ANALYSIS:The Minister's other investments casts doubt on his ability to raise cash to pay debt, writes PAUL CULLEN
THE IMAGE of James Reilly as a wealthy and successful businessman has taken a severe knocking this week as a result of his appearance in Stubbs Gazette over an unpaid €1.9 million debt.
The Minister for Health answered some of the questions about his investment in a nursing home deal that went sour in his statement to the Dáil on Wednesday night, but other questions remain unanswered. At the same time, other parts of his business empire are starting to attract scrutiny.
The overall picture emerging is one of a person who still has considerable assets and yet is financially extended in several directions. There is nothing unusual in this in modern Ireland, of course – except that Reilly is a member of Cabinet.
The nursing home deal has been described as complex and the Minister’s explanation as legalistic, but it is quite simple. In essence, 13 investors came together to build a nursing home and take advantage of tax breaks available in 2000.
Five of the investors, including Reilly, former Fine Gael councillor Anne Devitt and Indian doctor Dilip Jondhale, would be personally liable for their investment. The role of the other eight was to bring in extra finance and they were to be bought out when the tax breaks ran out.
Jondhale rented the premises and operated the home. The business flourished, but relations between Jondhale and the landlords (who included himself) were fractious. He felt the premises had not been finished, and stopped paying rent for a long period. This row ended up in the High Court and although agreement has been reached, the issue of the historic arrears remains to be sorted out.
The group of eight investors was due to be bought out in June 2011 but Reilly’s group said they could not fulfil this part of the agreement because another dispute over the terms of a new lease had flared up.
The new lease is due to be signed today, which opens the way for a loan request to the bank. But Reilly still needs to fulfil his commitment to divest himself of the business, and it is not clear how this will happen. Although he has halved his asking price, it remains too high for his co-investors to bite. In any case, it makes no sense for them to take on his share of the liability while the €1.9 million debt – plus interest and legal costs – is hanging over the group.
The eight investors secured a judgment for the sum due against Jondhale in May.
This seems to have lulled Reilly and his group into thinking they would not be pursued, even though the deadline for repayment ordered by the High Court was long past.
It is difficult otherwise to understand why a senior politician did not see the Stubbs listing coming down the tracks, and thereby alert his handlers. In the event, it took 10 days after the judgment was registered against the Minister and four others before the news emerged.
The performance of Reilly’s other investments casts doubt on his ability to simply raise cash to pay off the debt. He has abandoned plans to build a health centre at Airside Retail Park near Dublin Airport along with two other GPs, and the site is currently for sale. The project, which received planning permission, was funded by a loan from Ulster Bank, according to land registry documents. His spokesman declined to say last night how much was borrowed to fund this investment.
A holiday home the Minister owns in Doonbeg, Co Clare, has been on the market for more than two years but remains unsold. Reilly transferred his busy medical practice in Lusk, north Co Dublin, to another doctor on assuming office last year and has had his name removed from the medical register.
It is starting to look as if Reilly’s business affairs are in a similar state to that of the health service he is charged with rectifying.