Business Irish

Friday 19 October 2018

Lifting a lid on Anglo’s links to the docklands

Anglo Irish Bank helped finance the property explosion in the docklands, but was it too close for comfort to the docks development agency, wonder Nick Webb and Louise McBride

ANGLO Irish Bank lent more than €1bn to property tycoons building massive office, shopping and apartment blocks in Dublin’s docklands, while its former chairman Sean FitzPatrick sat on the board of the Dublin Docklands Development Authority.

A Sunday Independent investigation can reveal that Anglo Irish Bank was the dominant lender for much of the major development that transformed the area and made tens of millions of euros in profits for Anglo’s clients.

The profitability of these schemes would have been hugely dependent on decisions from the authority.

The authority had the power to decide on a range of specifications from social housing quotas to height or density — all of which were of massive importance to the builders. Latest figures from the DDDA show that social housing units are just below the government figure of 20 per cent of all new housing developments. Anglo would have pocketed millions of euros in fees and interest from funding these schemes.

Anglo’s links to the Docklands Development Authority (DDDA) are extensive. While still chief executive of the bank, Sean FitzPatrick joined the DDDA board in 1998, finally leaving in 2007.

Former Anglo Irish Bank director Lar Bradshaw was also a key player in deciding how the docklands was developed.

He was chairman of the DDDA from 1997 until 2007. Bradshaw joined the board of Anglo in 2002, resigning in the wake of the loans scandal last December.

Another Docklands board member Donall Curtin is married to a senior Anglo executive Anne O’Donoghue. Curtin said that he told the DDDA of his wife’s role at Anglo. She has never been involved in the lending side. The DDDA was satisfied that no conflict of interest existed in either the acquistiion or the financing of the IGB site, according to Curtin.

Another former DDDA board member Angela Cavendish had been involved in financing property in East Point with Anglo Irish Bank more than a decade ago. Former DDDA board member Declan McCourt is a director of vast car importer OHM, which has had a number of loans with Anglo Irish Bank through its Scanveco subsidiary.

McCourt absented himself from meetings when Anglo and BoI, of which he is a director, were being discussed. The DDDA insists there is no issue with corporate governance.

“The code gives clear direction as to the procedure for disclosure of interest by members of the board and the impact of such declations on the workings of the board.

The provisions have been consistently applied in full to the DDDA’s business, according to the Authority.

The uncomfortable relationship between the Docklands Development agency and Anglo Irish Bank was first revealed in the Sunday Independent in early 2007.

Michael Smith, the campaigner whose inquiries led to the establishment of the planning tribunal, made a complaint to the Standards in Public Office (SIPO) about these links. He believed that about 15 property development companies — largely owned by the best-known developers in the State — were the principal builders in the area. The majority of these, he claimed, were bankrolled by Anglo.

The €411m purchase of the Irish Glass Bottle site in Ringsend by a consortium including Bernard McNamara, Derek Quinlan and the Docklands Development Authority has proved particularly contentious. Especially as

Anglo Irish Bank provided a large chunk of the €293m in bank financing for the deal. Anglo also split a €5m “arrangement fee” with fellow financiers AIB.

At the time the DDDA decided to buy into the Glass Bottle site, and to approve the consortium's decision to borrow the €293m from Anglo Irish Bank and AIB, Lar Bradshaw, the DDDA's chairman, was a director of Anglo. Sean FitzPatrick, the then chairman of Anglo, was also on the board of the DDDA.

While Bradshaw and Fitz- Patrick both declared their conflict of interest in the meetings about the Glass Bottle site in October and November 2006, and absented themselves from meetings, their involvement with the DDDA has clearly sparked concerns.

After a preliminary inquiry SIPO decided not to launch a full investigation into connections between Anglo and the DDDA. “While it may be that both [Sean FitzPatrick and Lar Bradshaw] held substantial shareholdings in the bank, there was no evidence that either held ‘control' of the bank,” it noted.

The report was made long before it emerged that Fitz- Patrick had ridden roughshod over corporate governance rules to hide nearly €100m in personal loans off Anglo’s balance sheet. And before it emerged that Anglo had been cooking its books thanks to over €8bn in loans from Irish Life & Permanent.

Summing up its findings, SIPO also noted that there was no evidence that any of the decisions made by the authority “had the consequence or effect of conferring on either Mr FitzPatrick or Mr Bradshaw personally a significant benefit”.

But the sheer scale of Anglo Irish Bank’s involvement in financing the development of the docklands has never emerged. Until now.

As well as the high-profile and hugely controversial €293m loan to fund the purchase of the Irish Glass Bottle site, Anglo Irish Bank was the chief lender in the syndicate that provided Richard Barrett and Johnny Ronan’s Treasury Holdings with more than €390m for the development of Spencer Dock. This was the largest secured property loan in the history of the State.

Crucially, Sean FitzPatrick was involved with the DDDA board when it made decisions on the make-up and the density of the scheme. Anglo was also involved in financing for another Treasury tower project in Grand Canal Quay.

Anglo financed much of Paddy Kelly’s development in the area including the €80m National College of Ireland, the adjacent Clarion Hotel and apartments. These two projects were valued at €125m by Kelly’s Redquartz Group.

The bank also stumped up over €13m for a recent redevelopment of the hotel.

Kelly’s Haytonvale Developments, which built the €75m Ivory building and Quality Inn (now Maldon Hotel) block was funded by Anglo.

The Kelly-fronted €150m Gallery Quay apartment and office block was also financed by Anglo. The McCormack family’s Alanis Capital was also involved in a number of Kelly projects. The €175m SJQ complex on Sir John Rogerson’s Quay was also bankrolled by Anglo.

Although primarily backed by AIB, Bank of Ireland and Bank of Scotland, apartment king Liam Carroll was also an Anglo customer, with his companies Danninger and Zoe Developments having mortgages registered with the bank. Carroll was working on a deal to build a new €200m headquarters for Anglo Irish Bank as part of a €1.5bn complex on the north docks.

Sean Kelly’s Benton Properties, which is developing land at the Boland’s Mills site, is also backed by Anglo Irish Bank. Benton paid €42m for the land in 2004.

Derek Quinlan, who was partially financed by Anglo in his €1.4bn buyout of Jurys Inns, is also a major player in the docklands with some of his private clients owning several sites.

Sean Dunne, whose plans for a massive tower block in Ballsbridge have been thwarted, has also been funded by Anglo. His Mountbrook company is behind the Bloodstone building as well as the Riverside office complex. Bernard McNamara — another massive Anglo client — developed the €180m Longboat Quay.

Both Quinlan and McNamara are involved in the controversial Glass Bottle site deal.

Along with McNamara and the Derek Quinlan consortium, the Sunday Independent has learned that DDDA has already forked out over €7.5m in interest since it bought the site for €411m in late 2006. The purchase of the 26-acre site was funded with a €293m loan from Anglo Irish Bank and AIB.

The DDDA holds a 26 per cent stake in the site.

Valuations of the site have tumbled, with Davy recently writing down its private client investment to about 60 per cent. DDDA boss Paul Maloney told an Oireachtas committee:

“We recognise the value is in the order of 20 to 30 per cent lower than the valuation received in 2007.”

Last week it emerged that the DDDA had stopped paying interest on the bank loans for the site. The Becbay consortium has already paid almost €7.5m interest on the €293m loan. Becbay, which has not paid any interest since the end of June 2008, has been renegotiating the terms of the loan over what the DDDA described as “short-term technical issues”.

The DDDA has guaranteed €26m of the €293m loan. A member of the Dail committee, Fine Gael TD Phil Hogan, criticised Maloney for “taking a very casual approach” to the valuation of Glass Bottle site. “When renegotiating [the terms of a loan], I would expect to know what the property is worth before I enter a meeting. How could anyone renegotiate with a bank without having professional advice on what the site is worth?”

Another complex transaction involving the DDDA, property developers and Anglo Irish Bank is the relocation of the National College of Ireland from Ranelagh to the docklands. The DDDA provided lands for the development of the NCI's campus in the IFSC, which opened in 2002. Joyce O'Connor — a sister of former Anglo chair, Sean FitzPatrick — was president of the college at the time the deal for the construction and financing of the new campus was agreed in 1997. Both the DDDA and the college have pointed out that this was a year before Sean FitzPatrick joined the DDDA board.

It cost about €80m to build the new campus — €44.4m of which was provided by the NCI. The Origin 8 consortium, which included Paddy Kelly, the McCormack family and Ged Pierse’s Pierse Contracting won the contract to build the college. When contacted by the Sunday Independent recently, Kelly confirmed Anglo was his backer.

“Anglo provided the loan for the NCI, as they did a lot of the developments in the docks,” said Kelly. Documents show that the bank provided a €70m “development facility” to the consortium.

The sheer scale of Anglo’s financing of developments in the area, the links between the bank and the DDDA and the role FitzPatrick played in approving developments built by Anglo clients will need to be examined in detail.

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