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  Its continental European business, with developments in Slovakia, Hungary and the Czech Republic, had assets of €990 million at the end of 2010, with bank borrowings and loan notes outstanding of €984 million. Irish Nationwide was not among its lender banks, while NAMA has taken up loans previously owed to Anglo Irish Bank and Bank of Ireland.

  As the largest borrower from the society, Mulryan was close to Fingleton. This relationship would have been further deepened as the society continued to make good money from Mulryan projects in Ireland and Britain that went spectacularly well in the late 1990s and early 2000s. In the end, however, when the music stopped and the property crash hit, the Ballymore group had substantial outstanding loans with the society. Those loans are now being handled by NAMA, which is working with Mulryan. The agency has not disclosed the level of discount applied to these loans, which would reflect the extent of the society’s losses on them.

  MAKING A BALLS OF IT IN BALLSBRIDGE: SEÁN DUNNE

  As 2004 drew to a close, the Irish commercial property boom was in full swing. Things were going very well for Irish Nationwide. Things were also going extremely well for a core group of twenty-five to thirty big developers. Michael Fingleton had built relationships with several of them early on in the boom and in some cases before it even happened. So they were loyal to him, as long as the easy, non-recourse loans kept coming.

  But Seán Dunne was a little different. The former builder from Tullow, Co. Carlow, was getting bigger and bigger in the property game. He had been close to Fingleton, and the society had backed him with loans on residential developments from the early 1990s. Their business relationship had been mutually profitable. However, in the early 2000s tensions had emerged. Minor disagreements that sources say they cannot even remember meant that by the end of 2004 Dunne had paid back almost every loan he had borrowed from Fingleton. The society’s net exposure to Dunne, later dubbed the Baron of Ballsbridge, was a modest €13 million. This was nothing for a man who spent €1½ million on his wedding bash the same year.

  Dunne was very wealthy at the end of 2004, but what he had would never be enough. He wanted to think big, earn big and spend big. But that meant borrowing big. At a time when Fingleton’s list of clients in Britain was growing rapidly, he was still keen to do big commercial property deals in Ireland.

  So, in one way, the two men needed each other; that common profit motive drew them back together again. They had become friendly again some time in 2004. By that summer they were close enough for Dunne to invite Fingleton to his wedding party on the Christina O in July 2004. At the bash, which went on for fourteen days, Fingleton mixed with such celebrities as Ronan O’Gara, Mick Galwey, the fashion designer Karen Millen, P. J. Mara’s son John, and the Gate Theatre director Michael Colgan.

  The wedding invitation must have worked. ‘It was extraordinary in one way,’ said a former senior executive at Irish Nationwide.

  Dunne had been a good client years earlier, but he and Michael had some kind of falling out. Dunne had paid up practically all of his loans and was basically gone from the place. Then suddenly he is back, and Michael is shovelling out money to him again in 2005. It would have saved the society a lot of money if Dunne had not come back at all.

  As Dunne decided to go on a borrowing and buying splurge in 2005, he turned to Fingleton to finance some of it. By the end of 2005 the society’s net exposure to Dunne had shot up to €58.7 million. A year later it had ballooned to €131.5 million, placing the man behind Mountbrook Homes and DCD Builders in twenty-first place in the list of the society’s biggest exposures. Those years when the two men did not do business together must have saved Irish Nationwide quite a lot of money in the end.

  Dunne’s exposure to the society was nothing compared with what he owed other banks, including Bank of Ireland and Ulster Bank. All of them would rue the day they lent big to Seán Dunne.

  Dunne’s father was a local fire officer and town clerk. Dunne studied surveying at Dublin Institute of Technology, and when he graduated he emigrated to Canada. He spent three years in Alberta, working in tough conditions on tar sands, extracting oil for the American market. He came back to Ireland in 1979 and in 1983 set up his own company, DCD Builders. His first project was the construction of twenty houses in Sallynoggin, Co. Dublin. He then went on to build more houses in Co. Kildare, Bray, and west Dublin.

  But within two years the market was in the doldrums. Dunne emigrated to England, returning four years later. He got a taste of a big development when he teamed up with a group of blue-chip Davy Stockbrokers executives and clients to form Berland. This company bought and developed the seventy-acre St Helen’s Wood site at Booterstown, Co. Dublin. It was bought for £17 million. The investors included Kyran McLaughlin and David Shubotham of Davy’s and Martin Naughton and Lochlann Quinn of Glen Dimplex.

  The project was launched into a tough market, but Dunne made good money out of it. He bought up lots of land around Dublin with the proceeds, including 50 acres between Swords and Malahide and 166 acres in Rathfarnham. He went on to develop the Whitewater Shopping Centre in Newbridge, together with Seán Mulryan. He eventually received more than €100 million for his shareholding following a court settlement. He told people he made €80 million from the development of houses and commercial units in Greystones, Co. Wicklow.

  Dunne was the typical party animal. He gave lavish parties at his house in the K Club in Straffan, Co. Kildare. He was known to fly friends by private jet, costing about €4,000 per hour, to rugby matches. He bought a corporate box at Lansdowne Road stadium for approximately €470,000. Dunne jointly financed a €1 million all-weather rugby pitch at Clongowes Wood College at Clane, Co. Kildare. For his wife’s thirtieth birthday he hired the Park Hotel in Kenmare and held a fancy-dress party, on the theme of Pirates of the Caribbean. Gossip among local people at the time claimed that one guest asked if he could park his helicopter somewhere else, because he was embarrassed at how small it was compared with some of the others.

  In 2009 he was the subject of an extraordinary article in the New York Times. The journalist spent a day with Dunne and described him downing champagne cocktails, copious amounts of wine and pints of Guinness to wash down a dinner of potatoes and turkey soaked in gravy. Dunne told friends that when he was bidding for Jury’s Hotel in Dublin he asked his wife to think of a number between 253 and 275. Without knowing what he intended, she picked 275. This was the price in millions he then bid for the hotel.

  Dunne was close to Bertie Ahern and Charlie McCreevy, and both were invited to his wedding reception on the Christina O and sent spoken messages of good wishes. He was a regular in the Fianna Fáil tent at the Galway Races, where he met his second wife. He attended Ahern’s constituency fund-raisers and invited him to his son’s twenty-first birthday party in 2008. Ahern had invited both Dunne and his wife to be present in the gallery when he made his historic address to the joint houses of the US Congress in April 2008.

  The earliest record of Dunne borrowing from Irish Nationwide is in 1995, when he borrowed about £2 million, secured on lands in Rathmichael, Co. Wicklow. Other lands were also used as security on another £2 million that year. These loans were repaid in 2004. In 1996 he borrowed again, the security being land in Celbridge, Co. Kildare. ‘Fingleton and Dunne were two of a kind, destined to get on and destined to fall out,’ was how one source who knows both men put it. They were both headstrong, determined and ambitious.

  The rapprochement in 2004 coincided with the eve of Dunne’s biggest buying spree. In 2005 a mystery buyer acquired a house in Shrewsbury Road, Dublin, on 2½ acres. The price paid was €58 million. Dunne immediately denied that he was the one behind the purchase. He was so determined to dispel the rumour that he had a statement read out to a meeting of the Shrewsbury Road residents’ group, telling them he had not bought the house.

  Dunne already lived in Shrewsbury Road, and had a number of run-ins with neighbours over various residential issues. The new purchase stuck out be
cause it was the most expensive house ever bought in Ireland. Years later it emerged that the beneficial owner of the house was not Dunne but his wife, the former Sunday Independent gossip columnist Gayle Killilea.

  Another landmark deal in 2005 was the purchase of Jury’s Hotel in Ballsbridge, Dublin, and later the Berkeley Court Hotel, along with the nearby office block Hume House. Dunne didn’t stop there but went on to buy one of the blocks in the AIB Bankcentre just up the road. He spent €710 million buying up chunks of Ballsbridge, with a further €15 million in professional fees. He paid €260 million for Jury’s, €119 million for the Berkeley Court, €130 million for Hume House and €200 million for his slice of AIB Bankcentre.

  The biggest lender in all of this was Ulster Bank. Dunne has said that he sank about €135 million of his own money into the purchase of the two hotels, suggesting that he borrowed more than €250 million from Ulster Bank. The bank, which is owned by Royal Bank of Scotland, later syndicated some of this debt to a group of smaller banks.

  There are mixed stories about why Fingleton did not participate in lending money for the Ballsbridge hotel deals. Former Irish Nationwide sources say Fingleton was bragging afterwards that he had not financed the purchase of the hotels at what was an outlandish price. Other sources have suggested that Fingleton wanted to get in on some of the action but Ulster Bank muscled him out with a better deal.

  But Fingleton did lend Dunne €70 million to partly finance his purchase of four blocks of the AIB Bankcentre. Dunne used a company registered in the Isle of Man as the borrowing entity. This was a mechanism he used many times, as did other developers. By borrowing money through an Isle of Man company the business does not have to submit accounts. It also has tax benefits and greater privacy surrounding the transaction.

  AIB had signed a twenty-year lease on the premises but had a break clause scheduled for 2011, which meant it could get out of the rental agreement if it wanted to at that stage. AIB informed Dunne that it wanted to exercise the break clause and vacate the premises. With the property market on its knees, Dunne would have found it very difficult to find suitable commercial tenants willing to pay the same boom-time rents as AIB.

  This reality forced Irish Nationwide to write down the value of the €70 million loan to €18 million, a substantial loss for the society, a 74 per cent write-down on the Dunne AIB loan and a loss to the society of €52 million. The loan was secured on the value of the property, which had tumbled, and a personal guarantee.

  Another boom-time Fingleton loan to Dunne came in 2006. This related to two adjacent sites in Kilcock, Co. Kildare. Dunne bought the site of a former sweet manufacturer called Zed Candy and a smaller nearby site. He acquired the Zed Candy site through an Isle of Man company, called Waterside Kilcock Property Company. A loan facility of €38 million was granted by Fingleton to cover the Zed Candy site and the smaller adjacent site. Dunne secured planning permission for 180 apartments and a 29-storey shopping centre, but An Bord Pleanála overturned the permission.

  The deal was done at the peak of the property boom. Even if the planning had worked out, the value of this site would have fallen anyway; but once An Bord Pleanála shot it down, its value tumbled. Irish Nationwide wrote down the value of this loan from €38 million to €5 million, an 87 per cent loss. Dunne gave a personal guarantee of €35 million on the loan. This reflected the complacency and the casual approach taken by the society towards big clients who borrowed tens of millions, in sharp contrast to how it dealt with ordinary borrowers.

  In 2008 Irish Nationwide had to petition the court in the Isle of Man for permission to formally register the charges or security on the loan. In its submission it said that ‘by inadvertence, accident or otherwise the said two legal charges have not been registered within the time prescribed under Section 79 [of the] Companies Act 1931.’ Fortunately for the society, the judge did extend the time limit, and the charges were allowed to be registered.

  But both of these Dunne loans ran into trouble. Waterside Kilcock Property Company was placed in receivership after the loan was transferred to NAMA. It is likely that NAMA paid about €5 million for the €38 million loan. Dunne’s personal guarantees have proved to be virtually worthless.

  Dunne’s property empire collapsed. He moved to the United States with his wife and family and is now the subject of litigation by NAMA, which is accusing him of transferring several millions in assets to his wife. Gayle sold an apartment in Geneva for several million and used much of the proceeds to acquire two multi-million luxury houses in Connecticut. The Dunnes deny any wrongdoing.

  A syndicate of lenders behind the Jury’s and Berkeley Court purchases secured judgements against Dunne for €165 million. NAMA has secured judgements totalling €185 million. Dunne gave personal guarantees to NAMA banks in the region of €135 million. His main holding company, DCD Builders, went into receivership. Its last accounts show that it had a loss of more than €250 million in 2008. In the same year that its turnover collapsed from €48.7 million to €10.7 million, payments to two of its directors, Seán Dunne and Ross Connolly, doubled to almost €1.9 million.

  A SLIPPERY SLOPE: HUGH O’REGAN AND THE KILTERNAN HOTEL

  The publican and hotelier Hugh O’Regan had the dubious distinction of being the first person to be taken down in the property collapse on foot of a sizeable personal guarantee granted to a lender. Irish Nationwide secured a judgement of €60 million against O’Regan, primarily related to loans it had granted him for the Kilternan Hotel. O’Regan was financially ruined, and he died in November 2012 at the age of forty-nine. He had made his money through the pub trade by buying, developing and later selling ‘superpubs’. He sold his Thomas Read chain of bars at the top of the market in 2005 for €30 million.

  Born in Dublin, O’Regan had done extremely well in business and found himself in the right place at the right time on many occasions. He used an inheritance of €19,000 from his mother to get himself onto the property ladder, buying a house in Sandymount, Dublin. In 1988 he remortgaged it to buy a pub in Temple Bar.

  After that he never looked back. He opened up a string of upmarket and trendy bars around the city centre at just the right time, including Thomas Read’s at the corner of Dame Street and Parliament Street. Other large drinking-houses followed, including Hogan’s, Searson’s, the Bailey, Pravda, and Life Bar. O’Regan also became a hotelier when he opened the Morrison Hotel on Ormond Quay, which was designed by John Rocha.

  Somewhat annoyed at the prices publicans were paying for drink from the breweries, O’Regan set up a web site, bartrader.com, which was aimed at selling wholesale to publicans at better prices. He sank close to €2 million in the venture. But he had the business acumen to sell out his Thomas Read group at the best possible time. He held on to the Morrison Hotel, which was owned through a separate company. He bagged €30 million and became a very wealthy man.

  O’Regan could have retired very young at that stage, but two things instead took his interest. His big vision was a hotel at Kilternan on the Dublin–Enniskerry road owned by the Irish-American businessman and philanthropist Chuck Feeney. The Kilternan Hotel, built decades before, was a fairly nondescript building, noted for having an artificial ski slope, where wealthy Dubliners went to improve their skill before taking to the piste in the Alps, where without practice they might look a bit foolish. But O’Regan had a much grander plan for the hotel.

  Though it was miles from Dublin and had a poor record as a hotel, in 2001 O’Regan bought the Kilternan Hotel and Country Club from Feeney for €12.7 million. Irish Nationwide subsequently lent O’Regan close to €150 million to turn it into a massive new hotel, leisure centre and conference centre. The redevelopment was also supposed to include a theatre and a ‘global innovation campus’. This was O’Regan’s big idea.

  He poured money into the venture, which was originally backed by First Active PLC, the former building society. Sources close to O’Regan said that Fingleton never came out to see the develop
ment for which he had approved tens of millions, though it was only a few miles from his home in Shankill or his office in Dublin.

  As with many ambitious projects on this scale, as the building proceeded the costs mounted. Having guzzled about €150 million, it still wasn’t finished.

  O’Regan had other loans with Irish Nationwide. His immediate loan facility on the Kilternan Hotel was €135 million. A further €31 million was granted in relation to a development site at Cóbh, Co. Cork, part of the former IFI fertiliser plant, which was zoned for mixed-use development. O’Regan wanted to acquire 110 acres of freehold and leasehold property from the Department of the Marine and planned to build 1,200 residential units. He also had loans from Irish Nationwide in relation to his plan for a fashionable private members’ club at 8 St Stephen’s Green, the former Hibernian United Services Club, and a facility in relation to an investment property in central Dublin. The loans were granted on the basis of a capital and interest moratorium, which meant that he didn’t have to pay back the principal or any interest for a few years.

  In the spring of 2009, just as Irish Nationwide was in the process of being effectually nationalised, it approved a fresh loan facility, which would bring the total amount owed to €180 million.

  O’Regan had his own financial difficulties from the crash in relation to other borrowings. The most tricky was the €80 million owed to Anglo Irish Bank. This had been built up as he spent money on such ventures as the purchase of the former Hibernian United Services Club. As part of the deal with Irish Nationwide for the €180 million facility, O’Regan agreed to release funds from Clubko, the company behind the St Stephen’s Green project. He also agreed to provide fresh guarantees from his Thomas Read Holdings venture, which included assets like the Morrison Hotel. The deal didn’t wash with Anglo Irish, and Irish Nationwide also decided not to proceed.