Liam Carroll: I did it my way?

Re: Liam Carroll: I did it my way?

Postby garethace » Mon Aug 24, 2009 6:35 pm

What a bloody nosed scrap this is turning out to be.

Lyndon MacCann, senior counsel for ACC, which opposed both the hearing of the petition and the attempt to appoint an examiner, said that the bank would be submitting affidavits from a bank official, a property valuer, an economist and an insolvency practitioner to respond to the companies' claims that they have a reasonable prospect of survival.


http://www.irishtimes.com/newspaper/breaking/2009/0824/breaking45.htm

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Re: Liam Carroll: I did it my way?

Postby garethace » Tue Aug 25, 2009 8:13 am

Well, it is either pay up for some legal and financial services now, or face a lengthy dole queue in a month's time when all of the dust is settled. These fellows don't know much else, except what they do.

I can see shades of the 'Full Monty' to this already I am sad to say.

Legal sources said that David Torpey and John Pope, directors of the companies, may personally be exposed to the costs of the second petition, if it fails, as they passed resolutions as directors to make the second application.


http://www.irishtimes.com/newspaper/finance/2009/0825/1224253193430.html

I have already spoken to directors of Liam Carroll's companies who have never been unemployed in their entire careers, and wouldn't even know where to find a dole office.

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Re: Liam Carroll: I did it my way?

Postby garethace » Tue Aug 25, 2009 1:57 pm

Of course, what Eamon Gilmore suggested is going to be a crucial step of the whole complex and messy political, social and economic process facing Ireland in the coming months.

It is important that up to date information from the Carroll case be fed out to the PAC investigation of the banks. Without linking up those two investigations properly, it doesn't make any sense.

It would be like have too suspects in a case, and not bothering to use 'The prisoner's dilemma' to set one off against the other.

Mr Gilmore said the Attorney General should apply to the court for the right to nominate lawyers to ensure that the public interest is protected in the proceedings.


http://www.irishtimes.com/newspaper/breaking/2009/0825/breaking57.htm

In fact, in this instance, it would help to keep the Zoe valuations a secret, in terms of the banking investigation case. Because then, that information would not be exposed to those giving evidence to the banking investigation. At least, until the investigations were over and done with.

Speed will be of the essence now as senior banking officials begin to retire or jump ship.

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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Aug 27, 2009 8:06 pm

-

Blood Diamonds


I have taken a stand on the side of Irish developers for long enough now. That was mostly tactical on my behalf. Because with a lot of the emotional protest out there, to do with property prices and the big developers, a lot of useful and constructive arguments were lost. That of course, is to those property developers' advantage, not to their disadvantage. It is the first stage in their 'recovery plan' and to date, it has gone quite well for them. People are more confused now about property and that business, than they were six months ago.

It is okay for minister Eamon Ryan to say, that Irish speculators, bankers and property developers will pay the price. But the truth is, we all know they won't pay any price. Because our government doesn't know the property game well enough to go after anybody. The Irish government doesn't have the teeth in that regard. The Irish proeprty developer is banking on that strongly in their recovery plan. Expect normal procedures and rules to apply very shortly, as the Irish government has to form an orderly retreat in the face of a battle it doesn't quite understand.


A prisoner in one's own land


For a lot of the time during the Celtic Tiger, I felt a bit like Solomon Vandy, the character from the movie Blood Diamond. I felt like a prisoner in my own country, to property developers. I am satisfied to say that Zoe developments were the best masters I ever had. I learned a lot from Zoe developments and they put a lot of effort into me. For that, I am very greatful. But having argued the case in favour of the Irish property developer for quite a while now, I am almost ready to say what I didn't like about them. I was gathering some thoughts today, with regard to the Liam Carroll and Zoe developments court case.

I was thinking of how economical that Zoe developments were in their approach to building. I don't agree with other commentators that being economical meant producing worse offerings than what else was on the market. But that is not the relevant point at all. The relevant point is that Zoe were economical in how they built their buildings.


Having the best land


The other point I began to think about was their land bank. Their land was situated in some very good locations indeed. It was good development land. Zoe were a company who had done themselves a lot of favours in how they approached land acquisition over the years. They had become skilled in that area, if nothing else. Everyone would agree on that fact today.

That led me to a third point. If Zoe developments were good at building cheap buildings and were well catered for in terms of the land they owned in Dublin, then why were they so agressively geared up with credit? One would imagine, that Zoe developments as a company, having worked so hard all through the years to perfect a system of cheaper building, having worked to put together a portfolio of land resources, that Zoe might be able to use those advantages better.


Stepping down a gear or two


One would think Zoe would be able to ease back from the frontier of what was possible, with regard to obtaining loans from banks at low rates of interest. Why was Zoe developments like a bicycle in top gear? Where its loan book was like the large front cog, while its liquidity was like the tiny cog at the rear of a bicycle. It made me wonder. Are Zoe developments like other building developers? Or are they different?

Are other developers out there agressively leveraged or not? If so, by how much?

Consider the facts above. Zoe developments were leaders in terms of building cheaply and fast. That is a non-trivial advantage in terms of a development business. Zoe developments owned land that other developers could only dream about. I believe strongly that other developers are equally as extended in terms of non-performing loans or worse. That is quite frightening to be honest.


Borrower of last resort


The minister for Finance, Brian Lenehan has made it clear today in the Irish Times newspaper that Ireland needs to get the best rate possible in terms of borrowing. The only way to do that, is to establish the Irish government as the borrower of last resort in this country. Only the government of Ireland can obtain the finance at the rates that can make a full economic recovery possible. If we depend private investors in Ireland to turn around our fortunes, things could get very bad indeed. Ireland needs the government to become a player in the market today. It is not the situation that everyone would like. But it is a much more sustainable solution than any other at the moment.

During the Celtic Tiger I would argue that private investment companies such as Zoe development over-extended themselves to the degree that they did, simply in order to keep the Irish government out of the property market as a player. I don't know what Karl Whelan would do with that thesis. He might rubbish it, I don't know. But if it has any merit at all, then it bears a relationship to his own thesis. It adds another wrinkle to things, that Karl Whelan must incorporate into his analysis.


Too much for bottles


We saw at the Ringsend bottle factory site what it eventually took the DDDA to do, in order to grab a small piece of the action. The DDDA were worried that too much was happening in the Poolbeg area, too fast, for them not to have a stake. Rightly so I believe. Irish developers were beginning to scoffing at local authorities by that stage. But it cost too much to get in the game by then. The piles of chips in the middle of the table had climbed too high. Everyone had consumed too much wiskey and inhaled the same bad, smoke filled air. It was hardly the kind of table a local authority should have sat down to.

The DDDA had watched helplessly as the entire length of Mayor Street upper and lower got developed without their involvement. It was often joked at Zoe developments (and I presume at other major development companies) that the local authorities had very little to say about the docklands, because they didn't own any stake in the lands.


Turning it on it's head


NAMA will turn things as we know it in Ireland, on its head. In fact, I am worried in their haste to gather all of the chips in one motion, the Irish government will over-correct too much. I believe it would be a good thing, if some of the land was released from NAMA back into the open market at today's prices or slightly above. Yes the project would take a hit, but I don't like the idea of NAMA holding on to the land resources for too long.

That is what Zoe developments tried to do. What eventually happens, when you are strapped for cash you mortgage something, you place additional charges on what you have. In other words, you buy yourself breathing space, but the result ends up the same. The NAMA body is in a worse situation, because it can buy itself un-limited breathing space and a self-destructive cycle could set in, like it did at Zoe.


Property cycles


Alan Ahearne thinks that NAMA could hold onto the land much longer than 5-7 years. I don't agree at all. If the property cycle hasn't returned again in those 5-7 years, I don't believe that Ireland is gaining any advantage. I believe that a stake should be put in the ground, regarding the release of assets into the market. Allow every other player out there, to plan their operations around something firm. Holding on to the assets for longer than 5-7 years will create a bureaucracy, whose has every incentive not to do anything with the assets. Because the minute it does, it is doing itself out of a job. That is basically what happened at Zoe developments, and that is why they failed so miserably in the end. That is the game of land development, but economists without experience in the field wouldn't have an intuitive grasp of it.


Holding all of the Diamonds


There is one final aspect to all of this, I would like to consider. The Irish banks have done everything in their power, including paying €30 million worth of trade creditor debt for Zoe developments in order to keep product from reaching the market. It reminds me of that movie 'Blood Diamond' in which a London based diamond trader buys blood diamonds, but regulates supply to the market so that young ladies have to pay top prices for their precious stones. The fact that Irish banks are willing to do this now, confirms a suspicion I had, they have known about the game for some time.

Indeed, this was one of the primary reasons, that Zoe developments over extended themselves to obtain a property portfolio, which was grossly out of proportion with it as a building company. It was acting as one of the storage facilities for the diamonds. Zoe probably did not realise that was the case themselves. They were so consumed with their own ego.

As much as Zoe developments was geared up for speed of construction, they couldn't use a quarter of what they owned. There were other reasons for acquiring property. Those had to do mainly with the regulation of supply of product onto the Irish market. One of the most cynical moves of all, was the buying up of Greencore shares. There was a company trying to turn itself around and why should someone with such a large Dublin based portfolio worry about Mallow, Carlow or Tuam?


Alternative solutions


I believe, it would be a good thing if some of the NAMA land was released back onto the market as soon as possible. So that there would be an equal balance between state and private owned development land. That would ensure a healthier competitive market going forward, between private and public interests. That is what should have been the case all along. The property market had been grossly distorted by vested interests who did everything in their power to prevent alternative solutions, to the ones they provided, reaching the market. It was companies such as Zoe developments working with the Irish banks and other developers who sought to keep the government out of the picture altogether.


Holding no cards or no chips


I would not like to see a situation where private interests in Ireland held no cards or chips at all. What we need is a decent play-off between private interests and public. We need to play one model against the other. Neither are very good on their own. Both are prone to mad excesses of waste and squander. But have both in competition with each other should prove interesting. Irish developers foolishly believed that by keeping the government out of the picture entirely, they would be holding all of the cards. We know now, how poor a conception of economics those development companies had. Otherwise, they wouldn't be left in a situation where they hold no cards at all.

The development companies felt that by holding all of the cards with regards to land, that they could enforce a situation, where the tired, out-of-date business models could continue, long past their shelf life. That was the plan all along. It was a very unsophisticated plan, but it did work for about a decade. The Irish development companies became very profitable and the local authorities were in no rush to pass new legislation regarding standards of development etc. In other words, by owning all of the land, the Irish developers were stopping innovation happening.


The Irish architect


Developers held all of the cards, and the Irish architect could only winge and moan at best. The same boring product was pouring onto an already saturated market. Creativity and imagination was under valued. No constructive, forward-thinking innovation was taking place. Every time an architect moaned about this, the Irish developers liked it even more. The Irish architect was like the small kid in the school yard, everyone liked to pick on.

I can speak from experience there.


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Re: Liam Carroll: I did it my way?

Postby garethace » Tue Sep 01, 2009 12:34 pm

I was wondering why UCD economist Morgan Kelly was hiding in the long grass, during all of this NAMA debate. I read several of Kelly's essays about economics late last year. Now, it makes sense to me. Professor Kelly will get an opportunity to stand on one of the largest podiums that an Irish economist could hope for, in all of this property bust aftermath.

The bank is expected to produce evidence from insolvency specialist Simon Coyle accountancy firm Mazars, property valuer Sean McCormack at estate agent DTZ Sherry FitzGerald, and from UCD economist Prof Morgan Kelly.


http://www.irishtimes.com/newspaper/breaking/2009/0901/breaking25.htm

Kelly will prove a very reputable and convincing witness for ACC bank in today's High court case.

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Re: Liam Carroll: I did it my way?

Postby garethace » Tue Sep 01, 2009 3:14 pm

Latest breaking news.

Anglo Irish Bank, in a letter, said it had no objection to an examiner being appointed in a bid to save the Zoe Group and is willing to finance the companies further to the tune of over €60 million.


http://www.independent.ie/breaking-news/national-news/banks-agree-to-lend-carroll-companies-more-money-1874846.html

Anglo Irish, a bank described in yesterday's joint Oireachtas committee on finance briefing, as not having earned a 'red cent' for the Irish taxpayer. I could seem that the Anglo Irish head quarters at North Wall Quay may have a chance of completion after all.

That will set a cat amongst the pigeons I am sure.

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Re: Liam Carroll: I did it my way?

Postby garethace » Tue Sep 01, 2009 5:56 pm

I notice how the issue of valuation methods has become a battleground for the Zoe High court case today also. Exactly how it has raised huge questions in relation to NAMA also. The question is, who will carry out the valuations. The same parties who tried to hype up the Celtic Tiger property bubble for so long?

This is what makes Morgan Kelly such a credible witness I believe. The High Court judge has to factor this in. The credibility of Irish valuers is being openly debated and questioned in other parallel discussions. Not to mention the fact that a new form of valuation method is being tested with NAMA: the long term value model. Which no chartered surveyor in Ireland has used ever, in 40 years of practice.

While ACC had questioned the methodology by which those valuations were reached, it had not disputed the actual figures provided. John McCann of BNP Paribas had provided an affidavot for his side to the effect the methodology was valid, counsel added.


http://www.irishtimes.com/newspaper/breaking/2009/0901/breaking25.htm

I assume that Zoe is hoping to build a credible case around the notion of the 'long term valuation' method, rather than the mark-to-market method. The fact alone, that a little more information exists now in the public domain, about this new valuation method, can only help Zoe in it's case. We had the credible witness of Mr. Mulcahy, a ex. chairman of Jones Lang LaSalle speaking in support of minister Brian Lenehan only yesterday.

For those of you who tuned into the joint Oireachtas committee on Finance meeting yesterday, and reading these reports from the Zoe case, one cannot help but see the strong parallels. An article on the subject of valuation techniques appeared in today's Irish Times by the chartered surveyor, Eoin McDermott.

Another important factor in this process will be the categorisation of property assets including undeveloped unzoned land, undeveloped zoned land (greenfield, brownfield, prime urban), undeveloped property with planning refusal, undeveloped property with planning permission, partially completed buildings, completed unoccupied buildings, completed partially occupied buildings, etc.

It is imperative that an overall strategy and action plan is put in place for the macro management of these distressed loan assets.


http://www.irishtimes.com/newspaper/opinion/2009/0901/1224253586371.html

It is good to hear from the Chartered Surveyors perspective in the newspaper. Interviewed on RTE radio news at one today, Eoin McDermott offered a suggestion, there were potential buyers out there in the Irish property market. However, availability of finance was a key issue for those potential buyers.

Maybe I am paranoid here to an extreme degree. But does that sound a little like the Celtic Tiger chicken and egg situation all over again? I remember Liz O'Kane suggested towards the end of the Celtic Tiger, that finance for buyers was becoming an issue. Liz seemed to indicate in my opinion, in some media interviews, that had the credit kept flowing that prices of property were fundamentally sound and could continue close to 2006 levels perhaps.

As deputy Alan Shatter, I think it was, said in yesterdays joint Oireachtas committee on Finance meeting - there is a lot of 'circularity' involved in all of these issues to do with property, valuations, loans and NAMA legislation.

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Re: Liam Carroll: I did it my way?

Postby missarchi » Tue Sep 01, 2009 11:39 pm

5 year mortgages and if you don't own a zone 1 home by the time your 26 you get one for free...In the interest of the families:D

Long term architecture value might make an appearance...
Fixed fee then an annual fee or architectural rates:p
bonuses of 10% of the value of property for any award received...

blah blah

Long term value and long term mortgages... some one is going to have to pay them...
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Re: Liam Carroll: I did it my way?

Postby garethace » Wed Sep 02, 2009 1:04 pm

I would agree with ACC bank's council in this instance.

Counsel said that "hostility" had been shown to Danninger between August 2008 and April 2009 when nine winding-up petitions were filed against the company by unpaid creditors. "Presumably they were paid off," he said.

This was an example of the risk facing the company but that the court was not being told about this, he said.


http://www.irishtimes.com/newspaper/breaking/2009/0902/breaking26.htm

It and other key parts of the story have been purposefully shielded from the court's view. In terms of mounting a second petition, the Zoe team should have done a lot better on this count I think.

I believe that the Greencore and ICG share holdings have only been referred to in terms of their producing dividends in the Zoe defense case. But an awful lot about those shares, has indeed been concealed from the court proceedings.

In a way, that I don't care for very much. I am sure the Attorney General's office and many others are watching however.

Zoe is a company which could learn a lot better how to report on its status, in a lot of ways. It has improved a lot over the course of these court proceedings, but it still has some ways to go. Trying to conduct business, while at the same time remaining such an opaque institution has not been good in the end for Zoe, I do fear.

I hope that NAMA can learn to do better, in this regard. A very good article was published by Constantin Gurdgiev in last Friday's Irish Independent newspaper.

There is, however, another option -- an option of fixing Nama legislation to minimise the expected losses to taxpayers and bringing about transparency and accountability to its operations. Let's call it Nama Trust.


http://www.independent.ie/opinion/analysis/nama-needs-tweaking-or-it-could-destroy-us-1871834.html

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Re: Liam Carroll: I did it my way?

Postby garethace » Wed Sep 02, 2009 4:27 pm

A couple of black eyes given out today, there is no doubt about that.

Judge Frank Clarke adjourned the hearing until Monday and said a ruling could take seven days after that to deliver.

That would mean a ruling just before the Dáil is due to debate the NAMA legislation.


http://www.rte.ie/news/2009/0902/carroll.html

I mean, could you write a script for this really? It might as well be a soap opera like Dallas. I don't know what sort of 'impression' that Ireland is making abroad, but I know it must be an impression at least.

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Re: Liam Carroll: I did it my way?

Postby garethace » Wed Sep 02, 2009 6:48 pm

Not to mention the 'Irish Davos' on the 18th September.

Three years ago, at the World Economic Forum in Davos high up in the Swiss Alps, it struck me again just how many people of Irish decent – not just from the US, but also from Britain, Australia and even Argentina – were movers and shakers in the world of business.


http://www.davidmcwilliams.ie/2009/08/31/diaspora-can-foster-future-success

What an 'action packed' week that is turning into.

The Liam Carroll High court decision, the NAMA debate and an Irish Davos all in one week.

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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Sep 03, 2009 9:55 am

-

Ghost Towns


I think NAMA might be going off course. I think NAMA might be missing the point. Mixing up what is 'good' or sustainable development and what is 'bad' or un-sustainable development. The ugly, we can live with, as long as it is built in a sustainable location.

There is a lot of talk in the newspapers today about Liam Carroll's property loans going into NAMA. I think there is absolutely nothing wrong with the Zoe developments property portfolio. It is one of the healthiest in the country from many points of view. Even if you were to exclude the 'hope value' as Fine Gael's Richard Bruton described it. The Zoe portfolio is eventually going to come out on top. There should be no real rush for NAMA to deal with Liam Carroll's loans, other than the fact that he made a royal mess out of his company[s].

Liam Carroll engaged in a very un-orthodox method of development, as I described briefly in a Sunday Tribune article.

http://www.tribune.ie/article/2009/aug/23/developing-on-the-back-of-a-cigarette-box/

But that is an entirely separate issue. It does not say there is something 'bad' or otherwise with Liam Carroll's property portfolio. The distinction needs to be made. To an extent, the NAMA plan and the Liam Carroll case are totally separate issues.

The first loans I would move into NAMA, if it was up to me, are those really un-sustainable ghost towns and so-called 'development lands' speculatively purchased in the upper Shannon region. Which may take decades and decades to work through the system and be worth anything, if at all. If there was some way we could get them moved in the NAMA vehicle first and simply bull doze the construction, which is never going to pay for itself, I would be all for it. I don't know how you do that in legal or financial terms though. Buying something simply to bull doze it down.

A problem with NAMA is, the big boys will be the first to be taken care of. The smallest of the 1500 lenders in the NAMA portfolio, hold those bad developments in the upper Shannon ghost towns. Unfortunately, it is the ghost towns of the upper Shannon region, and in places like the 'Ring of Kerry' that are causing the worst fears and doubts in terms of the bank loans. But those will be last in the queue to go into NAMA.

I don't think there is any real risk with Liam Carroll's property. We all know it is going to recover, be developed, leased or sold at some stage. I don't think there need be any doubt about that. It is only a discussion over whether a private interest or a public one, gathers the most benefit from that transaction. But it is not a transaction we should worry about, it is going to happen one way or another.

The side of the portfolio that really worries me, is where a transaction may never take place. The ghost towns which were built way out in the sticks of NAMA land. The only purpose of the ghost town was to fool the droves of settlers coming out of Dublin, who were searching for the 'good life'. They were moving into the western wilderness with bags of money having sold their home in Dublin. They were being ambushed by speculative developers in the upper Shannon region and elsewhere in the hinterland. A failure to use 'mark to market' methodology with that sort of rubbish, both on the buyer and builder side of things, will upset everything in property market.

I know one enterprising hair dresser in Dublin city, who purchased 10 acres of bogland in County Laois. The man still believes it is worth building a house there. Despite the fact, the site is land locked with no road into it. (Unless the occupier buys a helicopter, they are snookered) That man is not a stupid guy. He has run his own sucessful and viable business all his life in Dublin. But he is a player in the 'property market' who needs to be given a firm signal, of what the real value of his property is. So that he can absorb the write down immediately and move on with his life. Chalk it down to experience, or whatever way you like to put it.


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Re: Liam Carroll: I did it my way?

Postby missarchi » Thu Sep 03, 2009 10:56 am

Do you think Liam would do well with major infrastructure?
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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Sep 03, 2009 9:12 pm

missarchi wrote:Do you think Liam would do well with major infrastructure?


There is a difference between civil and structural engineering. No I don't think LC would do well with major infrastructure at all. There are only a couple of things, his kind of operation works for. He would do a good job of completing a project such as North Wall Quay. He is fine at doing that sort of thing.

What I don't really like about the Zoe group, is that they wish to 'add value' to land, which they will sell later as part of their business plan, but having obtained planning permission for schemes on the land first. That is okay if they mean land in Dublin City Centre. But if they mean land which has never been touched or serviced, then of course they are going the wrong way about it. A lot of the Zoe group's land, or more specifically the Dunloe land is un-serviced land.

An Adamstown kind of approach would be required in their of advance civil infrastructure. I think that Zoe are playing catch up to others like Castlethorn construction, in that regard. You need a strong culture of project management to achieve was Castlethorn did at Adamstown. I don't believe the project management culture exists in its full extent within Zoe at all. They are short personnel in that regard.

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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Sep 04, 2009 7:32 pm

In today's Irish Times newspaper, Simon Carswell reports on new developments in the Zoe High court case.

http://www.irishtimes.com/newspaper/finance/2009/0904/1224253823351.html

Simon Coyle, an accountant with Mazars, raised queries about the group’s management “capacity” in a submission on behalf of ACC rejecting KPMG’s findings that Zoe had a reasonable prospect of survival.


I too agree with this assessment. I knew this the first day I walked into the company as an employee in late 2006, early 2007.

Though I do believe Zoe were a lot better than most other Irish property development outfits, who operated worst than many sole traders would. I wrote about this today, at the Designcomment blog, entitled 'Angel Investors'.

But because the general standard across the construction sector business in Ireland was so low, does not an excuse make. Zoe, and Dunloe was a multi-billion dollar business venture run by a couple of blokes who started out as sole traders, and will go back to that eventually.

It is a pity that construction industry is crippled by those limitations.

Mr Coyle also questioned if Anglo Irish Bank and Bank of Scotland (Ireland) (BoSI) would honour lease agreements on two buildings to be completed by Zoe.


They will not honour their lease agreements. Both projects were only intended to 'carry the fool further down the garden path' in my opinion.

It took most of us in Zoe, until the very, very bitter and final end to admit to that. Including the man himself, Liam Carroll, who knows he is effectively cornered.


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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Sep 04, 2009 8:06 pm

Here it comes, Fingers Fingleton.

http://www.rte.ie/news/2009/0904/irishnationwide.html

RTÉ News has learned that Irish Nationwide directly received a cut of profits from successful developments that it had financed.


My question is simple, and it relates very much to the concerns of Simon Coyle, an accountant with Mazars. Why the heck weren't Zoe management able to shout up and command a 'piece of the action', if the suits over beside the Grand Canal in Ranelagh were able to demand their's?

On that point alone, I would question the 'capacity' of Zoe's management. There is nobody really left in Zoe with a stake in the operation, now that the man in charge is out of the picture. This was the entire problem all along. Everyone was contented to be polite with Mr. Carroll as long as he wrote them pay cheques at the end of the month. There was no one at Zoe with a large enough stake to put into the pot themselves, in order to take charge in the company's operation and direction. There still isn't.

With Finger's Fingleton, and the other Irish banking institutions filling the role of the 'Liam Carroll's partner' in Zoe developments, there was no way that any of Liam Carroll's directors could even mount a challenge. This is what is bad about Irish banks being so involved in Irish property development, to the extent to which boundaries lines were rubbed out for good. We are now left with a complete 'vacuum' in the terms of management in the biggest property development liability in the entire state.

I drank pints with John Pope. I put up with dirty tackles from David Torpey playing five aside soccer on Astro turf. I took no crap whatsoever from Liam Carroll. But the fact remains, all three of those people, whom I knew, were hardly running anything in their company for a finish up. It was all the banks direction. I said this from the start. Bankers have to go back to being bankers, and architects should be the architects. Otherwise, why do we even bother to train architects in Ireland?

I have been linking to Ruairi Quinn's blog entry for quite some time. Deputy Quinn raised an important point not too long ago.

We need a fresh start and a new framework of regulation, transparancy and accountability. Banks must return to being service providers to our economy and not speculative players in their own right.


http://www.ruairiquinn.ie/?p=18

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Re: Liam Carroll: I did it my way?

Postby jdivision » Fri Sep 04, 2009 9:25 pm

Brian, in fairness, I Nationwide's annual report lists its interest in property developments. The company owns a number of property development companies, and at one stage it actually received a mortgage from Gerry Gannon to buy land in north Dublin. If the story's about completion fees, it's been extensively discussed already. There's nothing new in the RTE story. However, if you do want to be shocked have a look at the scale of Lloyds property interests. We are by no means alone
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Re: Liam Carroll: I did it my way?

Postby garethace » Fri Sep 04, 2009 9:37 pm

I know the Fingleton stuff is old news for anyone 'in the loop' of Irish property for heaven knows how long. I learned about Fingleton relatively lately myself. Only last January to be exact, from a life time civil servant.

But you have to put on your 'politician's hat' to look at this. This is the 'political dynamite' that Steven Collins in the Irish Times wrote about, not so long ago.

We all looked at Prime Time yesterday evening and witnessed our minister for Finance struggle to deal with an RTE lacky, is all I could describe it.

The latest breaking news on the Irish Times website as we speak is this:

http://www.irishtimes.com/newspaper/breaking/2009/0904/breaking54.htm

You don't have to be a razor sharp news reporter to join up the dots.

This Fingleton story is breaking. The fact is this Fingleton story might as well be 'hot off the press', because it will be breaking news, as far as the Irish public are concerned.

I have been waiting all along for this banana skin. It is the kind of one, that minister Brian Lenehan could finally slip on. In fairness to the minister, he has played an outstanding part for FF all along.

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Re: Liam Carroll: I did it my way?

Postby garethace » Sun Sep 06, 2009 2:37 pm

-

Return of the Phantom


I will be delighted if I have helped to contribute one useful piece of vocabulary to the discussion about Irish property. If I did nothing else other than that, it has been worth the effort. The term 'Phantom Equity' is now taking root in the public consciousness. I think it is a very useful description and something I scribbled about in late July. By the way, Jones Lang LaSalle were the estate agent advisors to Zoe developments and Dunloe Ewart when this particular attempt was launched in the closing hours of our mad defensive effort to save the company.

If you dropped below 15,000 square meters you were too low. I conducted rough feasibility studies for both Harristown and Cherrywood. North Wall Quay was locked up in litigation and a stop gap needed to be found and fast. Nothing short of rocket propulsion would save the day.


(See Designcomment blog entry entitled 'Development as Freedom')

This is why I find it strange, that no less than the 'rocket engineer' himself, a former chief executive of Jones Lang LaSalle read out the testimony at the recent Joint Oireachtas Committee on public finance meeting. Even moreso, given the fact a photograph appeared in the Irish Independent today, of 'mother' Mulcahy with Sean Dunne. Sean Dunne was the successful legal objector to the North Wall Quay Anglo Irish bank headquarters construction. The project that put Zoe developments into so much trouble in the first place. It is the reason why Liam Carroll's health is so poor, he will be unable to show in court tomorrow. Zoe developments is the company which threatens to bring 'the whole house of cards down', to use justice Kelly's phrase. Given the proximity of property valuation expert, John Mulcahy to all of this mess, I cannot understand how he is supposed to represent the impartial and objective views of the Irish taxpayer. I am not a property valuation expert, but I would probably do a better job myself.

Fine Gael's spokesperson for finance, Richard Bruton has used the term 'Phantom Equity' on public record. While minister for Finance, Brian Lenehan has publically voiced his distaste for the term. Perhaps in due course, minister Lenehan will find out the real truth. Jones Lang LaSalle do know what 'Phantom Equity' is. They have been dealing with the stuff for so long. I think that Neil Callanan in today's Sunday Tribune got his analysis of the 'Phantom Equity' problem for NAMA bang on the nail. Everything in Callanan's article today, conforms to my own experience working on projects during the Celtic Tiger. Specifically, the tier one larger developments where 'nine figure' sums were involved.

http://www.tribune.ie/business/article/2009/sep/06/phantom-equity-could-haunt-nama-for-years/

I also found Callanan's article about the Zoe developments High Court case very informative. (See more revealing insights by Senator Shane Ross below) The only thing I would have to add, is what ACC Bank's council mentioned in the High Court. Why are only seven of the Zoe companies represented in court? Why haven't the Greencore shares been presented as part of the business plan? Callanan raises the point about loans with personal guarantees by the Carrolls which are now worthless, should impact on the Zoe developments business plan. It goes back to Callanan's argument about the 'Phantom Equity' problem that NAMA will face. Callanan also noted that every 0.5% rise in interest rates results in an additional €40 million Zoe have to pay each year. €700 million worth of the €1.2 billion of Zoe's loans are floating rate, the rest are fixed.

My favourite article of all, was in the Irish independent, the interview between Ronan Quinlan and Michael O'Leary of Ryan Air.

"Liam Carroll owns lots of properties that are being let to Government institutions. These are performing assets. They can be sold tomorrow to international investors at face value. We need to sort this out. There are lots of worthwhile properties there that are saleable, but the only ones who can work that out are the bankers.


http://www.independent.ie/national-news/developers-and-banks-should-take-the-pain-oleary-1879550.html

I assume that Carroll has already sold the future rental income for those properties to Bank of Scotland Ireland as part of the huge re-financing agreement between them. The cash from that deal was pumped into Greencore and Irish Continental Group share holdings. Indeed, why aren't the ICG shares playing a major part in the Zoe business plan? Already this week, we read in the Irish newspapers of An Taisce's objection to Dublin Port Authority extending it's pier infrastructure. The Irish government is urgently trying to solve a problem in relation to security of oil supplies for the country. The ICG shares represent a crucial part of the puzzle, if An Bord Pleannala refuse Dublin Port Authority their application.

Michael O'Leary correctly pointed out the Irish banks 'know where the bodies are buried'. On the other hand, what McWilliam's described as a powerful and growing stronghold on Grand Canal Street, the National Treasury Management Agency - all that they can do is hire an auctioneer to go out and do their dirty work for them. The exact ones who made a 'bollocks' of the property market in the first place. I raised the same issue myself not too long back. Because Constantin Gurdgiev was demanding to know in his article for the Irish Independent, why the Irish taxpayer didn't receive any deeds or title with the NAMA bound loan book. In my opinion, there is not a hope in hell, that a government agency or anyone associated with government can be seen to be dealing with the sordid stuff that Irish property developers handled. That is a service the private sector property development business in Ireland, in association with banking institutions provided. We should not send our brighest and best civil servants to be deal with the real bad stuff.

I mean honestly, the Irish state institutions cannot even lease a property where there isn't 100% assurance on the deeds and title. The fact that Carroll managed to leases so much of his commercial space to the Irish State, ensures that those properties are sound. Why aren't those assets being presented in the High Court as part of the KPMG business plan? More than likely because of the securitization deal done with Bank of Scotland Ireland to take ownership of all future rental income from the Irish State. Given that as the case, it is no wonder BOSI are now willing to 'front' Zoe developments some more money, despite the fact they are pulling out of Ireland. By the way, something else Senator Shane Ross points out in today's Irish Independent newspaper is that KPMG are auditors of AIB bank. AIB bank has €500 million worth of loans outstanding to the Zoe group.

Carroll's legal team produced a report from accountants KPMG, maintaining that Zoe could see its assets rise to €1.36bn in less than five years. KPMG also happen to be auditor to AIB, Carroll's biggest creditor. Presumably the blue- blooded auditors declared this fact. Carroll owes AIB nearly €500m.

An optimistic report from Goodbody Stockbroker's economist Dermot O'Leary was offered by Carroll's counsel as a reliable forecast that the general recession would bottom out in 2010, followed by a recovery in 2011. Goodbody is owned by AIB. Presumably this was declared in court?


http://www.independent.ie/opinion/analysis/puffers-paradise-named-nama-1879456.html

Does anyone else get the impression, that the people responsible for the solution to the Irish problem, are nearly all the people responsible for making the mess in the first place? So much for introducing new ideas and fresh perspective into the operation, is all I can say. That was the bones of what David McWilliams argued in his excellent article in the Sunday Business Post article today. Well done, McWilliams. Or to para-phrase what Dail deputy George Lee said on Newstalk radio station, the over-pricing of assets and the under-pricing of risk was the cause of our problem. Now we are being asked to believe that, over-pricing of assets and under-pricing of risk is the solution. As I said, so much for introducing new ideas and fresh perspective. Why are we so convinced that Morgan Kelly, George Lee and David McWilliams are all wrong now? Between the three of them, they were the only voices of reason [heard on media] during the Celtic Tiger. Why are we so convinced that the people who caused our troubles are now going to solve them?

http://www.sbpost.ie/post/pages/p/wholestory.aspx-qqqt=DAVID+McWilliams-qqqs=commentandanalysis-qqqsectionid=3-qqqc=5.2.0.0-qqqn=1-qqqx=1.asp


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Re: Liam Carroll: I did it my way?

Postby garethace » Mon Sep 07, 2009 2:53 pm

This is a pile of BS. It is all to do with optical illusion.

Mr Shipsey said the evidence now before the court in this second application has more than adequately addressed the insufficiencies the Supreme Court identified in the first application.


http://www.rte.ie/business/2009/0907/carroll.html

Council for Zoe developments is telling us they are entitled to be 'economical' with the truth, they 'ration' us with the facts and figures and 'deny' us what we are entitled to. A full and and comprehensive overview of the operations of the Zoe group.

Very, very disappointing for myself as an Irish citizen. But given the fact that AIB bank hasn't been willing to put all of it's cards on the table in relation to the banking crisis, in the hope they can sell all of their rubbish to the Irish taxpayer, I don't suppose it should come as any surprise the KPMG plan for the Zoe group only presents half the picture as well. That is why I am supportive of the Fine Gael proposal to establish a good bank, and make both AIB and BOI suck on it, along with Zoe developments.

There is no other way to look at it, other than the fact that NAMA is a bail out for companies like Zoe developments. Furthermore, it is a bail out at a time when the Irish people can least afford it. Having been over-charged for a decade for rubbish property products, we are going to have to face over-charging a second time around, to the same people. To take senior counsel Bill Shipsey's own remark, that never before have the interests of the wider Irish community been so much to the fore. I do not believe council Shipsey understands himself the full implications of what is in that statement. I feel it is disgraceful how little of the evidence was presented before the High court.

Not to mention the fact, that Liam Carroll himself did not even show his face.

But he said people working for the companies are not in such a fortunate position.


I lost my position working for this company. I cannot see anything wrong with ACC bank's approach. I'm sorry. Provided that a foreign bank isn't allowed to run off with the Irish Continental Group share portfolio. Which no Irish government member seems capable of going out and buying today, in order to keep intact a necessary strategy to upgrade the facilities at Dublin Port. The Irish government has no problem spending €100 billion needlessly. But seems to find it very difficult to spend €100 million in the right way. That is going to prove very under-mining of confidence in Ireland as a country, capable of supporting itself and its economy.

What we need right now are leaders - not PR stunt men and women. We need a general election.

He said there were a number of compelling reasons why the court should use the discretion it has allowed in the appointment of an examiner - most particularly that the application for protection enjoys the overwhelming support of most of the companies' banks.


It was the banks themselves who ensured that the Zoe developments court presentation was as bleak and depressing as they could possibly make it, in order that they can sell all of their worthless sh**e into NAMA. Along with prime real estate which Zoe developments built up over two decades of very hard work.

Mr Shipsey said support could also be found in the detailed independent accountants' report submitted as part of the application, and it was unlikely such a compendious report has ever been seen by a judge of the High Court before.


An 'asshole statement' right there.

Never before has a property empire which owes close to €3.0 billion to the banking system appeared before the courts either. We are not talking about some 'corner shop' here, which cannot pay its bills. The Liam Carroll empire is likely to comprise of 10% of the total write down the NAMA plan needs property developers to take, in order for the NAMA plan to work. More has been concealed from the court than has been revealed all through this case.

The whole thrust of the Zoe developments defense is rather like one of those tribes in the African plains, who lined up one behind the other in other to conceal their numbers as they march from a great distance. The purpose of the Zoe defense, was to conceal the true size of one third of the entire Liam Carroll property empire. We are not even being allowed to contemplate even the extent of a third of the entire empire. The purpose of this, is to make us believe that the problems, or potential liabilities and risk, are much smaller than they are.

Much in the same way as we have been told that Irish property developers only took out 75% mortgages during the Irish property bubble. The real figure, is probably somewhere between 100% and 200%, with some more added on. We are being fooled into believing that NAMA is a much smaller risk than it actually is. I would contend, the Irish people may feel a lot better, and the world markets too, if the full extent of things was revealed. Instead of all of this 'optical' BS.

He said in the last referendum, voters had sat on the fence, and in the companies' first application, the banks had sat on the fence.


The first honest statement I have read.

Making his closing comments, counsel for ACC Rossa Fanning, said there was no evidence before the court to suggest the bank opposed the petition for anything other than rational commercial reasons. To suggest otherwise, he said, was unfair.


I would agree, with the one qualification mentioned above in relation to the Irish Continental Group share portfolio. ACC Bank are entitled to the Greencore portfolio, for all I care, if they can spilt it down the middle with Ulster bank. It is the ICG shares I believe either Michael O'Leary himself of Ryan Air, or minister for Energy Eamon Ryan must buy now. I suspect it will be Michael O'Leary given the fact, paying a toll charge to import fuel into Ireland, is not in his best interests.

He also claimed it did not make sense for the companies to argue that NAMA is not relevant to their application. He said the loans in question are prime candidates for transfer to the new agency, and there may be a good reason for the supporting banks to want to see those loans transferred into NAMA.


Yes, because the Zoe portfolio is one of the few potentially good loans in the entire €90 billion's worth of thrash. If the NAMA project, did not receive the Zoe loans, then the entire NAMA plan is as good as dead now.

But he said that reason was 'light years away' from the intention behind legislation allowing companies to enjoy protection of the courts.


Agreed.


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Re: Liam Carroll: I did it my way?

Postby garethace » Mon Sep 07, 2009 10:27 pm

Who is going to be included in this effort? Am I going to get a say?

Zoe had prime sites in Dublin’s docklands, “a world away” from agricultural land zoned industrial down the country, counsel said. All it wanted was a chance to try and work out a survival scheme over the next 80 days.


http://www.irishtimes.com/newspaper/breaking/2009/0907/breaking81.htm

Will it be the same captains, who put the ship on the rocks to begin with, are going to draft the new strategy? Including most of the consultants who claim to know what Liam Carroll's best interests are. That is what pisses me off the most. Everyone who knows the least about Zoe as a company, are also claiming they know the most about Zoe as a company.

How does one get the mix right? If I see Jones Lang LaSalle anywhere near that revised rescue plan, I will run a million miles from Zoe developments. All I have to say, is Zoe was a stable enough company, though a less profitable one, operating at a much smaller scale. These large projects have not been kind to it at all. Mainly because that is a club, in which Zoe were simply not welcome entrants.

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Re: Liam Carroll: I did it my way?

Postby garethace » Mon Sep 07, 2009 10:39 pm

Isn't this a real jem:

Remarking a bank’s interest is to recover as much as possible of its debt and it “would be mad” for a bank not to go along with a scheme to that effect, the judge asked was it reasonable for the court to infer the banks’ did not think this scheme was stupid but not to further infer they believed there would be a company at the end of it? Mr Shipsey said he could not disagree.


http://www.irishtimes.com/newspaper/breaking/2009/0907/breaking81.htm

Read it several times over, it does make sense, in a far out kind of way.

Interesting point here:

Addressing the effect of a possible rise in interest rates, counsel said rates could be fixed and AIB was offering a rate of 2.7 per cent up to 2014.


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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Sep 10, 2009 6:38 pm

Well done Brian Lenehan, too right in my opinion. The guys working for Zoe will feel hard done by, I know, but such is life.

Speaking on RTÉ's Six-One News, Minister for Finance Brian Lenihan said he welcomed today's clarification from the High Court and said it showed the need why NAMA was needed.


http://www.rte.ie/news/2009/0910/carrolll.html

I am still not in favour of NAMA. It might be the 'best solution' for the banking crisis, but I believe the Fine Gael solution fits into a solution, for the entire country better. There are problems in Ireland at government, corporation and at individual level, which I believe the Fine Gael solution would address better in one quick clean shot. But that is only a matter of opinion.

Well done, again, to Brian Lenehan.
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Re: Liam Carroll: I did it my way?

Postby highorlow » Thu Sep 10, 2009 8:57 pm

[quote][but I believe the Fine Gael solution fits into a solution, for the entire country better. There are problems in Ireland at government, corporation and at individual level, which I believe the Fine Gael solution would address better in one quick clean shot. But that is only a matter of opinion.
/QUOTE]

I presume it's the 'good bank' proposal?

I'm not sure if Fine Gael can explain this as a solution? Do you understand what they are on about?

I'm not an accountant and as a layman on the fence I've a fair idea of what NAMA is about from simplified explainations in the media and elsewhere and I see it as possibly the best solution. However, I can't follow for the life of me what the good bank is about?

Some other 'economists' have stated that we are better to let the banks and developers go under altogether + fire sale of assests = cheap land that the government should buy themselves. Don't think is a good option though...




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Re: Liam Carroll: I did it my way?

Postby garethace » Thu Sep 10, 2009 10:09 pm

highorlow wrote:
Some other 'economists' have stated that we are better to let the banks and developers go under altogether + fire sale of assests = cheap land that the government should buy themselves. Don't think is a good option though...


Thanks for the comment. I could go on for the night describing the various NAMA in's and out's I can assure you. But since, I spent most of my summer free time doing that, I will leave the Autumn free, and hopefully get some 'fresh air', and recreation. If you look at Designcomment blog you will find some things I have managed to put up there. I want to comment about the commission on taxation report also, over the weekend.

The selling of assets at the lowest rate, seems to be part of an overall plan. Whereby, Ireland can restore some kind of economic balance and stability, which it would have where you de-value the currency. If you de-value the currency, the loans being valued in the older currency, are paid back quicker. But we don't have that option available to us anymore. The option to sell assets at the lowest market rate, is the next best thing, if we hope to get on with our lifes again.

The only trouble though, with selling of assets that cheaply, is that it will not be you or me buying them, strangely enough. It will be hedge funds, and other private interests in Ireland itself, who capture the value in such a sale. They will have the resources at their disposal to take advantage of the opportunity. A bit like what you saw happen with Dermot Desmond and his Irish banking shares, except on a much larger scale. Perhaps not as large a scale as when the Russian oligarchs bought up the state assets, but not far off it either.

That is basically what NAMA is trying to avoid. The trouble is, NAMA ensures that a lot of the 'old regime' in Ireland remains intact and lives on. That is something that the majority of punters on the island do find replusive at this stage, including those from all political persausions. But it may be in their best interests to bite their lip. Retribution could be satisfying, but it could also be costly.

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