Local authority losses in Anglo liquidation were ‘unavoidable cost’, says Noonan

Unfinished housing estates may never be completed because the bonds taken out by bankrupted developers from the liquidated former Anglo Irish Bank are not being paid, the Dáil has heard.

Fianna Fáil public expenditure spokesman Seán Fleming accused Minister for Finance Michael Noonan of failing to disclose the issue earlier this year when he introduced the unexpected legislation, dealt with overnight, to liquidate the bank.

Mr Fleming said local authorities faced “impossible choices” of leaving housing estates unfinished or taking money from other services to pay for finishing roads, footpaths, drainage, street lighting and sewerage in unfinished estates.

Mr Noonan defended the move, however, and said there were "unfortunately unavoidable costs" associated with the promissory notes and subsequent liquidation of the Irish Bank Resolution Corporation.

Overall benefits
"However, it is important to remember the overall benefits to the State from eliminating the cost of the annual promissory note," he said. "We have reduced the State's cash borrowing requirement by €20 billion over the next 10 years."

He advised any local authority to contact the bank’s business management team directly in respect of any claims.

But Mr Fleming said “that will be of no comfort to people in housing estates throughout the country”. The IBRC “is telling local authorities to get lost and to join the bottom of the list of unsecured creditors”.

He said Mr Noonan should ask the liquidator to publish the list of all the estates potentially affected by the issue.

Housing estates
The Laois-Offaly TD said they were only now learning of the legislation's impact on housing estates left unfinished by developers who had gone to the wall.

Developers take out financial bonds to ensure that housing estates can be finished if they go out of business before the job is completed. With the liquidation of the former Anglo Irish Bank, however, the bonds issued by the financial institution are not being paid and “have been placed at the bottom of the list” of creditors Mr Fleming said.

Mr Fleming cited bonds issued by IBRC for four estates in his constituency which he said varied from to €354,000 in value. “The works needed to complete these estates might not require the full bonds or might require more, but access to those bonds is necessary.”

He said Mr Noonan was aware of this issue when he drafted the legislation to liquidate the bank last year.

Mr Noonan said officials from his office and the liquidators office recently met "as a matter of concern", officials from the Department of Environment and the Housing Agency. There was likely to be some level of exposure for local authorities, he said.