Almost 400 Irish people who invested between €10 million and €15 million in a property development in Bulgaria will have to wait for up to three weeks before they know if the project will be completed and the funds recovered. Conor Lally reports.
An Irish firm which sold many of the properties to investors here is hoping to take over the project after the Dutch company behind it had its funds frozen by the Dutch authorities last month. Consequently, it was unable to continue paying the builders.
Platinum Developments Ltd, which is based in Rathmines, Dublin, said KPMG is carrying out an audit on its behalf to determine if the Pomorie Hotel and Golf Resort on the Black Sea can be completed. Platinum is just one of a number of sales agents through which Irish buyers bought the Bulgarian properties.
The company's director of sales, Mr Aaron Tracey, said the KPMG audit should determine the accuracy of claims by the Dutch firm, NV Capital Ground & Building Investment (CGBI), that all deposits paid by investors had been spent on the project.
Mr Tracey said if this was the case, it was likely the company would be able to attract the amount of investment needed to complete the project. However, he could not guarantee that Irish investors would recover their funds. "We won't be able to say that until we see it in black and white in two or three weeks."
Platinum has already moved to stake a legal claim to the land on which the development is being built to safeguard as much of its clients' investments as possible.
The Dutch company's funds were frozen in Holland after an inspection of its accounts two months ago. The builders walked off the site in Bulgaria last month when it emerged there was no more money to pay them. Irish investors paid up to 30 per cent of the value of their properties up front, in deposits of between €15,000 and €50,000.
Mr Ype Bastra, a director of the Dutch firm, insisted yesterday that any money received from investors had been spent on building. He said Irish investors would not lose their money. Mr Bastra told The Irish Times that CGBI's accounts had been frozen because the Dutch authorities suspected money in the accounts was the proceeds of a fraud carried out by a Dutch company 10 years ago when many investors in a property scheme lost millions.
He said one of CGBI's sales executives, Mr Peter Kuiper, had owned a company in the early 1990s, which he then sold. It was after Mr Kuiper's involvement in that firm ended that the fraud took place. Mr Bastra said while the Dutch authorities were "entitled to believe we were doing things wrong, they are not right".
He said his firm was taking a legal action against the Dutch government on July 12th, and it was confident it would win this and regain access to its funds. However, even if the firm wins the case, it will not complete the project in Bulgaria, he said. Instead, this would be done by Platinum, who would pay CGBI a share of the profits when the project was completed.
A number of well-placed sources last night said that well-known figures in Irish business and legal circles were among investors in the scheme.
Mr Gavin Duffy, an Irish property investor, said he had considered buying some 16 apartments and eight retail units on the seafront boulevard. He visited the site 12 months ago and became concerned that so little work had been done in the 18 months since it began. He employed a Dutch company to carry out due diligence on the company behind the scheme. Its advice was that he should not invest.
"When a development of this size happens in Dublin, the speed of the building rising out of the ground is amazing. But it seemed to go much more slowly at \". He said the advice from the due diligence experts was that CGBI's financial resources may prove too small to see the project completed.