The Plan
Page 41
The Irish billionaire Brendan Allen should have stuck to his prosperous commodities trading business, but property had been too tempting in the euphoric years leading up to the crunch. Curiously he had started out by promoting coffee when Ireland was still a nation of tea drinkers. Unexpectedly Irish tastes broadened, the consumption of coffee doubled in the Republic and Allen prospered, diversifying, buying coffee on international markets and then directly from producers.
As his coffee business grew he developed a string of commodity traders from India to Colombia buying and selling tea, cocoa, palm oil and other food commodities. His producers were the world’s poorest, often most violent countries. His marketing slogan was fair trade; the reality was however quite different, what counted were profits and the more the better. With his trading company based in Nassau in the Bahamas, his business was beyond the prying eyes of NGOs and their kind, and of course the taxmen.
Whenever Allen deigned to visit to one of the producer countries, a small army of pistol carrying bodyguards followed him. His concept was to establish producers in the poorest countries with the lowest costs like Haiti, where thousands of poor farmers called Cafeieres Natives produced a specialty coffee called Haitian Bleu.
Allen liked to think of himself as a swashbuckling entrepreneur who had built his fortune in a half a dozen poverty-stricken lands where he controlled the production of commodities. Like other adventurers before him, the Irishman learnt how to manipulate corrupt local politicians and authorities so as to ensure the constant flow of his goods, even in disaster and riot prone Port-au-Prince. He had little fear of the cartels, whether they were in Honduras or Côte d’Ivoire, ensuring his political leverage by diversifying into local businesses such shipping, trucking, car hire and hotels. In brief; misrepresentation, deception, collusion and manipulation were all part of his tools in trade.
Pat Kennedy first met Allen almost ten years earlier when he was promoting a project of his own to get the Irish to drink more coffee. But when Pat was ambushed by Irish justice, through his own imprudence, Allen’s persistence paid off. He expanded into the UK, creating a chain of fashionable quality coffee shops. Allen then saw the advantages of diversifying his business into property, acquiring warehouses, distribution centres and outlets in strategic locations. Irish Netherlands needed little persuasion to provide the entrepreneur with the loans needed for his acquisitions, thanks in part to Kennedy’s encouragement.
With the arrival of the crisis coffee consumption in Ireland fell, for unexplained reasons, and almost as sharply as the price of property. Luckily demand for commodities also fell. Allen had few qualms when it came to compensating for the fall, forcing lower prices from his desperate suppliers, after all fair trade could work both ways.
When times were hard everybody had to make sacrifices, Allen mused to himself, his gaze wandering over London’s sprawling landscape as his Gulfstream made its approach to the City Airport. Allen was sure things would get better it was just a matter of weathering out the storm, rolling over his debts. A glance at his watch told him he would be on time for his meeting with Fitzwilliams.
Fitzwilliam’s patience with Allen had reached its limits; to his mind he was yet another of Ireland’s upstart entrepreneurs and the idea of continuing to finance his extravagant life style and unrealistic investments left him cold. Which did not however prevent him from gloating at the thought of cherry picking in Allen’s troubled prime property portfolio, an almost mouth-watering prospect.
A second wave of losses was now threatening the commercial property sector and mounting investor debt could no longer be ignored. A fall of more than forty per cent in asset values meant that almost every British commercial property loan issued over the previous five or six years was in trouble with half of them needing refinancing in the short to medium term.
There were numerous opportunities for the Irish Netherlands, as foreign banks offloaded their distressed property investments. But buying the right properties at the right prices was crucial. This was however made easier as commercial property weighed heavily on the balance sheets of many troubled banks and their borrowers. Distressed assets haunted those bankers who feared calling in loans could trigger a wave of insolvencies.
Though rental yields in commercial property were not great, they could not be sneezed at, and Fitzwilliams, gambling the market was near to its bottom, realized substantial gains were to be made once prices started to rise again. It was time to rebalance his investment books, and according to the time proven tradition of landed Irish Protestant families, dividing his money into three parts: one in real estate, one in business, and the third part at hand.
At the height of his glory, Brendan Allen had jetted around Europe buying property as though he was playing Monopoly. From his Knightsbridge base he ran a ten billion dollar real estate empire, vying with Arab sheikhs and US private equity houses to snap up some of the continent’s most prized trophy buildings.
Dubbed King Midas in Ireland, he seduced politicians, lawyers and celebrities, including Bono and David Evans, better known as The Edge, of the U2 rock band, who invested in his deals. As usual few such investors knew or remembered the fate of Midas.
Allen went being a star of the Celtic Tiger’s economy to a symbol of Ireland’s folly. Many of those who had listened to him saw their investments wiped out, when those euphoric days, built on aggressive borrowing, ended abruptly in the Irish banking crash.
Before the dust settled on Allen’s crumbling empire, he decamped to Switzerland, where he continued to live in high style, with occasional appearances at his Knightsbridge home. It was apparent that, far from being destitute, visibly he was still able to live high on the hog. His children continued at their high priced boarding schools, despite their father’s financial embarrassment, and his wife was seen shopping in Lausanne in a brand new Mercedes G Class SUV.
Allen told NAMA, Ireland’s state-owned toxic loan administration, he would never be able to repay the millions he owed. Many of Allen’s investments had already been seized by his creditors, prompting a string of fire sales, which included a yacht, a villa on the Riviera and a number of valuable paintings.
When confronted by the press over his lavish lifestyle, Allen enraged public opinion by replying, ‘Extravagance is a relative term. What may seem extravagant to certain is normal to others.’ Irish politicians accused him of living the high life in Switzerland after having fled Ireland, leaving investors and the state with debts running into hundreds of millions.
Banks were left holding worthless loans. RBS had financed Allen’s property empire in London. Then there was the Irish Netherlands, belatedly pulling the chestnuts out of the fire, foreclosing on Allen’s holding in the Citigroup Tower. The former tycoon would be remembered for his purchase of a site, once owned by a brewing group, a few miles south of Dublin city centre. The site acquired in 2006, destined for his ambitious Pembroke residential development, had cost Allen over four hundred million euros. Three years later it could not even be sold for grazing land.
Chapter 41 CALIFORNIA