Nama developer bash sparks rage
Builder gets €2.5m a month from State
Published 12/09/2010 | 05:00
THE lucrative deal between the State and a company controlled by Johnny Ronan and Richard Barrett for the controversial National Convention Centre will mean the taxpayer will hand the developers €633,000 a week for the next five years -- even though their company Treasury Holdings is among the Nama top 10.
Taoiseach Brian Cowen was among the guests at the convention centre opening, hosted in lavish style by the two developers, but Mr Cowen's attendance has angered the Irish public, according to a Sunday Independent/Quantum Research poll.
The Sunday Independent telephone poll found that 61 per cent of voters did not believe that Mr Cowen should have been a guest of the Nama developers at the reception and hot buffet. Most respondents believed it was an error of judgement to attend a function as guests of developers who have had to be bailed out by Nama, and by extension, the taxpayer.
Treasury Holdings, through its development vehicle Real Estate Opportunities (REO), now has loans totalling €896m in Nama.
The €896m worth of loans originally secured from Allied Irish Bank, Anglo Irish Bank and Bank of Ireland are out of total borrowings by REO of €1.49bn.
The €380m convention centre was built as a public private partnership between the State and Spencer Dock Convention Centre Dublin Ltd (SDCCD), an off-shoot of Treasury Holdings.
Under the terms of the National Convention Centre deal, the company controlled by Mr Ronan and Mr Barrett will receive a once off payment of €27m. On top of that, they will receive €25m in each of the next five years (€125m).
It means that, between the unitary (once-off) and annual payments, the new convention centre is worth €2.5m a month for the next 60 months to the developers bailed out by the State's bad bank.
But the payments to the company controlled by Messrs Ronan and Barrett will not stop there.
After those five years are up, index-linked payments will continue to the developers for the following 20 years. After 25 years (2035) the convention centre reverts to State ownership.
In a statement to the Sunday Independent, the Office of Public Works (OPW) confirmed the payments that will be made to SDCCD to operate and maintain the convention centre over the next 25 years.
The company was required to design, build, finance and now run the National Convention Centre.
"In return, once the construction of the convention centre was complete and open for business, the State will pay the company an annual charge, the maximum total cost of which over 25 years will be just under €380m in present day values.
"The annual payments in respect of the conference centre are subject to indexation. Accordingly, the payments schedule adds up to a larger amount than €380m in present day values," the OPW said.
The OPW also said the contract penalises for non-performance and offers profit sharing in when profits exceed specified levels.
In SDCCD's December 2008 company results, its directors' report notes that "with the world's economies, the financial sector has suffered more than most other sectors. It is critical that the banks determine the level of potential bad debts, complete the recapitalisation process and revert to a stable footing of lending once again on a commercial basis in order to restore confidence to companies and individuals alike".
Ironically, SDCCD's parent company Treasury Holdings was one of the first companies into Nama.
The attendance of Mr Cowen at last week's launch provoked scathing criticism, according to the Sunday Independent telephone poll. One respondent said: "He has time to hob-nob with developers while the country goes down the drain, disgraceful."
A minority (39 per cent) did believe Mr Cowen should have accepted the invitation. A number of respondents thought it was a good thing the Taoiseach was seen to be promoting a major tourist venue such as the conference centre.
"Of course he should have attended. He is the Taoiseach and this is a national convention centre," was one response.