Sean Quinn accused of not letting Anglo set foot in his shopping centre

Given Sean Quinn’s involvement in property in the 2000s which led to the former tycoon accumulating a portfolio reportedly worth €500m, and given Sean’s systemic borrower status at Anglo where he now allegedly owes nearly €3bn – and since Anglo is 100% owned by the State, that means Sean owes us nearly 2% of Irish GDP – it is a bit of mystery as to why NAMA did not move to acquire his loans. Arguably he was more a property “investor” rather than a “developer” but when it comes to buying shopping centres, for example, the distinction becomes blurred because if you’re not physically trying to change the configuration of the centre or add an extension, then you’re generally trying to change the mix of tenants and revenue model so as to maximise your income.

Last year, Paddy McKillen found NAMA on his tail despite Paddy’s protestations that he was an investor rather than developer; NAMA in response claimed Paddy’s €2bn+ of loans made him “systemic” even if the loans weren’t for traditional development. But in the case of Sean Quinn, NAMA has sat on its hands. Strange, that.

And so it falls to Anglo, or IBRC as it is now known having merged with Irish Nationwide Building Society, to pursue Sean for the repayment of €2bn+ of loans, reportedly secured against Quinn assets including the Quinn property portfolio. The properties are scattered across at least six countries including the Ukraine, where Anglo is meeting incredible resistance in enforcing its loan securities. Indeed, it is being suggested by local Ukrainian press that “machinations to block them [Quinn group in receivership] from taking control of the properties are being orchestrated not by Ukrainian groups, but by Sean Quinn, an Irish former billionaire, or his family”

And so in the Ukrainian capital,Kiev(or Kyiv) there are at least two Quinn commercial properties which Anglo is seeking to physically take possession of – the Ukraina shopping centre and the Leonardo business centre.

The Ukraina shopping centre (also known as the Shopping Mall Ukraine, or Univermag Ukrayina) is on Peremogy square in central Kiev– pictured here. It has 400,000 sq ft of retail/parking space and houses Ukranian and international retailers – it’s akin to the Jervis shopping centre, it’s not the biggest or swishest of shopping centres. It was redeveloped in the early 2000s and sold to the Quinn group in 2006 reportedly for USD 59m (€45m). It is said to be worth €60m today and is also said to have a annual rent roll of €8m.

The Leonardo business centre – pictured here – is also located in prime central Kiev . It has 300,000 sq ft of office and retail space – there’s a brochure for the building here. It has some top-notch tenants including Reuters and Commerzbank. It was also acquired by Quinn Property in 2006, reportedly for USD 95m (€73m).

Alas for Anglo, it is finding out that Kievis not Dublin. Last month, poor old Robert Dix, formerly of KPMG in Dublin but now chairman of Quinn Finance which we (the State, through Anglo) control, had an open letter to the Ukrainian prime minister Mykola Azarov published in Ukrainian media (print, such as the Kyiv Post and online – see below) making a desperate plea for support in taking possession of the shopping centre. Indeed Quinn Finance seems to have set up a dedicated website – www.univermagukraina.com – complete with thunder and lightening sound effects (I kid you not!) to publicise its campaign to take possession of the shopping centre. It is today reported that it is seeking the assistance of the local police to take possession of the shopping centre since “burly” security guards are sending Anglo’s representatives (or more accurately, representatives of the Quinn group in receivership) away with a flea in their ears.

Transparency International ranks Ukraine as one of the most corrupt countries in the world – it was ranked 134th out of 178 countries in 2010, with a ranking of 1 being least corrupt. In Ukraine you bribe the woman behind the counter at the post office so that she doesn’t steal your parcel, you bribe the policeman so that he doesn’t confiscate your car, you bribe the judge so as to avoid prison. In Ukraine journalists go missing and are found beheaded in the woods, political leaders get poisoned with dioxins which transform matinee idols into the Elephant man, and the latest outrage involves the former prime minister, Yulia Timoshenko who was recently jailed for seven years on corruption charges which the EU says are politically motivated – last week a video emerged showing the ill Timoshenko in what the authorities said was her jail cell, with the attention of seven doctors, a flat screen TV, air-conditioning ensuite bathroom with top of the range shower but Timoshenko protested the video did not show her usual conditions in prison. An Taoiseach Enda Kenny is reported to have raised the subject of Sean Quinn’s Ukrainian properties with current Ukrainian president Viktor Yanukovich in September – Enda might as well have threatened to invade the Ukraine for all the good it did.

The open letter from Quinn Finance (to which Anglo has appointed receivers) to the Ukrainian prime minister in November 2011

“Dear Mr. Azarov,

The deplorable virus of raidering (sic) has begun attackingUkrainewith new force. The memories of the recent arrogant raidering attacks on business are still very fresh for all of us. Today this malicious practice continues to manifest itself in such cases as the attack on the Kyiv’s legendary shopping mall “Ukraina”.

We, the Swedish company Quinn Holdings Sweden AB, are currently locked in a fight to retain the control over this enterprise, in which we own almost 93 % of the shares. Yet, taking into account the circumstances of our case, we have all grounds to assume that we are in danger of being deprived of our property.

In April of the current year an unfounded lawsuit was brought against Quinn Holdings Sweden AB, which resulted in the attachment of all shares of the shopping mall “Ukraina”, owned by the abovementioned foreign company. The market value of the shares in question amounts to tens of millions of US dollars.

Moreover, an additional lawsuit was filed against Irish Bank Resolution Corporation—an Irish bank, which is owned by the Government of theRepublicofIreland, and which earlier on financed the purchase of the shares of “Ukraina”—the main objective of which is to invalidate the mortgage agreement for the building of the “Ukraina” shopping mall.

As a result of a series of unlawful activities on the part of the former management of the Mall and other persons, numerous obstacles, which make it impossible for us, the owners of almost 93 % of the shares of the “Ukraina” shopping mall, to exercise our lawful rights, have been and continue to be created. Despite having the status of the majority shareholder, Quinn Holdings Sweden AB has been literally stripped off of their power to control the running of the enterprise.

This issue has received extensive media coverage inIreland, including on the premierIrishStatetelevision channel. It is also receiving international media coverage. This week the matter was featured in the Financial Times.

For more than two weeks now the newly appointed acting director of “Ukraina” shopping mall, whose appointment was approved at the general shareholders meeting by both majority and minority shareholders, is unlawfully denied access to his place of work.

The situation has almost reached the point, beyond which the shareholders of “Ukraina” shopping mall risk loosing the control over the enterprise irrevocably. Our efforts to protect our rights and our property continue to be obstructed by outrageously crude actions which systemically violate the law.

With the support of the Irish bank Irish Bank Resolution Corporation, which is today state-owned, we have invested considerable financial resources into the shares of the Mall. We assumed all the risks and responsibilities for the shopping mall “Ukraina”, became an example of the growing trust of foreign investors to doing business inUkraine. Tomorrow we can loose (sic) everything. We appeal to you, Mr Prime Minister, with the request to take this matter under your personal control.

Yours sincerely,

Robert Dix,

Board Member,

Quinn Holdings Sweden AB”

UPDATE (1): 5th January, 2012. Colm Keena at the Irish Times today reports that IBRC is “pursuing” Lyndhurst in Belfast and the British Virgin Islands.  The pursuit in Belfast is said to have involved IBRC (formerly Anglo) obtaining an injunction before Christmas preventing Lyndhurst from disposing of its interest in a company that runs the shopping centre. It is further reported that the case is back at the High Court in Belfast today where a continuation of that injunction is to be sought. Meantime in the British Virgin Islands, it is further reported that IBRC is also taking certain legal actions, details of which are not published, in order “to prevent the shopping centre slipping from its grasp” but it is stated at the top of the article that IBRC is trying to establish who is behind the company. Of interest is the claim that “a Quinn family company called Demesne Investments Ltd, with an address in Mr Quinn’s native Derrylin, Co Fermanagh, had an interest in debts due from the operator of the Kiev property [the Ukraina shopping centre] but these appear to have been transferred to Lyndhurst, via an intermediary”

UPDATE (2): 5th January, 2012. The BBC has an extensive report on court proceedings in the High Court in Belfast today where  Mr Justice McCloskey approved the continuation of injunctions against four companies,  Demesne Investments Limited (UK), Innishmore Consultancy Limited (UK), Lyndhurst Development Trading SA (British Virgin Islands) and Galfis Overseas ( Belize) which prevents each of these four companies from dealings in debt relating to the Ukraina shopping centre in Kiev (Kyiv, Ukraine). Inishmore is said by the BBC to have been set up in 2011 and its sole director is Peter Quinn junior, a nephew of Sean Quinn (see here for the map of the Quinn family tree). The suggestion is that Demesne had loan agreements involving the Ukrainian shopping centre and these were assigned to Inishmore in April 2011 and then they were further assigned to Lyndhurst in October 2011. Lyndhurst then, under what appear to be highly suspicious circumstances, obtained a judgment in the Kiev commercial courts on 26th December – IBRC has apparently complained about the judge’s conduct of the case which seems to have been highly irregular. Cutting to the chase, Anglo (IBRC) is seeking control of the Ukrainian shopping centre to help satisfy the €2.8bn that is said to be owed by Sean Quinn to the bank, and on the other hand other companies, some of whom are clouded in the corporate secrecy offered by the British Virgin Islands and Belize, are seeking to take control of the shopping centre. Lastly, it was suggested today by Anglo’s barrister that matters may be brought before the court pointing to fraud, contempt of court and breach of fiduciary duty.

UPDATE (3): 5th January, 2012. Colm Keena has filed a report for the Irish Times in which he says that Anglo (IBRC) has secured a Norwich Pharmacal order  to force the Belize authorities to disclose the identities of those behind Galfis Overseas Limited, and that Anglo is pursuing a similar order against Lyndhurst in Belize – Anglo may well need get Eamon Gilmore involved to deal with the BVI authorities who, after 9/11, have come under increased pressure to reveal beneficial owners of companies allowed register in their secretive jurisdiction. It is reported by Colm that Galfis is pursuing an office block in Moscow, the €140m Kutuzoff Business Centre.

UPDATE: 14th February, 2012. Having appealed a decision by Kiev’s commercial court to a higher court and having last week lost that case, Anglo (or IBRC) has made applications in Dublin’s High Court which could see the Quinns placed behind bars for contempt of court. Anglo is claiming the Quinns have breached an order obtained in Dublin’s High Court last year preventing the Quinns from disposing of, or dealing in, the property assets in their former empire. The claim now by Anglo is that Sean Quinn, his son and his nephew have breached this order and are accordingly in contempt of court. The matter is to be heard in Dublin on 24th February, 2012 according to Dearbhail McDonald at the Independent.

UPDATE: 27th February, 2012.  There will be a hearing in the High Court in Belfast on 27th March 2012 regarding the Kiev properties formerly in the Quinn Property group. In Kiev, it is reported in the Kyiv Post that a commission has been set up to investigate the goings-on in the company which controls the shopping centre, and according to the Kyiv Post quoting the commission “in November 2011, a group of people illegally seized control of the department store” And back in Belfast’s High Court last week, it was reported that a hand-writing expert is now to be brought in to examine claims that Sean Quinn junior’s signature had been forged on a company document in Kiev.