Gavin's Blog

“The Irish banks are so well capitalised compared to any banks anywhere across Europe that I am confident they can absorb any loans or any impairments that emerge in the ordinary course of business.”

Sigh. This is what Neary had to say on October 2, 2008. Just a few short weeks later and the Government was injecting billions into the banks.

Neary has spent his entire adult life, since he was 19, working at the Central Bank, and then at IFSRA. He clearly has no idea what the hell he is doing, and is so close to the establishment that he has no idea what regulation actually means. Oh and then there’s all that business about what he did or didn’t know about Fitzpatrick’s loans of €87m from Anglo, and why he apparently didn’t bother telling anyone.

I see new Anglo Irish chairman Donal O’Connor has seen fit to resign from his position at the Dublin Docklands Development Authority. John Gormley accepted his resignation today. Mr O’Connor served as Chairman of the DDDA since the middle of 2007. In a statement the DDDA said:

He has made this decision in light of his very significant commitment to his role in Anglo Irish Bank. His resignation also ensures that there can be no suggestion of a potential for conflict of interest, either perceived or real, with his new role as Chairman of the Bank.

Mr O’Connor himself said:

“As the new Chairman of Anglo Irish Bank, I am very conscious of the level of commitment required of me and, in addition, and I wish to ensure that there can be no suggestion of conflict of interest in the various roles I have. Accordingly, I have advised the relevant Ministers and the Chief Executive of the Dublin Docklands Development Authority of my intention to step down as Chairman of the Executive Board of the Authority.”

Hmm. No perceived conflict of interest? How did Mr O’Connor feel about Messrs Fitzpatrick and Bradshaw being on the board of the DDDA while at the same time being on the board of Anglo Irish? Of course the much vaunted SIPO commission looked into that whole relationship and found nothing untoward, prompted by a complaint from Michael Smith.

Furthermore, what is Mr O’Connor’s relationship with those two individuals? How did Mr O’Connor do while he headed the DDDA? Well, while he was chairman, he entered into a secret deal with Liam Carroll, which led to legal action. The secret deal could cost taxpayers millions. And who does Mr Lenihan choose to head Anglo? Mr O’Connor. In October, the Phoenix was on the story:

Having last year entered into a secret arrangement with developer Liam Carroll – which was challenged by Seán Dunne – the DDDA has now been exposed in the High Court to huge compensation claims. The Seán Dunne/Liam Carroll debacle looks set to cost the taxpayer hundreds of millions. As Carroll’s €200m north quay scheme has been rendered null and void and could be pulled down, the developer is bound to look to the DDDA, which greenlighted the project, to bail him out. To date, approximately €83m has been spent on the development. Seán Dunne, too, will be looking for massive compensation.

Then there’s the litigation from Johnny Ronan and Richard Barrett at Treasury Holdings, whose Spencer Dock Development Company also challenged the Authority’s links with Carroll described as “a direct relationship” by Justice Geoghegan – claiming that there was a covert contract between the DDDA and Carroll’s company relating to the development of the north quays, where the Spencer Dock company controls 29 acres. Ronan and Barrett have claimed that the DDDA “seriously compromised itself” with its commitments to Carroll and, given the High Court finding that the agreement gave rise to “a reasonable apprehension of bias”, the case already looks like game, set and match. Again, the claims for compensation here will run into millions.

However, the cock-ups with Seán Dunne and Treasury Holdings are only the tip of the iceberg in the docklands, where controversy is the order of the day. For example, it is far from clear what has been going on in relation to the building of the proposed iconic ‘U2 Tower’ but, given that the original architectural competition stretches back to 2003, it is obvious that something has gone badly wrong. That original competition was marked by controversy when the winning scheme could not be identified as relevant details had been lost and, as a result, the runner-up – Burdon Craig Dunne Henry architects, a firm associated with U2 manager Paul McGuinness’s brother-in-law, Felim Dunne – was deemed to be the winning
designers.

Of more concern to the taxpayer, however, must be the DDDA’s involvement in the Irish Glass Bottle site consortium. At the very top of the property market, this land in Ringsend was sold off by Paul Coulson and Dublin Port for a whopping €424m. What makes this deal so worrying is the huge level of debt inside the winning Becbay consortium. For example, Bernard McNamara put in €57.5m for a 41% stake but only €5m in cash. The balance came from Davy clients who subscribed for loan stock. In return they are to get a hefty 17% per annum return – which reflects the perceived level of risk in the project. This is not surprising given that the original purchase was backed by a €288m loan from Anglo Irish Bank, which also promised to provide a further €900m in development finance.

The DDDA itself has put up over €32m cash – presumably borrowed – while the latest annual report for the Authority also reveals loans to joint venture undertakings of €37.6m, €32.8m of which is accounted for by “unsecured interest-free” loans to Becbay. The notes to the accounts state “the executive board is satisfied that Becbay Ltd will not be required to repay this debt in the short-term and therefore these loans have been classified as financial assets”.

It is not only the involvement here of the DDA in such a highly-leveraged, costly project undertaken at the top of the market that is of concern. There are also questions about possible conflict of interest given the presence on the board of two Anglo Irish Bank directors, Lar Bradshaw (then DDDA chairman) and Seán Fitzpatrick.

Indeed, a complaint from Michael Smith even led to an embarrassing investigation by the Standards in Public Office Commission (SIPO).

Since then, both Bradshaw and Fitzpatrick have left the board (voluntarily) but, as Goldhawk revealed (see The Phoenix, 27/6/08) the current DDDA board is still closely linked to the bank.

For example, one of the new directors is Catherine Mullarkey, an ex-Anglo Irish executive. Moreover, accountant Donal O’Connor – who replaced Bradshaw as chairman – was subsequently slipped onto the board of, wait for it, Anglo Irish Bank. O’Connor is a partner in PricewaterhouseCoopers, which, the DDDA accounts reveal, earned €150,000 last year for internal audit and consultancy services to the DDDA.

The other members of the board are Niall Coveney, Dónall Curtin, Niamh O’Sullivan, Brendan Malone and Sheila O’Donnell. It is far from clear why this board has allowed the DDA drift into such controversial and potentially costly situations but Minister for the Environment, John Gormley, can hardly sit by and watch the taxpayer stuffed for millions of euro without those responsible being held to
account.

How much further should we dig? How about Treasury Holdings, poster boy of the great and the good of Irish entrepreneurial spirit. As Town Planner noted in May [via the Phoenix]:

IN THE league of politicians renowned for palling around with property bigwigs, Cork SouthWest Blueshirt Jim O’Keeffe is hardly amongst the title contenders. So Goldhawk was intrigued to see him give two-fingers to the ethics legislation recently by receiving €7,500 from Johnny Ronan and Richard Barrett. Jimbo received these donations in three installments, through three Ronan/Barrett companies.
Those pesky ethics laws state that no TD can receive more than €2,539 from one individual or organisation as Jimbo is well aware, considering he was Fine Gael’s justice spokesperson until late last year.

If a TD is unlucky enough to receive more than this from an admirer, he or she must not only swiftly return the dosh to the donor but also report the donation to the Standards in Public Office Commission (SIPO). Moreover, company subsidiaries are also covered in the legislation and are considered one and the same as the parent company.

So, when Treasury Holdings gave O’Keeffe €2,500 last year, he must have presumed that that would be the last he’d be hearing from the moneybags developers. O’Keeffe received another €2,500 from Spencer Dock Development Company Ltd (SDD), the company behind Treasury’s mammoth development in the Dublin Docklands. While Harry ‘Point Depot’ Crosbie is involved here, Treasury Holdings is the principal shareholder and, indeed, SDD’s accounts – which are signed off by Ronan and Barrett – state that “the company is a subsidiary undertaking of Treasury Holdings…”

Jimbo received a third cheque for €2,500 from Treasury’s Burlington Road HQ but in the name of Havenview Investments Ltd. The main shareholder here is Real Estate Opportunities Ltd (REO), the booming property venture run by Ronan and Barrett and controlled by Treasury Holdings. The other shareholders are Brossbar – a whollyowned Treasury subsidiary – and Jermyn Investment Properties Ltd, a UK company also associated with Treasury Holdings. To simplify matters, Havenview’s accounts – also signed off by Ronan and Barrett – list the “ultimate holding companies” as Treasury Holdings and REO.

None of which says much for Jimbo’s statement to Goldhawk that his three donors are completely separate legal entities, something which he says he checked with Treasury Holdings. Happily, O’Keeffe said he contacted SIPO when he received the “entirely unsolicited” donations and he was assured that he was completely in accordance with the rules. This is not strictly true, however, considering SIPO has no role in establishing whether or not a politician’s disclosures are genuine – it merely advises politicians on the guidelines. O’Keeffe would not comment on whether or not he believed the dosh to be ultimately coming from the same source anyway, ie Johnny Ronan and Richard Barrett. His Blueshirt colleague, Leo Varadkar, recently denounced Beverly Flynn, for “breaking the spirit” of the legislation by pulling a similar stunt.

Interestingly, O’Keeffe received a fourth cheque for €2,500 from Ronan and Barrett through Castle Market Holdings Ltd but returned it when the pair told him that this company was a Treasury subsidiary.

Ah yes. Who is on the Public Accounts Committee? Interesting.

Watching these three fumble around brought to mind a certain image. They remind of three drunken louts, staggering their way through Templebar, bumping into each other, into walls, into rubbish bins, and the further they walk the more likely it is that all three will, at varying times, collapse face first in a pool of stale Guinness, followed by their own vomit. At which point Ireland will be calling in the International Monetary Fund to bail us out.

While some may consider my views anti-FF, they are not. I don’t see much promise from the FG or Labour, besides perhaps Richard Bruton, and even Eamon Gilmore (his deadbeat speech was rather good). But these are only individuals, not their entire parties.

From where will the vision come? To say I am pessimistic about the future of this country would be an understatement. 2009 will be armageddon.

Back in October, someone calling themselves Deepthroat posted on the property forum thepropertypin.com. Some called him (or her) a crank, but others had their curiosity piqued. I for one welcome our own deepthroat, but wonder if the language could be a little more transparent. The earlier posts in October seem to indicate the Fitzpatrick debacle last week. I wonder what 2009 will bring. Many of these posts have since been deleted, but are available via the Google cache.

On October 16, Deepthroat said the following:

I am sick to the pit of my stomach to see what has played out in the media and I cannot bear it any more. The Irish public deserves better and needs to know the whole truth.

I have access to several people in the dail and these are the rumours that are cirulating in the small tight circle of powerful people who really know what has been happening the last few weeks:

- The events of the last few weeks are nothing compared to what has gone behind closed doors and is only known to the few people that attended top level meetings when the Irish banking system nearly hit the wall a few weeks ago. A financial scandal involving several household names was barely kept away from the public as a result of the panic in the stock market and has since been swept under the carpet. There are many individuals who would end up destroyed if the real story ever gets told. Unfortunately for them, the measures introduced did not stop the shitstorm that is coming. Thie truth can only be contained for a short while, even as I write a desparate cover up is under way to limit the damage that will be done to the Irish establishment once the journos get their heads around the truth ( as one individual almost has). Timeline: 3-6 months.

- Mary Harney and the Green Party are now being repositioned by spin doctors as the fall guys for some of the crap that is coming. Expect Harney to resign and the government to collapse as FF blames everybody but themselves. Timeline: 6 months – 1 year.

- A new government will be formed with FG/Labour and SF. A significant proportion of people in the highest ranks of Irish society will have their careers ended.

The truth is out there.

And

Think of what I am referring to as property Ansbacher, but with land-banks owned by shell companies. The collapse of the Irish banking system made a few individuals very scared, and scared people loosen their tongues. Our so-called political class is up to their armpits in this crap. This stuff has risen to the surface only accidentally in the last few years (for instance, CAB has been chasing corporate phantoms owned by other corporate phantoms).

As for FG and SF not getting into bed together, I have it on good authority that neither would like to face the electorate and will swallow hard and get on with the business of government.

Times have changed out there. Expect surprises.

Interesting stuff. Later on he replied:

The world has changed. FF are not the only party with their fingers in the sweety jar. This cuts right across all political divides. Six months ago, nobody would have predicted what has happened to the Irish economy. Perhaps in about six months from now, the unthinkable will happen.

Ask yourself these questions -

- Why have the Irish banks been bailed out and yet no senior banking figures been axed, unlike nearly every other country in Europe in similar circumstances?
- Why did the Financial Regulator not clamp down on irresponsible bank lending to developers?
- Why are the full banking liabilities kept secret?
- Why were Section 23 tax breaks continued even when those in the ‘know’ saw that the bubble was bursting?

Look to Mr.Juan Antonio Roca of Marbella, as an example.

Look to Argentina. Where is our Elisa Carrió?

There is an elephant is the living room.

Watch this space. Carefully.

And:

Clues. I cannot name names, even hint at names (sorry E).
But I will tell you how it works. Spin doctors are cynical depraved individuals and will use anything to create and manipulate the public sentiment. Just like a stage magician will be flourishing his hand with a handkerchief, while the other hand is actually up to something devious while you are not watching.

Always watch the hand they do not want you to look at.

For instance. It seems politically strange and naive to attack pensioners and remove their medical cards, when all you are saving is €100 million. There are easier ways to save this money without arousing such hostility.

However, this does two things. It will fill the airwaves with shouting and complaining (possibly justified) about ‘the poor old people’ for weeks and diverts attention away from ‘the other hand’, the one they do not want you to see. Another prediction – the pensioners will get to keep their medical cards (mostly) whilst at the same time isolating Mary Harney for a future fall when it is politically expedient. While the media obsesses about medical cards, the banking scheme was released, the terrible truth covered up for another little while and the FF head honchos disappear conveniently off the Irish stage to Brussels.

The plan all along was to arouse public hostility as a smoke screen. The medical card fiasco is a huge red herring.

In the coming weeks and months, keep watching the hand the magician does not want you to notice. To quote someone we know, it is all ‘smokes and daggers’.

And the next day:

Things have changed fast since I last posted.

It seems that those with something to lose are getting nervous. The announcement that the financial regulator will be examining the banks debts has meant that time is even more limited than I speculated earlier for the massive cover up at the center of the Celtic Tiger to be exposed. The book keepers in the UK and elsewhere are planning to pull the plug if this is not contained. This means using the nuclear option. In the next few weeks an Irish bank will be allowed to fail and a major public figure will be the scape goat. The banks liabilities will be conveniently absorbed by the government without having to disclose who owed what. This seems to be Plan A.

But, just in case, Harney, the Greens and even FF are now exposed to the wrath of the Irish public, the smoke screen of the medical cards was nearly too successful. A useful sideshow. But it has caused deep instability within the government (as it was intended to do) because those behind the scenes with everything to lose are considering relinquishing power in order to save their own skins from the storm that is coming. This seems to be Plan B.

In 2002 and 2005 this scandal was contained, in different and vicious ways. It may not be so easy to cover it up now. The government may fall on its own sword to save the people with real power.

Look for the patterns in the Capital Expenditure Program. Expect Chinese money to be used creatively. There may also be an announcement from the EU on something unexpected. Sir Alan Walters may have been right and if so, this cover up will lead us into Argentinian territory. This may be the unintended Plan C, accompanied by a new Flight of the Earls, except this time the Earls are more crooks than nobles.

The game is nearly up.

And this week:

I was here before, but I got into Deep Trouble. A certain party got wind of my posts and I had to remove myself.
The empire has now crumbled however and the party involved has worse problems to worry about than me. By the use of certain keywords in this message, senior boards members can vouch for who am I.

It has not come to pass exactly as I predicted, but there was an attempt to destroy a foolish third party in attempt to add credibility to certain public institutions and remove the limelight from where it had become uncomfortable. Plan B has now been rolled out and in an effort to ‘protect’ the banking systems, an attempt is being made to hide the truth. What has come out is only the tip of the iceberg. An entire generation of Irish people has had their futures written off by the greed and stupidity of a small clique of politicians, business people, bankers and public servants.

The manipulation is somewhat breathtaking. At my level, it is easy to think it is about keeping control – but see how the pork ‘crisis’ was delayed until the European Authorities could step in and save the poor farmers? All in the same week that the new Lisbon referendum was announced. Result – large possible ‘No’ vote taken out by fear. Fantastic. But wrong.

But even so, this earthquake that is now rumbling it’s way through the Irish political class – this is bigger and will be harder to control. Not since 2004 have so many ‘respectable’ people woken up to find the disgusting truth about their wealth almost front page news. To the two journalists who contacted me through PM – keep digging! There is gold down there. Lots of it.

My final riddle – who guards the guardians? Even dogs without teeth have an owner.

I am old and cynical now. You may see me on TV in the background somewhere as this thing unwides. I will try to smile.

It’s time to regulate.

The resignations at Anglo Irish Bank continue, as chief executive David Drumm resigns.

The bank may need recapitalisation or nationalisation before next Monday.