Sunday, 28 March 2010

Docklands board to seek inquiry into deals

The board of the Dublin Docklands Development Authority (DDDA) will call for an inquiry into the property deals and planning decisions made by the previous board and executive of the state agency over a 10-year period.

The inquiry, which will have full powers of discovery, will be proposed next month by Professor Niamh Brennan, who was appointed DDDA chairman in March 2009. The agency is finalising three reports to government on the planning decisions, financial management and corporate governance of the agency since it was set up in 1997.

Sources close to the DDDA said the reports had identified structural weaknesses in the agency and “confirmed all the reasons we have to be worried”.

“Niamh Brennan and the board were never going to be in a position to look at files in the offices of Anglo Irish Bank [which financed a number of the DDDA’s projects], interview Sean FitzPatrick [the former Anglo chairman] and others, or put allegations to people. That was not their role,” the source said. “But in gathering the information they have, they could be in a position to say, here’s what we think you should be inquiring further about.”

The three reports requested by John Gormley, the environment minister, were circulated to interested parties, including former directors, in recent days.

Phil Hogan, the Fine Gael environment spokesman, leaked copies of the draft reports to the media, accusing Gormley of covering up Brennan’s findings. He also published correspondence between the DDDA, the Department of the Environment and the Department of Finance in 2006, secured under freedom of information legislation.

The emails and letters showed that Dick Roche, then environment minister, gave DDDA approval within 14 working days to borrow €127m — its annual borrowing ceiling — so it could become a partner in the €427m purchase of the Dublin Glass Bottle site in Ringsend.

Hogan demanded to know why Brian Cowen, then finance minister, signed off on the approval, as required under law, within such a short timeframe and without seeking a due diligence test on the value of what was a record property transaction for a state agency.

A government spokesman rejected the charges as “a cheap attempt to smear the taoiseach” which deliberately ignored crucial facts.

“Brian Cowen as minister for finance did not approve the purchase of the site in question,” he said. “The [DDDA] is entitled to borrow up to a limit of €127m, with the approval of the minister for the environment, heritage and local government and the consent of the minister for finance.”

He said Cowen gave his consent following full consideration of this matter by senior officials in his department who “recommended, subject to your approval, that the DDDA be allowed to borrow the funds necessary to purchase the site”.

The Hogan correspondence tracks exchanges between civil servants as they assess whether to recommend the consent of government. In one, a senior finance official tells a colleague that “our main concern would be that any semi-state borrower has had quotes from a number of banks”.

The second civil servant then tells a department of the environment official that because the DDDA was a commercial semi-state, its borrowings would not impact on the general government debt.

Although its request to use its annual borrowing limit in a single deal was “unusual”, he noted, it was a matter for the environment department to assess if this was appropriate.

Asked about the apparently casual nature of some of the exchanges between civil servants, Hogan said the officials “took a view” based on the assumptions of Paul Maloney, [the then DDDA chief executive], and his board promising a 15% return on this investment.

“Nobody did any due diligence in relation to these assumptions,” he said. “There was no valuation carried out on the site independently, there was no financial expertise deployed independently and there was only one bank asked to quote, as far as we can see.”

Sunday Times

No comments: