Three well known Irish property developers who owed millions of euro to Nama managed to retain ownership of development land in Poland after going bankrupt in England, according to documents seen by The Irish Times.
Paddy Shovlin and brothers Tony and Patrick Fitzpatrick – who all availed of bankruptcy in England in 2012 – retained the interest in development land near Warsaw via a company in Cyprus.
The company in Cyprus owns a Polish company that is the ultimate owner of the 54,700sq m site outside Warsaw.
Leaked documents show the three men were shareholders in the Cyprus company from 2010 to 2018 – both before and after their bankruptcies – while two of them, Mr Shovlin and Tony Fitzpatrick, continued to own the Cypriot company after 2018.
Separate Polish company office records show that Mr Shovlin is currently a 50 per cent beneficial owner of the Polish company via the Cypriot company. The Polish beneficial owners register does not mention the Fitzpatricks.
Repeated efforts to secure a comment from Mr Shovlin and the Fitzpatrick brothers have been unsuccessful.
Sale of assets
According to British and Irish bankruptcy practitioners, the assets of people who are declared bankrupt normally come under the control of a trustee, who may then sell them. The trustee uses the proceeds from the sale of the assets to pay some of the debts of the bankrupt.
The trustees who acted in the three men’s bankruptcies refused to say whether they were aware of their asset in Poland. No details are available of the assets secured that were declared to the UK bankruptcy trustees.
The documents showing Mr Shovlin and the Fitzpatricks’ ownership of the asset are part of the Pandora Papers, a huge trove of leaked documents from a number of providers of offshore services obtained by the International Consortium of Investigative Journalists, which shared them with The Irish Times and other media partners.
The offshore service providers include the law firm in Cyprus used by Mr Shovlin and the Fitzpatrick brothers.
The firm, Demetrios A Demetriades, or Dadlaw, provided nominee directors and shareholders for a company called Coastforest Trading and Investments Ltd, but documents dated from 2010 onwards show the company was actually owned by Mr Shovlin and the Fitzpatrick brothers
Mr Shovlin was the beneficial owner of half of the Coastforest shares and each of the Fitzpatrick brothers had a quarter of the Cypriot company, according to the leaked documents.
The Cypriot company, Coastforest, owned a company in Warsaw, Pro-Build Sp Zoo. It had a subsidiary, Niebieski Zagiel Sp Zoo, which has an interest in a 54,700sq m site outside Warsaw in a town called in Bialobrzegi. Polish records indicate the land is still owned by way of this corporate structure.
The value of the property in Poland is not clear. One document seen by The Irish Times gives a current value for Pro-Build’s assets of 8.6 million zloty, or approximately €1.8 million.
Other filed documents indicate that the Polish authorities initiated proceedings against the Pro-Build subsidiary over debts associated with the land in Bialobrzegi.
A register of the beneficial owners of Polish companies – which was established in 2019 and is not part of the Pandora Papers – shows that Mr Shovlin is still the 50 per cent beneficial owner of Pro-Build Ig Sp Zoo, by way of the Cypriot company Coastforest Trading. It does not mention anyone else in relation to the company.
Leaked documents
The leaked documents from the Cypriot law firm include an April 2011 application form for the opening of a bank account in the name of Coastforest Trading with the Bank of Cyprus. It is not clear from the leaked documents whether the account was in fact opened.
The application form, which was filled in by Dadlaw, states that the three Irish developers are the beneficial owners of Coastforest and that it is expected the bank account would see transactions totalling €500,000 that year, one tenth of that amount the following year, and another $500,000 in 2013.
In the section about Coastforest’s business activities, the form reads: “Investments in property in Poland. (Company owns property in Poland – this is development land which it will either sell to a third party or the company may decide to retain the land and develop it.) Using own funds, bank loans, and funds from main activities (buy and sell property).”
The money in the account would be going to, and coming from, Ireland, according to the bank document.
The leaked documents include unsigned instructions from 2018, in which the shares in Coastforest held by Patrick Fitzpatrick were to be transferred in equal portions to his brother and Mr Shovlin.
The filings in Poland show that the chairman of Pro-Build is an Irish businessman, Patrick or Padraic Coll, who, according to the documents, was at times over the years given power of attorney to act on behalf of Coastforest and Pro-Build in relation to various matters.
Mr Coll had financial dealings with Pro-Build by way of a Cypriot company called Swiftbrook Ltd, which is also based in the Dadlaw offices. He was involved in Polish property dealings on behalf of a number of Irish investors during the Celtic Tiger years, the files show.
The leaked files include a 2010 reference to an agreement between Swiftbrook, on the one hand, and Pro-Build, Landmark Developments (the trading name used by the Irish developers in relation to property developments in Dublin), and a Cypriot company called New Bridge Trading, apparently in relation to loans.
The Irish developers were behind the Beacon South Quarter development in south Dublin during the 2000s, and were also part of a deal where they and others bought the former Bank of Ireland headquarters on Baggot Street, Dublin, and then leased it back to the bank.
Judgments
In September 2010 they were the subject of the first High Court case taken by Nama, leading to multimillion euro judgments being issued against them the following month.
In February 2012, Bank of Scotland secured a judgment order against the three men, and others, arising from an €180 million loan issued in August 2006 in relation to the purchase of the Bank of Ireland HQ on Baggot Street.
The ruling involved a judgment against Mr Shovlin for €7.9 million, and judgments for €3.9 million each against the Fitzpatrick brothers. The Fitzpatrick brothers are members of a well-known Dublin family involved in the hotel sector.
In May and June 2012 the three men, who had moved residency to England, were declared bankrupt there. At the time the English bankruptcy regime was significantly less onerous than the Irish one and was used by a number of well-known Irish property developers.
Since emerging from bankruptcy in 2013, Mr Shovlin and Tony Fitzpatrick have been involved in property development in the UK. They are the owners of shares in the UK house-building group Hayfield Homes.
When The Irish Times tried to contact the two men via Hayfield Homes a spokeswoman said the best way to contact them was by way of their email addresses, which she provided.
However, there has been no response to emails sent to the men in late September, nor to letters sent to them in early October to addresses in London they give in filings to UK Companies House. There has also been no response to further emails sent in February seeking comment.
Efforts to contact Patrick Fitzpatrick were also unsuccessful. Emails and letters send to addresses associated with Mr Coll likewise met with no response.
