Monday 14 October 2019

Ronan to claim Battersea sale was not in the taxpayers' best interest

Johnny Ronan gives written statement slating Nama to Bank Inquiry

TREASURY MEN: Richard Barrett and Johnny Ronan at the Dublin Convention Centre.
TREASURY MEN: Richard Barrett and Johnny Ronan at the Dublin Convention Centre.
Battersea Power station, which Treasury Holdings had planned to develop
HIGH-FLYERS: Johnny Ronan and Richard Barrett at the Convention Centre along with Brian Cowen in 2010

Niamh Horan and Nick Webb

Ireland's most high-profile property developer, Johnny Ronan, is expected to claim Nama was 'hell bent' on taking down his company Treasury Holdings. It is understood he will make the claims in a written statement to the Banking Inquiry, due for publication this week.

In the sworn statement, in which he is said to controversially quote the German words 'Arbeit macht frei' - work makes you free - a phrase which famously hung over the gates of the Nazi's concentration camp in Auschwitz, the property tycoon launched a scathing attack on the "bad" bank.

Separately, Mr Ronan's legal counsel, former Arthur Cox partner Rory Williams, wrote to Finance Minister Michael Noonan on September 6, 2012, alleging that Nama had destroyed Treasury Holdings "in an act of monumental folly and vindictiveness".

The letter also claims that the state agency asked Treasury to execute term sheets which were in breach of company law.

Mr Ronan's written evidence to the Banking Inquiry is expected to be by far the strongest attack launched by a property developer against the state agency. The only other high-profile developer to speak out against Nama in a submission to the inquiry is Michael O'Flynn. Both men have exited Nama.

In property circles, Mr Ronan, who founded Treasury Holdings with his partner Richard Barrett, has often lamented the fact that Nama is run by a team of former civil servants, who, he believes, don't have the real skills needed to oversee development companies.

One source told the Sunday Independent he had complained that dealing with Nama was like "asking an accountant to take the controls in an airplane's cockpit or asking a butcher to perform a heart transplant".

Meanwhile, in Mr Ronan's written evidence due out this week, sources say the developer is expected to claim that, in 2011, the Malaysian state fund SP Setia had agreed to buy Treasury's debt for its full value and fund 100pc of the development costs of Battersea Power Station. This would have kept Treasury afloat and meant the taxpayer received back the full amount lent to his company. However, when the funders asked to meet Nama, the state agency refused to meet unless they paid a non-refundable payment of stg£10m upfront.

Mr Ronan is said to claim that he complained to Nama that obviously no company in the world would pay £10m simply to meet someone face to face.

The talks never went ahead and, shortly afterwards, Lloyds and Nama enforced the debt against Battersea Power Station, ultimately leading to the downfall of Treasury Holdings.

Mr Ronan has consistently claimed he had no doubt that if Nama had not called in its loans on Battersea Power station, Treasury Holdings would still be in operation and would have repaid all of its debts to the Irish taxpayer.

Ronan is understood to have written to the Banking Inquiry that the decision made no commercial logic and to have claimed that Nama's decision was not in the best interests of the Irish taxpayer.

He also is expected to dispute Nama's assertion that Treasury Holdings requested £4bn in development finance from Nama in order to develop Battersea.

Mr Ronan is believed to argue that the company consistently projected a £4.2bn profit on Battersea in business plans submitted to Nama and that the state agency never once disagreed with the forecast. He is expected to state that this made the decision to move on Battersea all the more mystifying.

It is widely acknowledged that Battersea Power Station could yet prove to be one of the most profitable property developments in the world, and, in hindsight, Mr Ronan's estimated £4.2bn profit on the London development will be a conservative valuation.

In an interview with the Sunday Independent last year, a leading British property expert described the purchase of Battersea by Malaysian investors as "the deal of the century".

If Mr Ronan's claims are correct, the decision to enforce by Nama will be one of the costliest decisions in the history of the State.

Sources also say that Mr Ronan's statement will express bewilderment over Nama's decision to pull the plug on Battersea Power Station and subsequently Treasury Holdings, while at the same time supporting other developers.

It is also expected that Mr Ronan will raise concerns over a Nama employee who was offered a post in a rival company, though that was blocked by Nama.

In another allegation, Mr Ronan is expected to claim that Nama pressurised one of Mr Ronan's longest-serving legal advisers to drop Treasury as a client.

An executive from the agency is said to have called the adviser to remind them of their obligation to manage conflicts. Nama was, at the time, paying the adviser significant fees for other work.

Elsewhere, Mr Ronan is also expected to claim that Nama had been given a vast financial budget to employ legal and PR experts so that it would win every argument - and that the agency was keen to silence developers under its control.

In response to the claims, this weekend a Nama spokesperson said: "These and other contentions have been comprehensively considered by the High Court which ruled in Nama's favour."

When contacted by the Sunday Independent this weekend, a spokesperson for Ronan Group Real Estate said: "Nama well knows that the High Court did not consider these very serious issues but dealt solely with the procedure by which Nama appointed receivers to the Treasury Holdings group of companies. Nama's failure to deny or address the very serious issues put again before it, speaks volumes."

Treasury Holdings was one of the largest commercial developers during the boom, and was known for some of the landmark buildings on Dublin's skyline - including the National Convention Centre, the Alto Vetro Tower on Grand Canal Dock and Google's headquarters. At one point Senator George Mitchell had agreed to join the company's board.

It began to diversify out of Ireland in early 2001 as values soared. It developed a major business in China in early 2002, employing over 100 people, but its biggest single scheme was at Battersea Power Station in London, where it secured the largest planning permission ever granted in central London.

However, when the financial crisis hit, some €1.7bn in Treasury loans transferred to Nama and in 2011 Nama appointed receivers to the site and a number of other assets belonging to the company.

Treasury fought the decision and the case went to Dublin's High Court. Following the case, in July 2012, Ms Justice Mary Finlay Geoghegan found in Nama's favour - while ruling that Treasury Holdings lost on a technicality.

In her written summary, Ms Justice Geoghegan was highly critical of Nama. In a public indictment of the agency, she found that Nama acted unfairly and unreasonably against Treasury Holdings because it did not fulfil its obligation to give a fair hearing to proposals which could have saved the company.

Two months later, Mr Ronan's chief legal counsel, Mr Williams, wrote on Mr Ronan's behalf to Mr Noonan. In the letter dated September 6, 2012, he outlined the sequence of events leading to the collapse of Treasury Holdings and raised grave concerns regarding Nama's actions to that point.

Mr Ronan has recently exited Nama after repaying almost €400m in loans at par. He worked for six years to become free from the agency.

This weekend a source told the Sunday Independent that, despite his exit, Mr Ronan is still fuming that Nama took his business down: "They had two public companies, they were the best developers in the business, they were able to pay back all their debt at par, they had no personal guarantees, their valuations have come true on Battersea and the return it will make.

"There was never a need to take down the company," the source said. "So the question is why? Why, why, why?"

Just over four months since the exit from Nama, Johnny Ronan's name is again on some of the major plays in town.

He has recently bought the 3.7-acre AIB site, one of the most prized in the heart of Ballsbridge. He will develop the tallest building in Dublin after teaming up with the Wilbur Ross-backed Cardinal Capital to build a €130m skyscraper at Tara Street train station. He is also building a €150m new office building on Burlington Road with the backing of Colony Capital.

Sunday Independent

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