THE RECENTLY appointed chairman of the Dublin Docklands Development Authority, businessman Gerry McCaughey, resigned from the position yesterday after details of his tax affairs were disclosed.
The founder of Century Homes, a former Progressive Democrats election candidate, announced his decision on RTÉ radio and said “sinister forces” operating around the authority were “seeking to control who goes in there”.
Mr McCaughey and other shareholders of timber housing company Century Homes avoided paying capital gains tax on their huge gains when they sold the company in 2005, by using a tax device brought to their attention by accountancy firm KPMG.
The company was sold to Kingspan for €74 million and Mr McCaughey’s share was in the region of €31 million.
The scheme used by Mr McCaughey and other shareholders involved the shares being sold to their wives who moved temporarily to Italy. The wives sold the shares on to Kingspan.
There was no response from KPMG to requests for a comment yesterday .
Mr McCaughey told RTÉ radio that he did not know how the disclosure could be damaging to him when he had acted “completely within the law”. He said he took advice as to how to minimise his tax “in the same way others have done in the past”. However he was resigning as he did not want his affairs to be a distraction.
He said the information had come out four weeks after Minister for the Environment John Gormley, had appointed him to the authority. “The timing of it is very concerning.”
He was “concerned about forces operating around the DDDA, certain forces seeking to control who goes in there”.
Mr McCaughey had replaced the former chairman, Donal O’Connor, who is now the executive chairman of Anglo Irish Bank and is a former managing partner of PricewaterhouseCoopers.
The docklands area has been the location for extensive development over recent years and there have been concerns about a number of issues, including cross-directorships between the authority and Anglo Irish Bank while the bank has been funding projects involving the authority.
Mr Gormley said he “learned with regret from Gerry McCaughey that he was resigning as chairman of the Dublin Docklands Development Authority. I fully understand why he chose this honourable course of action . . . He impressed upon me that he had broken no law and acted at all times in good faith. I fully accept that as I have found him to be a sincere and honest person.”
A spokesman for Mr Gormley said later that the Minister did not approve of tax schemes and tax shelters, and had not known of Mr McCaughey’s tax manoeuvre at the time of his appointment.
Mr Gormley held a 20-minute telephone conversation with Mr McCaughey, who is in California, shortly before the businessman publicly announced he was standing down from the position.
Asked if Mr Gormley would have asked Mr McCaughey to resign had he not volunteered to do so, the spokesman said the question did not arise.
He said that following the conversation there was a mutual understanding of the course of action that would be taken.
Earlier, Labour Party leader Eamon Gilmore had criticised Mr McCaughey in the Dáil, describing him as a “Green crony”.