There is a school of thought that the solution to Dublin’s housing “crisis” is to unleash the same bunch of property developers who made such a mess of it the last time round.
There was a good example in yesterday's Sunday Independent in which an article detailing how Derek Quinlan has paid off €3 billion of his €3.5 billion debts went on to quote a source close to Mr Quinlan as saying the following: "The country needs to get going again and you can't do it without developers and financiers. We actually need Nama to allow the likes of Johnny Ronan and Derek Quinlan to get back to work and start spending money and create employment in the Irish economy."
Just in case you are from the planet Mars, Johnny Ronan has been accused of fraudulently stripping assets from his previous business –Treasury Holdings – when it was in Nama and the Office of the Director of Corporate Enforcement is weighing up whether to take action against him.
Mr Quinlan, we are told has “sorted all his banks” with the exception of Nama – to which he owes €500 million – but is fully cooperating with it, whatever that means.
Another way of putting this is that Quinlan still owes the Irish taxpayer €500 million. To put that in perspective, we are currently trying to get the European Union to allow us to refinance our debts with the IMF in order to save €350 million a year and avoid having to put up taxes again. If Mr Quinlan were to "sort" Nama, we might have some time for him.
There is so much wrong about this notion of putting these two individuals, and their peers, back in the saddle that it is actually hard to know where to start, but start we must.
It is tempting to look at this from the perspective of accountability. But this is a precept that does not figure very large in Irish public life, or that in truth we are entirely comfortable with.
Suffice to say that the notion that these lads should be let loose again with the blessings of the taxpayer does not comply with the notion of accountability.
Got it wrong
The more pragmatic and compelling argument for keeping them as far away as possible from the property market is that they are not good developers and financiers. They are, in fact, bad developers and financiers. Neither of them seems to have seen the crash coming and both of them seemed to have doubled down at the wrong moment. This goes for most of their peers and the number of Irish developers who got it right can be counted on the fingers of one hand.
It is true that there is a need for players to finance and develop property in Ireland. But these guys are not the solution, they are part of the problem. In fact it is arguable as to whether property development should be done by "guys" at all.
The superstar developer model that prevails in Ireland is a creature of a small country blighted by political corruption and a dysfunctional planning system. We should not forget that the ability to bribe country councillors was a core part of the skill set of many developers.
As we now know, property development involves such massive amounts of finance that it can kill a banking system. It also has profound economic and social consequences when it goes wrong. It is a bad idea for a small country to allow it to be dominated by a group of individuals.
A different model is needed and appears to be taking hold.
The empires of the developers have been broken up and sold off by Nama, mostly to international property funds, but lately some Irish.
It is axiomatic that those doing the buying are better developers and financiers than those whose assets are being sold. The future of our old developer class is as hired hands for this new money.
Some may lament this "transfer of wealth" but the benefit to the Irish taxpayer of allowing a handful of incredibly wealthy individuals to extract uber profits from the property market and kill the economy in the process is hard to see.
The new players don’t have Ireland’ s best interests at heart either, but hopefully they are better at their job than their predecessors.
Apology - October 8th, 2014
In our edition of September 8th last, we published an article under the headline “Ronan and Quinlan not the answer to housing ‘crisis’”. The article mentioned Mr Johnny Ronan and Mr Derek Quinlan. In the article, we made reference to political corruption and that the ability to bribe country councillors had been a core part of the skillset of many developers. We also made reference to accusations against Mr Ronan of fraudulently stripping assets from his previous business, Treasury Holdings. We wish to clarify that we did not intend to suggest that either Mr Ronan or Mr Quinlan had engaged in corruption, bribery or any other criminality and we withdraw any inference to the contrary. Mr Ronan states that, contrary to the assertion in the article, Treasury Holdings did see the property crash coming and had moved their main focus to China and Battersea Power Station. We apologise to Mr Ronan and Mr Quinlan.
