Quinn dispute costs State bank €22m in lost rent

STATE-OWNED Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank, is losing out on annual rental payments of at least $30 million (€22 million) as it cannot gain control of foreign properties bought by the Quinn Group with loans from Anglo.

One of the properties, the Kutuzoff Tower in Moscow which is worth some €180 million, produced rental income of $19.2 million in 2010. The Ukraina shopping centre in Kiev, which may be worth up to €60 million, produced rental income in 2010 of $10.8 million, according to Robert Dix who is a director of a Swedish holding company linked to the properties.

The two buildings are part of a portfolio that includes commercial buildings in Russia, Ukraine, India and Turkey that were bought by the Quinn Group with loans from Anglo.

The properties were advanced as security against the loans. However, legal manoeuvres in Russia and Ukraine are preventing the bank getting control of the local companies that operate the properties.

The bank has accused the Quinn family in legal proceedings in Cyprus of being involved in a conspiracy to prevent the bank gaining control of the properties. The family has rejected the claim, which has yet to be heard by the courts.

Bank executive Richard Woodhouse told a court in Cyprus earlier this year that Peter Quinn, a nephew of Seán Quinn, now has control of Russian company Finansstroy that owns the Moscow office tower.

New shares were issued to Peter Quinn, while shares that should be under the bank’s control were cancelled, according to Mr Woodhouse. The net effect was that Peter Quinn now owns Finansstroy, having paid just €1,000 for it. At the time the company had €4.5 million in cash that has since been moved, said Mr Woodhouse.

A Russian executive with Finansstroy wrote to Irish Ambassador in Moscow Philip McDonagh in October objecting to representations he said the Embassy had made. However, a spokesman for the Department of Foreign Affairs has told The Irish Times that no such representations were made.

Meanwhile, in Kiev court hearings and other events are preventing the bank gaining control of the firm that owns the Kiev shopping centre.

A spokesman for the Quinn family said it reserves its right to pursue IBRC for “substantial damages” for the “destruction of the Quinn assets and companies by Anglo mismanagement”. The family did not want to comment specifically about the situation in Russia or Ukraine. Mr Quinn, who has told a Belfast bankruptcy court he has assets of €50,000, owes more than €2 billion to IBRC.

Seán Quinn’s wife Patricia and their five children are involved in a multijurisdictional battle with IBRC over Quinn Group assets. The family also disputes the bank’s right to call in billions in loans it says it is owed.