State unwilling to bankroll Desmond's `ecosphere' concept for Dublin docklands

On the afternoon of Monday, February 15th last year, Mr Dermot Desmond attended a meeting in the Minister's conference room in the Department of Finance. Present were the Minister, Mr McCreevy, four senior officials from his Department, and one official each from the Departments of Environment and Tourism. The multi-millionaire financier was unaccompanied.

The purpose of the meeting was to discuss a huge and exotic project for George's Dock in the International Financial Services Centre (IFSC) which had been made by Mr Desmond two years earlier. Back then, in 1996, the estimate for the project was £130 million. By the time it was rejected, last month, the estimate for the project had grown to £170 million.

What Mr Desmond had in mind was a multi-storey glass pyramid, taller than Liberty Hall, built over George's Dock in the IFSC. Entry would be through the Stack A warehouse, a listed building, which would be filled with shops and restaurants.

Visitors would then go underground and cross over underneath George's Dock before going up into the large glass pyramid. Inside the pyramid would be an aquarium and simulated tropical forest habitat. The visitors could then wander through the pyramid seeing the animals and plants of the world, with the Liffey at times visible through the glass walls behind the tropical foliage.

Mr Desmond's view was that the "ecosphere" could be built at no net cost to the Exchequer, but the view of the Department of Finance was that it would cost the Exchequer a vast amount of money. Moreover the Department believed the Exchequer would be taking all the commercial risk involved, and the wealthy individuals who would make an investment in the project would get a guaranteed return, and stand to reap the benefits if the project proved a commercial success. During the long period the project was being considered by the Minister for Finance, along with other Government ministers, the Taoiseach and the Tanaiste, the development company which has the contract for the 27-acre phase one site of the IFSC, was frustrated in its plans to develop the historic warehouse as a museum. In the masterplan for the IFSC, the Stack A building, which in the 19th century hosted a welcome home reception for British troops back from the Crimean War, was to be the location for vital cultural and leisure activities which would bring more life to the area.

However because it formed part of Mr Desmond's proposal, the listed warehouse had been left idle. Failure to develop the building meant a large, semi-derelict structure was left in the middle of the IFSC, which lacked the range of activities the original plan envisaged.

The situation was "a matter of dissatisfaction" to IFSC occupiers, the Dublin Docklands Development Authority (DDDA) informed Mr McCreevy when he was still considering Mr Desmond's proposal. The Custom House Docks Development Company Ltd (CHDDCL), which had the contract to develop the warehouse, was also frustrated by the delay.

In February 1999 when the financier called to his Department, Mr McCreevy opened the meeting by saying he had invited Mr Desmond to present his proposal so that officials could ask questions. According to the minutes of the meeting Mr McCreevy said "that we must come to a conclusion one way or another and that by March 15th he will make a decision. He said that the advice of all the State apparatus has been in the negative".

Mr Desmond then spoke. He said that in developing the IFSC "he wanted it to be a living centre which would not be dead in the evenings and at weekends, and that he has made this commitment to the IFSC."

Mr Desmond said the plan for the IFSC had not been adhered to by the Government, the Docklands Authority, or others. "He said that the environment is a major challenge for us in the future," according to the minutes of the meeting. He had engaged US consultants and they had suggested the Ecosphere project. He had spent £1 million so far on the project, according to the minutes.

"Mr Desmond said the Ecosphere project would cost £130 but that he is not worried about the cost. His major consideration is that it will bring life to the IFSC and be a permanent feature of the area, and a tourist attraction," the minutes state.

Officials at the meeting then outlined the wide range of significant difficulties which existed, including the cost, the location, the implications for traffic management, and the rights of existing property owners in the area, particularly in relation to preserving the open water space amenity of George's Dock. Any resident could seek an injunction to prevent the covering over of the dock by the massive glass pyramid.

Mr Desmond said the Dublin Docklands Development Authority (DDDA) didn't like the project because it hadn't conceived of it. He said by virtue of his "moral commitment" to the project he was willing to give between £10 million and £20 million towards it. He was confident presentation of his project would eliminate any objections from IFSC residents.

"Mr Desmond went on to say that in 10 years' time the Financial Services Centre will move out of the Docklands with many job losses - and that he is certain of this. The reason for this is that everything is being driven by technology and multinationals have no loyalty." His own company went to India when it wanted software engineering. Labour was cheaper there. "He said that the same will happen with the IFSC."

Mr Desmond said the DDDA had done an "abysmal job" in project management and monitoring and that the specifications of the most recent buildings in the IFSC had been downgraded. There was no commitment to educational, social, or entrepreneurial activities in the area. The CHDDCL had "a licence to print money."

There then ensued a lengthy discussion between the officials and Mr Desmond as to how the project would be funded. However no clear picture emerged and the officials asked the financier to send in a "precise financing proposal" for the project, which could then be used to summarise the proposal for the Minister. Mr Desmond agreed to do this.

Four days later, on the Friday, he sent the financing proposal for the £100 million-plus project to the Department. It was on one page and comprised four sentences.

The Department had decided after the meeting with Mr Desmond that a memorandum for Government should be prepared, and work began on drafting it. Documents from the Department of Finance file on the Ecosphere project, released on foot of a request under the Freedom of Information Act, indicate that there still existed some confusion over how exactly Mr Desmond saw the project being funded. The draft memos invite the Government to consider the project, but note that the Minister cannot recommend it and list some of the reasons why he cannot. From the file it would appear the matter was never brought to Government.

However extensive consideration of the project at the highest levels continued.

Mr Desmond had first made his proposal in 1996, at the time of the Rainbow Coalition and a commitment had been given that the project would be assessed by a number of departments. At the time the development of the Stack A warehouse was being actively pursued by the docklands authority but the matter was put on hold following a request to do so from the Government, which wanted time to allow Mr Desmond's proposal be examined.

In December 1996, the economist Mr Peter Bacon completed a report on the Ecosphere project which had been commissioned by Bord Failte. A Department of Finance review of this report said Mr Bacon's overall assessment was "one of cautious welcome" but with some qualifications. Mr Bacon thought the Ecosphere project might break even after five years, but that there was little prospect of the capital costs being recouped.

A change of government then occurred, but it is not clear what was happened between December 1996 and February 1998, when Mr McCreevy wrote to Mr Desmond suggesting a meeting which did not occur until a year later. The departments of Finance, Tourism and Environment were already cold on the plan at this time. The official attitude to the Ecosphere project was not changed as a result of the February 1999 meeting.

It is not clear from the file what happened in the wake of the meeting. Mr Desmond's one-page submission on the project's financing was considered by a number of senior officials, and a number of draft memoranda for government were prepared. A note was sent to Mr McCreevy in March 1999 pointing out that "at official level, in all three departments, the case against Exchequer support is perceived as overwhelming." A draft memo for Government, and a draft letter to Mr Desmond, rejecting the proposal, were included with the note.

Two months later officials in the Dept of Finance were trying to establish if Mr McCreevy had received the file in March. They couldn't find it but eventually decided Mr McCreevy had received it in late March. "We can only assume that the Minister has not got around to dealing with the submission," one official observed. Meanwhile the Minister for the Environment, Mr Dempsey, was trying to find out what was happening. The Department was under "considerable pressure" from the docklands authority, which was anxious to get on with the development of Stack A.

From the file it would seem nothing happened for the rest of 1999. Somehow the Taoiseach, Mr Ahern, then became involved. In February, 2000, a senior official in the Department of Finance sent a note to Mr McCreevy regarding the proposal which began: "Following the meeting with the Taoiseach..." What was now being considered was a meeting between Mr Desmond, Mr McCreevy, Mr Ahern and the Tanaiste, Ms Harney. Mr Desmond was to be allowed make another presentation. In March copies of the negative departmental assessments of the project were sent to Mr Ahern and Ms Harney. However efforts to confirm a date for the top level meeting from Mr Desmond did not succeed. On May 15th Mr Ahern wrote to Mr McCreevy:

"I now understand that it has not been possible to arrange a date suitable for the promoters. This would suggest that the promoters' interest in proceeding with the Ecosphere has diminished." Mr Ahern said he believed it should now be possible to allow the docklands authority to proceed with the development of the Stack A building. "I would be grateful if you could consider taking this course of action and informing the Docklands Authority to this effect."

In June Mr McCreevy sent a copy of the letter he proposed sending to Mr Desmond to Mr Ahern, Ms Harney, Mr Dempsey and the Minister for Tourism, Dr McDaid. Having received support for the move from everyone consulted, Mr McCreevy then sent the three paragraph letter to Mr Desmond. Having outlined the extent of the consultation which had occurred, he wrote: "I regret to inform you that I have now decided that the considerable Exchequer support for this project should not be provided." The docklands authority and the CHDDCA are now expected to proceed with the refurbishment of the Stack A warehouse.