IE: Collapse of gentlemen’s pact cost greyhound board millio

[filou007de]

From www.irishexaminer.com

Description: http://cache.tcm.ie/media/images/l/Lime ... tadium.jpg

Collapse of gentlemen’s pact cost greyhound board millions

By Conor Ryan, Investigative Correspondent

Monday, August 27, 2012

The Irish Greyhound Board (IGB) rejected legal advice to protect itself in a multimillion-euro gentlemen’s agreement that later collapsed, heaping debt on a company under extreme financial pressure.

It was one of many costly unwritten pacts that underpinned the building of its new €23m stadium in Limerick.

Newly-released papers have revealed the IGB dismissed warnings from solicitors Holmes O’Malley Sexton (HOMS), and engineers, Atkins.

These had looked to spell out the terms of a critical "gentlemen’s agreement" in writing.

The verbal pact hinged on a promise by Limerick Racecourse Company, which sold it 11 acres for its new stadium, to cover a projected €2m bill to raise the level of the marshy site by two metres.

The consultants warned the IGB this commitment should be specified in the final contract for sale. The IGB said this could not be done because it could put in jeopardy the good will it was relying on to make savings. Weeks into the work the arrangement collapsed and the IGB was forced to tender for the work at an eventual cost of at least €2.4m.

HOMS also told the IGB to delete "inappropriate" arrangements it made to pay key professionals working on the site.

These deals involved LRC, a private company, appointing professionals to oversee parts of the build. This happened without the contracts going to tender.

HOMS said early references to this deal should be removed from the contract because they were not appropriate for a public body. These clauses did not appear in the final draft.

The Dáil Public Accounts Committee has asked for reports on numerous issues arising from the build from the IGB and the Department of Agriculture following earlier probes by the Irish Examiner.

The development of the Limerick track almost doubled its debt burden.

Internal records show the IGB has been trading fractionally below its €25m borrowing limit for the past two years. Its loan is currently on an interest-only basis.

IGB had calculated that repayments would add up to €5m a year on top of its ordinary outgoings. This has been after its bank, AIB, agreed it does not have to sell surplus sites to pay down the loan until the market improves.

The IGB said its long- term loan stood at €22.7m on Dec 31 and it had more than €5m in debts due within a year. Surplus cash from 2011 was used to pay down the debt.

*Read more here <http://www.irishexaminer.com/analysis/i ... 05379.html> and here <http://www.irishexaminer.com/analysis/d ... 05378.html>

Related documents:

Letter from IGB's solicitors in November 2007 expressing concern at the terms of the land contract <https://www.documentcloud.org/documents ... -2007.html>

Letter from IGB's engineers in November 2007 showing the lack of legal protection for the company in the land deal <https://www.documentcloud.org/documents ... -2007.html>

The IGB CEO's explanation for the company's position on the advice <https://www.documentcloud.org/documents ... dvice.html>

Draft side letter sent to the IGB to cover gentleman's agreement. It remained unsigned <https://www.documentcloud.org/documents ... -2008.html>