Brennan under fire at inquiry into ill-fated docklands deal

The former chief executive of the Dublin Docklands Development Authority (DDDA) strongly criticised the authority's former chairwoman, Niamh Brennan, at a committee hearing in Leinster House yesterday.

Paul Maloney was chief executive of the authority from 2005 to 2009 and was central to the disastrous investment in the former Irish Glass Bottle site in Ringsend, Dublin, in 2006.

Ms Brennan was appointed to the authority subsequent to the collapse of the property market and oversaw inquiries into the activities of the authority during the boom years.

Mr Maloney, speaking to the Dáil Committee on Public Accounts, said he had “watched aghast” for four years as Ms Brennan “issued report after report on DDDA without ever offering an opportunity for those involved to present their views or have a say”.

He said the reports produced were leaked to RTÉ when only the Minister for the Environment and Ms Brennan had them, "depriving all participants of any natural justice in being able to defend themselves".

'Disinformation'
He said the reports contained grievous accusations which had "since been withdrawn or discredited".

Ms Brennan also sought to have the conclusions of a report prepared by solicitor Declan Moylan altered, he said, "because those conclusions did not blame executives". He suggested the committee call Mr Moylan as part of its investigation of the Ringsend deal.

Mr Maloney said he was appearing before the committee at his own volition “because I can no longer stand aside as so much disinformation and untruths have been printed about this deal”.

The Ringsend site was bought in 2006 for €412 million in a joint venture involving property developer Bernard McNamara and including bank borrowing of €219 million. The loss to the authority, following the transfer of loans associated with the deal to the National Asset Management Agency, was €52 million.

Mr Maloney said he never saw any act by any member of the board who was also a director of Anglo Irish Bank that was not focused on the interests of the authority. Former Anglo directors Seán FitzPatrick and Lar Bradshaw were on the authority's board.

He said the authority over the years had come out with a net profit of €80 million, notwithstanding the losses on the Ringsend site. He also said the development of the docks as overseen by the authority was successful and recognised internationally as being so.

Mr Maloney said he was proud of his work with the authority. While mistakes had been made and, with hindsight, he “hugely regretted” the Ringsend deal, neither he nor the board could have known that the property market and the financial system would almost collapse within 18 months of the purchase.

He said he would not accept any propositions from “someone who served on the board of Ulster Bank for six years” when that bank had lost billions.

At that stage he was stopped by PAC chairman John McGuinness, who said Ms Brennan was not present and it was “not fair” to be making repeated criticisms of her.

Ms Brennan, who is a professor of management at University College Dublin School of Business, is due to attend before the committee to give evidence to its inquiry into the DDDA.

Mr Maloney asked that he be allowed to appear before the committee again after her appearance “to ensure no further disinformation is given”.

He said Ms Brennan, in her inquiries into the authority, had gone from “perceived conflicts of interest to actual conflicts of interest” and had done so “without a scintilla of evidence” to support this. She “rode roughshod over corporate governance”.

Mr Maloney said a mistake contained in a letter to the Department of the Environment about the value of the bid to be made for the Ringsend site, was corrected by the authority before the then minister sanctioned additional borrowing by the authority and its entry into a joint venture for the purposes of the bid.

He told Eoghan Murphy, Fine Gael, that when the authority decided to bid for the site, he considered what property developer would make a suitable partner. The person concerned had to be trustworthy, capable, interested and have a reputation for delivering quality.

Not many developers qualified. His first proposal was Sean Mulryan but Mr Mulryan said he was at the time concentrating on London. His next idea was Bernard McNamara. He had never met either man before.

Increased equity
When he met Mr McNamara, it transpired he was already looking at bidding for the site, which was to go to tender in three weeks' time.

The value of the site, estimated at €220 million in June 2005, had grown substantially by October 2006, not least because of changing rules in relation to the area of floor space it would be possible to build on it.

At a meeting just before the bid, Mr McNamara said he wanted to bid €437 million but Mr Maloney and Mr Bradshaw thought that was “ludicrous”. The authority’s board set a cap of €411 million for the bid.

Because of concerns about property prices at the time, the authority had reduced its involvement from 49 per cent to 26 per cent. He had been “astonished” when Mr McNamara agreed to this. The DDDA also demanded that increased equity go into the purchase.

Just prior to the bid, Mr McNamara also informed Mr Maloney and Mr Bradshaw that he was no longer looking to Royal Bank of Scotland for funding, but was instead seeking funds from Anglo Irish Bank because of its more "streamlined" service.

This created perceived conflicts of interest, given the presence of two Anglo directors on the authority’s board, something that the board discussed at 8am the following day.

In the event, Anglo shared the loan risk with AIB, and Mr McNamara later brought financier Derek Quinlan in on the deal to mitigate his risk.

Mr Quinlan’s involvement was agreed, after the tender, by the authority’s board. Mr Maloney said he had never heard of Mr Quinlan up to this point.