Questions over sale by Nama of drug warehouse
PAC’s McGuinness to probe ‘off-market’ deal
Published 29/06/2014 | 02:30
A DOCKLANDS 'fortress' used by the Revenue Commissioners to store millions of euro of drugs, contraband cigarettes and laundered diesel is at the centre of controversy after being sold in an 'off-market' deal to Dublin Port Company.
The chairman of the PAC, John McGuinness, has called on Nama for a full account of how in 2012 it came to sell the 48,000 square foot warehouse developed at Dublin port by businessman Harry Crosbie along with two other properties in his portfolio for approximately €5m without bringing them to the open market.
While sources on either side of the transaction have disputed the sum secured by Nama for the Revenue contraband warehouse - with one claiming that it had been sold for just over €2m and another counter-claiming that it had sold for as much as €4m, Mr McGuinness fears the state agency may not have achieved the best price.
Fuelling the PAC chairman's concern is the fact that the premises are occupied by the Revenue on a 25-year lease at a rent of €750,000 per annum.
Taking those numbers into account, sources within the real estate sector estimated the docklands warehouse could have commanded a market value of €7.5m - or a figure equivalent to 10 years' rental income.
"Ten years rent is not a bad multiple to be used as a guideline and anything below that needs to be explained," Mr McGuinness told the Sunday Independent.
He added: "Transactions like this are being talked about and it's for the PAC to ascertain the facts of the matter and to ensure that by doing that, Nama is getting the type of money that is appropriate for the property.
"The taxpayer is entitled to know what these deals are about. Otherwise, there's a risk that there will be an undermining of Nama with misinformation. There's enough of that going about."
Asked to explain the circumstances surrounding the sale of Mr Crosbie's docklands warehouse, Nama defended both the price it had achieved and its decision not to put the property on the open market.
In a statement to the Sunday Independent, Nama's spokesman said: "The final sale price was the result of extensive negotiations in line with market valuations at the time of the transaction and was the best price that could be achieved given the particular circumstances of this asset.
"Dublin Port Company (DPC) also had a shared interest in the property and built-in pre-emption rights in respect of the interests held and included in the sale. Given the existence of these rights and DPC's expressed interest in acquiring the property, the option of an open market sale was not available.
"The sale also proceeded in accordance with the Nama board commitment to give first option to state bodies on the purchase of Nama-related property which may be suitable for their purposes. All sales to state bodies (government departments, local authorities, state agencies and other statutory bodies) in accordance with the Nama board commitment are conducted on the basis of assessed market value."
The issue of Nama's 'off-market' sales were highlighted only last month by the Comptroller and Auditor General (C&AG) in its latest progress report on the state agency.
Having examined the sale of 144 properties, the C&AG found that 26 of them had not been openly marketed.
In the case of six of these properties, the C&AG found that the sales with gross proceeds of €12.1m had been to state bodies in Ireland or the United Kingdom.
In another four cases with a gross disposal value of about €500,000 the C&AG said there was "no evidence that the properties had been openly marketed and the files did not provide explanations for this."
In its defence, Nama told the C&AG that it was "satisfied that the properties in these cases were openly marketed because fees had been paid to selling agents."
In the case of the Revenue's docklands warehouse, Nama's spokesman told the Sunday Independent that the property had been sold by Mr Crosbie himself with the benefit of full professional advice and with Nama's consent.
This had been done, the spokesman said, with a view to paying down the developer's "significant indebtedness".
The sheer extent of Mr Crosbie's debts were back before the High Court last Friday, with Mr Justice David Keane granting Nama summary judgment of €77m against the developer. The judge said Mr Crosbie had failed to show any reasonable prospect of a bona fide defence to Nama's claim which would entitle him to a full court hearing on the matter.
While Mr Crosbie and Nama were given a week by Mr Justice Keane to consider his ruling, questions over the 'off-market' sale of the developer's docklands property may continue for some time yet.
The Sunday Independent understands the warehouse at the centre of the controversy was purpose-built during the boom by Mr Crosbie at the express request of Revenue officials following several serious breaches of security at another storage facility they had been leasing from him in the docklands area.
Commenting on the secrecy which had surrounded the planning of the fortress-like warehouse which is bounded by a 3m high wall and 4.5m electric fence, the source said: "The proposals submitted to Dublin City Council don't have any mention of the building's purpose. There was an agreement reached with the planners on that for security reasons."
An examination by the Sunday Independent of the planning files held at Dublin City Council bears out this claim .
In a letter attached to the application submitted by Mr Crosbie's company, Shoal Trading, the city's deputy planning officer said: "The executive manager of the planning department discussed the proposal with the applicants and it was agreed the applicant could state, for security reasons that the intended use is for storage and delivery thereafter."