Simon Kelly is trying to distance himself from what he describes to KATHY SHERIDANas the 'power greed' culture of developers, fuelled by tax breaks plied by the government
‘THIS BOOK is dedicated to Paddy Kelly, my friend and father.” Paddy and Simon, father and son, forever entwined by blood, mutual adoration, a property addiction and €700 million worth of debt soon to be lumped in with the other Nama’d billions that threaten to sink the country for a decade.
Simon Kelly is on a sticky wicket. He accepts responsibility for "lacking the courage to step out of the herd", for coming across as a "smug, arrogant bollocks", for putting his signature to the loans. And yet much of his book, Breakfast with Anglo, is devoted to blaming others – the banks, the politicians, the business partners, the investor partners, even his beloved Paddy.
As a 14-year-old “computer nut” armed with an Amstrad, Kelly was already the wonderboy number-cruncher, attending business meetings with his father. Now, nearly 39, his dilemma is obvious. He needs to put clear blue water between himself and the other lumpen, “red-faced” builders and developers with their “monstrous S Class Mercedes” to complete the journey from ultimate insider to outsider. Been there, done that, drove the Porsche. All better now.
The lad who bypassed third-level education to rush into his father's world has turned from "Robodeveloper" to devourer of tomes such as The Grip of Debt, rolling newly acquired terms like "debt slavery" around his tongue while doing a part-time masters degree in corporate sustainability and responsibility at Ashridge, a "posh" English business school.
“It’s a big wide-ranging thing that includes economics and poverty,” he says, adding: “I wish I’d done all that the other way round.” He hopes he will become a “more rounded person” than he was three or four years ago.
That was when he had a “kind of an awakening”, following his thwarted €273,221,000 bid for the Jury’s site in Ballsbridge. Madness, for sure. But the apartment sums were based on rich parents aching to buy in for “little Max or Saoirse . . . And a successful development in Ballsbridge meant simply extracting the maximum price from all those parents.”
Buffing his outsider credentials, he says Ballsbridge was “nice, and close to town, but beyond that it was just an address. The downside for me, growing up there, was the people, who seemed to think they were better than everybody else. But as a developer I was happy to feed that myth.” Foxrock gets it in the neck, too, as a place “with an overall air of artificiality . . . perfect homes for plastic people”.
He has no grá, either, for the newly refurbished Shelbourne Hotel (scene of the eponymous breakfasts, paid for by Anglo), with its “over-polished floorboards . . . The boom had removed whatever class and mystique Dublin had had, and the treatment of the Shelbourne was no different.”
Investors scorched by the losses in the Kellys’ many golf clubs will hardly be amused by his fresh analysis of their hubris: “Carton [House] was pure vanity . . . but it reflects the Celtic Tiger, I think, and I don’t like seeing that too often.”
The young Simon was not without his Celtic-pup accoutrements, cruising around in a Porsche 911. He drives an 01 Land Rover now, he says, batting away the Porsche as “a 1994 rattlebag that cost me €14,000, that is now sitting with a flat tyre, untaxed and won’t start – and available to any bank that wants to come and collect it”. He and Joanna live in an old rectory on five acres in rural Wicklow, not far from the fashionable oasis of Brittas Bay. It cost them €780,000 in 2002, and it’s an ideal base from which to encourage solid non-consumerist values in their five sons aged from 10 months to 10 years.
There are no paintings or symbols of wealth, he says. “We were so busy investing money in projects that there was never free money . . . We always trusted Anglo to provide the credit for the facilities; we didn’t sell a lot of buildings, we gave them back all the rent, so the big payday never came.” They didn’t keep the “reserves” others managed to keep, which went into pensions and made your tax bill go away, he says. “There was no limit on pension contributions until 2006.”
The book – an easy, well-written, 200-page read – highlights the sterling work performed by the government in the form of tax breaks for developers. They created the market in Tallaght, a “great place to shelter your income from tax”. They were central to the Kellys’ move into the hotel business. In fact, it became normal practice to separate the property from its tax allowances entirely and sell the tax breaks to investors “who needed them”.
They couldn’t believe their luck when an obscure provision in Charlie McCreevy’s 2002 budget (which reversed Bacon’s party-pooping measures) restored full capital allowances to designated sites. “At the stroke of a government pen, it allowed us to add 20 per cent to the value of everything we were doing at Smithfield.” Which, of course, included apartment prices. They saw McCreevy at a function soon after and went up to thank him. The minister replied that he never liked to intervene in the market; the Bacon measures were an intervention and therefore wrong.
Kelly said nothing but was left wondering for days “if the government really understood the power of capital allowances . . . Didn’t he see that tax breaks were a huge intervention on the market? But it wasn’t for us to write the rules, merely to play by the ones we were handed.” As a defence in an ethics-free environment, it’s an oldie but a goodie, although a long journey from his new interest in corporate responsibility.
By 2006, Kelly was starting to think he and his father were just “jockeys” for the banks’ bets. A close associate of his who got sight of AIB documents relating to substantial personal loans said the theme throughout was “approve this loan to Mr X – maximum limit €200,000 on overdraft. He is a key connection to Simon and Paddy Kelly.” It was “mad lending”, says Kelly, “and they were lending him money to get to us.”
In the summer of 2007, he saw the writing on the wall and, sensing a squeeze at Anglo, he sold off all his Anglo shares at over €17 a pop and persuaded his mother Maureen to do the same. She sold €100,000 worth of them, which she’d bought at about €12 each.
He tried to sell off assets, a process stymied, he claims, by business associates, short-sighted bankers or intractably greedy partners blinded by the mirage of “future profit”. Even his father wanted to gear up instead of selling. “There was loads of greed – greed for keeping things as well as greed for money. It’s a kind of power greed. If you owned lots of buildings, you were powerful. If you were a big developer, people put you in the paper and built you up as a power in Irish society. But if you were really smart and had one building with no bank debt, no one ever heard of you. So I think it was greed for power as well as influence. Paddy too.”
So how did the family feel about Paddy drinking champagne like the lord of the Glenties? “If he was drinking champagne, he was stupid. I told him but I think he knew it himself. I don’t know whether he bought the champagne . . . It might have been bought by someone else. We’re not media savvy. We haven’t been tuned for five years to watch our step – like some people.”
But it hardly takes much savvy to be careful with words and sensitivities, to drop the blithe “I never lost a night’s sleep” schtick at a time of national shame and humiliation . . . “Yes. And I think he’s only catching up with my thinking on that.
“Paddy went through smaller versions of this in the past. But they weren’t national sovereignty issues for Ireland . . . I suppose I’ve been driving the business much more in the latter years and it could be that I’m aware of the complexities. Paddy was never one to look back even in the boom . . . and Paddy being Paddy, he can’t probably change.”
Kelly’s theory is that – “like government ministers” – as his father assumed more of a chairman’s role in the business, “there was a distance created that separates you from the ground and the reality, and it’s hard to get back down there”.
As for the repossessed BMW that, lo, turned out to be in Maureen Kelly's name, he says: "If I was doing it now, I'd say let [the sheriff] have the car and don't do the showboating . . . The banks are owed money, give them the car." But at the time, he says, the car was merely a "proxy" in a wider battle between ACC Bank and the Kellys. " 'Look, it's happening every day all over Ireland,' " he told Paddy. " 'I'm reading the Wicklow Peoplewhere a fellow put a digger in front of his house, blocking the sheriff. This is the normal course of business for everyone, don't feel special.' And when Paddy thought about it, he said, 'Yeah.' "
Reality bites. Maybe.
Breakfast with Angloby Simon Kelly. Penguin Ireland, £14.99
