FINANCE: FRANK McDONALDreviews Bust: How the Courts Have Exposed the Rotten Heart of the Irish EconomyBy Dearbhail McDonald, Penguin Ireland, 259pp, €17.99
THIS IS a litany of shame and disgrace, a relentless recitation of what its author describes as the near-biblical tide of recklessness and greed washing up at the door of the Four Courts. But you would need to have your wits about you to read it, because some of the deals that went bad were so bewilderingly complex.
There are villains aplenty, notably those who were so consumed by greed that they were quite prepared to screw long-time friends and business partners to get more of the loot for themselves. And we would have learned almost nothing about their machinations if the property bubble hadn’t deflated so quickly and spectacularly.
The US billionaire Warren Buffett once remarked that we get to see who has been swimming without their togs on only when the tide goes out. As Dearbhail McDonald, legal editor of the Irish Independent, writes, this was quoted by Mr Justice Frank Clarke in an action taken by ACC Bank against a solicitor who failed to put in place proper security for a €7 million property loan.
Solicitors get a rough ride in this book, particularly the notorious chancers Michael Lynn and Thomas Byrne, who built up mini property empires by abusing the system. Yet neither they “nor any other rogue lawyer referred to gardaí has been arrested, let alone charged or convicted” of any offence, the author writes. Nor any banker.
Or take the case of Gerard Killally, one-time chairman of Offaly County Council and running mate of the Taoiseach, Brian Cowen, in the 2007 general election. He and his wife, Naomi, earned the nickname of Edenderry’s Posh ’n’ Becks with their ostentatious 740sq m (8,000sq ft) mansion and his-and-hers OY 1 and OY 2 cars, changed every year.
Killally was speculating wildly in land, including a site on Daingean Road in Tullamore he agreed to buy in partnership with the former Co Offaly GAA manager Richie Connor and two others. But as an e-mail from a solicitor noted: “He doesn’t want the two new fellows to know that he had originally got it bought for €5m and is basically screwing them for another €1.5m.”
Everything went sour and ended up in the Commercial Court, where Killally broke down as he pleaded with Mr Justice Peter Kelly – one of the few heroes in this tawdry tale – for a freezing order on his assets to be relaxed so he would have access to €4,000 a week to cover household expenses; the dole is €196 a week.
Coincidentally, as the author notes, the former socialite Fiona Nagle – estranged wife of the financier Breifne O’Brien – also asked the judge to release €4,000 a week for her “day-to-day expenses”. O’Brien allegedly ran a Bernie Madoff-like Ponzi scheme based on luring people with money, including friends, to invest in phoney property deals. He admitted it was “easy to pull the suckers in when the economy was booming”.
And, as McDonald writes, the boom spawned “a club of amateur speculators – teachers, gardaí, taxi drivers and other people of ordinary means who had no particular knowledge or experience of the property business” – who were all getting rich.
Or so they thought at the time.
“What they didn’t know was that within three years everything they had ever worked for would evaporate” as the market collapsed and the banks that had recklessly dished out money began calling in personal guarantees; these, it turned out, were not so “empty” as the investors were led to believe.
As everything unravelled the Commercial Court was transformed from “an efficient and busy accident and emergency unit . . . into a field hospital overrun with casualties of the falling Irish economy”. And what Kelly, a Tridentine Mass attender, brought to it, as McDonald writes, was a sense of morality that was notably absent during the boom.
It became clear that most banks were willing to roll over for large developers, such as Liam Carroll, even while “homeowners and businesses were being pursued without mercy in the courts”, she says. But, as a result of a landmark case taken on behalf of a small debtor named Caroline McCann, at least they are no longer being jailed.
Anglo Irish, the bank everyone loves to hate, “wasn’t just your bank, it was your partner”, according to Michael Daly of Fordmount Property, another casualty of the crash. Favoured developers could just pick up the phone and get finance from Anglo to activate whatever deals they had in mind. And we’re all paying dearly for that now.
Its now-bankrupt former chairman, Seán FitzPatrick, was demonised by one of the tabloids as the Angel of Debt and the Pariah of the Playa when he took a brief Spanish holiday. The shenanigans involving Anglo Irish and Seán Quinn – as well as Anglo Irish, Davy and Bernard McNamara – are also covered well by McDonald.
The cover features a rogues’ gallery, luridly depicted in woodcut mugshots. There are also some errors. Mr Justice Declan Costello is referred to three times as “Costelloe”, Seán Dunne never lived in a €57 mansion on Shrewsbury Road, and the Government had not underwritten the banks’ debts and nationalised Anglo Irish “by April 2008”.
The book is necessarily a snapshot of a saga that has yet to play out. McDonald often resorts to cliches about storm clouds gathering and writs being fired off, but she has put together a compelling account to back up her conclusion that “the Celtic Tiger was little more than a mirage: a massive pyramid scheme”. It will make readers mad.
Frank McDonald is Environment Editor of The Irish Times. His most recent book, written with Kathy Sheridan, is The Builders: How a Small Group of Property Developers Fuelled the Building Boom and Transformed Ireland
