The Irish rebel of the banking crisis

February 17, 2011, 3:00 PM UTC

Joe McNamara was once a successful property developer. Now he’s fighting Anglo Irish Bank and staging disruptive scenes at parliament. Is this the new face of Ireland?

By Rob Curran, contributor

Joe McNamara, one of the only people facing criminal charges in the Ireland meltdown. He's now running for public office.

Early one morning last fall, as representatives gathered inside the Irish house of parliament to debate the nation’s looming bankruptcy, a cement truck with “Anglo Toxic Bank” painted on the barrel of the mixer drove up to the gates of the building and hit them with a thud.

The driver, Joe McNamara, earned the nickname the “Anglo Avenger” from this and other protests against nationalized lender Anglo Irish Bank. Now, even as McNamara, a former property developer, awaits a hearing in criminal court over alleged damage to the gates, he is campaigning as a fringe candidate to represent his hometown inside those very gates.

Anglo Irish Bank lies at the center of Ireland’s ongoing fiscal crisis, which has so far resulted in a $91 billion bailout from the European Union and other international sources. Anglo was nationalized more than two years ago. Since then it has continued to post huge losses, and it’s been mired in controversy over its lending practices. Last week, its government-appointed finance officer abruptly quit and Moody’s downgraded the bank’s debt to junk.

And now its fiercest critic, the Anglo Avenger, is executing a guerilla-style political campaign ahead of the February 25 election. On Jan. 17, McNamara seized the microphone as some of the audience staged a walkout from an event organized by Frank Fahey, a parliamentary representative of the ruling Fianna Fail party in McNamara’s resident city of Galway. McNamara pushed toward Fahey, saying “Are you going to resign? If you don’t resign, I’ll be running as an independent candidate against ya.”

McNamara now faces Fahey, who is nicknamed “Forty Gaffes” in a colloquial reference to his own property holdings, and as many as 13 others in a competition for five seats in Galway West.

Call him a folk hero, a reckless vandal or a profiteering opportunist, but McNamara, 41, personifies the rise and fall in fortunes of a generation of Irishmen and women. And, in his attacks on a government that backstopped imprudent lenders like Anglo Irish, he has acted out a rage that is widespread in Ireland.

But despite evidence of financial chicanery at the bank, McNamara and a handful of other protesters are so far the only people facing criminal charges related to the Irish financial crisis. Many Irish citizens believe the state should have come down hard on bank officials rather than protesters.

“[McNamara’s] particular grievance with Anglo is that he feels the bank was run in a corrupt and reckless way, and that people like himself who were striving to repay their loans and do their best and who didn’t borrow on a massive scale, were persecuted to a great extent,” said Cahir O’Higgins, McNamara’s defense lawyer.

Anglo Irish Bank declined to comment. McNamara, who has remained elusive in the press despite his very public outbursts, also refused to comment when reached by phone.

Achilles heel

To understand how McNamara’s frustration grew to a point where he was willing to drive a cement truck into government gates, you must first head to Achill Island.

Achill is one of Ireland’s western extremities and it is Ireland in extremis: here, the mountains have jagged cliff edges and the Atlantic wind is so bitter that it occasionally carries snow even in summer. Famine, emigration and the collapse of the fishing industry – the island has borne the brunt of them all. The same is true of the Great Recession.

The first sight that arrests a driver coming through the tiny village of Keel on this island is the cliff-bounded beach. The second is a concrete pit about a hundred feet long and more than two stories deep. The metal skeleton of unpoured foundations make this pit look like the open grave of the Celtic Tiger. And that’s effectively what it is.

It was supposed to be a luxury hotel built by a local boy made good. Its developer, McNamara, grew up near the site of the hotel on Achill.

In the 1990s, McNamara and his brothers built houses on and nearby the island, according to Achill native James Kilbane, a popular Irish singer who says he is an acquaintance of McNamara’s. They had a sterling reputation on Achill for the quality of their work and their dedication. The family business launched McNamara’s career as a successful developer during which he built large residential projects in County Sligo and in Galway City, and renovated a four-star hotel in nearby Barna, County Galway.

In 2001, McNamara and his partner Stephen Harris incorporated Harrmack Developments. Luxury was new to Achill when McNamara’s crew started work on the foundations for the Keel hotel in 2006. Building was initially held up by a planning-permission dispute, according to the Daily Mail.

Keel wasn’t the only source of McNamara’s problems. Like many in the property business, the partners misjudged the sustainability of Ireland’s growth. The Irish Independent reported that Harrmack paid 18.8 million euro ($25.5 million) for farmland in County Clare, and then failed to get planning permission to build on it.

Shortly after construction of the Keel hotel got underway, Anglo Irish recalled loans made on that project and others, according to claims made by McNamara in Irish newspapers. In McNamara’s eyes, Anglo Irish “pulled the plug” on his business, says O’Higgins, his lawyer. McNamara originally told the press that the bank pushed his business into “receivership,” the Irish form of bankruptcy that gives creditors more sway than is typical in U.S. bankruptcy courts, over a debt of 3.5 million euro ($4.7 million).

McNamara wasn’t alone, of course. Ireland’s property mania eclipsed that of even the U.S. More than 78,000 new housing units were completed in 2007, Bank of Ireland estimated in a research note. In the U.S., the Commerce Department reported 1.5 million housing units completed in 2007; if the U.S. had built at the same rate as Ireland in proportion to its population, more than 6 million houses would have gone up that year.

McNamara’s nemesis

Ireland’s banks, too, have fared worse than those in the U.S., and perhaps none worse than Anglo Irish.

Founded in 1963 as a commercial bank and controlled for many years by an Irish family based in the U.K., Anglo Irish came to specialize in development loans. The bank relished risk, and established itself as banker to the new class of property developers, including McNamara, that mushroomed in the 2000s. The only security against most Anglo Irish loans was the projected value of unbuilt buildings. Soon, Allied Irish Bank (AIB) and Bank of Ireland (BIR), the two largest banks in the nation, began to ease their own standards in order to keep up with Anglo’s growth.

When property prices turned against it in 2008, Anglo Irish allegedly engaged in brazen sleights of hand to hide its troubles. To hide the flight of one large shareholder, the bank loaned 392 million euro to 10 investors to buy a 10% equity stake in itself. The bank also made personal loans of more than 100 million euro to its former chairman and chief executive, Sean FitzPatrick, without disclosing them. In September 2008, the Irish government guaranteed the Anglo’s loans and its bond payments, along with those of all Irish banks, a move that resulted in the nationalization of Anglo Irish. Fitzpatrick was the subject of a police investigation after its collapse, but has yet to face charges.

The last straw for the fallen government of the Irish Prime Minister, Brian Cowen, was the disclosure that he had met with FitzPatrick, and even played a round of golf with the banker, in July 2008, at the height of the bank’s troubles. Following these revelations, Cowen dissolved the government in early 2011, and announced he would not run in the election this month that’s expected to decimate his party.

The Irish government repeatedly underestimated the scale of the bad debts it had underwritten at the bank. The most recent projection for the cost of Anglo Irish’s failure to the taxpayer is 34.3 billion euro. That’s roughly 20% of Ireland’s 2009 gross-domestic product of $227.2 billion as estimated by the World Bank. The total book of loans on Anglo Irish’s books at the moment of failure was estimated at around 72 billion euro. Some analysts fear the EU will soon have to step in yet again to save Ireland from its banks.

McNamara began his protests against Anglo Irish in Galway in April 2010 when he blocked a branch office by temporarily abandoning a truck in front of it. Then, on September 29, 2010, he crashed into the gates of parliament, and into the public consciousness.

Damage to the parliament gates was apparently minimal. Still, McNamara will answer charges of criminal damage at a hearing at the Dublin district court in March and could face up to a year in prison.

On December 7,  McNamara drove to the parliament house again, this time on a crane from which he blared protest songs, including one by Lady GaGa. The authorities charged Mr. McNamara with dangerous driving, and he faces a separate hearing on the matter.

Ireland, of course, has long cherished its rebel spirits. And abandoned buildings are nothing new to the nation either. The Atlantic wind slowly grinds the ruins of “deserted villages” left on Achill Island by the Famine of 1847.

But the ruins, the civil unrest, the flight abroad, and the imprisoned rebels were supposed to be things of the past.

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