Mr. Lar Bradshaw:

I thank the committee for its invitation to come before the committee. This is the first time that I have spoken publicly about my time in the Dublin Docklands Development Authority and the purchase of the Irish Glass Bottle site.

From previous minutes of this committee, I noted references to "the absence of others being willing to come here to discuss what happened". I wish to put on record that I agreed to come here immediately following receipt of the invitation from the committee.

Moreover, as members may or may not be aware, I have spent the past three years working intensively with the lawyers of the authority as one of the key witnesses in its defence of the case brought against it by Mr. Bernard McNamara and Donatex. This included producing a comprehensive and detailed witness statement.

In the committee’s last meeting on this topic on May 2, Mr. John Tierney, outgoing chairman of the authority, announced that this case was recently dropped by the plaintiffs, removing a potential €100 million exposure for the State. The plaintiff dropped the suit shortly after receiving the key witness statements, including mine. The committee may also know that, at the request of the authority, discussion of these matters by the committee was effectively deferred until the legal case with Donatex was over. As I was a key witness for the authority, it obviously would have been inappropriate for me to speak publicly until that case had been resolved.

I thank the Comptroller and Auditor General for his clarification of one point, a clarification which he made at the two previous committee meetings, and he has done so again today, when he stated "while management advised the board that the property market in 2006 was overheated, it nevertheless recommended the investment for strategic reasons". This is an important clarification for the committee because, as you know, the actual report which is in the public domain states, both in the overview and again in the body of the report: "The executive advised the board of the authority that the joint venture bid for the Irish Glass Bottle site would be made in an over-heated commercial property market" - full stop.

There is no mention in the report of the very significant fact that the executive was clearly and unambiguously recommending that we should proceed with the purchase and that the board acted on that advice.

I will return to this point later but the failure to disclose this point in the report of the Comptroller and Auditor General, may have inadvertently contributed to some committee members, and others, formulating a negative view as to how our board was run and that the board somehow overruled the executive in deciding to pursue the purchase of the Irish Glass Bottle site. This view is incorrect, as has been clarified three times by the current Comptroller and Auditor General. I would appreciate if the original report could be corrected.

In this opening statement I would like to cover three topics. First, I would like to provide the committee with some context about how I became involved in the DDDA and how I thought about my role and the task ahead, after I initially became involved. Second, I wish to highlight three points from the Comptroller and Auditor General's report which have not been discussed to date, but which I think need to be aired publicly because they explain the Irish Glass Bottle transaction in a broader context. Third, I wish to comment, but only briefly, on what was achieved in the docklands during the ten years that I served as chairman of the authority. I am doing this so that the committee has a better understanding of the context in which to evaluate the decision by the authority to participate in the purchase of the Irish Glass Bottle site.

I am aware that none of the committee has ever met me and none of the committee knows me. Therefore, I would like to take a few minutes to explain why I took on the role of chairing the DDDA, initially for five years, and then for a second five-year term, what my motives and ambitions for the docklands were, and how I thought about the task ahead.

When Deputies Brendan Howlin and Ruairí Quinn, as Ministers for the Environment and Finance, respectively, met with me in late April 1997 and asked me to become the first chairman of the authority, I felt extremely honoured and privileged to have the opportunity to serve on this board. Their description of the task ahead, and particularly the difference in remit to its predecessor, the Custom House Docks Development Agency, CHDDA, greatly appealed to me. The new emphasis, not just on physical regeneration but also social and economic regeneration, represented an exciting prospect for the area. I was brought up and lived the first 23 years of my life two miles up the road from the docklands - in Coolatree Road, Beaumont and my wife's family had lived and worked in the docklands for generations. Her grandfather was a docker and her uncle was a labourer in the docks. It was an area she and I knew well. To be given the task of helping to regenerate the area was a once-in-a-lifetime opportunity, an opportunity which I appreciated and was determined not to squander.

During that meeting, the two former Ministers explained that the target was that the whole area would be regenerated in 15 years, which would be the lifetime of the authority. Therefore, it was immediately obvious to me that things would need to move quickly to achieve that timescale. There was a small number of issues to be sorted out with the Ministers but, once they were sorted, I was happy to accept their invitation to chair the authority.

At my first board meeting, I attempted to set out a first draft of a vision for what we might achieve over the life of the project and what would make it a unique and distinctive success. I have with me a copy of the document I circulated on that day. In my opening remarks I proposed for consideration a number of metrics, or key performance indicators, against which we should hold ourselves accountable and that would define the success or failure of our endeavour. These included the following: the increase in population in the area, the number of homes in the area, the number of people working in the area, the increase in employment levels for the local people, the improvement in participation in formal education of the local population, the level of educational achievement of the local population, the reduction in crime, and some measure of the social capital or well-being created.

This last one was a difficult one to articulate, but what I was trying to get at was some sense of well-being for the community, perhaps best captured by the idea that the docklands would be a truly great place to live, work and play. I called it the "happiness-misery index", with which some Members may be familiar.

Once we agreed on those metrics we then set out to set targets against each one. During that process, I got much advice suggesting that we were being too ambitious and were setting ourselves up for a fall. My view was exactly the opposite. My lifelong experience had been that setting ambitious targets and maybe falling short, nearly always led to better outcomes than managing down expectations and then exceeding them. These metrics and targets were worked up by the council and became enshrined in the DDDA Masterplan, 1997, which was our blueprint. They were out there for all to see and that included the board, the council the wider community and anyone who had an interest. We had nowhere to hide and that is how I liked it.

Of all those metrics, the ones I felt most passionate about were those to do with education. In nearly all my speeches over the next ten years I would refer to the enormous return on investment in education. I used to say that education gives everyone the dignity of choice - about where they live, and where they work and at what they work. Suffice to say that every day for the next ten years, all my board colleagues, the staff of the authority and I, devoted ourselves to trying to deliver that blueprint. Unlike developers in those days, who were busy buying up landbanks quickly and releasing them slowly, I knew that time was against us, and every day needed to count.

Before I was officially appointed as chairman, I made it my business to speak with several of the board of the Custom House Docks Development Agency, our predecessor and an organisation that had established the platform on which we needed to build. This obviously included the previous chairperson. I reasoned that I had much to learn from those who went before me.

There were many challenges and issues that we faced over the years. I would like to briefly comment on two particular aspects of my role: that of chairing the board and chairing the council.

As the committee may be aware, the board consisted of eight members. These were all appointed by the Minister for the Environment. The council consisted of 25 members, all appointed by the Minister for the Environment and drawn from local community leaders, local councillors, professional bodies and various State bodies with land interests in the area. It was my responsibility to chair both the board and the council.

If one thinks about the scope of our brief, which was about social, economic and physical regeneration, and if one consider the metrics, which I have already described, one will quickly realise that the nature of the decisions to be made and the process of decision-making had some unique features which were quite different to any other private commercial companies. Unlike most commercial companies, we could not use one simple measure, such as profit maximisation or increasing shareholder value, to inform decision-making. Frequently, decisions required making difficult tradeoffs across multiple dimensions and affecting and involving multiple stakeholders. As people who operate in the public policy area, members of the committee will all be able to readily appreciate this challenge.

As a result, I knew that there was a real premium in bringing the collective judgement and wisdom of all the board and the executive, to bear on these decisions, because it would require all of those attributes to make those trade-offs. Having worked for 20 years in McKinsey, this would have been my natural style anyway. There were many times that I went into board meetings at the authority genuinely unsure of what the right answer was, but always confident that the collective wisdom would come up with the best answer. In that context I worked hard to create a dynamic in the boardroom that facilitated what I used to call the pursuit of truth and the emergence of the best answer. I encouraged both the CEOs with whom I worked over the ten years to ensure that the board had full visibility of all options, not just management's recommended one. That was our standard practice and the records of the board will show that to have been the case.

I encouraged management to understand that it was all right, even preferable to not always have a shared point of view and that sometimes it was a show of strength to be able to say that there were differing viewpoints at executive level and then to look for board guidance on the option to be pursued. I insisted that all relevant data and facts were available to the board and not just data that supported the executive's recommendation. Too often I have seen how people use data and facts to confirm their hypothesis as truth, rather than look at it in a detached and open manner. People should be prepared to change their hypothesis, if the data or facts suggest something different. I borrowed and tried to instill another one of the values of McKinsey, the firm I had worked for. That was the obligation to dissent - not the opportunity to dissent, not the privilege to dissent - but the obligation to dissent.

So, for example, I would always ensure I heard from everyone when it came to difficult decisions. If that necessitated going around the room one by one, that was what would happen. I needed everyone to know their view counted and that they had an obligation to do the preparatory work to ensure that view was informed.

I tried to instill an environment in the boardroom which was challenging and collegial. When someone asked me recently why a board is required to be collegial, my response was that, ultimately, the board has to make decisions. If a board is challenging and if its members are bringing all of themselves to the discussion, inevitably there will be occasions when, to reach a decision, people have to move from their position and either compromise or maybe completely give up on their preferred way forward.

My experience has taught me that to ensure the long term effectiveness of the board and that everyone is in pursuit of truth and never in pursuit of ego, it is important to create an appropriate level of collegiality to be the glue that keeps the board together. It is a combination of both characteristics, namely, being challenging and being collegial, that is essential for a board to operate effectively.

Before it became fashionable I introduced board evaluation. This included an overall evaluation of the board and peer reviews of each board member and of me, as chairman. I did this in order that we could keep improving and upping our game. I have brought along a copy of the documents that formed the basis of those evaluations. Perhaps after this meeting the committee can get a sense of the kind of behaviours and dynamic we were seeking to inculcate.

Another key task for me was chairing the council and it might be helpful if I told the committee a little about that. If education was going to be one of the distinctive characteristics of this project, the other was going to be the unique governance model. I stand to be corrected, but I believe that no other docklands regeneration project in the world has had the level of local community involvement we have had. While other docklands regeneration projects may have had spin-off benefits for local communities, nowhere else have local communities played such a participative role in planning the regeneration programme. I take no credit for that idea; rather it is to the credit of the legislators who had the vision to design the governance model as they did. However, along with the executive, the board and the council, I did try, with complete commitment and integrity, to honour that intent.

As I mentioned, the council was composed of 25 people representing all key stakeholders. I was absolutely committed to the effective involvement of the council, in particular local community leaders. Even though we worked successfully on many issues over the years, I should point out that it was not without its arguments and, at times, heated discussions. While we would have had different views on many issues, including the nature of leadership for a community leader, I always appreciated the fact that they were happy to roll up their sleeves with me, do the work and bring all of themselves to every discussion.

When we had our first council meeting it became clear that everyone expected it would take a couple of years to work through a master plan that would govern the evolution of the docklands over the next 15 years. My view, which I expressed at the time, was that we needed to complete the exercise in six months. That was simply because, after two years, all the available land would be bought up by developers and the inevitable value that would be created by the master plan and planning schemes would accrue to them and not the communities. In other words, we had what is called a burning platform.

In the event, the council got very involved from the start and, along with the board, everyone worked twice as hard and twice as long, and we completed the master plan within six months. This was really important to me as it was the authority, comprising the executive, board and council, setting out its stall. Every day needed to count for the ambitious plans of the authority to be realised within its 15 year lifespan.

While the legislation allowed for voting at council, it was my fervent wish that we would never resort to it, and I do not think we ever did. The trouble with using votes is that it allows everyone to maintain their position without having to listen to other views and, in the process, maybe fail to explore new and better options that might emerge if everyone realises that consensus has to be reached. I have described these aspects of my role to give the committee a flavour of how I thought about things. No doubt over the coming hours as I answer all its questions, it will get a fuller picture.

The second topic I wish to cover is to outline three important points which are contained in the report of the Comptroller and Auditor General but have not really been discussed publicly to date. I believe they are very important. They are: first, that the State did not lose money as a result of the Dublin Docklands Development Authority's purchase of the Irish Glass Bottle site - in fact it made money; second, the State could have made substantially more money; and, third, a previous decision by the authority in 1998 to acquire the Bord Gáis site had many similar characteristics of the IGB decision and was fundamental to the successful regeneration of the docklands. I would like to elaborate on each point.

On the first point, contrary to popular belief, the State and the taxpayer did not lose money as a result of the DDDA's decision to purchase a share of the IGB site in 2006. In fact, the State made money. The Dublin Port Company, a wholly State-owned enterprise, got 33% of consideration of the IGB site. The DDDA, another wholly State owned enterprise, purchased 26% of the IGB site. As a result, the State manifestly could not lose money. Indeed, the higher the price paid by the joint venture, which included the DDDA and its partner, the more the State would make because the stake the State was selling though the Dublin Port Company was more than the stake the State was buying through the DDDA.

As the Comptroller and Auditor General made clear in his report, the DDDA lost €52 million, which I regret and will discuss later. The report also makes clear that the Dublin Port Company received 33.6% of the proceeds or just over €138 million. This means the State netted just over €85 million net profit from this transaction before any consideration of stamp duty or capital gains tax which also accrued to the State. I want to assure taxpayers that they did not lose out of this deal. The authority did, a point to which I will return.

On the second point, the State could have made considerably more money from this transaction. As outlined in the report of the Comptroller and Auditor General, South Wharf plc, which was the tenant on the IGB site, moved to exploit a legal loophole which would have allowed it to buy out the freehold title from the Dublin Port Company for a tiny fraction of its true value. In the report, under his first conclusion, entitled Protection of the State Interest, the Comptroller and Auditor General states:

The exposure of the State caused by the provision of the 1978 Act had been highlighted by the Land Law Working Group of the Law Reform Commission in 1992 when a recommendation was made that the loophole should be closed off. The continuation of the loophole resulted in losses to the State ... Further losses arose in early 2007 when the Dublin Port Company only managed to secure one third of the sales proceeds from land to which it originally had freehold title.

In other words, the State did indeed suffer a significant loss, but it was as a result of successive Governments over 14 years failing to act on advice given in 1992 to close a loophole in the Landlord and Tenant (Ground Rents) (No. 2) Act 1978.

The Comptroller and Auditor General suggests that the loss was 17% of €412 million, or approximately €70 million, on the basis of advice received from the Department of Transport which indicated that the normal split between landlord and tenant on such a site would be 50-50. Many would suggest that the actual loss was substantially higher, in that a landlord would expect, in similar circumstances, to end up with significantly more than 50% of the consideration for an asset for which he or she holds freehold title. I am no expert, but I am sure the experts can comment.

On the third point, the authority's decision to purchase the Bord Gáis Éireann site in 1998 had many similarities to the decision about the IGB site. It was a similar size site, there were issues of contamination, the project carried significant risk, it was a big decision and the State was on both sides of the transaction. In 1998, there were many naysayers who criticised the authority for exposing the State to unknown liability, namely the decontamination issues associated with the site. However, the authority reasoned it could not leave a contaminated site of huge strategic importance to the master plan to lie festering in the middle of the area. We reasoned that the State was on both sides of the transaction and that this was what we were set up to do, so we purchased the site.

Pages 62 and 63 of the report of the Comptroller and Auditor General outline the financial return of that particular decision. It is in the appendix of the report. Simply put, we spent around €70 million purchasing and decontaminating the site and made more than €200 million between cash receipts of €170 million and social and affordable housing and commercial units delivered to the authority at zero cost. The committee will now know from the metrics I described, against which we measured ourselves that for the board, the financial gain from the transaction in 1998 was not the end but merely the means to the end.

I highlight these three points, which have not been mentioned to date by this committee, to try to ensure there is a balanced approach to the evaluation in hindsight of our decision to participate in the acquisition of the IGB site.

Finally, I would like to briefly mention what was achieved during the first ten years of the authority's life. Many people have contacted me, since hearing that I was coming in here today, to urge me to set out in full detail what was achieved in the docklands during that period. I do not think it is for me to do that today, but I do think that someone independent should do that, in a comprehensive and objective way, and I might return to that in my closing statement.

I am conscious that many members present may not be aware of what the docklands was like in 1997. Let me just say, that it is my personal belief that the docklands has been transformed, and the most important transformation is that which cannot be seen.

There are a number of concerns about the purchase of the IGB site that have been brought up in the report of the Comptroller. I thought it would be more appropriate that members should have the opportunity to question me on each of them rather than for me to deal with them in what I now recognise is a rather long opening statement. I am now ready to assist the committee in any way I can and I would be pleased to answer members' questions. When members have finished questioning me I will make a closing statement.