I wrote in January about the Law Society’s secret arrangement to guarantee a loan in favour of a private insurance company, the SMDF, to make up for huge losses suffered by that company as a result of a disastrous investment. The Society has now released its 2009 financial statements and only one, brief reference is made to the guarantee, including the news that it has not yet been finalised.
That January post also mentioned massive losses suffered by the Society in a disastrous invesment of its own and the summary of the 2009 statements distributed to solicitors inlcludes the following disclosure:
[The Society’s after tax surplus for 2009] includes an exceptional loss of €480k, representing a further write down of the value of the Benburb Street site in 2009. The write down required by our auditors in 2008 was €14.7m.
In 2006 the Society appears to have been gripped by the property mania affecting the nation and this property was bought for unspecified and unexplored development purposes, at a cost of €22.4m. In 2009 it was revalued at around €7.7m and the 2010 write down brings it to €7.22m.
The then-President of the Law Society said at the time of the purchase:
I believe that the great majority of solicitors today, and in the future, will view the purchase of this Benburb Street site, like the purchase of Blackhall Place, as a wise and practical decision made in the long-term interests of the profession.
In 2010, the Society says of the €15.2 million lost:
These write downs must be put in the context of the Society never planning to sell the site. Importantly, the site is free of debt.
I don’t know which one of those sentences is worse.