You can tell Michael O’Flynn is a different class of developer: for a start, he’s announced today he’s donating part of the “substantial contribution” to his legal costs from junior minister Lucinda Creighton, to the Crumlin Hospital Foundation. He was speaking at the conclusion of a court hearing where he claimed the Minister for European Affairs had defamed him, and in court, a statement was read out today which,in part, said “it is appropriate that she has agreed to make a substantial contribution to my legal costs part of which I will donate to Crumlin Hospital Foundation”
You see NAMA won’t normally allow its borrowers to sponsor events or sporting teams or make charitable donations. And given this “substantial contribution” from Minister Creighton would be regarded as unencumbered income, it must mean that Michael is up-to-date on his very significant borrowings – said during the course of the hearing to be north of €1bn – or that the borrowings don’t have recourse to his own personal income or wealth as it is rumoured that he is one developer who didn’t give personal guarantees.
So today in Dublin’s High Court, the case taken by Tiger Developments and O’Flynn Construction chief, Michael O’Flynn against Minister Creighton concluded with a settlement between the two. Michael had claimed that Lucinda had defamed him during a speech at the MacGill Summer School in 2010 followed by a newspaper article and radio broadcast. Following a Fine Gael fund-raising golf tournament in 2010 at the K Club in Kildare, Minister Creighton had criticized the “cancer of cute hoor politics” and said that “Fine Gael cannot condemn Fianna Fáil for entertaing developers in the Galway tent while holding the biscuit tin to high-profile developers beholden to NAMA” and later said she was referring to Michael O’Flynn. Michael said this all amounted to defamation.
On Tuesday this week, it was reported in the Independent “He [Michael O’Flynn] told his counsel, Declan Doyle, that her solicitors put forward proposals that she would issue a press release which she would carry on her website and also issue to the ‘Irish Times’, along with a contribution to Crumlin Children’s Hospital. Mr O’Flynn said he refused to accept these proposals and wanted an apology which would receive the same publicity across the media that the “attack” Ms Creighton had made on him had received.”
Today, the settlement seemingly involved two statements being read to the Court – firstly on behalf of Minister Creighton “I made comments about Michael O’Flynn and his attendance at a fundraising Golf classic for Fine Gael in particular concerning low standards and wrong doing. I am happy to confirm that Michael O’Flynn is an upstanding developer and person who operates his business to the highest standards. He has not done any wrong and any suggestion to the contrary was not intended by me. I apologise to Mr O Flynn and his family for any hurt and distress caused by my comments. I have agreed to pay a contribution towards his legal costs.”
The statement on behalf of Michael O’Flynn was “I am very happy that the damage to my reputation caused by Ms Creighton’s very public comments in her speech at Glenties and her subsequent interviews with RTÉ and the Irish Times has been recognised in these court proceedings. It is regrettable that I was compelled to bring these proceedings and I am delighted to have received an apology in open court from Ms Creighton. From day one, all I was seeking was an appropriate apology from Ms Creighton and a donation to Crumlin in recognition of her inappropriate comments about me, and it is appropriate that she has agreed to make a substantial contribution to my legal costs part of which I will donate to Crumlin Hospital Foundation. I have been in operating in business in Ireland and abroad since the 1970s, and I treasure my good name both in my professional and my private life.”
The hearing took the best part of three days this week, and won’t have been cheap, but we don’t precisely know what costs were incurred by Michael O’Flynn or Lucinda Creighton or what a “contribution” or “substantial contribution” means. But neither “contribution” nor “substantial contribution” means “100% reimbursement” so this has cost Michael money. And again, we can see how he is different to other NAMA developers who would be constrained in their freedom to sue people because NAMA generally wants to snaffle their unencumbered income and wealth.
During the hearing some mud was thrown with the claim by Michael that he had contributed to the election campaign of Lucinda’s husband, the current Senator Paul Bradford.
As regards the settlement statement, it more a clarification than an apology. The Minister doesn’t confess to saying or writing anything which was incorrect. She does clarify that in the case of Michael O’Flynn that he is “an upstanding developer and person who operates his business to the highest standards” The apology is for “any hurt and distress” caused by her comments, there is no admission that what was stated was incorrect. Minister Creighton refers to a simple “contribution” to Michael’s legal costs, whilst Michael refers to a “substantial contribution” but whatever it is, Michael is going to be out of pocket. But that seemingly isn’t NAMA’s concern.
UPDATE: 19th November 2012. The Irish edition of the Sunday Times – not available online without subscription – yesterday refuted a claim made on the Newstalk radio station on Friday last that Lucinda was paying €100,000 towards Michael’s legal costs and a further €50,000 as a donation to the Crumlin Hospital. The Sunday Times journalist Mark Tighe reported that Lucinda paid “at least €50,000 to settle the defamation action” and that this figure was confirmed by “sources from both sides of the dispute”. Furthermore Lucinda is reported to have been annoyed by the report on Newstalk.
Note LC’s comment: “….. who operates his business to the highest standards.”
How does that equate with making tremendously bad business decisions to be so much in debt to have to go into NAMA?
Quite baffling!
@Michael, as Michael O’Flynn himself would say, he had no real control over NAMA acquiring its loans. And NAMA has taken over performing and non-performing loans. About 15-19% of NAMA loans are performing. And by reputation Michael’s loans are performing and he doesn’t have personal guarantees.
So you can’t conclude that he has made bad business decisions, “tremendously” or otherwise. And NAMA is not about the size of debt, though Michael apparently has €1bn+ loans. Remember in the case of EBS and INBS, there was no threshold on loans acquired. At Anglo it was €5m and at Bank of Ireland/AIB it was €20m.
So NWL, what would you estimate is his Loan and Value amounts in his NAMA portfolio?
@Michael, no idea. It will depend on the original loan and what has been paid down. All we know is property had dropped 50-70% from peak, but if the original LTV was low, that shouldn’t be an issue. What is known is that Michael has a formidable reputation amongst Irish development community generally and it is said that his loans are performing and he has limited if any exposure to personal guarantees.
NWL, would it be safe to say, in comparison to Durkans, http://www.independent.ie/business/irish/durkan-slams-nama-as-building-firm-repays-all-its-bank-loans-2982553.html that MOF would not have made as good business decisions given I gather it must be assumed that being in a position to “buy” yourself out of NAMA could be a good thing (or should be a good thing, I assume there was no master plan by developers in taking huge loans between 2004 – 2007 that their would be a state agency formed to facilitate them in light of a downturn)?
Can you give any evidence of MOF having a formidable reputation amongst the development community? Is the “development community” subset of citizens still a worthy judge of such reputations do you think?
Can I ask have you evidence of his loans performing in their entirety?
@Michael, no I don’t have details of Michael O’Flynn’s loans or LTVs, I was merely reminding you that you can’t assume that loans in NAMA are non-performing, because some are performing, 15-19% by reference to the original loan conditions.
Durkans mightn’t have much good to say about NAMA but Ballymore, for example, has been positive about the Agency. And remember the Agency is one of the few sources of development finance for developers and staple finance for buyers.
Evidence of his reputation? He’s a leading light behind Property Industry Ireland which represents the building business including developers. He has large borrowings but has stated his loans are performing, which is rare enough for such large exposures and by reputation, he has few if any personal guarantees, unlike most developers. Beyond that, take my word for it.
NWL, we took people at their word in this country maybe too much in the past and look where it got us …
You refer to the PPI but perhaps it should have been more prolific during the Celtic Tiger to ensure more sustainable construction had been carried out in the last 2 decades?
@Michael, Property Industry Ireland (PII – I think PPI generally refers to loan protection insurance) was formed last year. But having said that, its members were certainly active in the boom years but I do know that the organisation has made efforts to deter the buccaneering developers of the boom. However, PII hasn’t been very active and it was described on here – accurately, I still think – as a weird organisation. But some developers have joined the organisation at the behest of Michael O’Flynn which reflects the regard in which he is generally held in the business.
Does the outcome of this case suggest that the Defamation Act does not offer as much protection of free speech on matters of public interest as was thought?
I understand that Michael O Flynn has no personal guarantees attached to the debts of either O’ Flynn construction or Tiger developments. People need to therefore realise that M O Flynn has no personal association whatsoever with the debts of either company- be they performing loans or otherwise. Now thats what I call a stroke of business brilliance.
@MNagle agreed quite the stroke so you saying his empty white elephant in Cork built with 150 million via AIB is non recourse,no wonder they out that business.
They lent that on a spec. resi development with little or no pre sales….
Non Recourse can often be illusionary there can be “carve outs” for say negligence or fraud etc. The reputation damage from puking back keys is extremely significant,you can become a pariah in the banking community.For someone who clearly treasures his good name the damage to that from walking away would be career ending and sully his reputation.
JG, the stink doesn’t last, I know quite a few investors/developers who handed over the keys in 09 and are now back in the saddle again with fresh loans
Few this side the water had PGs
@DCB for someone who alluded to treasuring his good name,the honoring of debt would clearly be a moral obligation.PG’s or not he borrowed the money spent it astutely or otherwise.You could compare walking away from debt over here to stepping in dog sh*t,it can be scraped off ones shoe but the stink and smell lingers…..
As a avid follower of the sport of kings,the recipient of 200,000 from NAMA annually,does MOF truly think he can walk away good name in tact w/o leaving a bad smell and sullying his treasured good name?
ML O Flynn didnt sign PGs. And is continuing to work with NAMA on the developments as far as I am aware. No reason he would need to be declared bankrupt I would imagine.
I would have thought he had built up decent reserves over the years from a massively succesful Mount Oval development in Rochestown (C4!!). The elysian is a fine build, just in the wrong town, and a few years too late.
I would have thought MOF was an asset to NAMA to be honest.
The Elysian is perfect where it is. It would sell out tomorrow if they priced it properly.
The problem is the “won’t sell them for less than they’re worth” mindset:
http://www.independent.ie/national-news/the-elysian-a-beacon-of-light-that-is-yet-to-shine-2478367.html
Allied to this NAMA is now keeping a shadow inventory to try and set a floor.
Neither of them comes out of this as the sharpest tools in the box.
Just like the bank shareholders: holding them all the way down!
Slim chance re trip to UK
NWL, if MOF can be deemed a developer who operates to the “highest standards”, and excuse my ignorance, but if I am correct Green Properties seem to have performed adequately in the last 2 decades to not require them to go into NAMA, what standard could it be safe to say Green operate to given there is no such superlative on the word “highest”?
@Michael, going into NAMA is not a guarantee of business failure and the fact that 15-19% of NAMA loans are performing testifies to this. Sean Quinn is not in NAMA but famously has loans tied to €500m of property assets, including development assets. Paddy McKillen is (mostly) not in NAMA but is certainly facing challenges in the UK where he has lost litigation with NAMA and the Barclay brothers (though he is appealing against both). And there are companies in NAMA which seem to be doing fine, eg Ballymore and Castlethorn. NAMA has taken the place of the original borrower, that shouldn’t stigmatise ALL borrowers whose loans have been transferred to NAMA.
NWL, I didn’t say anyone has failed had I? I gather you would rather not answer my previous question directly? As you alluded earlier to the regard certain developers are held in, can I ask what critertia you would use to determine the regard developers can be held? Surely it’s not purely by reliance on associates within the PII is it?
@Michael
What would your “highest standards” in this Business Be.
One thing for sure you won’t find a Man who is held in Higher Regard than MOF.
Can you answer me first as I asked first?
@Michael
Okay in brief the people that I would feel would be held in high regard within the Property Development/Construction sector would be the likes of MOF ,the Cosgrave brothers,SM, PK,People /Companies that went the extra mile in projects down the years. People at the Lower end would be TMF of PH fame and others who have simply walked away from Debts ect . The rest somewhere in between. That’s my Personal View. Welcome yours now
@patrick you appear to be a nice chap,the metric is cash,it’s business.
Here is his x partner I will forward the relevant documentation as they say in Texas all hat no cattle…..how Vegas Pat….
“Harcourt became a 60 percent partner in Sullivan Square in August 2006. Doherty, with an estimated net worth of $1 billion, attended the ceremonial groundbreaking last year.”
http://www.lvrj.com/business/18443219.html
A billionaire ……another broke paddy full of sh*t….burning subbies..beshmirshing the good name some of us spent years making until these idiots arrived stateside and got taken…..go home Dohery go home.
Upstanding indeed
http://www.irishtimes.com/newspaper/finance/2012/1222/1224328120075.html