Two bank managers are suing Cork County Council to force it to complete a controversial €11.6 million land purchase in Charleville, Co Cork. Colm Keena and Barry Roche report
The council has put the deal on hold pending a Garda inquiry and an internal investigation into why the deal was done with the two bank managers for €11.6 million, when the land was allegedly available for €8 million.
No date has been set by the High Court for a hearing, but proceedings have been instigated.
The two men, Permanent TSB regional manager Brian Cremin and Cork City branch manager Denis O'Reilly, agreed to buy the land for €8 million last November, but had already started negotiations to sell it on to the council for a €3.6 million profit.
However, when the original vendor became aware of this, it contacted the council. An investigation was put in train by Cork County Council manager Maurice Moloney and the deal has not been closed as a result.
The original vendor, Pushkin Developments, queried why the council had not sought to buy the land from it for €8 million, when it had been the subject of a marketing campaign and had been advertised in the national press.
Pushkin became aware that the land was being sold on to the council because Mr Cremin and Mr O'Reilly had put in place a mechanism to avoid stamp duty.
They had asked for an "assignment clause" in the contract with Pushkin which would allow the land to be transferred directly from Pushkin to a third party, and thus only one stamp duty bill would arise. The deal would have attracted stamp duty at 9 per cent.
When Pushkin became aware that the third party was Cork County Council, it made its complaint.
The two bank executives paid a €200,000 deposit to Pushkin in December last and paid the balance of the money in May or June of this year. It is understood the money was not lent by their employer Permanent TSB. The interest on an €8 million loan could be up to €20,000 a month.
It is not known if the two executives are acting on their own or with others. The deal is not connected with Permanent TSB.
The Garda yesterday confirmed that the Garda Bureau of Fraud Investigation in Cork has launched an investigation but said it was still at a very early stage. The investigation relates to 20 acres of land zoned for housing off the Limerick Road at Charleville in north Cork.
Cork County Council has instigated an internal inquiry which will be carried out by the council's head of personnel, John Walsh, and is expected to take several weeks to complete.
No action had been taken at this stage, a council spokesman confirmed.
The council brought in the Garda as the inquiry involves people who do not work for the council.