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Profile – Big Man Hogan digs

Never free of controversy, the Minister for the Environment’s descent has accelerated from the beginning of 2012Michael Smith 

 

Phil Hogan first became involved in politics at a local level as a member of Kilkenny County Council from 1982 to 2003. He was Chairman of the council from 1985–1986 and 1989–1990. In the 1980s Hogan and Fianna Fáil’s Liam Aylward were to the fore in rezoning moves on Kilkenny County Council such as that for the Loughboy Business Park and at Callan – on lands owned by Fianna Fáil supporter, Pádraig O’Rourke; and for lands owned by car-retailer and GAA bigwig, Michael Ling, a Fine Gael supporter.

After unsuccessfully standing in the 1987 General Election, he was appointed to the Senate from the Industrial and Commercial Panel. He was returned to the Dáil from the Carlow/Kilkenny constituency in 1989, holding a number of front-bench positions.

In 1995 Hogan was forced to resign as Minister of State at the Department of Finance with special responsibility for the Office of Public Works, when a staff member sent out Budget details to the Evening Herald before the Minister for Finance rose to his feet to announce them. Following his resignation from this post Hogan became Chairman of the Fine Gael parliamentary party, a position he held until 2001.

In February 2009 Hogan admitted he was feeling the pinch of the bust when he declined to follow his close friend Taoiseach Enda Kenny’s example in taking a five per cent cut on his then €110,000 salary. “My personal circumstances don’t allow that at the moment”, Hogan said. Details of what this implied came out when Hogan’s loan arrangements with Irish Nationwide Building Society were made public earlier this year.

Hogan told Village in 2011 that he hoped to be Minister for the Environment after the General Election. In the run up to the election he announced that he would shut down the Moriarty Tribunal when he got into power. Hogan was a witness at the Moriarty tribunal. Fine Gael grandee, Mark FitzGerald, told the tribunal that Hogan was at a meeting with himself and Denis O’Brien in 1995 at which the mobile phone licence was discussed. Hogan denied this at the tribunal. Clearly it was dubious for a witness to the tribunal, one who comes out of it badly, to announce he intends to shut it down.

In April 2011 Hogan met disgraced former Fine Gael Minister, Independent TD, Michael Lowry, immediately after release of the Moriarty report which had found that Lowry had acted corruptly in the awarding of the mobile-phone licence to Esat in the 1990s. The meeting was also attended by a department official and representatives of a company called Filmco, which deals in the disposal of plastic farm waste. Three days later a Dáil censure was carried against Mr Lowry. Two Cabinet colleagues expressed concerns about Mr Hogan’s meeting with Mr Lowry, just 48 hours before Mr Hogan said he had “no truck” with anybody criticised in the report.

A press release from the Department of Environment said that Phil Hogan and Denis O’Brien bumped into each other at Mount Juliet hotel earlier in 2012, and spoke for a matter of moments. The Minister has not, his spokesperson said, held any official meetings with Mr O’Brien.

But the Minister only really started digging as 2012 started.

In February 2012, Minister James Reilly held a meeting with Phil Hogan just before adding a primary care centre from Hogan’s constituency to his list. The meeting was recorded in Reilly’s ministerial diary as “re primary care”.

In March, Hogan apologised to Ann O’Connell (70) for a lewd remark he made to her at an Oireachtas golf outing in Connemara in August 2011. O’Connell, who owns a number of buy-to-let properties, said she “took the opportunity to say to him that I hoped he would not ‘screw’ property owners in promised legislation”. She reported Hogan’s reply as: “I have no problem screwing you. Hasn’t Mairtin been screwing you for years”.  The remark upset O’Connell who immediately complained in writing to the Taoiseach Enda Kenny. Hogan issued a letter saying: “I unreservedly apologise for those remarks which were totally inappropriate in a personal sense … It was intended in a jocose and private basis and certainly not intended as insulting”. Ms O’Connell, who was an administrator for former Taoiseach John Bruton, was unimpressed.

In April, a Kilkenny woman who texted Minister Hogan about the hardship that the household charge would cause to families with children to feed received a crass response from the Minister: “would you ever relax and feed the children?”.

In June also, Phil Hogan’s Department of the Environment stopped enquiries into alleged planning irregularities at six local authorities that had been initiated by former Minister, John Gormley. In an interview in Village Mr Hogan had already appeared to prejudge the issue by characterising the allegations of planning irregularities as “spurious, mostly”. Nevertheless, the only change, said a spokesman for Mr Hogan, was that instead of appointing external consultants “at substantial cost to the Exchequer”, officials would review the “considerable work and analysis” already undertaken by the Department’s planning division. When the review was complete the Department handed the affair to planner Henk Van der Kemp for recommendations. But the issue of corruption – as opposed to mere bad administration – is well beyond the remit of the review and the recommendations.

Hogan is also sitting on Mahon tribunal recommendations dating from March, to give statutory effect to the national spatial strategy and regional planning guidelines; and to appoint an independent planning regulator with powers to enforce planning policy and also the power to investigate “possible systemic problems” in the planning system, “including those raising corruption risks”.

In June Hogan asked the Public Accounts Committee to stand down its investigation into the involvement of the Dublin Docklands Development Authority (DDDA) in the purchase of the Irish Glass Bottle site in Ringsend because of its possible impact on a separate legal battle on the acquisition, which prevents the committee from “enquiring further in public session into matters connected with the special report”. PAC chairman John McGuinness told Village he was unhappy with the precedent the Minister’s order might set for other enquiries where legal proceedings were at all possible.

Over the spring and summer it was revealed that Hogan availed of “soft” loans of close to €900,000, personally approved by Nationwide Building Society’s crooked boss Michael Fingleton, whose other delinquencies have cost the state up to €5.4bn.

Hogan’s unorthodox loans were made so he could buy a house in Dublin 4 and a spiffy penthouse in Portugal using two interest-only loans, an aggressive equity release, and for his final loan, apparently very little paperwork. Hogan’s first loan from the society was a standard loan to buy his home in Kilkenny, and both capital and interest were to be repaid monthly on a €330,000 mortgage.

Then he borrowed about €450,000 to buy a property in Haddington Square in Dublin 4. Luckily, as it must have seemed, for him this loan was to be interest-only for over a decade.

Hogan then leveraged up to buy an Algarve apartment after the building society decided to give him an equity release – as it believed that the combined value of his other properties was €1.2m, much more than they are worth today. So Fingleton lent him €430,000 to buy his Portuguese holiday home, interest-only for a decade.

The Sunday Independent reported that staff at Nationwide could not find the usual loan-to-earnings assessments that would be demanded when advancing individuals more than €1m.

Revealing the opposite of the Midas touch, Hogan’s Kilkenny home is currently for sale for €295,000, though he had borrowed €900,00 against it. The Minister is downsizing.

Fine Gael TD and Junior Minister Paul Kehoe bought Hogan’s Haddington Square property in June 2010 after its value fell sharply relative to Hogan’s total borrowings from the society (which at their peak were more than €1.2m). It had been on the market since June 2008, opening at €625,000. Kehoe paid €355,000, almost €100,000 less than the mortgage Hogan had taken out to buy it.

Kehoe omitted to declare his rental income from Hogan’s old property in his Dáil register of interests until April when it was uncovered by the Mail on Sunday.

At the time Kehoe told the Sunday Independent: “I was not aware of [Phil Hogan’s] financial arrangements. I got a loan to buy the house with my wife. It was fully valued by auctioneers and it was all perfectly normal. There was absolutely nothing untoward about any of this”.

In April, the Sunday Independent reported that Hogan had an outstanding service charge of €4,320 on his Portuguese holiday home.

Hogan said he hadn’t paid this as he was in a dispute with the complex’s management company.

“Would you pay a charge if you were unhappy with the service?”, he asked. The management company now reports that the matter has been settled.

This was embarrassing for the government and the Minister since the deadline for payment of the controversial €100 household charge had just passed.

In September, Phil Hogan wrote to constituents in Bonnetstown, Kilkenny, informing them that a Traveller family would not be housed in their area. Hogan says that he intervened in the matter by passing information received at his constituency office on to the local authority, about the possibility of conflict if the Carthy family was moved in to the area. Two weeks later he asked about another family, the Cashes. The local authority ignored the Minister’s pleas and housed the Carthy family in Bonnetstown anyway.

In October 2012 Phil Hogan was booed at a reception in Nowlan park for the victorious Kilkenny hurling team, as he stood upon the stage with Brian Cody, Henry Shefflin and the team.

In October Hogan announced the abolition of Section 140 of the Local Government Act 2001, removing the power that allows councillors to direct officials and planners to take certain decisions regarding the granting of planning permissions, though councillors, contrary to reports in a naïve press, will retain their ‘reserved powers’ over zoning and rezoning. He also announced that the number of local authorities would be reduced from 114 to 31 with all 80 town councils abolished, that the number of elected councillors was to be reduced from 1,627 to 950 and that a local referendum would be held in 2014 on the creation of a directly-elected Dublin mayor.

Hogan’s biggest political battles are probably over the household charges, water taxes and septic tanks. In July 2011, Hogan outlined plans for a €100 annual “household charge” that would become operable from January 2012 for two years, ahead of the introduction of a full property tax, based on site valuations, in 2014. It now seems more likely that the tax will be based on property value not site-value, reflecting a move towards equity rather than economic efficiency. Of 250,000 households, some 14 per cent will be exempt from paying the charge. Hogan has accepted the tax will cause hardship for some families, but presented it as the minimum possibility, saying it would cost “a modest €2 per week”. Minister Hogan never seems to have appreciated the socio-economic merit of a property tax, reflexively blaming the Troika or saying that while he “would have preferred not to have had to introduce this charge”; Ireland is “one of the last countries in Europe not to pay for essential local services through a locally-based tax”. Despite the controversy, some of which centres on the charge being unfair as not graded, and the slow start to the collection process, the Department of the Environment now believes that the compliance rate will be close to 75 per cent by the end of the year.

Responsibility for collecting the property tax has been passed to the Revenue Commissioners, who will also be responsible for collecting the household charge arrears.

The annual household charge proposal has proved controversial for Hogan on many levels. His suggestion that councils would be rewarded if they “pull out all the stops to collect the charge” was criticised, though mostly by those opposed to the tax in the first place.

Hogan also confirmed a new state utility company, Irish Water, would be set up in the autumn to oversee the process of installing meters in all domestic dwellings. That would pave the way for domestic water charges based on usage in two years’ time, he said. The new charges will be the first local taxes to be introduced for more than 30 years, since the new Fianna Fáil government led by Jack Lynch abolished domestic rates in 1977. In September Hogan admitted that legislation enabling the introduction of metered water charges will be delayed until the end of the year, three months behind schedule.

In February Phil Hogan announced a reduction in proposed new septic-tank charges from €50 to €5 for any of the estimated 400,000 householders with septic tanks who registered within three months of the scheme becoming operational in March 2012. Householders have until March 2013 to register. Hogan reduced the fee as an incentive for owners to register early, shortly before he was due to appear at a fractious public meeting with the fearsome Mattie McGrath, TD.

Protesting septic-tank owners from mainly rural areas are concerned that if their tanks fail inspection they will incur huge costs for remedial work with no financial support from the state.

Hogan stated that (only) 10 per cent of tanks will be inspected and they will have to meet the new standards as set out in the Water Services (Amendment) Bill which recently passed through the Oireachtas. Fianna Fáil’s environment spokesman Niall Collins described the reduction as a distraction from the main issue: “He knows as well as I do that the registration fee was never the issue. It is a drop in the ocean for septic tank owners compared to the potential cost of replacing or upgrading tanks that fail inspection. He has missed the point”. But it seems more the case that Hogan failed to sell a message that the polluter must pay – for the cost of constructing elaborate discharge systems as well as for the inevitable contamination of land and water.

Hogan certainly is a Minister ‘in interesting times’ and some of the controversy that seems often to envelop him derives from the nature of his job. But the desired characteristics of bravery, vision and articulacy seem often a foreign land to this most mundane and unideological of politicians. If he is lucky 2013 will see him installed, courtesy of his patron, Enda Kenny, in a plum position – out of harm’s reach.

 

Hogan’s volte face on Poolbeg incinerator

The Poolbeg incinerator alternates in the public consciousness between the tediousness of something whose current status and complexity are just beyond comprehension for the non-zealot; and a sense of a scandal and flush-inducing accelerating waste of public funds. The Dublin City Council (DCC) Manager has ignored advice from all quarters, including his own councillors, to scrap the ill-fated project forever. The recalcitrant City Manager, John Tierney, who acts on behalf of all the Dublin Councils on Poolbeg, appears to be accountable to no-one. Back in 2007, Tierney received a letter from the then Minister for the Environment, John Gormley, asking him not to enter a contract with Covanta. Tierney went ahead and signed a lose/lose contract for DCC.

In opposition both Fine Gael and Labour said they were against the incinerator. On taking office it has been a different, more confused, story. Phil Hogan abolished the plans of his predecessor, John Gormley, to impose prohibitive levies on incineration. Gormley had also stalled plans for the incinerator by, apparently, delaying a decision on a foreshore licence for the facility. Phil Hogan made a complaint to SIPO against Gormley for abuse of his ministerial office. SIPO investigated the matter for almost a year and half, though Hogan spinelessly attempted to ‘withdraw’ his complaint as it neared determination, and found no wrong-doing on Gormley’s part. Gormley had argued that DCC did not need the foreshore licence as it had a CPO for the site. The day after Gormley left office DCC dropped their foreshore licence application, a possible indication that DCC had maintained the application simply to embarrass Gormley.

Back in 2007 Dublin’s four councils collected around 300,000 tonnes of residual waste.  Almost all of it was sent to landfill. But it was intended that in the future such waste would go for incineration, deemed somewhat less environmentally deleterious. In recent years, private operators have come in to capture large swathes of the market, massively boosting recycling rates. Furthermore, the downturn reduced consumption and recovery technology has improved. The projection is that next year as little as 200,000 tonnes will be available for incineration. This leaves incinerator operators worried that recycling will undermine their volume-based profits, evoking anti-environmental motivations.

The prognosis for the Poolbeg incinerator is unclear, though the City Council has been attempting to build it for over a decade. Construction at the site finally began in December 2009, but was suspended six months later.

Work has yet to resume on a project that has so far cost an estimated €80 million in public funds, with a likely final budget of close to five times that amount.

Meanwhile, negotiations netween DCC and US developer Covanta continue. Indeed the contract has been scandalously extended three times already, the last time until mid-October 2012, a date which has mysteriously passed without termination or extension. An earlier, August, deadline had itself been described as “final” and the City Council’s behaviour is legally unorthodox. Furthermore, the latest version of the contract no longer includes the “put or pay” clause under which Dublin local authorities would face penalties if they failed to supply a minimum of 320,000 tonnes of waste per annum for the facility. Removing the requirement will save DCC up to €80m annually in running a below-cost black-bin collection necessary to keep private-sector operators, who might have claimed the compensation, out of the market.

Moreover, the contract term has been reportedly extended to 45 years, increasing its value to Covanta very substantially, in return for Covanta dropping the clause, and the Dublin  Councils now expect to be able to sell their ‘preferential access rights’ to the private sector.

This could allow them to recoup the €80m in public money invested in the project so far, including the cost of land acquisition.

However, that brings DCC and Covanta into likely breach of EU procurement rules because the contract terms have changed so much – including by adding 50 per cent to its waste capacity in 2007 – since the contract was tendered in 2004/5.  The European Commission is now considering a complaint on the matter.

DCC has maintained Poolbeg would not be viable unless it could control all the waste collected by private operators in the Dublin region, and could also decide how that waste should be disposed of – to Poolbeg. The Fine Gael-Labour coalition in its programme for government promised to introduce competitive tendering for the provision of local waste collection, after which one supplier would provide the service. With legal action threatened, Minister Hogan u-turned on this, deciding instead to retain the existing market structure of unrestricted competition. The move means an end to shopping around for the best price available.

In 2007, when DCC sought to introduce a similar measure, two private firms (Panda and Greenstar) succeeded in a High Court challenge. Though under appeal, that win emboldened private operators and presumably spooked the Minister.

DCC already charges needlessly-high commercial rates to city businesses in order to operate its household black-bin collection below the cost of provision because this enables it to retain a big enough share of the black-bin market to suppress the payout due under the penalty clause in the incinerator contract. Penalty payments are expected to amount to €15m each year from 2013 if the incinerator is built. But that’s only one factor in the equation. Add to that the burden of operating the black-bin service below cost – €63m a year – and ratepayers in the brave world of Poolbeg could needlessly be caught for close to €80m a year.

Covanta and DCC claim they are still in ‘the throes’ of negotiation, but financial backers are naturally cautious, given the fragile state of the Irish economy. One financial analyst has even suggested that Covanta will not make a final decision on this until 2014 when they will have a clearer picture of where Ireland Inc. is going. It’s likely that the saga will drag on and that many more ‘self-imposed deadlines’ will come and go.

Meanwhile Bord na Móna have made innovative and apparently progressive proposals for waste management to DCC but the Council does not seem open-minded.

The kernel of this scandal is not the incompetence and unaccountability of DCC but the missed opportunity for a reasonably priced, truly sustainable, indigenous waste-management regime, which could create real jobs.