Mick Wallace: high debt and low standards in public office
Like many other Irish businesspeople, Mick Wallace has watched his development company collapse around him. But how ong can he hold on to his seat in the Dáil, having admitted he underdeclared €1.4 million in VAT?
THE DECISION of the Independent TD for Wexford, Mick Wallace, not to resign his Dáil seat in the wake of his admission that he knowingly filed false VAT returns has received little support from his fellow TDs.
His company, MJ Wallace, underdeclared €1.4 million of VAT, and Revenue has imposed interest and penalty charges of more than €700,000. The company is not in a position to pay the debt.
A few media commentators have praised the way Wallace dealt with the revelation, and some in the business community have empathised with the plight of a man trying to save his business from collapse.
Wallace’s position is not equivalent to that of the Independent deputy for North Tipperary, Michael Lowry, who created a toxic nexus by way of – according to the McCracken and Moriarty tribunal findings – offshore accounts, payments from business figures, political fundraising and interference in State business. Lowry and his refrigeration business made a settlement of €1.45 million in 2007. That said, the continued presence of the two men in the Dáil sends out an unhappy message about standards in Irish public life.
A request this week to interview Wallace about his financial affairs was unsuccessful, but his public statements, along with public records, paint a picture of a man who made bad decisions while struggling to handle the unexpected collapse of his business.
Wallace, who is 56, is the director of a number of companies, including management companies associated with apartment developments built by MJ Wallace, and restaurants and wine bars that he tended to build on the ground floor of his developments.
The accounts for MJ Wallace show that it grew through the years when the Irish property boom was turning into a bank-fuelled bubble. The construction and civil-engineering company produced a pretax profit of €2.47 million in the year to the end of August 2005, during which it had an average of 44 workers. Pretax profits the next year were down to €407,005, and were at a similar level in 2007. During those years turnover fluctuated, but the amount of bank debt was rising steadily. In 2005 the company had bank loans of €14.8 million that were due to be repaid within five years. By 2007 that figure had jumped to €34.22 million.
In his interview with The Irish Times earlier this month, before the disclosure of his tax settlement in the quarterly defaulters’ list, Wallace said the first signs of the impending storm came in 2008, when he was working on a development on North Circular Road in Dublin. In April that year ACC Bank sanctioned a €7.5 million loan, but a few months later it asked him to stop work on the development. The next year, he said, the company was finishing the Behan Square development, near Croke Park. The bank wasn’t giving the company the money it needed to complete the work, he said.