IRELAND 23 February 2018
Press Release: VFM Report on Property Sale by Shannon Development
The Comptroller and Auditor General, Mr John Purcell, has today published a report on a value for money examination of a sale of property by Shannon Development.
The property in question was a plot of land measuring 3.5 acres at the Ennis Road, Limerick. The land had been transferred to Shannon Development by the IDA in 1988 but was not registered in the Land Registry, although an adjoining factory site was.
Shannon Development did not realise that the land had been transferred to it until it fortuitously came to light in late 1997. Shannon Development was registered as owner in March 1998.
The failure of the State agencies to protect the title to the property resulted in encroachment and a building company began dumping spoil on the land.
The building company commenced proceedings to establish title by way of adverse possession in 1997, but withdrew from the case prior to a High Court hearing in 2000. Shannon Development sold the site in May 1998 to the owner of the adjoining factory site for ?254,000 without going through a competitive process. The sale price was in line with a valuation given by an estate agent.
Taking account of an independent valuation commissioned as part of this office?s examination and the fact that the purchaser had agreed to indemnify Shannon Development against any future claims, the proceeds were probably broadly in line with what was obtainable in the absence of competitive tension. Furthermore, if title had been protected it is likely that Shannon Development would have achieved a better price.
Where an industrial development agency is concerned, good practice would dictate that in order to achieve the best price reasonably obtainable, surplus property should be sold through an open market process and property for industrial development sold with a covenant restricting its use to that purpose.
In this context, the disposal procedures adopted by Shannon Development in the sale were inappropriate in that other adjoining property owners, or possible interested parties, were not invited to tender.
The examination also reviewed a case where Shannon Development intended to sell a factory on 116 acres at Gilloge, County Clare without a covenant restricting its use to industrial purposes. However, Shannon Development pulled out of the sale following further consideration by the Board.
Where large properties like that at Gilloge are being disposed of, property earmarked for industrial promotion should be segregated from surplus property, in order to ensure that the most appropriate disposal mechanism is being used.
Shannon Development has assured the Comptroller and Auditor General that it has taken steps to strengthen its procedures and all proposed disposal transactions are now reviewed by its internal audit.
Notes for Editors
The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil ?reann.
The full text of the report is available on the website of the Office of the Comptroller and Auditor General (go to www.gov.ie/audgen/)
For further information about the report, please contact:
Richard Rapple at 01-6031038 or at Richard_Rapple@audgen.irlgov.ie