March 26, 2010

BIffo & Gormleys DDDA Cover Up

Cowen 'rushed approval' for loan


Fri, Mar 26, 2010

Taoiseach Brian Cowen took just 14 working days to sign off on approval for the Dublin Docklands Development Authority (DDDA) to increase their borrowing levels in order to take part in a deal to buy the Irish Glass Bottle site.

According to Freedom of Information (FOI) documents released to Fine Gael this week, Mr Cowen, who was the then Minister for Finance, sanctioned the extension of the DDDA's borrowing allowance to up to €127 million in October 2006.

At the time the authority’s net worth was valued at €110 million. Mr Cowen's approval allowed the authority to take part in a consortium headed by property developer Bernard McNamara to acquire the Dublin site at a cost of €412 million.

The authority invested €47 million for its 26 per cent stake in the project through a series of loans to Becbay. However, its latest accounts now say that the site is worthless and taxpayers could be left facing a multmillion euro bill to cover the losses.

The FOI documents, which were released to Fine Gael's environment spokesman Phil Hogan, show that there was no independent valuation carried out on the site, which the DDDA valued at €220 million.

The documents also indicate that the Department of Finance questioned the authority's decision to repay monies borrowed and the source of funding but carried out no further due diligence.

An internal Department of Finance email sent on October 6th, 2006 - two weeks before Mr Cowen gave his approval - stated that its main concern was over the fact the DDDA seemed to want to borrow up to the full statutory limit in one go.

On October 18th an email from the Department of Environment said the authority should be able to borrow money as it understood the question of Exchequer support did not arise.

Approval was given for the increased borrowings on the basis of the DDDA being "self financing" and able to "repay borrowed monies".

Commenting on the FOI documents, Mr Hogan said they confirmed "a rushed decision to approve the DDDA's heavy involvement in the speculative property deal" on the Irish Glass Bottle site. "As a result of the rushed decision, key issues to protect the taxpayer were overlooked."

Mr Hogan said there was no evidence that the DDDA's request had ever been discussed at Cabinet level and described the decision to grant approval as evidence of "State-sponsored property speculation."

He also claimed that Minister for the Environment John Gormley was "complicit in covering up the core of the corporate governance that underpinned this deal".

Mr Hogan said the DDDA should now be declared insolvent. 
Speaking to reporters in Tullamore, Co Offaly Mr Cowen said he acted “in compliance with the official advice” in relation to the DDDA and rejected Fine Gael's claims solely to allow it to enter into a speculative property deal.

“That’s not true. The involvement of the minister for finance in relation to this relates to giving a consent in respect of the DDDA reaching their statutory limits,” Mr Cowen said. “They had already 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 advisors’ recommendations, he said: “The giving of the consent was in compliance with the official advice.”

Yesterday, Mr Gormley said he may call for further investigations into past actions of the DDDA following the publication of the three draft internal reports. Mr Gormley also rejected allegations Mr Hogan that the Government was involved in a “cover-up”. He described the claims as scurrilous and “muck-raking”.

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