Reilly left red-faced as he's named on debt-default list
HEALTH Minister Dr James Reilly faces the embarrassment of being officially named this morning on a debt defaulters' list for failing to pay €1.9m.
In an unprecedented development for a sitting cabinet member, he will be named this morning in the latest edition of the debt-monitoring magazine 'Stubbs Gazette'.
It follows a nursing home investment deal, motivated by a lucrative tax break, which turned sour last year.
The High Court ordered Dr Reilly and four others to pay €1.9m to purchase the nursing home in Co Tipperary, which they first invested in 12 years ago.
The tax-driven investment deal involved a well-heeled syndicate of professionals, including doctors, solicitors, architects and engineers.
Dr Reilly will be named with three business partners in today's publication, while the fourth partner was named previously.
Magazine bosses admit to being "flabbergasted" at a minister's name being listed.
One of the four business partners is a former Fine Gael councillor, Anne Devitt, who resigned from the party after the Mahon Tribunal found her actions were "entirely inappropriate".
'Stubbs Gazette' is best known for its lists of debtors, but the magazine also publishes all financial judgments against businesses and individuals made by the courts. Businesses and banks use the details published in the magazine as a test of the creditworthiness of potential borrowers.
Dr Reilly insists he will pay his share of the bill, but gave no indication of when this would happen.
Dr Reilly and the others consented to the €1.9m judgment, meaning they accept the debt is owed.
But one of the individuals owed the money confirmed to the Irish Independent last night that the debt had not been paid.
"We have not received any funds as yet," said Michelle Mellotte, a solicitor who is among eight investors left out of pocket.
She said she remained hopeful that the money would ultimately be recovered.
The minister is currently in Cyprus at a meeting of EU health ministers and won't be back until tomorrow.
The Health Minister is already at the centre of cabinet tensions over his failure to manage spending in his department.
But he has a financial problem of his own after the case against himself and four others came before the Commercial Court in Dublin in February.
Dr Reilly and the others agreed to settle the case taken against them, in relation to the construction and operation of the Green Hills nursing home in 2000.
The High Court formally ordered Dr Reilly and the four other investors to pay €1.9m, after reneging on a deal to buy the home out from the other investors once it had been in operation for a decade.
Dr Reilly owns a 25pc share of the nursing home, but now says he wants out of the business, once the debt is resolved.
Upon being appointed to government, the minister transferred his interest in the nursing home to a trust looked after by his lawyer on the advice of the state ethics watchdog.
In response to a series of questions from the Irish Independent last night, Dr Reilly's spokesman contacted the minister in Cyprus and issued the following statement:
"On assuming office -- and in accordance with the Standards in Public Office Commission -- Dr James Reilly handed over power of attorney to his solicitor in relation to his business interest in this property.
"A court case earlier this year, related to the property, resulted in an agreement that Dr Reilly and four co-investors would buy out the interests of another group of investors. That judgment of the court is not in dispute.
"The parties are now seeking to agree the methodology for the payment of the sums due on foot of the judgment.
"Dr Reilly has nothing to do with the ownership of the nursing home business on the property.
"Dr Reilly's political colleagues are aware of his involvement in the property transaction and of his wish to divest himself of his interest as soon as agreement can be reached."
'Stubbs Gazette' managing director James Tracey admitted he was "flabbergasted" when he saw the minister's name in his latest edition.
"Today a good credit rating is the gold standard for lenders, banks are almost looking for reasons to withhold credit," he said. Being named in 'Stubbs Gazette' is regarded as a good reason.
The investment deal that Dr Reilly and his fellow investors agreed to back in 2000 was typical of many tax-driven investments put together at the time.
Thirteen investors raised the funds to build a 54-bed nursing home in Carrick on Suir, Co Tipperary.
Most of the 13, including Dr Reilly, put up £60,000 -- equal to around €76,000 -- of their own money to join the consortium, while one investor contributed £30,000.
The group then borrowed €1.9m from Bank of Ireland to help finance the development.
Court records show it was a consortium of well-heeled investors -- doctors, solicitors, architects, engineers and other professionals -- and that they were drawn from across the country.