THE CHAIRMAN of the Dimplex group, Martin Naughten, is among a number of business figures who invested in White's Hotel in Wexford as part of a tax scheme, The Irish Times has learned.
Twenty investors put varying amounts into a €9.6 million fund that formed part of the scheme behind the construction of the hotel. Davy Stockbrokers acted for the investors.
Last week representatives of various sub-contractors held a demonstration outside the hotel, complaining that the developer of the property, Balmaford Ltd, had not paid €3.291 million due to the contractor that built the hotel, Cleary Doyle Contracting Ltd. The money is due to Cleary Doyle and a number of sub-contractors.
A complicated structure was put in place for the building of the hotel. Balmaford was set up to develop the hotel and then let it to a company, White's Hotel Ltd, which had common shareholders and directors with Balmaford.
The 20 investors were assembled into a group called the White's Hotel Co-ownership group. It borrowed €32.5 million from Ulster Bank and, together with the €9.6 million put up by the investors themselves, this created a fund of €42.1 million.
Balmaford signed a contract with Cleary Doyle for €42.1 million for the construction of a 157-room hotel. On completion of the hotel, the co-ownership group was to pay that amount to the developer.
The investors were then able to claim the €42.1 million expended on the construction of the hotel against their personal tax liabilities over the seven years following the 2006 completion of the hotel, according to the details of the deal.
According to one of the sub-contractors involved in the deal, Barry English of Winthrop, White's Ltd will purchase the hotel from the co-ownership group at the end of the seven-year period during which tax relief is to be claimed.
The contributions towards the deal by the various investors vary in size. Mr Naughten has a 20.19 per cent stake while David Goddard, of Davy Private Clients, has a 19.64 per cent stake. Davy Private Clients acted on behalf of the investor group.
The other investors are: Kevin Hamell, Griffith Avenue, Dublin; Eamonn O'Rourke, Howth, Co Dublin; Neil O'Sullivan, White's Cross, Co Cork; Kieran Murphy, Rochestown Road, Cork; John Fitzgerald, Enfield, Co Meath; Noel Browne, Celbridge, Co Kildare; James Flynn, Castleknock, Dublin; Tony Kelly; Drogheda, Co Louth; David Shubotham, Foxrock, Dublin; Alan Crean, Charlestown, Co Mayo; Damien Donegan, Celbridge, Co Kildare; Damien Donegan, Celbridge, Co Kildare; Fergus Jordan, St Albans Park, Dublin; Des Murphy, Rochestown, Cork; Patrick Halpin, Templeogue, Dublin; Pat Whelan, O'Connell Avenue, Limerick; Pat Chesser, Cecil Street, Limerick; Aidan O'Connor, Glanmire, Co Cork; and Kevin McDonnell, Virginia, Co Cavan.
According to the Revenue Commissioners, the tax incentive scheme for hotels cost the exchequer up to €107 million in 2006, when 1,515 claimants benefitted from it. Figures for 2007 are not yet available.
In 2005, the scheme cost the exchequer up to €67 million, when there were 1,038 claimants. In 2004, it cost the exchequer up to €37.7 million, when there were 611 claimants.
