Losing McNamara court fight could lead to collapse of DDDA
LOSSES at the Dublin Docklands Development Authority continued to mount last year and the state-owned agency could collapse if it fails to win a court case taken by property developer Bernard McNamara, the DDDA's annual report said yesterday.
The organisation, which once counted the bankrupt Anglo Irish chief executive Sean FitzPatrick among its directors, has been almost destroyed by its involvement in a calamitous €412m property deal to redevelop part of Ringsend, Dublin.
Losses linked to this deal and other developments were €22.5m in 2009, less than the €225.7m posted in 2008, but enough to leave the DDDA some way from returning to profit.
The company is being sued by Mr McNamara, who headed a group of investors put together by Davy Stockbrokers when the developer and the DDDA teamed up with Derek Quinlan to buy the 24-acre former Irish Glass Bottle site.
The DDDA said it was confident it would win a case against Mr McNamara but the agency's accountants, KPMG, warned in the report that "failure to deliver on the forecasted assumptions may cast significant doubt on the ability of the authority to continue as a going concern".
"On behalf of the executive board, I would like to apologise for the fact we're not yet at breakeven," chairwoman Professor Niamh Brennan said in the report. "We will redouble our efforts to achieve this challenging target."
She added that the DDDA's work continued to be overshadowed by the legacy of past decisions, particularly the investment in the Ringsend site. Prof Brennan, who did not accept payment for her work last year, became chairwoman of the DDDA in March 2009 after the authority first ran into problems that threatened its survival.
Several reports have been commissioned on what went wrong at the agency tasked with reviving the capital's docklands since 1997 and the Comptroller & Auditor General has recently won government permission for an in-depth probe into the DDDA's failings.
The DDDA said yesterday it took a writedown of more than €10m on property assets after a €186m writedown in 2008.
Prof Brennan had previously described the 2008 writedowns as very aggressive, but falling property prices forced the agency to make the new provisions for 2009. The DDDA's overall debt rose to €71m last year from €48.5m the previous year.
The organisation cut staff numbers to 27 from 64, but the cost of salaries and allowances remained little changed at €4.35m compared with €4.87m the previous year as many senior employees left toward the end of the year.
Legal fees more than doubled to €1.14m as the company prepared to defend itself against actions by Mr McNamara and engaged with officials compiling reports into the agency.
The annual report revealed that it made a payment of €128,000 to former DDDA chief executive Paul Maloney following his departure from the company in July 2009 to compensate him for lost earnings because his contract had extended until June 2010. Mr Maloney was also paid €121,000 for seven months' work in 2009.
The report revealed that negotiations with the preferred bidder to build the U2 Tower, due to be constructed on Britain Quay and to house the band's studio, continue to be suspended. They were first suspended in October 2008.
The DDDA-owned chq shopping centre in the IFSC lost three tenants last year, but may benefit from the extension of the Luas, the authority added.
The Kelleher family, behind Meadows & Byrne, which rents one of chq's stores, is believed to be one of three shortlisted groups interested in buying the retail complex.