Liam Carroll: I did it my way?
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€130 million was lent by ACC bank to Liam Carroll. That much is known. They want it back. That much is also established. I suspect Liam Carroll was ‘handling’ the Irish Ferries shares on behalf of someone else. Someone like a Dutch oil and gas company who didn’t want their presence known.
The fact that Liam Carroll had gone on such a buying spree on so many other land-related investments provided a good smoke screen to the whole plot. At the opportune moment ACC bank would have flooded more capital into Liam Carroll’s companies which would have enabled Carroll to buy the Irish Ferries company outright. Obviously, it had to appear to the newspapers as if it was a struggle. But Liam Carroll was the hot tipped favourite. We know that much also. The fact that Carroll has a history of conducting ‘hostile takeovers’ in the past, made him the perfect collaborator. The plot was even easier to hide under our noises. Liam Carroll was the perfect camouflage for a Dutch oil and gas company.
The events on the Mayo coast served like an effective diversionary tactic. To draw peoples’ attention from the eastern side of the country where the deal was really happening. The Mayo events served to tie up whatever resources the ‘concern groups’ in Ireland could muster. Lets face it, there were a lot of hot flasks and ham sandwiches made to support troops on the west coast. All the time, Dublin port was wide open to attack. That is where the attack was to take place. What strategic importance has Mayo in anything? Its only real value is to distract attention from our real vulnerable point. An international Dutch oil and gas company would have known that. The peasant Irish obviously did not.
There is a Napoleonic kind of genius to the ‘battle plan’ when you look at it. The Dutch multi-national has been doing this all over the world. Why not in Ireland too? They practically invented the game. They know the sequence backwards. But when the Irish property bubble collapsed, the Zoe group threatened to fall over and collapse. Liam Carroll’s days were numbered. He would be taken out of the picture. Something had to be done fast in order to preserve the plan. The deal was off as far as ACC bank were concerned. They moved in for the kill.
It wasn’t the miserable €130 million they were worried about. It was the much larger and more strategic picture, which has eluded most of us until now. ACC bank’s main priority was to secure a receiver to ‘receive’ the Irish Ferries shares so that the plan could continue in some shape or form. The necessary business was all transacted under the watchful eyes of judges, politicians, news media and the public citizenry of Ireland. It is important to note, in all of the above, a pretty basic and hard working construction group were drafted into service by a foreign owned multi-national. The honest and straightforward chaps at Royceton, whose day jobs had always been their priority, found themselves wrapped up in something much larger and more complicated than they could understand.
But Liam Carroll understands it. He is one of the most brilliant men I have ever come across. But with Liam Carroll, his own financial wealth and prominence seems to have come first. We have to make that legal distinction now between the honest, hard working men and women at Zoe developments and the game playing that playing above their heads. To say that some were involved, or in-the-loop or knew something is very debate-able. I sometimes wonder why we bother with a government in Ireland. Perhaps the country should run on auto pilot. If and when the An Taisce group get to the bottom of the Liam Carroll case, all hell will certainly break loose. I respectfully suggest that the government moves to manage the situation before then.
Brian O’ Hanlon
I’m sure what you’re saying is insightful, garethace, it’s just not very condensed.
Frankly the sight of the length of your comments puts me off reading them, which has the knock-on effect of putting me off reading anything that has your name beside it.
Is it that you just like the sound of your own keyboard?
Apologies for the personal nature of the comments, it’s just that seeing a forum like this with so many encyclopedic comments from the one person gives it the appearance of a blog rather than the forum that it is intended to be.
Maybe you should just start a blog, see how that goes for you?
Foremanjoe,
You will find the blog entries at Designcomment. It was linked in the first post of this thread. I take all of your points above. I wouldn’t expect most people to read through most of what is above. I also appreciate that my thread is taking up too much prominence on the message board here. I apologise for taking up the space. But there is sort of an emergency happening. When hurricane Catriona hit New Orleans, a couple of quick and dirty solutions were set up online.
The most worrying thing in Ireland’s case, is the lack of clear information. The Irish journalists do read what is written above – the only people with the time and career description to do that. I think I am about done now. I am not a journalist and have no desire to make it my career. There isn’t much left to comment on from my point of view. Once the issue of the Irish Ferries shares has been taken into account. The court case should run its course now. Whatever will be, will be. I am fed up with the whole thing.
Thanks for posting your comments. I do appreciate them.
Brian O’ Hanlon
Good man, that’s fair enough.
Do carry on then, I’d hate to see what would happen if we had too many idle journalists on our hands!
Well, you see blogging is a form of journalism. That is my understanding of the weird and wonderful world of blogging. A guy with a dictaphone and a camera phone can be on the spot faster than a real journalist could. We exist in a world, where the cost of publishing has fallen to zero almost.
The other side to it, something un-earthed by Chris Anderson, a Wired magazine editor in his book called ‘The Long Tail’ is that bloggers might know a great amount, about something very detailed. In other words, journalists have to cover a huge territory. But bloggers can focus in on the micro-scale.
With the result that you get a synergy of efforts these days, between bloggers and journalists. There isn’t any journalist out there, in Ireland who could justify the expense and work involved in knowing as much about the Zoe company as I would. He or she would literally have to work on the inside and know the industry. On the other hand, I don’t understand or follow much outside of what I know. Which is quite limited.
From my point of view, I would rather that Zoe had continued doing what it did. I never posted or blogged an iota while I worked for Zoe as I recall. I was far too busy doing what I do, project management and architectural design work.
Brian O’ Hanlon
Still, I suppose it’s always good to have a driven whistleblower working with the journalists.
You could be our Cú NAMA, mythical folk hero of the post-boom era.
Yeah, it is too much hard work though. I wanted to finish off my night classes these last couple of months and that went on hold. Now, ordinary life has to get back into priority.
But the thing is, as newspaper sales drop and journalists can make more cash writing reviews of new digital cameras and expose’s about soccer players . . . they struggle a lot to find wherewithal to do any serious journalism. That is what bothers me a bit quite frankly. The noble profession of journalism has taken quite a beating in recent years. How is anything going to enter the public domain which might inform us in our decision making?
It appears we live in an information age, but we know less than ever. If there is any information deficit I have managed to fill, it has been worth something. I do look forward to an era when real journalists can do what they do best. Joining up the dots properly, so the rest of us can see the big picture.
Brian O’ Hanlon
For your interest.
We have heard about journalism working in a symbiotic relationship with blogging.
But what about blogging morphing into journalism ? ? ?
http://www.tribune.ie/article/2009/aug/23/developing-on-the-back-of-a-cigarette-box/
Brian O’ Hanlon
Barry O’ Halloran wrote an excellent article in today’s Irish Times newspaper.
Goodman was a big employer in an economy where one worker in five was out of a job, and the failure of his business would have had far-reaching ramifications for an entire industry. Back then, the government actually worried about unemployment and it responded quickly. The Oireachtas was recalled from its extended summer holiday to pass the law which created examinerships which, in turn, paved the way out of trouble for Goodman and the beef industry.
http://www.irishtimes.com/newspaper/finance/2009/0824/1224253136147.html
Brian O’ Hanlon
Doomed, doomed, doomed . . . one gets comfortable with the idea after a while, it becomes so familiar.
He said the court did not agree with the claim made by counsel for ACC that the new petition is obviously doomed.
http://www.rte.ie/news/2009/0824/carrolll.html
Brian O’ Hanlon
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
Brian O’ Hanlon
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.
Brian O’ Hanlon
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.
Brian O’ Hanlon
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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.
Brian O’ Hanlon
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.
Brian O’ Hanlon
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.
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.
Brian O’ Hanlon
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.
Brian O’ Hanlon
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…
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
Brian O’ Hanlon
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.
Brian O’ Hanlon
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