Monday 20 November 2017

'From 2003, I noticed a very unpleasant total obsession with money in Ireland'

Former Treasury Holdings developer Richard Barrett has diversified his investments overseas but is back in business in Ireland. He spoke to Liam Collins

Richard Barrett
Richard Barrett
Liam Collins

Liam Collins

He's sitting in the bar of the Dylan Hotel drinking a sparkling water and suffering from jet lag. Dressed in a sober blue suit, shirt and tie, Richard Barrett clocks me first, even though we have only met once before, over a decade ago at a dinner in Dublin Castle. As one half of Treasury Holdings, Barrett epitomised the boom years, although he stayed as far from the limelight as his colourful business partner, Johnny Ronan, basked in its glare.

They were described as the Jesse James and Billy the Kid of the Irish property scene by no less than Forbes Magazine.

"You were Billy the Kid," I remind him, sifting through my research material.

"Is that good or bad?" he inquires in a slow, refined accent that betrays nothing of his Mayo origins.

The same research material reveals that in more recent years Barrett walked away with an estimated €35m in cash from the sale of his stake in Forterra Trust, a Chinese property company, with a €5 million 'success fee' from the ogre of property developers, Nama, as the icing on the cake.

And it is Chinese property that has brought us together again, as he has reluctantly agreed to an interview, provided we stick closely to his two new ventures - a Chinese property company called Heng Xin Li and a spin-off dot com company called Know Your Customer.

But as I find out over a prolonged discussion, Barrett, while enthusiastic about the prospect of these ventures, is equally animated and passionate about the need for social housing and nursing homes and is offering to provide such infrastructure through a series of funds under the umbrella of Bartra Capital.

"I see it as a sort of social payback because I don't need any money" he says. "What about those poor people? They have hundreds and hundreds of families living in these hotels - how can a family live in a hotel? It is ridiculous in 2016, everyone should be entitled to a decent place to live. The Government has only a certain amount of money.

"We can provide less costly units by building specifically for the needs of those waiting to be housed and then rent them back to the State."

During the boom years, Barrett went to China in an attempt to "diversify" Treasury Holdings. There he learned to speak Chinese, but, he concedes, the wrong way.

"I ended up not being able to read or write it. That was ridiculous, so I went back to university to do it the right way."

Treasury eventually sold its Chinese business to Barrett and Ronan - and that is another saga in itself. But his years there have given him a unique insight into the needs of the new, wealthy Chinese class and their wish to diversify at least some of the $21trn on deposit in China's banks.

The online company he has established with Cormac Doddy, Heng Xin Li, is, he says, the first crowd-funding platform in China that invests Chinese money in property outside China.

"The attraction of this platform to the Chinese is that it provides a diversified investment for them.

"Some have deposit accounts in banks or stockbroking accounts or Chinese real estate, but there has not been, until recently, a huge amount of Chinese personal investment outside China.

"It gives Chinese people an opportunity to buy a portion of … a share of … property. Up to now, many of them had seen the west in the movies, but now, because of tourism, they've been there, they recognise addresses, they know 5th Avenue in New York or Park Lane in London are good addresses, so they believe their money is safe in those places.

"It is upper-end property, but you can invest as little as €2,500 or you can invest as much as you want."

Although it opened for business seven months ago, he says the average contribution is three times higher than expected and the money is collected 20 times faster.

Currently authorised to buy property in London and six cities in the United States, he plans to expand by buying property in Paris, Berlin and other European capitals.

"Generally, most tech companies are set up by tech people - this is real-estate people who are using technology rather than technology people in real estate. It means what you are being offered has a better chance of it being a good deal."

But investing Chinese money in foreign bank accounts led to a major headache, because of world-wide money-laundering legislation to prevent terrorist financing.

"You have to produce all this documentation to prove you are who you say you are. This is rather hard to do online, so we were encountering some difficulty in the course of trying to get this thing going.

"All these banks were doing it manually; this is ridiculous, so we launched this second company. When we were explaining to the foreign banks where we were opening the accounts, they said, 'Oh my God, that's great. We'd love something like that.'"

It has turned into a separate business (with Dublin-based chief technical officer Claus Christensen) developing the software in Ireland where Know Your Customer.Com has its headquarters.

It means that Barrett is now dividing his time equally between his homeland and China.

"After the crisis, I didn't really see the point, when Ireland was going through austerity, of spending a lot of time here. China was very strong at that stage and had a very undervalued stock exchange, so I spent a third of my time investing in the Chinese stock exchange, a third investing in Chinese companies and a third at Jiao Tong University in Shanghai, learning Chinese."

But he admits he had also developed a growing dislike for boom-time Ireland.

"I noticed from about 2003 onwards a very unpleasant thing occurring in Irish society, or at least the circles I moved in. I had always experienced Ireland as a virtually classless society where you could easily be standing on the terraces at a football match or the bar in Doheny & Nesbitt beside a millionaire or someone like that.

"Then I noticed, especially at dinner parties, this total obsession with money and people losing their values. Before, if you were at dinner with someone very rich, you would even avoid mentioning it; then it became a competition to show off how much money you had. One of the reasons I stayed in China is that I did not like that, I didn't like the way the society was becoming."

Ireland, he believes, has now largely reverted to type.

He also believes the present Government has done "a very good job" but may suffer for it.

"A lot of the time, the ones who fix it get booted out" he says. "I met the guy from the IMF that was in charge of Ireland and he said he had an extraordinary experience here in that he'd be walking in the street on his way to the Merrion Hotel, and normally he'd nearly need to have bodyguards, but fellahs passing him would say, 'Howaya, Chopra' or tell him, 'Do you know what you should do?'

"It was a unique combination of a population who knew the party had gone on too long and they had to take their medicine and a Government brave enough to give them the medicine and fix it."

In the meantime, Treasury Holdings went down in flames and his partnership with Johnny Ronan more or less ran its course.

"We have some joint assets left together, he's specialising almost totally in Ireland, whereas I have Irish businesses, but I have also substantial holdings outside Ireland. Treasury was essentially liquidated but we had lots of assets outside Treasury."

He professes no deep regret at the loss of trophies like Battersea Power Station, which is now being developed as a landmark central London mini-city.

"It was a bit of a pity because we put a lot of energy into it and we did get extraordinary planning permission and they are building precisely what we had in mind, but it is only one project, I wouldn't be getting too emotional about a building site. My attitude is c'est la vie."

Barrett, because of his low profile, never became the focus of the post mortem that followed the collapse in the same way his partner did.

"I am not a publicity-seeker, I'd prefer if I wasn't in the newspapers, I don't need to be. Other people use publicity for their purposes. He [Johnny Ronan] had an interesting time with them [the banking inquiry]. He was asked but I wasn't."

His flirtation with Nama was also almost non-existent.

"I am a barrister and when you are studying you read a lot of law cases. What has been happening since day one in foreclosures is banks said to people, or are alleged to have said, 'ah this doesn't matter it's just a formality.' So I always took the view if the proposal was not good enough to stand by itself, either you shouldn't be doing that particular development or it does actually need more equity, so put in the cash, rather than borrow more money, and be stuck with a guarantee when I didn't know whether it would be called in or what the hell would happen.

"The only guarantee I ever gave was €3m on the Westin Hotel. It was an enormously complicated construction because there were 19 protected structures and there was an over-run of 10pc.

"At the time, we were buying a considerable amount of other stuff and the bank said, 'Okay, we will lend you the extra money but we want a bit of extra cover' and I agreed that I would personally guarantee half - which came to €3m.

"Nama served a demand and I paid it the next day. I can't tell you how many seconds I was in Nama but it wasn't too long. Treasury Holdings was in Nama. Things do go wrong, you could marry the wrong person or make a wrong decision, so you can either sit around moping about that or you can say 'things have to go on'."

With the upswing in the Irish economy, Barrett is back in business, in both Ireland and China, and re-entering the property market from a different, and perhaps unexpected, angle. But then he was never one for doing the expected in the first place.

Tony O'Reilly "treated terribly" by banks

Richard Barrett is not into self-pity, but he feels the pain of Tony O'Reilly.

"He was very good to me when I was young. When I was a student he took me into the house in America, gave me a job, and went out of his way to ask what I was interested in. At times I would be sitting in his house in Pittsburgh and he would fly back from some place and you'd think he'd be shagged, but he would stay up and talk to me about what I was doing, although he had plenty to do himself. It is terrible that after all he did for Ireland the banks treated him that way,

"I mean, like, the amount of money he raised for the Ireland Funds and how that money was put to use saving lives. Basically, his money kept Waterford Glass afloat for four or five years more than it should have.

"There are relatively few Irish people on the international stage of stature, so you have him, Peter Sutherland, Mary Robinson. I know he has helped all sorts of people - if a person does a huge amount for his country, treat him with a bit of respect.

"Banks have to be paid back, but there are ways of handling things less publicly than what he was subjected to."

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