Entrepreneur, impresario and developer Harry Crosbie made an appearance on RTE’s “The Saturday Night Show” with Brendan O’Connor over the weekend (the programme is available here from RTE until 22nd October, 2011). Harry’s contribution starts from about 19:00 minutes in and from about 24:00 he talks about his dealings with NAMA.
Harry is responsible – either in his own right or with others – for the development of significant buildings in the docklands area of central Dublin, including the Point Village on North Wall Quay, the Grand Canal Theatre, the National Convention Centre, the Dublin Eye, the Gibson and Clarence hotels and developments on Vicar and Creighton streets. His home which he describes as “a warehouse” is on Hanover Quay. “Not a bad gaff” is how presenter Brendan O’Connor described it.
Known for his optimism and chutzpah, Harry was his usual up-beat self in his contribution. Not a man for missing an opportunity either as he publicly called on Dunnes Stores to honour what Harry called a “commitment” given in court to Mr Justice Frank Clarke to occupy one of his developments. He expressed gratitude to NAMA for further financial assistance which is helping to complete his developments and sustain employment. Harry said that “in four years time we’ll be flying and buzzing and we’ll have paid back everyone and we’ll be laughing”
Brendan challenged Harry on this last point, and reminded Harry that with commercial property having declined two thirds from peak – the Q2, 2011 Irish indices showed drops of 63-64% and the Q3, 2011 indices due out shortly are expected to show further falls – Brendan asked, how could Harry hope to repay what he originally borrowed.
“The money we’re going to pay back is what they [NAMA] paid; that’s the only money” said Harry and Brendan confirmed that might be 40c in the euro on the basis that NAMA has, on average, applied a 58% discount to loans acquired. Harry didn’t know what NAMA had paid for his loans but agreed with the gist of that. “We’re going to pay back what they [NAMA] paid; that’s what’s going to happen in the real world” said Harry. When probed further by Brendan as to what happens to the difference between the value of the loan at the original bank and what NAMA paid – the difference being commonly referred to as the “haircut” – Harry said “that’s gone..and it’s not coming back”.
“Are you worried that you’ll lose your house” asked Brendan. “No” said Harry resolutely “I’m absolutely confident that this will turn, the platform for recovery is actually there at the moment, it’s just that we can’t just see it yet”
How much does Harry owe NAMA? €500m suggested presenter Brendan. “No, it’s not that” asserted Harry. But set against the background of the above, Brendan might have gone a little further and asked if Harry was now regarding his debt as the price paid by NAMA for his loans or the original value of the loans.
Being a Saturday night entertainment show, Brendan could be forgiven for not asking Harry if NAMA had approved his business plan, and if he (Harry) had signed an agreement with NAMA, whether or not Harry’s loans are subject to personal guarantees, if Harry’s wife Rita had benefitted from spousal transfers and if NAMA was pursuing these, Harry’s salary from NAMA and if there was a performance bonus. These are all contentious and at some point will need be teased out, so that we can see how NAMA is practically dealing with its debtors.
UPDATE: 8th February, 2012. Anglo (or rather the Irish Bank Resolution Corporation, IBRC) has appointed receivers to a company in which Harry has a major stake. The bank is reported to have appointed David Hughes and Luke Charlton from Ernst and Young as share receivers to a company called Tora Company Limited, which is said to have been jointly controlled by Harry Crosbie and the Treasury Holdings dynamic duo, Richard Barrett and Johnny Ronan. The controlling company is called Brossbar Limited. Tora’s main asset appears to be the Wool Store building – pictured here – in Dublin’s International Financial Services Centre in Dublin 1.
If Harry owes, say, €300m and only pays back €120m, then Harry’s “haircut” will have cost every man, woman and child about €27. No wonder he can laugh.
It may be ‘gone’ from his obligations but it has been sent to the citizens.
Having said that it’s hard to dislike the man, at least he’s making a go of it down there and not abandoning those young people he sold the docklands negative equity dream to. The Point village/Castleforbes area is one that strikes me has being vulnerable to denigration over the coming years.
“It may be ‘gone’ from his obligations but it has been sent to the citizens.”
Not sure about that at all. I admire the guy greatly and maybe he can settle his debts by drawing on his more successful projects.
Will you ever come off it!! Why do you think he’s running projects for sick children and coming on the TV to crow about it? Because he cares?! He didn’t care enough about the rest of the children in the country when he charged them all €27 each to pay for his escape from bankruptcy.
This was a PR exercise from an unrepentant, reckless gambler who has no problems with charges his losses to the state, and keeping any profits for himself. He openly admits that he will not pay back the money he owes, only the money that Nama owes: “Over and above the haircut–it’s gone”.
I’m furious. I’m absolutely furious that this man can waltz onto TV and basically brag about his activities that helped brought down the country, brag about how he lumped his losses on the taxpayers, and who has the brazen cheek to advise people to “hang in there”, because “it’s going to fix” even as he still draws his exorbitant developer’s dole from Nama. All while tens of thousands are facing eviction from their homes.
This man should be bankrupt, or worse. Instead he’s being paraded around again as a “pillar” of society. A pillar which already collapsed! And crushed half a country beneath it.
I’m just angry that these people and more besides are let walk away, to face the most meagre of repercussions for their actions. That their incompetence and recklessness has been rewarded–handsomely.
I don’t care if the IRA get into the Aras or not. I’m voting for McGuinness.
P.S.
I liked the bit about RTE “not getting into that” with Dunnes Stores. When is a semi-state, not a semi-state?
I admire Harry too for sheer energy in getting things done but……what about Nama’s undertaking to pursue developers for the remainder of the debts outstanding-the haircut.Do we take it, now that Harry has let the cat out of the bag, that the taxpayer will foot ALL the bills for the outstanding debts(i.e all the haircuts) This would, to coin a well worn phrase “send the wrong message” to the remaining NAMA debtors.But of course it would be a very welcome message for the said people.Citizens can NOT afford to pick up this additional cost in addition to the soverign debt which will be a huge burden in itself over the coming 3 budgets.
A structured default seems to be the only “out” for Ireland at present.
I don’t think it’s reasonable to assume from the comments of this 1 developer that there is a “cat to let out of a bag”. Ie. No conspiracy between NAM and developers that they will not be pursued for the full amount owing. Comment would appear to be HC taking a pragmatic view on what can realistically be met by him. He could potentially still lose his house.
Comment re a “structured default” is fine but those that are proposing it are not rationalising fully the consequences of a default. Lets see how the Greeks get on before making any decision here.
Well, some of us have thought this for a while: http://www.thepropertypin.com/viewtopic.php?f=50&t=27290
@obsessivemathsfreak, seniorpropertyobserver : I agree with your views expressed. It is an intolerable situation where a property developer and builder can brazenly state that the haircut is gone. We were told at the time by Minister for Finance Brian Lenihan that loans transferred from the banks to NAMA would be pursued in full by NAMA.
Crosbie and the rest of the loan defaulters should have been bankrupted and so to the banks who issued said loans.
The point is a moot one. If Greece doesn’t have the hundreds of billions needed to pay the French banks – how can they pay it back? If Harry doesn’t have €100 million – how can he pay it back? I think the expression best related to Personal Guarantees includes “blood” and “stones.”
This particular stone is still suckling life blood out of the Irish State via his Nama bailout. Since he has time to tell us all how pleased he is with himself on national television, methinks there’s still some juice to be squeezed from this one.
@ ObsessiveMathsFreak
I feel the rage too. It’s a bitter pill to swollow seeing those that made hay during the ‘boom’ being employed to clean up the mess, but considering ‘we are where we are’ do you know anyone else that’d be more effective at working through the loans other than the developer himself?
Perhaps it’s the low bar, Drumm, Fingers, Bertie, fitzpatrick, Neary etc but I don’t have the same hate for this guy, he appears to be getting stuck in.
Granted the ‘hold on SMEs, it’s going to be ok’ was a bit rich considering he’d be you know what without state support.
I’m sorry, but are you being serious? This is the man who wrecked his company through reckless trading. Without Nama he’d be bankrupt and barred from running so much as a lemonade stand without supervision of a court. Strictly speaking he is the single most unqualified person to manage those loans.
Pretty much every developer in Nama was not cut out for the big property development game. Those that were weren’t cut out for the games they got into. The whole lot of them need to be removed from the property sector in Ireland and elsewhere before they do any more damage to themselves or anyone else. That’s what bankruptcy law is for.
Instead we have Nama, and the more spectacularly you fail, the more people you force into poverty, the more money you mooch off the state, the better your chances of getting a round of applause on Saturday night RTE talk shows. Something is chronically wrong with this country.
Spot on.
The official receiver will sort out these loans better than oul’ Harry “Houdini” Crosby.
This abuse of the citizens by the state just keeps rolling on.
Why would NAMA write-off any debt for Harry? If, in four years time, Harry remains a wealthy man with a lot of property assets shouldn’t be feel obliged to make good on debts he took on. Only a s***bag would expect others to pick up the tab.
simple solution
“If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender.”
http://www.irs.gov/individuals/article/0,,id=179414,00.html
I ripped the video for this and uploaded it to YouTube:
I’d love to know what the lads in NAMA think!
NAMA think.
An Irish oxymoron, at least if exclude the king’s ransom salaries they pay themselves.
two options-Bill Nowlan x Irish Life ‘vision’ of future which after all they gave us the soviet style Irish Life Center and was featured earlier or a few “Harrys”……and come on lads no more ‘scoffing’…………….
“This normal property market will be a dull place – a dull place that true property professionals feel comfortable to operate in, collecting rents, arranging viewings, organising contracts. No Get-Rich-Quick-Harrys relying on yield compression and ever-rising prices to justify their existence and scoffing at the old hands.”
http://billnowlan.blogspot.com/2010/09/when-will-market-go-back-to-normal.html
@john gallagher
re: simple solution
Unfortunately, these debts are owed by companies and there is no mechanism for forgiven company debts to be applies as tax benefits to the directors of those companies AFAIK…
@yoga if the loan is ‘non-recourse’ agreed but if its recourse or personally guaranteed then it runs with the individual.
Apologies, I posted this earlier on the wrong thread:
@yogan, Ahh… not all the debts are owed by companies. Far from it. Most investment property was held personally – in partnerships, in Trusts, QIFs (Qualifying Investment Funds), or other personal vehicle.
The reason being that Capital Allowances could be utilised at the highest personal tax rate, as opposed to holding in a company where tax was only 12.5% and did not require sheltering. Holding corporately was hugely tax inefficient as to subsequently transfer the profits out of the company to the personal arena exposed the shareholder to taxes that could not be sheltered as easily as the Capital Allowance route.
And this is what happens to the poor sods left in Anglo.
http://www.guardian.co.uk/business/ireland-business-blog-with-lisa-ocarroll/2011/oct/03/anglo-irish-bank-lending-small-business?newsfeed=true
Interesting @wstt, thank you, so these chaps are personally liable for the debts then?
john gallagher, I believe the revenue already treat forgiven loans as gifts.
@Yoganmahew,
Did Anglo’s golden circle get a tax bill?
@Ahura M
Well, those rules have to be applied… for sure if I give someone a loan and don’t make them pay it, it will be treated as a gift and either I or they will have to pay gift tax. Likewise if I just give money to people, they will have to pay gift tax.
We all know, though, that rules are for the little people.
From experience and anecdote harry’s view is not the view of the larger developers. I really do think that the attitude he espOuses is not shared by his peers in Nama. One of whom thinks it has set things back by several months. The vitriol above shows we have a long way to go yet before there is any recognition that by and large many borrowers are anxious to redeem their debts to the taxpayer! Recent announcements of sales however mean continuing shortfalls. How are these to be dealt with? Recent comments by Brendy that legal rights will be respected ring hollow at this point. We wait on promised changes and despite rumors that they are on the way nothing as of yet…
Vitriol. Yes indeed.
I met an old neighbour (well in his seventies) yesterday on the pitch in Gaelic Grounds in Limerick after the match. We chatted and as we left I asked about his family. Two of his four daughters (in their thirties) are in Australia and will not be coming back. I tried to ease the pain a little by telling him that there was nothing here for them.
Still almost tearfully he said that “Still, we would prefer if they came back to this little country”.
How about having the perpetrators suffer the same fate as the victims.
It is certainly galling to seek them swanning around ‘with diamonds on the soles their shoes’.
Terrorists in the Aras is not my biggest concern.
The biggest bank heist in history had just been sprung on the Irish people by post modern terrorists.
John Paul Getty:If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.
Simon Kelly in his book incorrectly attributes this old cliche to McInerney but this view was prevalent among Irish developers and personal guarantees are going to get called.
Amazon.com: Breakfast with Anglo (9781844882502): Kelly, Simon Kelly: Books
Harry’s view is not shared by NAMA. His view is commercial, but in the context of Ireland, it is wishful thinking.
Take Brendan’s recent speech – he speaks of “not selling loans and assets below the NAMA purchase price”. This is as delusional as Harry’s view. The fact is that NAMA cannot control the values and set them at their levels. The value of the assets will be controlled by the amount a cash purchaser, probably a US hedge fund, will pay- and they are looking for an initial 20% plus IRR. This is before we allow for the “yield compression” that will enhance capital values for them as a “bunce” over the next few years.
@wstt i thought a couple of Irish ‘players’ were all over this.. following the ARC but so far………..
“Two big names in business have teamed up for this venture. Mark Duffy is the former chief executive of Bank of Scotland (Ireland), while Kevin Warren is one of Ireland’s biggest property fund managers.”
http://www.rte.ie/news/2009/1020/arc-business.html
“Financing from ARC’s UK fund backers is key. Some reports have put the amount of money behind ARC at €3bn, but Duffy and Warren won’t confirm this and industry analysts are sceptical the number is that large.”
http://tribune.maithu.com/article/2009/oct/25/arc-light-pierces-the-clouds-of-collapse/
[...] reported in The Irish Times on Wednesday and on NAMAWineLake it seems there might have been a fundamental change in the extent to which NAMA will pursue [...]
Things are already on the up for ‘arry.
http://www.irishtimes.com/newspaper/ireland/2011/1210/1224308869811.html