Court Two of the Four Courts has rarely seen as many well-cut suits. Usually, the court houses criminal trials, which don't tend to feature accountants, bankers and various captains of industry. On Thursday, the court was packed with parties interested in the outcome of a petition by Liam Carroll-associated companies for the appointment of an examiner.
Drama is no stranger to Court Two, but it usually comes through the processing of a primal business-like crime. Thursday's drama was unexpected but no less instructive. Soon after 2pm, Judge Frank Clarke bounded onto the bench. Like the other professionals present he was dressed in a suit of clothes and the hair on his head was his own. This being an out-of-term sitting, the professionals were not called on to get togged out.
Clarke is a busy man, combining this holiday sitting with his role as chairman of the referendum commission on Lisbon. The workload doesn't seem to be getting him down. Over the course of the following 90 minutes, he repeatedly showed himself to have a grasp of a report which earlier in the week it had been submitted that "it was unlikely such a compendious report has ever been seen by a judge of the High Court before".
The report was compiled by David Wilkinson of KPMG as an independent assessment in support of the Zoe group's application to keep ACC Bank at bay. It was compiled for the benefit of the court to show how Zoe had a reasonable chance of survival.
Clarke was due to deliver his ruling, but he told Zoe counsel Bill Shipsey that he needed a few matters cleared up first.
The judge referred to various aspects of the report that were unclear. After each one, Shipsey went to the public gallery to consult with Zoe directors David Torpey and John Pope. On three occasions, the three men along with four other lawyers and accountants went outside the room to straighten out the instructions for Shipsey.
The upshot was the judge had spotted figures that indicated there would be a €3m shortfall in income for the companies, which effectively meant their survival plan was kaput.
"I have done the sums and, frankly, to me it doesn't seem to add up," Clarke said.
"The material is either presented in a poor way or else it is plain wrong." And: "I take a very serious view of the quality of this independent report."
Earlier in the week, Shipsey told the court the "public interest" was "at the forefront" of the application for protection. Now, it appeared that this report – supposedly independent, and supposedly vital to the public interest – was a slipshod affair that painted a rosier picture of Zoe's finances than turned out to be the case.
Clarke said he had already decided to dismiss the application, but the wrong sums had even strengthened his opinion on the matter.
As a morality tale for what has dragged the country to its current station, it couldn't have been starker. The developer somehow saw a confluence between his interest and that of the wider public;
the devil was in the complex detail.
So it went in the bubble years, with developers being given the reins of the economy, despite the evidence of history and the warning signs which some economists and commentators had claimed were hidden in the detail. It was a matter of keeping your eyes on the road and driving on while the going is good.
Carroll's application was out of the same school of business. Having failed the first time around for protection, an unprecedented second application was allowed, largely on the basis of the medical condition of the company's principal.
One of the questions arising from Carroll's legal odyssey is the role of independent accountants and auditors. Notably, all of the issues spotted by the judge in the report were ones that cast Zoe in a better light.
Ten years after the Public Accounts Committee's inquiry into Dirt uncovered questions about the role of independent accountants and auditors, the same issue appears to be raising its head. The whole affair resonates with the crony capitalism at the heart of the country's woes.
There is little dispute as to the underlying motivation of Carroll in trying one more time to get protection from the court. If Zoe was able to limp on until the autumn, Nama might have provided the cover the courts were so reluctant to extend.
Instead, Thursday's ruling may now have implications for the credibility of Nama. Next week, finance minister Brian Lenihan is to outline the discount on the €90bn in loans of which Nama will take control. Meanwhile, if ACC Bank gets its way, a fire sale of Zoe assets may ensue as the bank seeks to recover its €130m in loans.
The fire-sale price will be a serious indication of the market that currently exists. It will be interesting to observe the difference in the real market price and the global one which will be set for Nama. If the former is a lot lower, questions will immediately arise as to whether the taxpayer is being sold a pup.
Carroll's failed bid for protection came in the same week that the Nama legislation was given some tweaking, apparently in order to placate the Greens. Two of the new measures raise serious issues in what is being billed as the most important legislation in the history of the state.
The measure to make it a criminal offence to lobby the National Asset Management Agency was inserted at the Greens insistence. This ensures developers or politicians will be restrained from attempting to curry favour with the agency. Why wasn't that in originally?
One of the main objections among the public to Nama has been a deficit of trust. After years of Fianna Fáil being in the pockets of developers, how could the public believe the taxpayers' interest rather than the developers' would be the agency's guiding principle? That it took the Green Party to insist on the lobbying clause does little to inspire confidence in the motivation of the main coalition party.
In terms of the nation's health in the long term, the insertion of a provision to tax rezoned land at 80% is a major departure. In 1973, the Kenny report into planning recommended rezoned land be fixed at a price of agricultural land plus 25%. For the following 36 years, successive governments baulked at implementing a measure that wasn't just reasonable, but imperative.
During that time, planning corruption thrived on rezoning. The huge windfalls that accrued once land was rezoned ensured some landowners and developers were willing to go to any lengths to hit paydirt.
Successive governments backed off from interfering in the sacred free market of land speculation. When Garret FitzGerald was asked in recent years why his government didn't act, he couldn't remember the exact details. The socialist taoiseach Bertie Ahern hid behind the constitution when the matter was raised during his tenure. After he stepped down, he claimed his failure to act in this area was one of his regrets, a statement which was eminently convenient.
For the last decade the planning tribunal has sifted through planning corruption at great cost to the taxpayer. Rezoning was the issue that brought Ray Burke's activities to the attention of the media, the Oireachtas and directly led to the establishment of the tribunal. Rezoning windfalls motivated Frank Dunlop to bribe councillors on behalf of clients, many of whom, according to Dunlop, knew exactly what was afoot. Rezoning gold was at the root of the inquiry into Bertie Ahern's finances, although no corruption has been uncovered as of yet in that case.
Apart from corruption, the rezoning windfalls cemented the bond between Fianna Fáil in particular and developers, the latter of whom used to fall over themselves in funding the democratic process. That coupling was again at the root of the property bubble that landed us in the current mess.
Despite what arose in the course of the planning tribunal, we were repeatedly told that there could be no interference in the market. We were told that some who reaped fortunes were just lucky, while others had astutely spotted where rezoning would occur in the public interest.
Now, it turns out, it was all a cod. At the stroke of a pen, it is possible to impose a putative tax on rezoned land, something which will ensure that in future planning has a much better chance of progressing in the wider public interest, rather than in that of hungry politicians or developers.
And the motivation for this major volte face? Saving the coalition by offering a fig leaf to the membership of the Green party. In such base political moves is the future shape of a nation fashioned.
Yet despite what looks like a welcome intervention by the Greens, the new tax may in the short term bring its own problems. With rezoning no longer fashionable, what of the so-called development land, the loans for which will come under the Nama umbrella? Will that rezoned land now be more valuable because there will be little incentive to rezone further? Will it be subject to a bubble effect? Will a higher price end up rewarding the very people who got us to where we are?
Only time and Nama will tell in the years ahead as we attempt to extricate ourselves from this god awful mess.
Read below to see how the Sunday Tribune has reported about Carroll over the past few weeks
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