PAUL CULLEN, Political Staff
PRIVATE BRIEFING: LEADING DEVELOPER Garrett Kelleher was the prime mover behind a private briefing by former Anglo Irish Bank chief executive David Drumm with two journalists last November, The Irish Times understands.
During the briefing, Mr Drumm alleged Brian Cowen asked the National Treasury Management Agency (NTMA) to put deposits into the ailing bank in April 2008.
The allegation, denied by the Taoiseach and NTMA head Michael Somers, surfaced in media reports last November, attributed to an “unnamed” Anglo director. Yesterday, the Irish Daily Mail ran lengthy extracts from the briefing and linked Mr Drumm to the allegation for the first time.
The article quotes Mr Drumm as saying Mr Cowen told the Anglo executive he “told those f-ckers” to invest in the bank.
Mr Drumm was asked at one point: “And Biffo intervened directly ?” He replied: “Yes, there’s no question.”
Mr Drumm claimed the former financial regulator, Patrick Neary, knew about the bank’s problems with businessman Sean Quinn, who had built up a 25 per cent stake. He also blamed the media for letting the Government “get away” with blaming everything on the bank. “And it’s not credible,” Mr Drumm said.
“Somebody killed the country. It wasn’t us. €20 billion was the debit of the country, that was created in the time of Bertie Ahern and Brian Cowen.”
Mr Drumm spoke for over an hour by conference call from the US to writer and columnist Bruce Arnold and Mr Kelleher. Arnold was approached because of his stated belief that Fianna Fáil croneyism is to blame for the country’s economic problems, rather than any individual banker.
Another journalist, Jason O’Toole, was invited by Mr Arnold to be present in his home in Sandycove, Co Dublin, during the call, but Mr Drumm was not aware that he was present.
Mr Kelleher, who is close to Mr Drumm and shares his view that Anglo is being scapegoated for the economic crisis, organised the call to give Arnold an insight into the former Anglo chief’s version in relation to the collapse of the bank and Mr Cowens role in events.
Mr Drumm understood the information was being provided on a background, non-attributable basis.
O’Toole could not be contacted yesterday but Irish Daily Mail editor Paul Drury said O’Toole had been invited to attend the briefing and at no time was he told that Mr Drumm was speaking off the record.
Asked whether the call had been recorded, Mr Drury said that he didn’t know. O’Toole had made detailed records and had compared notes with another journalist who was present.
Mr Drumm declined to comment yesterday.
O’Toole, Arnold and Mr Kelleher could not be contacted.
Monday, January 17, 2011
Developer was key force behind interview Drumm gave to two jounalists - The Irish Times - Sat, Jan 15, 2011
AIB used forged document to claim couple’s home
Monday, January 17, 2011
ALLIED Irish Banks is conducting an internal investigation into how it used forged documents to claim it held a security over property owned by a couple who borrowed €120,000 from the bank.
The couple, who live in Munster and have asked not to be identified, have warned all borrowers to keep full copies of loan agreements and check that the bank has not falsely claimed to have a claim on their properties to secure outstanding loans.
The pair originally sign- ed a loan agreement on September 8, 2008, for a €120,000 bridging loan to finish an investment property they were building. However, the couple were unable to sell the completed house in the depressed property market and ran into repayment difficulties. A new "altered" loan agreement dated September 23, 2008, was produced by the bank giving AIB security over their investment property and their family home. This document had the couple’s signatures and altered dates and conditions. "We were extremely distressed to be sent a contract — 13 months after the original agreement — that we’d neither seen, signed or agreed to, that documented our family home and our investment property was put down as security. "We could not believe that one of the largest banking institutions could blatantly alter documents and use our signatures from our original contract and transfer these to a revised contract without our knowledge. "Had we not kept our own original documentation, the bank appeared to have security against our family home without our permission," the couple said. On January 10, 2010, the bank wrote to the couple stating: "We do not have an explanation for the credit agreement dated 23rd September 2008, and it was not accepted by Mr & Mrs ——, we have not been relying on same and it has been removed from the file. We trust this is to your satisfaction." The couple have failed over the last 12 months to get an adequate response from AIB as to how it came to use forged documents. "We have been under exceptional stress and uncertainty, unable to obtain any answers other than if we are unhappy with the bank’s response, ie fraudulent behaviour; that we can complain to the Financial Services Ombudsman (FSO)."The bank has been completely impersonal and indifferent to our feelings..." AIB told the Irish Examiner the matter is under investigation. The FSO cannot name financial institutions found guilty of wrongdoing and the couple feared AIB was pushing them in this direction to cover up the issue.
Small loans set for NAMA are less than expected - Irish, Business - Independent.ie
Monday January 17 2011
THE portfolio of smaller land and development loans passing from AIB and Bank of Ireland to NAMA is 20pc smaller than originally expected, NAMA boss Brendan McDonagh has confirmed, writes Laura Noonan.
The news comes six weeks after AIB and Bank of Ireland were told to transfer all their land and development loans to Nama, eliminating a previous threshold of €20m.
At the time, the Department of Finance expected Nama to take on an extra €16.6bn of loans, bringing the agency's total portfolio to about €90bn.
Emerging
Appearing before a Public Accounts Committee meeting last week, Mr McDonagh said the "figure that's emerging" for the pot of those smaller loans is "probably in the region of €13bn".
Mr McDonagh told reporters the loans were expected to be transferred across by "mid year".
The Central Bank is expecting the banks to take a combined €1.4bn hit on the amounts Nama pays for the loans versus the amounts the banks are holding them at.
The bulk of that €1.4bn is understood to relate to AIB. If the portfolio of loans transferring from AIB is significantly lower than expected, then AIB's hit on transfer may shrink.
Irish Independent
AIB in the firing line again!
McInerney built around a long history of adversity - The Irish Times - Mon, Jan 17, 2011
Whatever happens next for the housebuilder, it won’t be the first time since flotation that its backers have taken a hit, writes BARRY O'HALLORAN
EVEN THOUGH the High Court has refused to endorse its rescue plan, there is still some chance that housebuilder McInerney could survive at a hearing today.
A new investor, Oaktree Capital, has offered its banks €25 million in full and final settlement of a €113 million debt. Mr Justice Frank Clarke ruled against this a week ago on the grounds that it was unfairly prejudicial to the banks. It has since emerged that State agency Nama is about to buy the loans, casting a different light on the banks’ position.
Irrespective of what happens, there will be very little left from the Irish business for shareholders. It won’t be the first time in its 40-year history as a public company that its backers have taken a hit.
Thomas McInerney was one of the best-known names in Irish construction when it floated in December 1971, a year after its then managing director, Ambrose McInerney, and his fellow board member, Frank Cleary, signalled their intention to list the firm on the Dublin market.
As well as being responsible for around 10 per cent of the homes in each of the Republic’s main cities, Thomas McInerney had built Croke Park’s Hogan Stand, one of Shannon airport’s runways and part of the University College Dublin complex at Belfield.
By the mid-1970s, its operation in Britain was the biggest local authority housing contractor in London.
When the flotation was first raised in December 1970, Ambrose McInerney said that the company would go to the market when conditions were right.
This took another 12 months, but when it happened, its share offering was five times oversubscribed, despite the fact that postal delays meant some bids from Britain did not get to Ireland on time.
The shares were priced at 66 pence and raised £2.2 million. The company subsequently announced that 1971 sales were £15 million and profits were £1.15 million.
Growth continued over the next few years, but in 1974, McInerney lost £3.3 million and had borrowings of £12 million. The company was forced into a fire sale of assets such as office blocks in Dublin and London and had to lay off 1,100 staff. To help ease the burden of debt, the McInerney family had to subscribe for £5 million in new shares.
Under this arrangement, the shares were equivalent to 8 per cent of the issued capital, but carried no voting rights. They were convertible in full voting shares after three years.
In a 1975 report that will sound familiar to people today, The Irish Times said that by the end of 1973, McInerney had geared up for a boom in building and property that failed to materialise, and it predicted that it could be in the “hands of the banks” for many years to come.
It didn’t quite pan out like that, McInerney turned the situation around over the next two years, and in 1978, branched out into civil engineering, with the purchase of a company called Public Works Ltd. At this stage it was also an active investor in the Middle East.
Ambrose McInerney stepped down from his executive role in the early 1980s and became non-executive chairman. Dan McInerney succeeded him as chief executive.
The group kept going through the 1980s, when building and property slumped in the Republic. Its contracting arm helped keep it going through this period, winning public and private sector-funded work at home and abroad, particularly in the Middle East.
It continued building houses, and developed Landsdowne Village, a collection of townhouses in Ballsbridge, Dublin 4, in the middle of the decade, which was one of the high-profile residential projects at the time.
Its problems came at the end of the decade. In early 1990, it warned the markets that the previous year’s profits would be lower than it expected. Subsequently it announced preliminary losses of £1.26 million punts.
On the basis that the company had prematurely booked some contracting profits, its auditors, Touche Ross, qualified their opinion of its accounts. The loss could have been around £2.2 million.
Worse was to follow. It began the new decade by announcing a £26 million loss for 1990, a year that the then chief executive, Sean Cannon, described as “horrendously difficult”. He blamed the deepest recession in Britain for 50 years. McInerney was forced to pull out of a collapsed British commercial property market, where it was an active player and which accounted for £14 million of the losses.
Similarly, activities in the Portuguese and Spanish leisure markets meant it had to make provisions against likely losses.
Its problems in Britain resulted in a long process that considerably diluted the existing shareholders’ interests in the group. This began in early 1991 when a group of banks took over 51 per cent of its British subsidiary, McInerney Homes, in return for foregoing a total of £37 million in loans.
The rescue plan did not work, and to avoid taking on £20 million of the £37 million liability, the group asked the bank to appoint a receiver to its British subsidiary at the end of the year. The following year, it agreed a restructuring that involved the issue of new ordinary shares and several classes of preference shares to the banks.
This meant shareholders faced a dilution of their interests. In other words, where they had once owned 100 per cent of the company, the deal left them with 44 per cent. Shareholders voted for it. The deal ringfenced its Irish operations from the problems that dogged the British business, and gave it a base from which it could start again.
Mid-way through 1994, a contingent liability relating to its holding in the Four Seasons in Villamoura in Portugal, and the breach of its banking covenants, left the group seeking more equity. The difficulties dragged on for two years and the subsequent refinancing led to shareholders being diluted to 4.5 per cent, although there was a claw-back under which they could subscribe for new equity.
By that time, it was 1996, and the Irish economy, which had been growing since the beginning of the decade, had taken off. Over the next period, demand for housing, particularly from first-time buyers, which became McInerney’s target market, began to rocket.
The company returned to growth, and during the following decade, began to expand in Britain again, this time focusing on the first-time buyer and social housing markets in the north of England, a business that it still has today.
It occupied a much less high-profile position in the Irish market than it had previously, although it still had one of more familiar brands in the house-building business. Its business model also avoided speculation and built houses to order rather than in the hope that people would buy them.
Nonetheless, when the property and housing markets collapsed, it found itself once again in breach of banking covenants, leaving it ultimately with no choice but to find a new investor and restructure the business. As this went on, it acknowledged that shareholders would face another dilution.
Green light for 40,000 homes as thousands more stand idle - National News, Frontpage - Independent.ie
Monday January 17 2011
DEVELOPERS have been given the go-ahead to build more than 40,000 new homes -- a year's supply in a normal market -- even though most of them will never be built.
The Irish Independent can today reveal that planners have approved 43,000 apartments and homes in housing estates in 2009 and 2010, despite a massive overhang of unsold properties in the market and banks refusing to lend.
And planners last night confirmed that many of the permissions were granted to developers hoping to increase the value of their land banks before they go to NAMA.
Serious questions now surround the decision of local authorities to give permission for more homes at a time when tens of thousands of properties are lying idle in ghost estates across the country.
Planning Minister Ciaran Cuffe said last night that securing planning permission to bump up the value of distressed land banks would not lead to a "pot of gold", and that significant reforms of the planning system would "take time" to take effect.
New laws will only allow local authorities to grant permission for a set number of homes which will be set out in regional planning guidelines.
"It may well be that applications will be granted (today) that might not be granted after the plans are reviewed, but we can't make all the changes overnight," he said.
The figures show that in the first nine months of last year more than 11,000 houses and apartments in estates were approved by the councils.
In 2009, when the housing market was in freefall, permission was granted for almost 32,000. The figures do not include permissions granted for one-off houses.
The developments include major town centre schemes and individual housing estates.
Among the companies granted permission include Cosgrave Developments, who secured permission to build 605 apartments on the former site of Dun Laoghaire Golf Club. The company already had permission for 856 units on the southern section of the site.
Dividend
A subsidiary of Park Developments called Viscount Securities was given permission to build 438 housing units in Diswellstown near Castleknock, in Dublin, last February.
The Dublin-based construction company paid a dividend of more than €470,000 to its owners as loans linked to the building firm were being prepared for transfer to NAMA.
Joe O'Reilly, who built Dundrum Shopping Centre, was given the green light for 342 new homes in Dunshaughlin, Co Meath, in January last year.
The previous December, he was given permission to build another 40 units in phase two of the Dundrum shopping centre.
Local authorities in Sligo, Cavan, Monaghan and Donegal, also gave permission for thousands of new units despite any recovery in the market likely to take longer in rural counties than in the cities.
Gordon Daly, president of the Irish Planning Institute, said many of the permissions were granted at the request of the banks.
"Many of these permissions may be the renewal or alteration of existing permissions on land already zoned for development for the purpose of retaining or enhancing the value of development land at the request of lending institutions or NAMA," he said.
The County and City Managers Association, which represents local authority bosses, insisted that all applications were decided on their merit.
The Labour Party said it would consider introducing a ban on granting permission for large-scale housing developments.
- Paul Melia
Irish Independent
In the midst of the greatest oversupply of housing ever known in this country, how mad is this?