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Anglo in bitter legal battle over NY hotels

Nationalised Anglo Irish Bank is involved in a bitter legal battle in New York over its investment in landmark Manhattan hotels.

One of the hotels, the Art Deco 172-room Beekman Tower near the United Nations Headquarters served as a backdrop in the film The Bourne Supremacy starring Matt Damon.

The Beekman and the 187- room Eastgate Tower hotel were purchased in 2006 at the height of Anglo's status as the developers' bank of choice in a $149m deal.

Anglo originally provided $100m in debt funding to acquire the hotels, while 59 high net-worth Irish private clients put in some $49m between them.

Anglo and their American partners created an investment entity called Peninsula Real Estate as a vehicle for the deal.

The original plan was to renovate and upgrade the hotels, add new rooms and rebrand the Eastgate in conjunction with a national hotel chain. But from the very start Anglo, on one side, and the 24 US investors in the deal, headed up by experienced US hotel sector operator Timothy Haskin, diverged.

Anglo balked at the cost of renovations proposed by Mr Haskin which, it is claimed, were to cost three times the original $32m estimate.

Since then, purchase property values, even in the heart of Manhattan, have been on the slide and room rentals have dropped as much as 40 per cent.

Mr Haskin and the US side of the partnership claim that Anglo have frustrated the completion of work by not providing funding and failing to approve plans for redevelopment.

Court papers lodged in the New York State Supreme Court last month, seen by the Sunday Independent, reveal that the identity of the individual Irish investors will be made known for the first time to Mr Haskin and US equity investors now embroiled in the feud with Anglo.

The row is set to be the subject of a binding arbitration hearing in front of the American Arbitration Association. However, in the interim Anglo attempted legal moves to remove Mr Haskin, and in response he applied to the courts and was granted an injunction stopping any moves to change his status before the arbitration hearing.

In papers lodged on Mr Haskin's behalf with the New York State Supreme Court he alleges that "almost from its inception the partnership has been mired in disputes".

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The legal suit alleges that the disputes concerned the cost and the scope of renovations to the hotels and the role of Anglo Irish Bank in the partnership.

Meanwhile, fraud bureau detectives have nearly concluded their trawl through documents and computer files seized from Anglo earlier this year and the process of interviewing key witnesses will now begin.

The Garda Commissioner, Fachtna Murphy, has deployed extra manpower to the Anglo case. Initially seven detectives were assigned but now 20 officers are on the investigation team, including detectives seconded to the Office of the Director of Corporate Enforcement.

The investigation is focussing on the movement of €7.45bn in deposits between Anglo Irish and Irish Life and Permanent to bolster Anglo's books and an allegation that an attempt was made to conceal from shareholders details of loans to former Anglo chairman Sean FitzPatrick.

Detectives are also looking at the circumstances surrounding a controversial loan of €451m to a so-called "golden circle" of investors to buy bank shares which had originally been built up by the businessman Sean Quinn.


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