KerryBog2 wrote:Says it all about Zoeâ€™s internal controls, the ineptness of their finance dept, and the bordering on criminal unprofessionalism of their external accountants who signed off on that application.
And you consistently suggest that they get involved with running NAMA?????
Of course you are completely correct in everything you have said above. Once again, thanks for displaying your common sense, and pointing out the obvious and plain facts of the matter at hand.
I had some friends in the finance department at Zoe, not bad guys and not evil people at all. But I am afraid I have to agree with you. They were so far out of their depth they didn't seem to know it. Of course, they manipulated the accountancy report and that was a perfect textbook example of what was wrong with the Zoe company in the end. Something I never want to be associated with. However, that does not preclude me from looking into the full depth of the Zoe organisation and seeing the parts that were useful.
Zoe developments was no more or no less than a haven within the construction industry as a whole. A place where the brightest and best of the construction industry could go to develop their ideas with some small degree of finance and support from Liam Carroll. They went to Zoe developments, because they couldn't get the support anywhere else in the construction industry. It is those peoples' work and ideas I tried to express in my writing mostly.
I was shocked myself, having met a couple of Zoe finance guys lately and they still were believing their own bull shit. That is why I was so relieved that ACC bank did step in, and throw a bath of cold water reality over the lot of them. (Including the other Irish banks and the department of Fianance in Ireland itself) I wouldn't have been that generous myself, I would have taken out a blow torch. But that is a story for another day.
Now that all of this news has broke and we are finally well rid of Liam Carroll and Zoe developments, it is easy to claim it was text book. That it was logical and Zoe developments had to fall. The reality is, when I and other workers received these kinds of letters last May, there was no news in the papers about Zoe developments or Liam Carroll.
I wrote several hundred lines of insider information, in order to publish what I knew and what I thought of Zoe developments organisation. A lot of which has helped other claimants out there to try and conceptualize their own strategy and to bring their case against Liam Carroll. Make no mistake about it, myself and Liam Carroll do have a lot of unfinished business. But there are other pressing matters at hand, in particular, the setting up of NAMA. Trying to establish a positive future for this country.
The boys in finance were the only guys left rattling around on the second floor at Chapel House in Parnell Street. I think they believed if they stayed there and kept really quiet that everyone would simply forget about them. Isn't it always the case with people who borrow beyond their means. They did a very good job at putting on the brave front and pretending to feel 'relaxed' about the whole mess. But as Judge Kelly pointed out, with this large amounts of money, it is the lender who has a problem as well as the borrower.
The Zoe finance guys were good guys, nice guys. But boy were they smug about themselves. Where did they get that smugness from? I am glad that the no.2 and no.3 directors were named in addition to Liam Carroll in today's newspaper. For the first time ever, I might add. David Torpey and John Pope, both men I knew well and I still think were decent guys at the bottom of it. Dave had over a hundred directorships in the Zoe companies, while John had 65. Of course Liam had two hundred and something. Liam ordered the lobster.
For the record, I am not suggesting that we carry on with the same Zoe staff and bring it into NAMA. What I am suggesting is that we glean the structure and set up of the Zoe organisation from those directors (as part of their service to society) and we capture the best ideas from that to re-cycle into NAMA. The trouble is, good ideas are in very short supply these days and Ireland has produced so few home grown companies. We should try to understand the ones we have.
Moving on, is certainly the best advice Kerrybog, by far the best advice. I appreciate you are really pissed off with me right, but allow me to clarify what I was saying if I may one last time . . . I am going to use the analogy of building a race car, so buckle yourself in and wear a crash helmet.
The racing car analogy
What I am trying to suggest is that Zoe's business model is useful, it is innovative and it is 'born' out of the Irish context. It could be economical to run and very efficient when it is wrapped inside the correct chassis, transmission, tyres, aerodynamic design, driver, pit crew and mechanical maintenance. The Zoe developments exercise was disasterous in so many ways. That is, if you judge it as a developer's company. But if you judge it as a building company, as a designer of a process and a way to build things, I think it was second to none in this country. I know my way around enough of the construction industry in Ireland to know that much.
I always think of Carroll Shelby, the unlikely Texan automobile designer who put together a classic old British sports car chassis with an American pick up truck engine to create the Ford Cobra that became a race winner. In a similar way, I believe that Zoe engine for design and construction management could be transplanted into NAMA's execution plan in some way and taken advantage of. The Zoe contractual simplicity is the answer to an awful lot of the things that threaten to make NAMA too large, too cumbersome and too hard to handle for everyone concerned. Without the right kind of engine I don't think that NAMA will make it off the starting line.
With the Zoe type of company, the designer, client and builder are the same person. That buys you a lot of things right there. The culture and the language is very consistent across the one organisation. Everyone is pulling in the same direction. They have no requirement for legal fights, they cannot sue each other because they are the same company. Their only choice is to get on with the job. That is the crucial insight. That is what I mean about transplanting an efficient and powerful 'engine for construction' into the heart of NAMA. That might not make sense to a banker. But I guarantee you, to any engineer out there it makes a lot of sense.
Break it into chunks
I am suggesting we break the NAMA portfolio which is away too large and cumbesome into chunks of say â‚¬4.0 billion each. (Rather like strategists in the F1 pit crew break a race into stages) We work on those chunks one at a time. Or perhaps a couple at a time, if we can form a couple of Zoe type companies to deal with it. In the same way a couple of cars race together as part of a team on a race track.
Zoe developments 'engine' is only required to take care of the construction management side of it. We would need help from designers also, who would work inside the same company as the contractor and the client. This closes the loop and allows us to start fixing projects right away. That is why Liam Carroll could cut all sorts of corners that other developers could not.
The important thing is that we choose someone wisely in this kind of Zoe contractual arrangement to become the client. Because the aim of NAMA is to release all of the assets into the private market within a 5-10 year time frame. The client in my hypothetical Zoe type arrangement would be someone who has run shopping centres, who has run housing rental projects, who has run logistical and warehousing enterprises in the past.
Without that experience on board, NAMA is doomed to fail. The projects will not be carried out in a way, that will enable us to release projects into the private part of the economy in the timeframe of 5-10 years.
How does one manage assets on this colossal scale?
We have some organisations in Ireland at the moment who can understand how to manage up to â‚¬4.0 billion Euros in capital. For instance, Dublin Airport Authority with the assistance of their consultant Turner and Townsend. We have the Railway Procurement Agency. We have ESB Networks, and we have the department of Agriculture which has distributed vast amounts of money throughout the Irish system over decades.
Those are the kinds of experts we should have sitting around the table to form the chassis, the transmission, the tyres and the aero-dynamics that NAMA will need. It doesn't really matter if we have to go back to retired department of agriculture civil servants or whoever, to glean the knowledge and insight we need. A long view will be demanded on this. Everyone has a role to play, even the oldest amongst our community.
ESB Networks are the ones in Ireland charged with management of the largest physical asset class we have over a long period of time. They have a particular and very valuable insight to contribute. I think if one consulted ESB networks they will claim that working with a â‚¬4.0 billion size of capital investment program is much too large. They have done it, but would never entertain the idea of doing it again.
I mean, that was a project with a simple straightforward agenda to upgrade all of the country's medium voltage transmission infrastructure. The plan wasn't complex like construction of shopping centres and town centres ultimately can be. Yet the Irish nation is looking to resolve â‚¬50-90 billion worth of bad real estate debt. Hold on a minute here, lets get some perspective on what it is we are trying to do. Before we saddle our grand children's grand children with more problems than they already have.
An engine that is proven and works
We do need a good reliable and efficient engine for construction at the heart of all of this. The one that Zoe designed and put into use over 20 odd years is proven and tested on the race track. I say we take advantage of that and we use it to give the Irish nation some fighting chance. It is quite simple. Intelligent people will learn to understand how it works very quickly and enjoy its benefits.
Zoe developments only provides the engine required in order to do construction. What I am suggesting is, we don't only transfer Liam's bad debts to NAMA. What we do is we transplant his engine of construction management and design into the heart of the NAMA vehicle also. Daft and all as that may sound.
What went wrong with Zoe developments from the start, it was operating its engine in isolation without all of the other parts. Typical of a group of engineers isn't it? To get so carried away with the gorgeous technology they are playing around with. But that doesn't mean it's engine is due for scrappage.
It's engine is perfect for the job NAMA has to do. Surviving 24 hours at Le Mans in one piece is no small task. Zoe developments has the only engine with the racing pedigree for that circuit. We must not throw that away. We must not throw out the baby with the bath water. Or else, where is all of the expertise in construction going to come from to build out NAMA's projects?
Enzo Ferrari of real estate
I often give the example of Michael Dell and his production line. As it grew and his company got into bigger stakes, Michael had the sense to call in the assistance from much better managers than himself. After Michael Dell's company grew beyond the hundreds of thousands of dollars scale, he hired the best 'million dollar' managers he could find.
Michael Dell even had to replace those managers when his business grew into billions of dollars. Obviously, there are less billion dollar standard managers or leaders out there, than there are million dollar men. When it comes to NAMA, it is larger than GE Real Estate Capital for heavens sake! Who are practically the Enzo Ferrari of the real estate financing world.
The small Cobra works that beat Enzo
Ireland is a tiny nation of a few million people, which expects to negotiate something away larger than anyone has tried in the past. We are in exactly the same position relative to the competition that Carroll Shelby found himself back in the early sixties. With his small group of 'Cobra works' car builders. What he set out to build was by no means conventional, but it changed the rules of the race at Le Mans.
That is why I offer some background into the Zoe developments organisation. Not everyone had a priveleged insight into the way the best construction company in Ireland did its business. I had to get some of that knowledge published. If any other company than Zoe developments had built as much in Ireland during the Celtic Tiger, it's debt would be more like four billion than 1.2 billion Euro today.
So the real question is, how do we integrate that very successful engine of design and construction management, into an overall vehicle that is robust and ready for race track conditions? Because the race track is exactly where we are going with this NAMA vehicle, make no mistake about it. If we are to burn our way through this â‚¬50-90 billion of toxic debt, (think of it like 24 hours of non-stop driving at Le Mans world championship) we will need the best car and driver to make it to the chequered flag.
Brian O' Hanlon