Inside the world of business

THE IMF and the EU continue to play their good cop/bad cop routine. Or, to be more precise, the IMF and the ECB.

Hot on the heels of the ECB’s dismissal this week of any talk of a soft restructuring by Greece of its debts as economic hari-kari, the IMF’s Ajay Chopra has come out and said that austerity measures alone just will not cut it, and that the bailout funds need to be upgraded. This sounds like a coded endorsement of a soft restructuring or one of the many proposals dismissed by the ECB such as the purchase of Greek and Irish debt in the market by the bailout funds.

Mr Chopra has also said the bank should provide medium-term funding for banks addicted to its emergency lending measures. Top of the list would be the Irish banks, which are still utterly dependent on the ECB.

So far, the ECB has opposed any such measures on the basis that it would be exceeding its mandate and would constitute a bailout of member state. Apparently lending over €100 billion to an insolvent banking system does not constitute a bailout if you recycle that lending every couple of weeks.

If he continues in this vein, Mr Chopra may well get a state banquet all of his own when he next comes to Dublin to review progress under the bailout package.

But more pertinently his comments – which carry the backing of the IMF – create an exquisite dilemma for Christine Lagarde, the French finance minister who is tipped to succeed Dominique Strauss-Kahn.

Wearing her current hat, Ms Lagarde remains firmly in the austerity camp, but if she is really interested in a move to Washington, she will have to tread a more nuanced path from here on out.

Not everything Fingleton touched turned toxic

THE DECISION of Michael Fingleton and Irish Nationwide not only to lend to developers but to become profit-taking players in property development projects was one of the reasons for the building society’s spectacular losses.

Those losses hit €3.3 billion last year on top of the €2.5 billion incinerated the year before.

Irish Nationwide said on Thursday that it is confident the Government will not have to write another cheque for this financial disaster.

Among the assets remaining after the mess are various investment and residential properties which the new management, led by Gerry McGinn, has to call on to collect rents.

It turns out that Fingleton was financier, developer and landlord in his role as chief executive of the building society.

Behind Irish Nationwide’s head office at Grand Parade in Dublin – just across the Luas tram line – are eight houses leased out by the building society to tenants.

On the other side of the line are the large warehouses which were owned a long time ago by the failed building company McLoughlin and Harvey.

The warehouses are used to store Irish Nationwide records.

The building society valued all these properties internally at €68 million, a decrease from the €72 million valuation in 2009.

Any repossessed properties are not included.

However, among the properties are 62 apartments in Booterstown Wood on the Stillorgan Road in Dublin, which were built by Brian M Durkan and Co for the society.

Some 34 deposits have been paid and a further 22 contracts signed to purchase the apartments, which were guiding on the market last year from €215,000 a pop.

McGinn says that the Booterstown Wood development is worth about €10 million and that the building society expects to make a small profit on the project. So not everything that Fingleton touched turned toxic.

Elliott creditors deserve preferred bidder status

IT WAS an open secret in the construction industry for some time that P Elliott was in trouble.

Even before the company let its staff go last month, it was generally accepted that it was just a matter of time before some sort of formal insolvency proceedings got under way at the Cavan-based group.

On the face of it, it looks like the directors did the responsible thing this week and voluntarily invited the receivers in. That should hopefully help to stem some of the knock-on losses to sub-contractors, suppliers and other parties who do not have any security to call in against whatever the group owes them. But there will be losses, and that will mean other businesses, and quite possibly their workers, will suffer.

The secured creditors take precedence, and, if previous examples are anything to go by, it would be unusual if the unsecured creditors were to get anything near what they are owed. The other parties likely to lose out are clients who have been left with unfinished projects.

Work has stalled on the construction of the graduate medical school at University of Limerick, a project at St Patrick’s teacher training college in Dublin and a scheme that forms part of the Ballymun regeneration project, which is also in the capital.

Presumably, these, and other P Elliott jobs, will have to be finished, and the clients will have to find new main contractors to do this.

It would ease at least some of the pain for sub-contractors engaged to work on these sites if they were re-engaged, or at least given some sort of preference in any bidding process.

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