ANALYSIS:The Dublin Docklands authority is one of the most high-profile casualties of the property crash, FRANK McDONALD,Environment Editor
NOT MANY more than half a dozen people have so far read Prof Niamh Brennan’s report on corporate governance in the Dublin Docklands Development Authority (DDDA), including Minister for the Environment John Gormley, who commissioned it, and Attorney General Paul Gallagher, who is considering its legal implications.
Prof Brennan was appointed by Mr Gormley to chair the DDDA last March precisely because of her expertise in corporate governance and “forensic accounting”.
Her appointment was all the more amazing because she is married to the Minister’s bitter constituency rival, Michael McDowell, former leader of the Progressive Democrats.
It was already clear that the authority was in serious trouble. For reasons that are still unclear, it had become a minority partner in Becbay Ltd, the consortium led by developer Bernard McNamara, which paid €412 million for the 24-acre Irish Glass Bottle Company site in Ringsend at the peak of the property boom in December 2006.
Indeed, the authority’s direct involvement in this ill-fated deal was used by Davy Stockbrokers as a selling point in the prospectus it issued to investors who were being asked to provide “mezzanine finance”.
It noted that the authority had “fast-track planning powers, which guarantees the authority’s ability to make things happen”.
Why the authority needed to get involved in the acquisition of the site, when it was already the planning authority for most of the Docklands area, has never been explained. The deal was backed by a €288 million loan from Anglo Irish Bank, whose chairman was on its board, while then authority chairman Lar Bradshaw was a director of the bank.
At the time, the authority issued a statement saying it operated within a “strict code of conduct on conflicts of interest”.
Minutes of the relevant board meeting, revealed later, stated that “no material conflict of interest existed in respect of the participation by the directors in the discussion and decision on the proposed acquisition”.
Either way, it was a disaster for the authority because the glass bottle site plummeted in value as the grossly inflated property bubble finally burst; last November, surveyors commissioned by the authority estimated that it was then worth only €60 million – a staggering €352 million less than Becbay had paid for it just three years earlier.
The docklands authority stopped making repayments on its portion of the debt, as did Mr McNamara and his partner in the deal, one-time financial wizard Derek Quinlan, who now resides in Switzerland. Last December, the investors rounded up by Davy won a High Court judgment against Mr McNamara for €63 million – a sum he simply could not pay.
The mire into which the authority sank as a result of its decision to stump up €75 million for Becbay has left it virtually insolvent. Its financial position is even more precarious than the operating loss of €27 million for 2008 revealed in its most recent annual report, published last November. It is in a “fragile state”, as Prof Brennan conceded.
Staff numbers have had to be culled, with at least a third laid off.
Former chief executive Paul Maloney, who had previously been an assistant city manager at Dublin City Council, decided to resign last July after a late-night board meeting.
What’s left of the organisation is now being run by long-time senior official Gerry Kelly, as acting chief executive.
The Dublin Docklands Development Authority is one of the most high-profile casualties of the property crash. Some observers believe it should be abolished, with its planning functions taken over by Dublin City Council. But others point out that such a transfer would not resolve the fundamental problem – the mountain of debt looming over docklands.