Tuesday 26 September 2017

The fight for his good name may be Crosbie's biggest challenge yet

The developer behind the Bord Gais Energy Theatre rejects Nama's claim that he hid assets from it and is seeking his day in court

HONOUR: British Ambassador Dominick Chilcott, left, presents Harry Crosbie with his OBE from Queen Elizabeth in 2012. Photo: Collins
HONOUR: British Ambassador Dominick Chilcott, left, presents Harry Crosbie with his OBE from Queen Elizabeth in 2012. Photo: Collins

Ronald Quinlan and Niamh Horan

IF you had asked anyone before last week to describe Harry Crosbie, you wouldn't have had to wait too long for the term "visionary" to cross their lips.

While it's a description that's still very much appropriate given all that he has done for Dublin with his pioneering development of the city's docklands over several decades, today it sits somewhat uncomfortably amidst serious allegations of "breaking the law" as it is set down under the Nama Act.

Having spent his whole life building an empire which includes the O2, Bord Gais Energy Theatre and the Convention Centre (which he developed in partnership with Treasury Holdings), Mr Crosbie finds himself in the autumn of his years fighting to protect his good name.

With Nama's decision to bring an application before the High Court last Wednesday seeking summary judgement against him for the potential career-ending sum of €77m, the fight for that good name and his hard-earned reputation as one of Ireland's most accomplished developers may prove to be the greatest challenge Harry Crosbie has faced yet.

In opposing Nama's application for judgement against him and looking for the case to be brought to a full trial in the commercial court, Mr Crosbie has made it clear he realises that it's make-or-break time for his empire, and for the narrative that will be attached to his legacy by future generations.

But while the claims being made against him in relation to his alleged lack of co-operation with the State's so-called bad bank are extraordinary, and his counter claims against Nama and its officials equally so, the most extraordinary aspect of Mr Crosbie's present predicament is that quite possibly, it could have been avoided altogether.

Central to the bitter dispute between the 65-year-old businessman and Nama is its contention that having agreed a Memorandum of Understanding (MOU) in January 2012 under which they had agreed to work together, information came to light subsequently to suggest that Mr Crosbie had failed to disclose substantial assets, including properties in the south of France and cash deposits both in France and Ireland.

The reporting in various media over the past number of days of these and other allegations have proved to be hugely upsetting to Mr Crosbie and his family.

Last night, the developer broke his silence on the matter, saying: "NAMA had much if not all of this information before the MOU was ever signed. In any event, nothing much particularly turned on this for me as I had few if any rights under the MOU in any event."

Mr Crosbie, meanwhile, insisted in an affidavit opened in court last Wednesday that there had not been any "intentional non-disclosure or concealment of material assets at the time in question".

In an email sent by Nama portfolio manager Paul Hennigan to Mr Crosbie's solicitor on June 22, 2012, however, Nama takes a different view.

Referring to the Statement of Affairs Mr Crosbie had provided to Nama prior to agreeing his MOU with them, Mr Hennigan wrote: "It is not for Nama to present information to Mr Crosbie to allow him to provide an accurate statement, as he is legally required. Nama's role is to assess the declaration as being accurate and to decide whether Nama should seek for Mr Crosbie to be prosecuted for breaking the law if the declaration breaches the Nama Act. I know you know the seriousness of this matter; I don't think Mr Crosbie does."

What followed next in Mr Hennigan's email could be viewed as being either little more than a warning or as Mr Crosbie sees it, an example of the "level of aggression and frankly vicious accusations" he claims were made by Mr Hennigan in the course of their dealings with each other.

Commenting on Mr Crosbie's high-profile appointment to the board of the proposed National Children's Hospital, Mr Hennigan wrote: "Given his public profile and government appointed position as chairman of the board with respect to the proposed new children's hospital, I would see it as a personal humiliation for Mr Crosbie to be seen to be defrauding the taxpayer, especially so given Nama, i.e. the taxpayer, is now funding the improvement of his assets to assist him in repaying his debts and indeed a salary for Mr Crosbie. I think Mr Crosbie needs to remember Nama is not a bank, we are a State agency and his interaction with Nama is his interaction with the State."

While it may yet fall to a judge to decide whether Mr Crosbie's alleged failure to disclose all his assets was intentional or not, it's clear from the letter sent by the agency's solicitors, McCann Fitzgerald, on August 3, 2012 that Nama took a dim view.

Among the serious allegations raised by Nama in that communication, the precise content of which is reproduced below, were:

1. "Cash payments made to various family members, including payments of €740,000 and €650,000 to Mr Crosbie, to [Mr Crosbie's wife] Rita Crosbie following the acquisition of the connection's loans by Nama. No approval was sought from Nama for these payments. It was also acknowledged by Mr Crosbie that, with regard to the payment of €740,000, these funds originated from the misappropriation of the AIL [the company that owns the O2 theatre] dividends charged in our client's favour."

2. "In 2010 and 2011, Mr Crosbie diverted dividend payments of €1.5m, charged in favour of Nama, in respect of shareholding in AIL. This is a very serious matter for your client and it is regarded by Nama as tantamount to diverting monies to which the taxpayer is entitled. This matter must be addressed."

3. "Following the acquisition of the property in Wexford [a holiday home and music studio] in 2007, we understand that Mr Crosbie spent in excess of €3.2m on the

property, which he continues to assert is held by his wife.

"Details of the source of this funding has not been disclosed to Nama."

4. "Nama has concerns about the value attributed by Mr Crosbie to chattels and to the contents of the various properties in which he and Mrs Crosbie have an interest. In this regard, Mr Crosbie has refused to permit a valuer to itemise and value the contents of the properties."

5. "Your client has now admitted to holding a 45 per cent interest in an investment property in France, details of which were not previously disclosed. In fact your client repeatedly denied having any ownership interests in any French property, other than Cap Ferrat, when this matter was specifically and repeatedly raised with him on 21 June 2012."

6. "Mr Crosbie misrepresented ownership of the leasehold interest in the property from which Cafe H [a bar and restaurant in the south docks] trades.

The lease is held by the Grand Canal Theatre Company Ltd and accordingly, is charged together with any income and profits from the lease, to Nama."

7. "Mr Crosbie did not disclose significant cash gifts to and assets purchased for his children or the significant payment made to Trevor Bowen [former director of Principle Management, U2's management company, which was sold last year to Live Nation]."

8. "Accounts show that the following drawings were made by your client . . . €1.5m in 2011, €1.55m in 2010, €1.22m in 2009 and €2.86m in 2008 from various companies in the connection."

9. "The statement of affairs furnished to Nama did not disclose funds that are held on deposit both in Ireland and France."

10. "In your letter of 22 June 2012, you indicate that a property in St Remi, France was acquired by a company called Greenroth and that the shareholding in the company is owned by Rita Crosbie and Christian Frankel.

"However, in preparing tax returns, Mr Crosbie declared an interest in this property."

11. "In the statement of affairs furnished, Mr Crosbie valued a property in Nice at €1m, whereas Nama understands that the property is in fact situated in Cap Ferrat and is valued at between €3.5m and €4.5m."

Contacted and asked for comment on the allegations made by Nama in the August 3, 2012 communication or the manner in which they had been raised in court last Wednesday, Mr Crosbie hit out last night at what he described as the State agency's "deeply damaging public portrayal" of him.

"I have spent the last four years dealing with Nama, the last two without public comment because I was told that criticising Nama in public was dangerous, no matter how offensive or bullying they were in their dealings with me. This week, however, it's gone too far. Clearly, civil silence doesn't work with this all-powerful entity," Mr Crosbie told the Sunday Independent.

Mr Crosbie's "civil silence" in relation to his dealings with Nama and its personnel may well be broken again in the near future should Mr Justice David Keane reject the agency's application for summary judgement against him and decide to send the matter forward for trial.

Were that to happen, the developer's evidence could yet prove to be embarrassing to Nama in view of the concession by Mr Crosbie's current Nama portfolio manager, Bernard McLoughlin in his affidavit that the agency's remit and the significant indebtedness of its debtors require "robust engagement which can become fraught".

The word 'fraught' certainly applies to allegations made by Mr Crosbie in relation to the dealings he says he had with his former Nama portfolio manager, Paul Hennigan.

Indeed, in a letter sent to Mr Hennigan's superior, John Mulcahy, on March 28, 2011, Mr Crosbie sought to have his business handled by another Nama executive, saying: "Mr Hennigan believes himself to be the caped crusader and we are evil doers. His constant righteous anger is a distraction. . . Could I ask that our business with you be handled by another officer in your organisation?"

Rejecting that request in an email on April 27, 2011, Mr Mulcahy defended Mr Hennigan, saying: "Paul may be forthright and to the point but he is somebody who is as straight as an arrow and with whom you will know where you stand at all times."

In Mr Crosbie's affidavit, he says: "I felt that Mr Hennigan relished his new-found power over me and he told me on one occasion that he would make me 'bend the knee'."

Elsewhere, the developer makes the sensational claim that Mr Hennigan told him he shouldn't get involved in organising any of the events surrounding Queen Elizabeth II's historic State visit here in 2011.

Mr Hennigan also told him, he claims, not to accept the OBE that was awarded to him subsequently or he would be subjected to damaging publicity.

Nama, for its part, has responded to Mr Crosbie's allegations in the High Court last Wednesday, with Senior Counsel Paul Sreenan describing them as "scurrilous"; utterly irrelevant, quite non-specific in nature and raised with the intention of smearing Mr Hennigan's name.

But while it's abundantly clear that there were tensions at various times between Mr Crosbie and Mr Hennigan, the developer does appear to have made serious efforts to repair his relationship with his Nama handler in the wake of the dispute over his statement of affairs. Indeed, a source close to Mr Crosbie pointed to the "full and binding" written agreement the developer subsequently arrived at with Nama on August 24, 2012, and on which he will seek to rely should his case go to trial.

Included in the deal's terms, the developer says, was an agreement that Nama would be provided with the security over certain assets over which it had no legal interest or claim and control of a number of companies. It was also agreed that he would appoint an agent to sell three properties in Villefranche sur Mer in France and give the €270,000 he estimated would come from his 45 per cent share to Nama.

In return for those concessions, Mr Crosbie's affidavit states the agency would no longer have legal recourse to his remaining assets.

According to Mr Crosbie, these included his interest in his family home at Hanover Quay, his son's home in the south Dublin suburb of Booterstown and Cafe H, the bar owned and operated by his wife, Rita.

Commenting on the deal's purpose, he says: "The entire purpose of that agreement was, as understood by all parties, to leave me in a position to avoid any further legal enforcement action by the plaintiff [Nama] against me personally, including personal bankruptcy."

In seeking to prove the binding nature of this agreement, Mr Crosbie points in his affidavit to the email sent to his financial advisors, RSM Farrell Grant Sparks at 4:29pm on August 24, 2012 by Paul Hennigan, his then portfolio manager at Nama.

Referring to the proposals sent by Mr Crosbie's advisers for Nama's consideration, Mr Hennigan wrote: "This is agreed. Tom Dane will be writing to you confirming same. Thanks for all your help with this matter. Have a good weekend. Paul".

Mr Crosbie says he took this email from Mr Hennigan as indicating that he "accepted in full" that the letter and the proposals it contained represented an "effective, operative and legally binding compromise of matters" between himself and Nama.

He adds that he never would have consensually divested himself of the remainder of what he describes as his "significant assets" except in circumstances where such a "fully effective and binding compromise" existed.

Four days later on August 28, 2012, lawyers for Nama wrote to Mr Crosbie's solicitors seeking additional documentation relating to a number of his companies. That letter stated: "We confirm that the details of agreement set out in your letter of August 24 are accepted by Nama."

Commenting on this, Mr Crosbie argues in his affidavit that if there had been any dispute or ambiguity about his having reached a comprehensive agreement with Nama, this "evaporated" once the August 28 letter had been sent by the agency's lawyers to his legal team.

Referring to Nama's request for summary judgement against him now, he adds that: "These proceedings are clearly designed and intended to repudiate and nullify that agreement, secure judgement against me and make me a bankrupt."

However, those assertions were flatly denied in the High Court last Wednesday by Mr Sreenan, who said there were no grounds for Mr Crosbie's claim that Nama had agreed in August 2012 it would not move to enforce against him and he has no real or bona fide defence to the claim for judgement.

Having heard both sides last Wednesday, Mr Justice David Keane reserved his decision on the agency's application for summary judgement.

Sunday Independent

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