COMPANY DIRECTORS, pension fund trustees, a co-op and several retired professionals are among 43 Irish private investors suing advisers for some €20 million over alleged negligence in relation to a failed investment in Poland.
The Polish property developments were allegedly managed by Howard Holdings plc, a company of businessman Brendan Murtagh.
The investors claim BDO, formerly practising as BDO Simpson Xavier, presented the Polish investment opportunity to a number of “perceived high-net-worth” clients and others with a view to making a business profit within three to four years but failed to carry out adequate due diligence.
The investors allege breach of contract, negligence, breach of fiduciary duty and breach of trust by BDO in relation to the investment known as “Project Poland”.
It is claimed the investors were told Project Poland was to be managed by Howard Holdings when, it is alleged, the project was a side project of two directors of that firm. It is also claimed BDO had very little information about the project when allegedly recommending it to “valued clients” and others from late 2006.
BDO gave investors the impression everything was under control when the project was running into serious problems, retired company director Denis McFerran, Swords Road, Malahide, Co Dublin, who invested €500,000, said in an affidavit.
Mr McFerran also claimed investors were told Howard Holdings and its directors would guarantee the investment sums and that net worth statements supplied in January 2007 put their estimated net worth at €115 million. However, when the investors sought to enforce a €28 million judgment against those guarantors, two were hopelessly insolvent while Mr Murtagh also had “little to offer”, he said.
Mr Justice Peter Kelly yesterday transferred the proceedings against BDO to the Commercial Court. The firm has said it will be fully defending the proceedings and does not accept the claims.
The biggest investment in the project was a €3 million sum by Paddy and Emer Digan, a pharmacist and retired teacher respectively of Baily, Howth, Co Dublin, while the lowest sum was €250,000, an amount put in respectively by, among others, solicitor Michael Staines, journalist Tom McEneaney, the Lisavaird Co-Op Creamery Ltd and two pension funds, the Ashley Glover and Ross Glover Pension Funds.
Retired property developer Pat Conway, Kilbride House, Baldonnel, invested €1.5 million while two other developers – Brendan Colivet, Punchestown, Co Kildare, and Paul Joyce, Turnerstown, Athy, Co Kildare, invested €1 million and €500,000 respectively.
Several company directors including David and Evanne Cahill, White Park, Arklow; Stephen Fitzgerald, Windgate Road, Howth; David Moffitt, Glenageary Hill, Dublin, invested €1 million. Investment banker Derek Kehoe, Cypress Road, Mount Merrion, Dublin, also invested €1 million while other investors including Dr Frank Keeling, Kileek, St Margaret’s, Co Dublin, and property manager Martin Ryan, Mount Eagle Drive, Leopardstown Heights, Dublin, put in €500,000 each.
In January last year, Loparco, a Luxembourg-registered company through which the investors provided some €20.75 million for the Polish projects, secured judgment for €28.1 million against Mr Murtagh, Dunheeda, Kingscourt, Co Cavan; Greg Coughlan, Fastnet, Ardbrack, Kinsale, and Brian Madden, Well Road, Douglas, Cork.
Loparco claimed it entered into agreements with Mr Coughlan in April 2007 relating to the Polish project and all three defendants entered into separate agreements guaranteeing the performance by Mr Coughlan of his obligations.
After a Polish bank demanded early repayment in August 2009 of loans to Polish companies involved, Loparco claimed Mr Coughlan was obliged to complete the €27.7 million acquisition of option shares in the companies. When Mr Coughlan failed to do so, Loparco ultimately secured €28.1 million judgment against all three.
