "best achievable price" when disposing of assets it controls. This has since been superseded by a rather self-serving intention of "making a profit".
According to a Department of Finance directive, Nama will not sell any of its assets below what it paid the banks, known as the Loan Acquisition Value (LAV).
Selling at below the LAV is contrary to Nama's more recent stated objective of making a profit.
These two objectives are contradictory and the conflict between the interests of the State and the interests of Nama arises.
Nama said that where it has sold property at less than acquisition value, it was done on a case by case basis, and the numbers are believed to be very small.
Crucially, by not selling at the open market value, even at a loss, Nama is dragging out the establishment of a floor in the property market, thus prolonging the recession by up to two years.
By doing this it is contravening its original legal requirement to "act expeditiously".
Indeed it was Michael Noonan in 2010, then Fine Gael finance spokesman, who best described Nama's impact. "Nama has destroyed the property market. The minister should call the people from Nama into his office and tell them to put €2bn or €3bn of property on the market at fire sale prices. These may be sold too cheaply but at least that would establish a floor in the property market and people would start again. Currently, everybody is watching prices continually falling and nobody will get into the market. They believe prices will fall further and are waiting for the bottom," Noonan told the Dail.
Nama responded by saying it will "not engage in fire sales nor will it hoard assets on a speculative basis, as neither approach would get the best price for the taxpayer".
As leading Nobel Prize-winning economist Joseph Stiglitz put it, "Nama's structure and objectives create negative value, destroying incentives that can hurt... the economy".
More worryingly, for Nama to meet its stated targets it has to realise about €20bn of Irish assets over the next eight years. That's €2.5bn a year in a dead market. It is farcical.
Also, there is now increasing doubt over the accuracy of Nama boss Brendan McDonagh's pronouncement that the property market has fallen 57 per cent from its peak.
His figure is at variance with the most up to date figures from the CSO. Since November 2009, when Nama's key valuation was made on the entire loan book, Nama says house prices have dropped by 14 per cent. The CSO says the drop since 2009 has been 30 per cent.
The website Namawinelake.com has asked: "Why would Nama be saying today that property only declined by 14 per cent since November 2009 when mortgage-transaction prices have fallen 30 per cent? Might Nama be trying to minimise the impairment costs it takes in its accounts in 2011, possibly to avoid a further injection of capital from the State?"
But there is also a mounting level of legal actions before the courts which have severely damaged Nama's intended objectives. Defeat to Paddy McKillen is said to have cost €7m in legal fees but it also lost the ability to assume control of his loans. Then 10 days ago, the High Court found against Nama in its quest to place Treasury Holdings into receivership.
And for all the loud boasting about its billions of sales, Nama had only booked €2.7bn to the end of September 2011, according to Michael Noonan. Nama has made a profit of only €132m on these sales, from better quality assets in markets where prices have improved since 2009.
It has emerged that €55m has been extended to 41 developers in "overheads" including their salaries. That's €1.3m per developer, far in excess of the average €70,000-€100,000 figure stated previously or the €200,000 salaries paid to two developers.
So what should be done now?
Firstly, Nama in the short run must sell assets at open market value, abandoning its position that it only sells at the 2009 price it paid. Establish a floor in the market, as Noonan said 16 months ago.
Secondly, in a moribund mortgage market, Nama can play a pivotal role in facilitating capital investment through a range of schemes aimed at investors, who could take control of much of Nama's asset portfolio (this idea is different to Nama's daft idea to underwrite loans in individual cases).
These two elements combined would revitalise the market.
Thirdly, it must also remember that it is an asset management agency and not a debt collector as its creator Dr Peter Bacon has repeatedly said. This means it needs to be far more flexible in its business plan and focus on more medium and longer-term targets as opposed to short term, narrowly focused ones.
Fourthly, given that Nama's monthly turnover is greater than the annual budgets of eight government departments, the time has come to consider having a minister solely responsible for Nama.
Ultimately Ireland cannot afford for Nama to fail, which it clearly is at the moment.
As things stand, based on the further decline of property values, it can at best recoup between €24bn and €26bn, which would realise a loss of between €4bn and €6bn to the taxpayer.
That cannot be allowed to happen and there is still time to change things.
The greatest success for Nama would be a restoration of some normalised property market and normalised credit lines, which would return the devastated domestic economy to growth, thus creating jobs.
It must also abandon its current course of being a debt collection agency, which it was never meant to be.
If it fails to do so, Ireland's lost decade which the IMF has warned about, will undoubtedly become a reality
THIRTY-FOUR YEAR old Peter Darragh Quinn has been feeling the pressure in the witness box of court six in the Four Courts this week.
He has been the subject of sustained questioning by the former attorney general, Paul Gallagher SC. Gallagher is acting for the State-owned Irish Bank Resolution Corporation which is seeking to have Quinn, his uncle, the former billionaire Sean Quinn, and his cousin, Sean Quinn jnr, sent to jail for contempt of court.
At the heart of the case is the Quinn family’s acknowledged efforts to put multimillion euro foreign property assets beyond the reach of Anglo Irish Bank (now part of IBRC), to which the family owes €2.88 billion.
On June 27th last year, Mr Justice Frank Clarke ordered the family to stop. The bank alleges that the three Quinns continued in their actions, something that the three men deny.
Peter Darragh Quinn told the court that, from 2010, he believed that Anglo would eventually seek to seize all the Quinn family’s assets. He was managing an international portfolio of property worth approximately €500 million that was owned by the five Quinn children, and he thought some of these assets could be protected.
Gallagher questioned Quinn about a Russian company, Finansstroy Investment, that formed part of the Quinn property group and which owns a number of valuable Russian properties, including the Kutuzoff Tower in Moscow which has a value of up to $180 million.
In order to facilitate getting money out of Russia, the property group included a Co Fermanagh company, Demesne Investments Ltd, of which Sean Quinn was a director, and which was owed very large amounts by Finansstroy.
According to Peter Quinn, he got advice about protecting Quinn assets in Russia from a Russian solicitor, Alexander Khokhlov, whom he met in the Kutuzoff Tower on March 16th, 2011. An interpreter was used.
“I was advised by Mr Khokhlov that, in order to protect the Russian property assets, it would be prudent to assign the intercompany debts due to Demesne to a separate entity.”
Some days later, Khokhlov told Quinn he was engaging a Russian firm of solicitors, Attorneys and Business, or AB, to assist. If the debts were to be assigned from Demesne, somebody, according to Peter Quinn, had to be found to assign them to. AB, which he had never heard of before, was going to do this.
According to Quinn, on April 4th, 2011, he received by courier to his office in Derrylin, Co Fermanagh, a large package containing assignments and other documents, all or most of them in Russian.
Quinn, who was the general director of Finansstroy, said he signed these documents as did Sean Quinn for Demesne. He said he flew to Moscow with the documents on the evening of April 14th, 2011.
That morning Anglo Irish Bank had seized the Quinn Group from its founder and his family in an unexpected move carried out with an almost military level of preparedness.
Quinn handed the documents to someone in the Kutuzoff Tower whom Mr Khokhlov sent to him for that purpose. He had no further dealings with the solicitor until February 2012, he said.
According to Quinn, the documents signed on April 4th assigned debts of more than $100 million owed by Finansstroy to Demesne, to Yuroslav Gurnyak, a person neither he nor Sean Quinn had ever heard of before. He said he could not remember if he told Sean Quinn to whom the valuable rights were being assigned to.
IBRC has said Gurnyak was working on a building site in Moscow when asked by a Russian lawyer to sign the documents for a nominal fee, and that he told this to an agent of the bank when interviewed. Gurnyak, according to the bank’s agent, said he had signed the documents during the summer of 2011.
According to Peter Quinn, he has a “gentleman’s agreement” with Gurnyak, with whom he has never discussed the matter, that the Quinn family would get 20 per cent of any money the Ukrainian national secures from the assignments.
Quinn told Gallagher that this deal, although risky, was better than the certainty of losing everything if the family had just waited until the bank made its move.
On June 20th, 2011, Peter Quinn flew to Dubai, arriving early in the morning and leaving that evening. He met a man he had never met before, Michael Waechter, of Senat Aktiengesellschaft, to discuss the creation of a trust which would hold assets for the grandchildren of Sean Quinn. Quinn, he said, wanted to get back into business at this stage, and wanted a vehicle that would allow him to do so.
A trust was established, in Switzerland, but was not put to use because of all that has happened since.
According to Quinn, AB knew of his intended trip and asked him, while there, to request Senat to acquire an offshore company for Gurnyak.
Quinn could not tell Gallagher why the firm would ask him to do this, rather than just go and organise it themselves. Nor could he explain why a firm of solicitors was asking him to get involved with the affairs of another of its clients, or why Senat, on June 22nd, got back to him rather than AB, to tell him it had purchased a Belize company for Gurnyak called Galfis Overseas Ltd.
Gallagher asked Quinn what he thought of the fact that the man to whom he’d assigned debts worth so much money and with whom he had an undocumented “gentleman’s agreement” was setting up an offshore company.
Quinn said he didn’t think about it. He rejected Gallagher’s assertion that the truth was that Galfis was being set up for the Quinns.
Documents signed by the Quinns not only assigned the debts due from Finansstroy,and other companies, for nominal $100 payments, they also doubled the interest rate that was to apply to the loans to 30 per cent, and backdated that increase to 2007.
Quinn accepts the doubling of the interest rate was not to Finansstroy’s benefit and increased the debt of that company by some €40 million.
On July 22nd, 2011, Galfis Overseas told a bankruptcy court in Moscow that it was owed $107 million from Finansstroy, citing a Russian arbitration award dated June 7th, 2011, which was based on the assignment of debts from Demesne to Galfis on April 4th. (The bank believes this was part of a process whereby Finansstroy would be put into bankruptcy and the creditor would end up with the Kutuzoff Tower.)
The documents produced in Moscow indicated that Finansstroy had been told of the pending arbitration award and had asked that the claim be processed without it being represented, even though the company had never had any dealings with Galfis.
Peter Quinn, who was general director of Finansstroy at the time, told Gallagher he had no involvement in the apparent award and “hadn’t a clue” how it could have come about.
The date of the supposed arbitration award, June 7th, was prior to Quinn’s trip to Dubai and his dealings with Senat. Up to Senat buying Galfis, it had been a shelf company and so could not have been involved in any assignments or arbitration case.
“Somebody is involved in a very serious fraud,” said Gallagher.
Gallagher said there was no reason why Gurnyak could not use his own name in the arbitration case, if what Quinn had said about the assignment of debts to the Ukrainian in April was correct.
Quinn said Gurnyak might have tax reasons for using the offshore company, but agreed this was only speculation.
Gallagher said AB was acting for Gurnyak and, on Quinn’s evidence, knew that Galfis didn’t exist on June 7th. Furthermore, he pointed out, AB was also, on Quinn’s instructions, acting for Finansstroy in the bankruptcy procedure. Is AB complicit in the fraud, asked Gallagher. “I am not aware of what went on,” Quinn said.
Gallagher suggested that what had, in fact, happened was that it was Quinn who produced to AB the assignment to Galfis, which would explain the law firm’s actions. “That’s not what happened,” said Quinn.
It is the bank’s case that an examination of the facts supports this suggestion. The bank’s case is that the Finansstroy debts were transferred in July, not April, and to offshore companies that remain under the control of the Quinns.
It believes the documents substituting Gurnyak for Galfis were created after the bank discovered that Galfis, because it was a shelf company at the time, could not have entered into any agreements in April 2011.
This version of events is rejected by the Quinns. Peter Quinn says he and his uncle signed documents assigning the debts to the Ukrainian on April 4th. He says his signature on the document used in the bankruptcy proceedings and which shows the debts being assigned to Galfis, is a forgery, and that a handwriting expert has confirmed this.
As an accountancy graduate, Quinn has conceded in court that he knew some of the actions he took were not of benefit to the companies involved, but said the intention was to benefit the Quinn family as ultimate owners of the assets.
The case is being heard by Ms Justice Elizabeth Dunne, who must come to her decision at the criminal level of proof – beyond reasonable doubt.
CONTEMPT ORDERS AND THE WITNESSES
THE ORDERS for contempt against the Quinns are based on allegations that, contrary to a High Court order of June 27th, 2011:
Seán Quinn snr and Peter Quinn, on or after July 20th, 2011, were involved in the assignment of loans worth $130 million to a Belize company (Galfis) and the application of a retrospective and “extortionate” interest rate, in relation to Russian companies Finansstroy, Logistica, and Red Sector.
That the same men were involved in an assignment on or after July 6th, 2011, of a loan of €45.2 million, to a Northern Ireland company (Innishmore Consultancy) with the objective of making the new creditor take priority over IBRC in relation to debts due from a Ukrainian company, Univermag, that in turn owns a Kiev shopping centre.
That Seán Quinn jnr and Peter Quinn were involved in $500,000 being paid from a Quinn property group company on August 30th, 2011, into the personal account of the general director of Univermag, Larisa Yanez Puga, contrary to the interests of IBRC and immediately prior to the Quinns losing control of the group company.
Peter Quinn is the first witness called in the case and is expected to complete his evidence today. Sean Quinn snr is expected to follow him into the witness box when the case resumes after the Easter break, with Sean Quinn jnr also giving evidence. Whether some of the foreign people involved in the matters being examined give evidence, possibly by way of video link, is not clear.
Paul Gallagher SC and Shane Murphy SC, instructed by McCann FitzGerald, are acting for the bank. Bill Shipsey SC and Brian O’Moore SC, instructed by Eversheds, are acting for the Quinns.
LEGAL DRAMA: THE MAIN PLAYERS
SEAN QUINN (65) used materials quarried from the small farm that he grew up on in Derrylin, Co Fermanagh, as the springboard for a manufacturing and financial services group that he built up over the course of his adult life and which at one stage made him the richest man in Ireland.
However, disastrous investments by way of contracts for difference in the shares of Anglo Irish Bank have led to his being declared a bankrupt in the Republic and to his Quinn Group, which was owned by his five adult children, being seized by the bank.
By way of personal guarantees his children, who at one stage owned assets worth hundreds of millions of euro each, have ended up owing Anglo, now IBRC, more than €2.88 billion. The family, however, is contesting the legality of its debts to the bank.
PETER DARRAGH QUINN (34) is a former senior county footballer for Fermanagh and an accountancy graduate who managed an international portfolio of property investments on behalf of Sean Quinn’s five children. The portfolio is estimated to have a value of up to €500 million and is the sole remaining family asset of value that the bank has not yet seized.
He has told the High Court that, since 2010, he had been expecting Anglo to one day seize the Quinn family’s assets and had urged them to take steps to put assets beyond reach.
He has also said information was deliberately withheld from a court case last year before Mr Justice Frank Clarke.
SEAN QUINN JNR (33) was involved in the running of the Quinn Group with his father and was at one stage the owner of the prestigious Belfry golf and hotel resort in England, bought for £186 million in 2005. His father and his cousin Peter are the alleged “prime movers” in the case currently before Ms Justice Elizabeth Dunne.
Sean Quinn jnr’s alleged contempt, which he denies, involves the payment of $500,000 to a Ukrainian woman, Larisa Yanez Puga, who managed valuable properties in Kiev for the Quinns, at around the time that the bank was seizing control of the company structure that owned the Quinn children’s international property portfolio. Efforts by the bank to replace Ms Puga’s role in running a valuable shopping centre in Kiev have encountered repeated obstacles.
STATE AGENCY Nama is pursuing former developer John Fleming through the British courts for a share of his income.
Mr Fleming’s property and development empire, Tivway, collapsed in 2010, owing its banks more than €1 billion, after the Irish Supreme Court shot down a rescue plan drawn up by an examiner appointed to the group in 2009.
He was declared bankrupt in Southend County Court in Essex, England, later that year. Last November, the same forum discharged him from bankruptcy.
This week, Nama applied to the British courts for an income purchase order against Mr Fleming. The case was adjourned for 10 weeks following a brief hearing.
An income purchase order would entitle Nama to any income earned by Mr Fleming for three years, above whatever level is deemed necessary for him to live.
Under the British system, bankrupts are generally discharged after 12 months. However, any creditor not involved in the original bankruptcy agreement can seek an income purchase order, once they make the application during the 12-month bankruptcy period.
Nama applied to the courts before Mr Fleming was discharged in November. This week’s hearing was adjourned to allow the agency to gather and assess information it needs to present its case.
Mr Fleming moved to England in 2010, shortly after the Supreme Court upheld an appeal by some creditors against a rescue plan proposed by George Maloney of Baker Tilly Ryan Glennon, who had been appointed examiner to the group in 2009. He applied for bankruptcy that November.
The settlement involved him handing over personal assets to creditors, including AIB and Anglo Irish Bank, that had secured judgments against him ranging from €15 million to €26 million. The assets handed over included his family home in west Cork, properties, investments and family trusts. He was allowed to keep two cars, clothes, valuables and cash of €49,000.
Mr Fleming’s business was based in Bandon. He began his construction business in 1975. The firm worked on projects across industry, energy and pharmaceuticals, and earned a strong reputation for the quality of its work.
It ran into trouble after it bought and began developing the Sandyford site, centred around a partially built 14-storey block, known as the Sentinel.
Tivway paid €245 million for the 11.3-acre site in Sandyford in early 2006, just as the property boom was reaching its peak. Three years later, the turnaround in the market that followed the financial crisis of 2008 forced Tivway to go to the High Court to seek protection from its creditors, and to have an examiner appointed.
Nama subsequently took over loans due to the Irish banks but was not a party to the bankruptcy agreement.
By Laura Noonan
Saturday March 31 2012
BAILED-out AIB is creating a 400-man team to work with struggling homeowners so the bank can fulfil the "simple objective of keeping everybody in their home".
AIB's new chief executive David Duffy revealed the new initiative yesterday, and promised that his bank would soon "come out aggressively into the market" with new creative products to help struggling borrowers.
But Mr Duffy also warned that AIB's latest cost-cutting round "may well" result in closures across the bank's 267-branch network as the bank adjusts to life as a "much smaller" institution.
AIB has been bailed out to the tune of about €20bn, it booked loan losses of €8.2bn last year, although bottom-line losses came in at just €2.3bn after various adjustments.
The drive to help struggling customers comes after a dramatic surge in AIB's mortgage arrears in 2011.
By the end of the year, 15.5pc of AIB's Irish mortgage book was in arrears of more than 90 days -- up from 4.8pc at the end of 2010.
AIB has 'forbearance' arrangements in place for 22,611 mortgages, including 13,442 on interest only payments.
There are also 4,964 where the mortgage term has been extended, and 1,512 where arrears have been added onto the main loan.
Of those 22,611 loans, 17,358 are said to be 'performing'.
"The bank will work with people in a customised fashion to try and resolve every situation with the simple objective of keeping everybody in their homes," Mr Duffy said yesterday.
Mr Duffy said his bank had spent "the last number of months" talking to regulators about a "whole array of complex solutions" in line with the recommendations of the Keane report on mortgage debt.
"We hope to be able to come out aggressively into the market with those products as soon as we have full approval from the Central Bank," Mr Duffy said.
Proposals from the Keane report include allowing struggling borrowers to rent their homes from the banks, and allowing borrowers in negative equity to 'trade down'.
Mr Duffy didn't specify what solutions AIB was pursuing, but said he "didn't believe" debt forgiveness was "the right answer for a great majority of all people".
By Nick Webb
Sunday April 01 2012
GIANT UK private equity firm Forum Partners has hired former Nama executive Enda Farrell to scour the Irish market for distressed debt deals.
Forum Partners is a €5bn real estate investment management firm, with operations in the US, Europe and Asia.
Mr Farrell was a portfolio manager at Nama before the move to the private equity company.
Fears that Forum Partners might benefit from Mr Farrell's inside knowledge of Nama were dismissed by the state agency, which is selling €80bn worth of property assets to investors.
A Nama spokesman told the Sunday Independent that no properties are sold without a competitive bidding process and that all properties are independently valued before any sale. All sales are also reviewed by the Comptroller & Auditor-General's office.
Top civil servants are restricted from moving to private sector jobs in areas where they may have specialist knowledge.
Civil servants must spend a year in "quarantine" before taking up these jobs.
Forum announced last week that it was shifting its focus to concentrate on European debt markets. The company is seeking to capitalise on the difficulties banks have with distressed borrowers.
"Enda will perform a number of roles for Forum, including sourcing loans from Irish financial institutions, creating new products for investment in Ireland and helping Crown [a Forum investment] build their loan servicing platform for Irish banks," according to Forum.
An independent review by former Louth county manager John Quinlivan found that several practices in the council were "unacceptable", including allowing its former director of planning to prepare local area plans which are used to decide if planning permission should be approved.
Most notably, the council ordered a building company to build a road even though it did not own all of the land, which led to it being dubbed the 'road to nowhere'.
An Taisce made a series of complaints about planning permission being granted for high-rise buildings which it claims should not have been approved under the council's own guidelines.
Concerns were raised about 23 individual planning applications approved between 2005 and 2009. Of these, 15 were overturned by An Bord Pleanala.
The heritage body also claimed that the council had ignored zoning policy and conservation issues.
The council said the developments were allowed under its planning guidelines.
Concerns were raised with the Department of the Environment about the number of one-off rural houses being approved in "very sensitive areas", particularly in Connemara.
In some cases, council management decided to overrule the advice of planners who advised to refuse permission.
Some 40 cases were referred to, many of which were overturned by An Bord Pleanala.
In 2009, Galway made 2,167 planning decisions, of which 122 were appealed to the board. Of these, the decision of the council was overturned in almost half of all cases.
The council appointed a liaison officer to act as a kind of middleman.
A constituent or company would approach a councillor seeking advice on obtaining planning permission for a development and the councillor would then approach the liaison officer. The officer would then relay the concerns to planners.
None of the meetings were on the record, documented and available to the public. MEATH
The concerns related to the council deciding on a number of occasions to change its development plan to allow certain types of development to go ahead.
There were six material contraventions of the plan -- some proposed by officials, and others by councillors -- which related to proposals to develop business parks in Dunboyne, Clonee and near Maynooth in Co Kildare.
In some cases, permissions were overturned by An Bord Pleanala on appeal.
CORK CITY Allegations were made in relation to 16 specific planning applications in Cork city, with concerns raised that meetings between applicants and council staff were not recorded.
Some complaints related to how planning functions were being carried out, with allegations that planning policies were not being implemented in the case of certain developments.
The council was asked to respond to complaints in June 2010, and has sent a submission to the Department of the Environment.