A High Court judge yesterday said it was "nothing short of astonishing" that a valuable State asset, the €62 million National Aquatic Centre at Abbotstown in north Dublin, should have been leased in 2003 - by a company whose shareholding was held by the Taoiseach and two Government ministers - to a company with a share capital of €127 and, according to accounts to the end of 2003, no fixed assets.
However, Mr Justice Peter Kelly said, the centre was leased to Dublin Waterworld Ltd "with entirely predictable results". DWL, with registered offices in Tralee, Co Kerry, had paid no rent since acquiring the 30-year lease in April 2003 and there was a dispute whether it owed a further €10 million in VAT.
There was also alleged breach of the lease requirements to produce audited accounts, regarding management of the centre and to contribute to a "sinking fund" regarding repair and maintenance of the centre.
It was also alleged that ticket admission prices were increased without the consent of Campus and Stadium Ireland Development Ltd (CSIDL), which awarded the lease to DWL.
The judge said the shareholding in CSIDL was held by the Taoiseach (25 per cent), Minister for Finance (25 per cent) and Minister for Arts, Sport and Tourism (50 per cent).
While the lease was competently drafted and comprehensive, this was of little benefit if the tenant was not an entity of substance, he remarked.
He made the comments when ruling on an application by DWL to stay proceedings brought against it by CSIDL, in which CSIDL is seeking possession of the centre for alleged breaches of the lease, for the purpose of remitting certain matters to arbitration.
The judge directed that the CSIDL proceedings could proceed in relation to its claim of breaches of the lease regarding rent, management of the centre and other issues and refused to stay that part of the CSIDL claim.
However, he remitted for determination by an arbitrator, Dermot O'Brien, the issue of whether €10 million was due in VAT and also remitted, for determination by architect Peter Keane, issues between the companies regarding repair and maintenance of the premises. He granted a stay on those parts of the CSIDL claim.
He also made further directions aimed at securing a speedy hearing of the CSIDL claim insofar as it related to the items not referred to the arbitrator and Mr Keane.
Given the number of admitted and alleged breaches of the lease and the description by the CEO of CSIDL of the centre as a facility of national and international importance, the judge said, it was not surprising that CSIDL had taken proceedings against DWL. What was surprising was the length of time it took CSIDL to initiate those.
In April 2005, CSIDL had served a notice for possession of the centre premises, at which time DWL had admittedly not paid a cent in rent.
It was only in the course of court proceedings on Thursday that he was told that €760,000 had been transferred by Anglo Irish Bank Corporation to the account of CSIDL on foot of a guarantee entered into by DWL, as a condition of its lease, of security for money due to CSIDL.
However, this security was entirely inadequate and left some €240,000 due and owing in rent and no proposals as to how that would be paid, he said. It also left CSIDL without security.
The judge rejected arguments by DWL that problems it had experienced in running the centre could be explained by the roof being blown off in a storm in 2005. He said the failure to pay rent predated this.
