THE DUBLIN Docklands Development Authority told the Department of the Environment the value of the Irish Glass Bottle site was about €220 million at a time when it was discussing an outlay of more than €400 million for it, according to a report by the State’s spending watchdog.
The report by the Comptroller and Auditor General has identified a number of shortcomings in the authority’s financial management, planning functions, and management of board business.
It is particularly critical of the authority’s role as part of a consortium that bought the glass bottle site for €431 million in 2007.
Most of that investment has been written off and the site is now worth just over a tenth of that, at €45 million.
The watchdog found no evidence to show the authority had subsequently informed the department that the sale price agreed was almost twice the amount it had valued it at.
The report has found that the authority believed its overall exposure, as part of the consortium, would be no more than €35 million, but at one stage its exposure ran to €81.9 million in relation to a deal which had gone badly wrong.
The loans of the vehicle it set up to purchase the site, Becbay Ltd, were eventually taken over by Nama.
“The total outlay of the authority on the Irish Glass Bottle site transaction has been €52.1 million, including the value of assets transferred as part of a settlement with Nama,” stated the watchdog.
The report also found the docklands authority did not obtain its own independent valuation of the site when it was deciding on the bid Becbay would make.
The management of the authority had advised the board that the bid would be made in an “overheated commercial property market”. However, a detailed analysis of the investment, benefits and risks of the project was not carried out.
A key finding in the report is that the authority obtained approval from the Minister for the Environment to increase its borrowing capacity up to its statutory limit of €127 million.
“However, the information submitted to the Department . . . did not reflect the planned scale of the project. The authority had informed the department that the value of the site was approximately €220 million, while an outlay of over €400 million was being contemporaneously discussed,” it stated.
It said no documentary evidence was located to indicate that the authority had updated the department on the much larger outlay.
“[Government consent] was given on the understanding that a transaction to the value of around €220 million was being contemplated.”
Two members of the board at the time, chairman Lar Bradshaw and Seán Fitzpatrick, were also directors of Anglo Irish Bank and another director, Declan McCourt, was a director of Bank of Ireland.
Board members disclosed their connections with banks providing finance for the Irish Glass Bottle site joint venture and the authority took steps to assure itself that its decision-making in relation to the Becbay funding decisions was in accordance with its own code of conduct, the report found.
It continued: “The board minutes do not record disclosure of any other personal, professional or business interests of board members that could represent a conflict of interest in relation to the acquisition of the site.”
The report has stated the authority’s liabilities were €32 billion at the end of 2010 and were funding property assets that would be “difficult to dispose of in the short-term”.
It has warned about future risks and said there were future “going concern challenges”.
