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Wednesday 13 December 2017

He used to be known as 'Bottler', now it's 'Dr Debt'

Fionnan Sheahan

Fionnan Sheahan

DR James Reilly, debt defaulter, not exactly a title you want attached to your name?

Nope. Dr Reilly is in the highly invidious position of being the first sitting Cabinet minister to be listed as a debt defaulter in 'Stubbs Gazette'.

How much does he owe?

Anything from €475,000 to €1.9m.

That's a lot of cash?

Quite. And he says the debt will be paid.

How did this all come about?

Here's where it only starts to get complicated with a lot more complications to follow. Dr Reilly was one of 13 investors in building a new nursing home back in 2000. The consortium came together to avail of property-based tax reliefs at the time .

But did he run the home?

No. Although he does have vast experience in the health sector, he was only a co-owner of the property.

How does the debt arise now 12 years later?

Well, after 10 years, when the tax relief ran out, it was intended that some of the investors not interested in staying in the business in the long run would be bought out by the rest. Eight of the 13 were in the deal for 10 years and five beyond that into the long-term. Dr Reilly is one of the five in it for the long-term.

All swell so far?

After the 10 years were up, there was a dispute over the agreed price to be paid. The case ended up in the High Court. A settlement was reached that €1.9m would be paid, as proposed, and this was recognised by the court in February. The five long-term investors would have to stump up the money by April.

Why didn't this happen?

The five long-term owners are working out the payment among them. But the entire affair became even more convoluted due to separate court cases going on relating to the tenancy agreement between the owners and the operator of the nursing home. By the way, the operator was also one of the long-term owners.

How did Dr Reilly end up in 'Stubbs Gazette'?

When the payment of €1.9m wasn't made by the deadline, the eight investors owed the money registered a judgment in the courts against the five long-term investors. Therefore, this signified the debt wasn't paid, so Dr Reilly and his four business partners ended up being listed in 'Stubbs Gazette'.

Is there any other way you can add to the confusion?

Yeah. While there are five long-term owners, they don't all owe 20pc each, because some of the shares come in different sizes, eg Dr Reilly owns 25pc.

Why can't the minister just pay his share and get himself out of default?

Although he is only liable for 25pc of the debt, he is tied to the other four under the terms of the agreement. The entire debt has to be paid in one chunk and if one of the five can't pay, then it falls to the rest to pay their share. If four can't pay, then it falls to the remaining one to pay the lot.

When is this all going to be sorted out?

No estimate is available. Dr Reilly says there is no question over the debt being paid. He remains a debt defaulter in breach of a High Court ruling until it's all resolved.

How is this playing ethically?

He consulted the state ethics watchdog on becoming a minister. They advised him to put his interest in the nursing home in a blind trust, where he would have no hand, act or part in it while he was a minister. But this wasn't allowed by the bank because of the ongoing litigation. The fallback position was to hand decisions on the interest over to a solicitor, granting him power of attorney.

How is this playing politically?

The Taoiseach and Tanaiste are standing by him but it's embarrassing for the Government. The Opposition are hitting him on it, focusing on his status as a Cabinet minister in breach of a High Court ruling and accusing him of having a conflict of interest. To make matters worse, he's already under the spotlight over the handling of spending in his department. Expect to hear a lot more about him.

What's his nickname now?

Well he used to be known as Bottler, because of his physical resemblance to comedian Brendan Grace and his schoolboy character, but now he's been branded Dr Debt.

Irish Independent

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