One of Ireland’s best known developers Niall Mellon, who has spent tens of millions building low income housing in South Africa, says Irish developers are being wrongly criticised for their role in the Celtic Tiger crash.
Speaking to the Irish Times Mellon stated, “Irish people need to remember there was no property crash in Ireland; there was a bank collapse that caused a property crash. Two different things. Fianna Fáil were desperate to blame anyone except themselves and heaped pain on developers.
“It was an absolutely disgraceful effort by the then government, and it hasn’t been much better under this one. But this year Frank Daly, the current chairman of Nama, came out and said it was the banks, not the developers. So developers need to be fairly judged now. Everyone is forgetting developers only built to satisfy demand.”
He states Ireland “is too small a country and doesn’t have any real experience to deal with large-scale insolvency and debt resolution. At the moment it’s self-destructing through a policy of spitefulness and negativity. My own view is that Ireland Inc’s strategy with Europe is failing. Ireland should have been lobbying for a minimum of a 30 to 40 per cent write-off of our total debt. We should use the opportunity of the EU presidency to march passionately but peacefully and try and influence a better outcome."
“There has to be a shared responsibility and a shared approach to solving this. So if you borrowed money you sell your assets to pay back as much of that loan as you can, and when you’ve done that you should be set free, in recognition of the fact that there was a systemic collapse of the financial governance system with the Irish banks.”
Mellon could have opted for “the easy choice” of bankruptcy in the UK but decided against it. Pride was one factor, another, he claimed, was that the Irish Government “doesn’t seem to have the remotest understanding of how vital entrepreneurs are to any economy, and there’s going to be no financial recovery in Ireland until business people are released from their guarantees. The banks loaned us money for the long term and called it in in the short term."
“It is mindbogglingly numbing that the Government have perpetuated mental torture on hundreds of thousands of Irish people who should not be held accountable to a personal guarantee. If they lost a particular asset, that’s fair enough, but there is no scenario that in any reasonable environment the banks should be allowed to enforce a personal guarantee.”
“We’ve had a systemic bank collapse, utter and complete. Nobody could have withstood what happened.”
6 Comments
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Switch to the desktop site to post a comment.| Nov 21, 2012, 10:13 AM EST
A distinguished and successful real estate man once told me “obscene profits lead to ruinous competition,” an accepted axiom of business. Ireland DID HAVE a real estate bubble, much like Spain, the United States, and, for all I know, the Congo. Ireland’s real estate developers (to their credit, taking on risk, creating, and sustaining jobs – for a time) flooded the banks with project proposals, the banks flooded the developers with approvals and money (courtesy of Europe’s financial system being willing to flood Ireland with capital,) such that the axiom was forgotten (NOT remembered) or disregarded. Mr. Mellon deserves much commendation for his low income housing work in South Africa, and for his EXCELLENT proposal of a minimum 30-40 % write off of Ireland’s sovereign debt by Europe. His sanguine comments regarding Ireland’s, and, by implication, Taoiseach Kenny’s, leadership team, however, might not be the proper shift of blame…we now have a shift of assets. A TOXIC portfolio becomes considerably less TOXIC when it is discounted to international banks at more than half its loan value on the books. And now these new international investors, German banks and otherwise, own how much of Ireland?
Smyrnian | Nov 20, 2012, 07:41 AM EST
Well Murph I disagree. It was very clear there was vast overbuilding combined with loose banking practices.
Murph46 | Nov 19, 2012, 10:30 PM EST
Smyrnian-you cannot be more wrong,read the history in Boomerang-It was the banks -Quinn who is in jail was a BANKER!
Smyrnian | Nov 19, 2012, 05:18 PM EST
I know the type well. typical dodgy developer trying to justify his own view of the world. Overbuilding brought on the problem and precipitated the bank problems: among other things. He had it backwards.
cillowen | Nov 19, 2012, 10:38 AM EST
wanting to come home to exploit natives as before - snakeoil fella.
Murph46 | Nov 19, 2012, 10:12 AM EST
He is dead right,proof -Read Michael Lewis's book Boomerang.One Irish bank with 6 branches ,lost 31 Billion Euros!