TAOISEACH BRIAN Cowen and Minister for the Environment John Gormley have rejected a claim from Fine Gael frontbencher Phil Hogan that they authorised “State-sponsored property speculation” by the Dublin Docklands Development Authority (DDDA).
Mr Cowen was in turn accused by Mr Hogan of attempting to “dodge the truth”. Mr Hogan, his party’s spokesman on the environment, said Mr Cowen’s decisions were at the heart of a “mess” that had led directly to the taxpayer being potentially exposed to a liability of €500 million.
The exchanges took place after Fine Gael released documents, obtained under the Freedom of Information Act, which showed Mr Cowen took just 19 days to approve a request from the authority to borrow up to its maximum limit of €127 million in 2006.
Mr Cowen was minister for finance at the time.
His decision paved the way for the State-owned company to borrow the cash it needed to invest, along with developers Bernard McNamara and Derek Quinlan, in a joint venture, Becbay, which bought the Irish Glass Bottle site at Poolbeg in Dublin’s south city for €412 million.
The deal has left the authority with a €5 million annual interest bill, while it faces the possibility that it could have to pick up the tab for interest due from other parties and unlimited cost overruns. The authority’s most recent accounts state that the investment is now worthless.
The correspondence released by Fine Gael yesterday showed that the authority first sought approval to borrow to its maximum limit, via the Department of the Environment, on October 4th.
It needed the approval before the 25th of that month, which was the deadline for formal offers to be made for the site to the seller, South Wharf plc.
The correspondence shows that various parties involved stressed that the request was urgent.
On October 4th, Department of the Environment official Liam Whelan told his opposite number at the Department of Finance, Dermot Keane, that there was “a limited window of opportunity of only two–three weeks in respect of the acquisition”.
Responding yesterday, Mr Cowen denied that he had allowed the authority to “massively increase” its borrowing level in order to be part of the joint purchase of the Irish Glass Bottle site.
He said that the authority already had a statutory borrowing limit.
“I simply gave consent that they would use that and that’s all that was involved. So there was no new limits set by me or anything like that.”
Asked if he had ignored legal advisers’ recommendations, he said: “The giving of the consent was in compliance with the official advice.”
A Government spokesman last night released correspondence confirming that Mr Cowen had been advised by officials to approve the docklands authority’s request.
It included a memo to Mr Cowen from an official in October 2006 outline the authority’s request and advising: “All things considered, it is recommended, subject to your official approval, that the DDDA be allowed borrow the funds necessary to purchase the site, on the basis that it is a self-financing body, with a net worth in the order of €110 million, and that it will be able to repay the borrowed monies without recourse to the exchequer.”
A statement from Mr Gormley’s office said that, in October 2006, he and Mr Cowen “consented to the authority borrowing up to its statutory limit of €127 million, as approved by the Oireachtas”.
“As long as the authority operated within this approval, it is mandated to make independent commercial decisions. Neither Minister had any role in approving the purchase of the site or in approving the final purchase price,” the statement added.
Mr Hogan responded: “Brian Cowen specifically sanctioned and approved the purchase of the Irish Glass Bottle site by the DDDA. Secondly, he also sanctioned the involvement of the DDDA in a joint venture company to buy that site. To suggest that he was sanctioning a borrowing entitlement is grossly misleading.”