'I went to bed a hero and woke up a villain'

On his final Building Blitz project in South Africa, the businessman and philanthropist Niall Mellon talks Nama, Enda and Ireland’s ‘witch-hunt’ of developers

When Niall Mellon is talking seriously his driving tends to suffer. So the drive through Khayelitsha is a quick-slow lurch. This sprawling apartheid-era township on the edge of Cape Town ranks among the top murder locations in South Africa and sees about six vigilante mob killings a month. The place is out of control, according to a high-level report on policing that hit the media this week.

Still, we lurch along.

The 2,000 white Irish volunteers who marched breezily on to the site of a Niall Mellon Building Blitz here four years ago could hardly have guessed at the huge security operation around them. “Niall Mellon could nearly invade Iraq with the level of security he employs for these,” says a project veteran.

Mellon isn’t keen to discuss it, but he carries a lethal-looking curved knife and is acquainted with the law. “In South Africa, if you stab someone above the waist it’s attempted murder,” he says, suddenly stopping the jeep outside a large secondary school.

It’s lunchtime and four 17-year-old schoolgirls are hanging around the gate. He calls them over and chats easily and unpatronisingly to them, asking about their ambitions, whether they live in a house or a shack, if they know anyone who’s been killed, and if they worry about rape. These are serious girls. Yes, a man was killed only a couple of days ago, they say. Yes, they worry about rape. “It has happened to friends,” says one girl carefully.

Two of them live in shacks, where fire, wind and rain are constant threats, where no electricity and the noise from the shebeens make it hard to study. But each of them knows exactly where she is headed: Sineso Pho to be a financial accountant; Sisi Pho to be a psychologist. The two who live in shacks, Cikizwa and Aphiwe, say earnestly that they want to be a chartered accountant and a lawyer. It’s a thrum of hope in a hopeless place.

Young as they are, they remember the Irish visit four years ago. “We remember them because when they see you, they greet you, and if they have food or something like that, they share it with you,” one says in careful English. Is that unusual? “That does not happen here.”

Back on the motorway we miss a turn, and suddenly we’re heading on to the glorious golden mile of Camp’s Bay, where Atlantic waves pound the stunning shoreline and a cooling breeze fans the affluent residents basking in another perfect South African summer. The contrast is head-spinning.

“Witch-hunt”

In a way we’ve just encompassed Niall Mellon’s early South African journey, from the site of his biggest volunteer building project to the place where he and his wife, Nicola, bought their first South African home. And because he isn’t burdened with false modesty he adds that they sold that lovely ocean-front villa in 2006 for €1.3 million, spent about €300,000 of it on a “very nice two-bed apartment” in Cape Town’s business district and used the rest to build 150 houses for shack-dwellers in Netreg, on the airport road.

“Every time I leave Cape Town, which is almost every week, I have a little look to the left and I think of all the good we did when I see those homes.” Does Nicola see it like that? “I married a beautiful woman who has no desire to have money. Which is just as well given what happened,” he says.

“What happened” was the collapse of the Irish banks in 2008. One day he was a developer worth more than €150 million; the next he had nothing. “The night the banks collapsed I went to bed a hero and woke up a villain. That’s what the Irish State did.”

Two years after what he passionately describes as a “witch-hunt” against developers, he surrendered his Mount Merrion home on five acres to Nama. “And – what people couldn’t understand – I also handed over another dozen properties I owned, unencumbered, with no bank debt whatsoever, any of which would have paid my mortgage for several years.” When he moved out of his Dublin home with Nicola, their three children and a fourth who was on the way, he had just €1 in his pocket, he says.

Nama seems a world away from Camp’s Bay and the nice Italian restaurant where the cheerful black African staff recognise him and his never-changing pasta order. But his anger is well-honed, and his proposals are an interesting mix of developer’s defensiveness and the activist’s righteous tradition of protest.

Shared responsibility

“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 claims he can be objective because he “didn’t build a single housing estate or apartment block in Ireland during the boom” (although he admits it wasn’t for want of trying). It was a number of expensive sites mired in planning hell that stopped him. But he had amassed the great bulk of his wealth, he says, in Britain in the late 1990s. “So the Celtic Tiger didn’t make much of an impact on me personally. I never expected it to.”

He says 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. ”

When he hit the buffers he noticed that other senior businesspeople had become obsessed with not losing their homes. His objective was to be in a position to say that he worked with the process “because I wanted to, not because I had to. I wanted to accept my share of the responsibility. Part of that was moving out of a big house. Part of it was keeping unencumbered assets and giving them to Nama.

“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.”

He could have opted for “the easy choice” of bankruptcy in the UK but decided against it. Pride was one factor; another was a sense that he could do a better job disposing of assets than a receiver. He has also managed to pay “95 per cent of debts due to a few hundred small creditors. So that’s nearly finished,” he says.

Way out

The crash meant he had to start anew, without access to normal bank loans. Some years ago he told The Irish Times he had held back from pursuing business opportunities in South Africa because “it would cloud the reasons for my being in South Africa”. But circumstances have forced a review.

“I’ve got involved in a couple of projects here in South Africa,” he says now. After numerous knocks he managed, 18 months ago, to obtain investment funding from private-equity firms in London. “I’ve received backing for two projects: one of them is mining and the other construction in South Africa.”

He declines to go into detail about either, except to say the mining operation is not associated with Lonmin, the company at the centre of recent strikes in which dozens of workers were shot dead.

The point is that he is recovering. And this, he says, is one of the reasons for this interview. “I want people who are feeling hopeless to take some inspiration from me. There is a way out.”

But the Irish Government “doesn’t seem to have the remotest understanding” of how vital entrepreneurs are to any economy, he says. “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.”

But why should the taxpayer take the hit? “We’ve had a systemic bank collapse, utter and complete. Nobody could have withstood what happened,” he says, pointing out that by any measure he was “reasonably prudent. My average gearing was 40 per cent of the asset value. So I didn’t owe €300 million on the value of €300 million. I owed €300 million on the portfolio of €500 million or €600 million.”

Bank staff now have a choice, he says. “A lot of very good bank managers come to me privately and say they are disgusted at having to enforce guarantees, and the resulting mental torture and cruelty against their clients . . . The many decent people working in the banks should send a letter to their chief executive saying: ‘I’d like to stay working for the bank, but I’m not going to enforce any personal guarantee.’ Stand up and be counted, because history will judge the people who stayed silent.”

Fierce passion

“But top of the food chain is Enda Kenny. I’m tired of people telling me Enda Kenny is a man of integrity, because he is custodian of those banks now, and tens of thousands of letters are being sent to people enforcing guarantees and terrifying them. So I would like to see Enda Kenny making good on that image he has or else we’ll start shouting that he’s not entitled to it.”

He declines to comment on any individual developer or banker, although the many high-profile Building Blitz volunteers have included Seán Dunne, Seán FitzPatrick and Michael Fingleton. “I don’t play God when people volunteer with me. Seán FitzPatrick is a good man: I was very pleased when he volunteered twice.”

Does it not concern him that people gained advantage by association with a good cause? “Seán FitzPatrick wasn’t one of those. There were other people who maybe hijacked me a little for their own egos and wanted to be seen out there. But I don’t really care. That’s life. I don’t mind: I got their money and they came to Africa, and that’s the end of it.”

Dunne’s visit included a widely publicised announcement that he would donate an apartment that he valued at more than €3 million. What happened to that? After a lengthy pause Mellon says, “We never comment on any donations unless we have the permission of any volunteer to do so.” But as it was so heavily touted shouldn’t we be told? “Ask Seán Dunne,” he says.

Meanwhile, even through the bad years, he continued to give 40 hours a week to his charity. For all the criticism levelled at Mellon, no one who knows him doubts his fierce passion, enduring commitment and enormous personal and financial contribution to the African cause.

He is conflicted about the direction of Irish foreign aid. “I love this continent and desperately see the need for support from developed countries. The businessperson in me is deeply uncomfortable with the fact that Irish Aid’s budget of €650 million is essentially borrowed to be donated. I wouldn’t increase it, but I would tear up the rule book now and recognise this is a time of absolute crisis for Ireland. I would sit back with businesspeople and with aid professionals and look practically at how many jobs for Irish people we can create with this budget. “If, say, Irish Aid is supporting educational projects in particular countries, maybe they could insist that the schoolbooks are printed in Ireland by Irish firms.”

Getting it done

His charity worked because he brought a business brain and “a practical, no-bullshit thinking to getting it done”, he says, as well as “an intuitive approach, which was about coming in and listening and learning and respecting South African culture”.

But it’s a tough decision to make. “The money I put in would only have had a limited impact, and it’s really the fact of giving my time that made our charity successful. And the fact there were so many decent people in Ireland who responded to my call for help.”

And, yes, he’s aware that some of the hard-won houses are rented out by their owners. “It’s about 3 or 4 per cent, and I have no issue with this. Some people are using that money to send their kids to school and to feed their family. That’s life.”

To those who carped that he should have left the building to South Africans, his answer is that, when he started, national policy was to build 26sq m houses with poor materials. He doubled the size, used first-rate materials and demanded first-class quality from the local workforce. In doing so, he believes, he and his team have helped to shape current national housing policy.

“I’m very proud of the South African government. We wouldn’t have built a fraction of these houses without their financial support. They are the real people who deserve a lot of recognition for our 20,000-house programme.”

Niall Mellon: New focus on Kenya

Niall Mellon was in his 20s when he started in property and financial services with the Niall J Mellon Group. Among the higher-profile purchases made by his company, Knockrabo Developments, was that, for €50 million, of the Bank of Ireland playing fields in Goatstown, in south Dublin, in 2003. A protracted planning- application process ensued.

In 2002, at the age of 35, he became involved in charity work focused on replacing shacks with houses in South African townships and he established the Niall Mellon Township Trust, which quickly grew to become a big supplier of subsidised housing in South Africa.

In March 2010 he told The Irish Times he had used all his personal funds to pay off “almost all” of his business debts over the previous two years, after it emerged that a judgment of more than €360,000 had been registered against him by a contracts-for-difference service supplier, IG Markets, in London.

This week sees the last of the annual week-long Building Blitzes in South Africa, and Mellon has announced the new focus will be on Kenya and education. As the last band of 600 volunteers marched on to site at Wallacedene township on Sunday, their T-shirts bore the message, “100,000 people housed in 20,000 houses”.