Financial fallout: Limerick businessman Pat Mulcair, owner of construction firm Roadbridge and the operating lease on the National Aquatic Centre, will lose some but not all of €32 million in anticipated tax allowances when the centre returns to the State this month.
After years of political controversy and lengthy litigation around a project sponsored by Taoiseach Bertie Ahern, the State body Campus & Stadium Ireland Development (CSID) faces a legal bill of some €1 million following yesterday's settlement of the case outside the Supreme Court.
In light of claims of leaks and structural defects at the centre - parts of its roof blew off in a storm last year - CSID said it will carry out an assessment of the building. "Although we are confident that the centre is in good condition, we will, however, be carrying out a full 'health check' of the total facility after 30 November, with a view to dispelling any concerns in this regard once and for all," it said.
The Supreme Court case was initiated by Dublin Waterworld, whose selection in 2002 as operator of the centre led the Government to remove Paddy Teahon, one of Mr Ahern's closest aides, from his post as head of CSID.
The firm was appealing a High Court order to return the centre to the State due to "wilful" breaches of the lease including failure to pay more than €11 million in VAT and rents. While CSID has drawn down a €761,000 guarantee in respect of some of the money it was owed, Dublin Waterworld started a separate Supreme Court appeal to an arbitrator's decision that it must pay CSID €10.2 million in VAT.
Dublin Waterworld signed its lease in April 2003. The High Court found that it breached the terms of that lease on that very day by going "behind the back" of CSID by assigning beneficial ownership to Mr Mulcair. At the same time, a subsidiary of Dublin Waterworld agreed to manage the centre for Mr Mulcair.
The funding arrangements with Mr Mulcair were described by the High Court as a "tax-driven deal" worth some €2.8 million per year and capped at €34 million.
Mr Mulcair's accountant, Tom Caulfield of Limerick firm O'Donovan Caulfield Lavin, declined to comment yesterday when asked whether his client would lose such capital allowances following the settlement.
Mr Mulcair will not receive an unquantified portion of the allowances, but the fact that the settlement came more than three years after he secured the lease suggests he has already taken some of the tax benefit from it.
"Without his funding, the centre couldn't have traded for the last four years," said Mr Caulfield of Mr Mulcair.
"He is pleased with the settlement. The settlement is beneficial to the staff of the centre and it's good for customers of the centre. He would see that it's a valuable national asset that's owned by all of us."
Asked about the High Court conclusion that Mr Mulcair's arrangement with Dublin Waterworld was made behind CSID's back, Mr Caulfield said this was a matter for CSID to address.
CSID indicated that staff at the centre will transfer to a new subsidiary of the State body. "Under the terms of the agreement with Dublin Waterworld, there should be a seamless transition to CSID so that it will be business as usual," CSID said.
The centre will be managed initially by David Conway of CSID, who ran the centre during the 2003 Special Olympics. CSID has not yet decided whether it will appoint a new operator.
