Developer threatened Patrick Honohan with critical ads

One of Ireland's biggest property developers, Greg Kavanagh, founder of New Generation Homes, warned the Central Bank he would spend "tens of millions" on an advertising campaign that would make the position of its then governor, Patrick Honohan, "untenable".

On January 8th, 2015, Mr Kavanagh sent an email to the bank, addressed to “Mr Honahan” (sic), seeking a meeting and stating: “As governor of the Central Bank sitting on the board of the ECB, I need you to react to a big problem the European banks need to avoid.”

Referring to distressed US bank loans to that country’s oil industry, Mr Kavanagh wrote: “Please speak with your ECB board and put measures in place to advise European banks not to buy these loans. Please react to this, it’s really important. Can you consider the above and revert back to me. Greg.”

The following day, Mr Kavanagh received a reply from Mairéad Davis of the Central Bank’s Public Contacts Unit, stating that Prof Honohan was too busy to “schedule meetings with members of the general public”.

Highlighting shortcomings

Later that evening, Mr Kavanagh replied: “Mairéad, I promise you, if one of those loans is bought by a European bank after yesterday’s date, I will spend tens of millions in advertisements across Ireland and Europe highlighting the short comings (sic) of the Irish Central Bank in knowing US banks are trying to sell these toxic loans to European banks.

“I will spend so much that the Governor’s position will become untenable due to his in action (sic). To be aware of the issue and not act is unacceptable here on.

“I know there will be some of these loans wrapped up to be good loans and sold to European banks over the next few weeks. When the next one is bought by a European bank I will immediately start the campaign.

“So if he does not raise the issue with the ECB I can assure you and him, I will act. Regards, Greg.”

This was not the first time that Mr Kavanagh had threatened to run an advertising campaign targeting the then governor. Three months earlier, on October 8th, 2014, he emailed a letter to the Central Bank, outlining his concerns at its proposed new rules on mortgage lending and marked: “Please forward to Patrick Honahan.”

Mr Kavanagh wrote: “Due to lack of action on your behalf, we were in the process of carrying out a Ryanair-style ad campaign to embarrass both the banks and the Central Bank into action, where you would actually put proper practices in place to allow for a ‘proper functioning market’.

“From the announcement you just made in relation to mortgages, it is abundantly clear the Central Bank do not understand what the basic principles of a properly functioning market are. You don’t need to be Einstein to understand what a proper functioning market should actually look like.”

Despite this, Mr Kavanagh signed off his letter to Prof Honohan: “Thank you for your good work in creating the opportunity for our company to make a fortune again. Regards, Greg Kavanagh.”

Rock-bottom prices

Copies of the emails in this report were obtained following a Freedom of Information request to the Central Bank.

Mr Kavanagh (31), from Arklow, founded New Generation Homes, which spent over €300 million buying up development sites in Dublin at rock-bottom prices at the height of the recession. Those sites are now worth multiples of their purchase prices.

The company, which has been backed by a number of international investors, plans to build thousands of houses and apartments on its Dublin landbank. So far, it has completed or is in the process of building 500 homes, concentrated in the most sought-after areas of the capital.

New Generation also plans a €250 million development on a south docklands site, consisting of 400,000sq ft of offices and 200 apartments near the Grand Canal Theatre.

Mr Kavanagh’s Balark Investments vehicle has been locked in a long-running legal dispute with Johnny Ronan’s Chambury Investments over the former’s plan to build 91 apartments over seven storeys on the so-called “Hickey site” at St John Rogerson’s Quay.

Greg Kavanagh told The Irish Times: “I am very passionate about what I do and sometimes I express myself in a very robust way. With the passage of time, I have learned to take a more considered tone, while continuing to feel strongly about the negative impact the mortgage interest rules are having on the property market.”