As Dun Laoghaire residents await An Bord Pleanála's decision on the controversial cruise liner berth proposed for the town's harbour, local banker Paddy Shanahan took a look at the books of the Dun Laoghaire Harbour Company (DLHC) – and finds the whole situation wanting. Harbour CEO Gerry Dunne's response is also posted below.
I am a banker with over 30 years' experience working in New York and London. I have recently returned to Ireland. I am married with two small boys and I run a corporate finance and restructuring practice here in Dublin. I live in Sandycove and am part of Dublin Bay Concern, an organisation comprising many residents of Dun Laoghaire-Rathdown (DLR).
My concern relates to the future status of the Dun Laoghaire Harbour Company (DLHC). I am opposed to the planned super cruise berth terminal for the harbour and to the Masterplan submitted by the DLHC. An Bord Pleanála is currently deliberating on DLHC’s application following a month-long oral hearing.
Meanwhile, the Harbours Bill 2015 was recently introduced into the Oireachtas. This bill will decide the future of DLHC. We are presented with two options, one of which will be decided by Minister for Transport Paschal Donohoe:
a) DLHC becomes a wholly owned subsidiary of the chief executive DLR CoCo.
b) DLHC is dissolved and integrated into DLR CoCo.
On a matter of profound importance to the residents of DLR and to the hundreds of thousands who use the harbour as an amenity every year, there has been little to no communication by the relevant elected representatives back to their constituents on this matter, excepting Richard Boyd Barrett and his party People Before Profit.
Difficult financial situation
On my own volition, I obtained copies of DLHC’s accounts from 2012 to 2014. I have analysed these accounts and found the following:
DLHC’s financial position has been declining in recent years. In 2012 the company’s cash reserves declined by €2.0m and in 2013 by a further €1.3m. The decline in cash was much smaller in 2014 (€37,000) thanks to the receipt of a €406,420 grant, the provenance of which and use for is unidentified in their accounts.
At the end of 2014, DLHC had cash reserves of €3.5m. With no revenue from the Stena HSS in 2015, remaining cash reserves of €3.5m are rapidly dwindling.
DLHC had bank loans of €4.8m at the end of 2014 for which it does not appear to have sufficient cash or the prospect of sufficient cash to repay in future years.
Based on the above facts, it is clear to me that DLHC is in a difficult financial situation and has neither the reserves nor the ability to borrow the funds required to build the proposed cruise berth.
Notwithstanding its precarious financial position and ignoring the implications to the well-being of Dun Laoghaire Harbour, DLHC wishes to roll the dice and stake its future on providing giant cruise berth facilities – this despite the reality of Dublin Port.
Less than 5km from Dun Laoghaire, Dublin Port is a highly profitable world-class shipping port, and it is the preferred cruise ship destination offering quick access to Dublin city centre. It already receives over 80 super-sized cruise ships a year and has recently received planning permission to begin a €200m development which will double its large cruise ship capacity together with a state-of-the-art modern passenger terminal specifically being built for visiting cruise liners.
DLHC proposes a collusive duopoly for the cruise ship business with Dublin Port. Not only is this stupendously naïve, it is also illegal for State-owned bodies to distort the competitive environment, and elegantly demonstrates the flawed business case DLHC proposes – especially in light of the Stena HSS departing for good under DLHC’s watch.
'A likely white elephant'
The Code of Practice for the Governance of State Bodies issued by the Department of Finance in March 1992 and updated October 2001 states that:
“As the ultimate owners of, and investors, in State bodies, citizens and taxpayers have an important and legitimate interest in the achievement of value for money in the State sector. Whether commissioning public services or providing them directly, State bodies have a duty to strive for economy, efficiency, transparency and effectiveness in their expenditure.”
In 2012 and 2013 DLHC received €250,000 and €200,000 in grants from Dun Laoghaire-Rathdown County Council (DLRCoCo) in respect of DLHC’S Large Cruise Liners initiative. The former was for tendering facilities outside the harbour mouth; the latter was toward defraying costs relating to the planning application.
If it transpires that the €400,000 grant unidentified in the accounts for 2014 was from DLRCoCo, then it would appear that nearly €1m of DLR taxpayers' money has been paid over by the council toward the planning costs of building a likely white elephant.
Is it unreasonable to posit a conflict of interest where the executive branch of DLRCoCo making the payments to DLHC houses the same department that approved the planning application currently being decided by An Bord Pleanála? Is this like Hamlet without the prince? Have DLHC fulfilled their obligations under the code regarding transparency and governance? Clearly not. Where is the oversight? There isn’t any.
Allowing true oversight
Addressing the Dáil on the occasion of the Harbours Bill 2015 debate on amendments last Wednesday 2 December, Minister Donohoe specified there is to be an undefined period of due diligence and examination of DLHC prior to its future being decided by himself.
In the interests of democracy let us hope the minister dissolves the DLHC and transfers its unencumbered assets to the local authority, thus allowing true oversight and accountability.
Given the close relationship and history between the non-elected executive branch of DLRCoCo and DLHC, a decision by the minister that makes the DLHC a wholly owned subsidiary of the chief executive will be a step backwards and simply perpetuates the current unsatisfactory status quo.
The future of Dun Laoghaire Harbour should be decided by the elected representatives of DLRCoCo, the harbour’s genuine stakeholders, and its various community groups.
Dun Laoghaire Harbour, dear to the hearts of all residents of DLR, is being held hostage to the ambitions of a dysfunctional organisation that is running out of money and being supported in a clandestine manner against all principles of transparency and governance.
Response from Dun Laoghaire Harbour Company CEO
DLHC has decided that it is not appropriate to make further public comment while An Bord Pleanala is considering our planning application.
Suffice to make the following brief points ;
[a] the European Commission have stated that the grant of €20m towards the Dublin Port development is made on the basis that such support is not given to dedicated infrastructure and facilities for cruise ships. Therefore, Mr Shanahan is fundamentally incorrect in his belief that Dublin Port can provide dedicated cruise infrastructure/facilities
[b] Mr Shanahan might be very interested to know that the four Dun Laoghaire yacht clubs combined make only a very minor financial contribution of c.€70k annually towards the upkeep/maintenance of the infrastructure of the 200 year old man-made harbour. This annual contribution constitutes less than 2% of our annual operating/capital costs.
Gerry Dunne, CEO DLHC
