Sunday, 28 March 2010

Dublin Docklands Development Authority in a battle for survival

'It is now clear that key information on planning issues were deliberately and systematically withheld from the current executive board. The agreement entered into by senior executives of the authority without the knowledge or authority of the executive board in relation to the Anglo Irish Bank headquarter building is a case in point"

January 2010 report by executive board of the DDDA to the Minister for Environment John Gormley

The Dublin Docklands Development Authority is in a battle for its financial life, a battle that it now seems destined to lose. The corporate governance reports released by Fine Gael's Phil Hogan show the extent of the problems.

"The financial outturn for 2010 is dependent on a payment due to the Authority of €20m in September 2010," according to a report by the executive board.

In addition, the DDDA is owed over €8m in levies and, as first reported in the Sunday Tribune, it has had to appoint debt collection services to pursue the unpaid debts. On top of this is its annual interest bill of €5m for the Irish Glass Bottle site and the DDDA quite simply is "incapable of operating on a break-even basis with this annual liability".

The upshot is that the authority may come under pressure to exceed its borrowing limits of €127m and that's where the taxpayer comes in. The State may have to pump money into a body that is running at a significant annual loss and where there is little hope of the money being recouped. The resemblance to Anglo Irish Bank is striking. And it is Anglo's tentacles that move everywhere in the DDDA, with cross-directorships and the bank's culture influencing the way the authority did its business. The damning result is that both are insolvent.

The documents released last week contain a wealth of new information. There was a "loose culture" in relation to internal systems of financial control. Salary increases were handled by then ceo Paul Maloney with "no oversight in his execution of these responsibilities, partly because the ceo did not bring these matters to the board's attention". In other areas, there were systems in place for cost control but they weren't implemented in practice. Perhaps most worryingly of all, "value-for-money considerations were largely absent in the work of the authority" until 2007.

This is summed up by the €625,000 spent on board and executive expenses between 2005 and 2009 and a jaw dropping €650,000 spent on public relations since 2006, all of which was first revealed in the Sunday Tribune. The worry for the taxpayer is that this may only be the beginning. The authority says it is operating "in a very litigious environment and it is possible that the Authority may be subject to other legal challenges in the future". Some of these legal challenges are likely to come from developers, some of whom have found that the planning permission for their buildings may not be valid while others are waking up to the possibility that they lost out on tenants to buildings that should not be standing because of "inappropriate planning decisions in the past", according to the executive report.

The authority put it best when it said that the findings of the report into planning by Declan Brassil "are commercially sensitive, with significant risks that legal steps may be taken against the Authority arising from its past planning practices". The costs of such actions can only be guessed, but no prizes for guessing who will be left with the bill.

Sunday Tribune

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