Business Banking Inquiry

Saturday 17 February 2018

Quinlan tells Banking Inquiry: I miss Ireland every day since becoming a tax exile

Derek Quinlan told the banking inquiry he misses living in Ireland
Derek Quinlan told the banking inquiry he misses living in Ireland

Boom-time financier Derek Quinlan claims he misses Ireland every day after going into exile to cut his tax bill.

The Celtic Tiger deal broker said among his chief regrets are leaving his children behind so he can pay his debts off quicker.

"I have a number of regrets - I'm not living in Ireland," he told a parliamentary inquiry into the country's banking crisis.

"Some of my children live here. It's not by choice. I miss Ireland. Every day."

The founder and former chief of Quinlan Private, which pulled together high-flying investors for property takeovers, said he left Ireland six years ago on the advice of consultants KPMG.

The move, first to Switzerland and then to London, was to reduce his tax bill and allow him repay more of his debts, he told the Oireachtas Banking Inquiry.

"It was a very, very painful move," he said. "I was 61 years of age at the time, with a young family."

The former tax inspector, who set up Quinlan Private in May 1989, is the first witness in the phase of the inquiry looking at the role of developers in the financial crash.

Mr Quinlan said he stopped buying property in Ireland in 2003, several years before the bubble burst.

But he said this was because there were more lucrative deals to be had abroad.

His firm opened offices in London and New York, where now US vice president Joe Biden and disgraced former New York governor Eliot Spitzer were among guests at the launch party.

Mr Quinlan said he did not see the crash coming.

He said the first time he realised there was a danger of collapse was when US finance giant Lehman Brothers went bust in September 2008, at the height of the sub-prime mortgage crisis.

Before that people in Ireland "could not spell sub-prime", he added.

"We believed in a soft landing theory... and we weren't alone in that.

"I believed we were going to have a soft landing, obviously with hindsight we didn't have a soft landing. It was devastation."

Mr Quinlan said between 2002 and 2007 there was a huge feel good factor in Ireland.

Most people "bought into this", including himself, and there were very few opposing views, he told TDs and senators on the inquiry.

"We've forgotten the feel good factor," he said.

"I know this is a very important inquiry, but there was a tremendous feel good factor here in Ireland. People felt good to be Irish."

His first major break came in 1990, when he brokered a property deal at The Square shopping centre in Tallaght.

He went on to pull together a 250 million euro consortium to buy part of the International Financial Services Centre (IFSC) on Dublin's Docklands and was central to many of the biggest deals of the boom.

These included the famous takeover of London's trophy hotel The Savoy.

From 2000 to 2008, the value of his company's assets soared from 602 million euro to 10 billion euro.

Comparing himself to having "the touch of Ronaldo" he said suddenly lots of people wanted to see him.

Irish banks were approaching him saying "we want to do business with you", but he added: "I, in general, refuse all corporate invites. But I got to know lots of very serious bankers."

Such was the hunger of banks to get into the property market, he recalled how in 2006 "a very senior banker" from a rival lender boasted about sitting outside rogue lender Anglo Irish Bank headquarters in central Dublin just to see who was going in and out.

"I was shocked," he said. "Here's a very senior banker, effectively I thought wasting his time, sitting outside on a Friday morning watching who was coming in and out of the bank.

"Then he said he went back, he made a report - these are the people he had recognised coming in and out of the bank."

Banks then went on to start pulling together property deals themselves for their own customers.

"They probably looked at someone like myself and said if he is doing it, we can do it," he said. "Banks are interested in making a profit."

Mr Quinlan said on another occasion he met a German banker at a Christmas party who told him she was financing his 19 million euro property deal at George's Dock in Dublin.

"I said 'no, we borrowed from an Irish bank'.

"It was the first time I knew the banks were selling the loans. We were paying the Irish bank 1.5% (interest) but her bank was only charging 0.5%, so the Irish bank was pocketing the 1% and our clients were losing out."

Mr Quinlan said after that he dealt directly with the German banks, and believed he was the first in Ireland to do so.

While he never kept any records of his political donations, he recalled donating 27,880 euro to the Conservative Party in Britain at a dinner with now Prime Minister David Cameron in 2005. He made another donation to the party in 2008.

He said he may have made a direct contribution to the now defunct Progressive Democrats (PD) and also would have "taken seats" at Fianna Fail, Fine Gael and PD dinners and golf outings.

"That's the basis we did it, we didn't look for any political favour, good, bad or indifferent," he said.

"I have never lobbied any politician in my life - and that includes Mr Cameron."

Asked if he felt any responsibility for the crisis, the financier repeatedly blamed the impact of US sub-prime crisis on worldwide lending. This was not even forecast by the US Federal Reserve, he pointed out.

He would not have invested in Irish property if he knew banks were taking short term loans, which he blamed for devastating them when borrowing, or liquidity, dried up.

Once revered among his backers as King Midas, he said the four main pillars of his investment philosophy were location, timing, liquidity and confidence.

"It is clear in Ireland that at one time all these four factors were decimated," he said. "I did not foresee this."

He added: "Ireland Inc suddenly became a no man's land. No-one could have seen how values would drop, but they dropped like a stone."

Nor did he accept any moral issue with the massive profits on some property deals during the boom to the detriment of first-time buyers trying to acquire a home.

"I am deeply saddened about the fall-out from the banking crisis," he said.

"I recognise that for a very large number of people in Ireland it has had an unprecedented and devastating impact."

Press Association

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