Dublin City Council gave an interest-free loan of €6.6 million to a financially straitened building company which it had contracted to do work on the Ballymun regeneration project.
The 10-year loan from the council-owned company, Ballymun Regeneration Ltd, to James Elliott Construction Ltd (JEC), was given in 2011 in part so the construction company could pursue proceedings through the courts, according to documents seen by The Irish Times.
It also allowed JEC to carry out €10 million worth of building repair work for Ballymun Regeneration, which was not put out to tender.
A contract covering the deal states that JEC “does not, at the date of this agreement, have the financial means to carry out the remedial works nor to undertake the litigation”.
The contract was signed by the then deputy city manager and chief executive of Ballymun Regeneration, Philip Maguire, and the managing director of JEC, Patrick Elliott.
It says the council subsidiary would be responsible for any adverse cost orders arising from litigation taken by JEC.
Pyrite levels
Proceedings cited in the documents against
Irish Asphalt
Ltd concerned the supply of material containing excessive levels of pyrite which was used on work done by JEC in Ballymun. The remedial work was required to repair the buildings affected.
In one case, which went to the High Court and the Supreme Court, JEC won damages of €2.5 million and costs of about €3 million. Other proceedings are ongoing. JEC is itself being sued by former clients in other pyrite-related cases.
The latest filed accounts for JEC show it had accumulated losses of €6.3 million at the end of January 2015.
In its 2013 financial year, it paid directors Patrick and Hazel Elliott a total of €626,926 and repaid a director's loan of €460,125 to Patrick Elliott. Directors' fees in other years were much lower.
Agreement
A December 2011 agreement between Ballymun Regeneration and JEC, called the “recovery proceedings funding agreement”, said the council subsidiary would be the ultimate decision-maker in relation to any steps taken by either party to recover money from litigation.
Ballymun Regeneration “agrees to pay all costs arising from an adverse costs order made against [Ballymun Regeneration] and/or [JEC] as part of the litigation steps”, the agreement said.
The agreement between Ballymun Regeneration and JEC also stipulated that the council subsidiary will not pursue the directors of JEC if the loan is not repaid by the company.
The JEC accounts indicate the company is a small operation.
A spokesman for Dublin City Council said it would be issuing a detailed statement on the matter later in the week.
Mr Elliott said he did not want to comment, given that proceedings were before the courts.
