Cantillon

Inside the world of business

Nama's Treasury actions carry the whiff of bailout

IT IS UNFORTUNATE for the National Asset Management Agency (Nama) that the first insight into its interaction with a large development company should reveal something that looks more like a a bailout than a no-nonsense restructuring.

Real Estate Opportunities, the listed arm of the Treasury Holdings property company, is clearly in deep trouble. It has hired advisers to start negotiations with the holders of its bonds and other debt instruments ahead of a May 2011 deadline, at which point payments fall due that it cannot meet.

It is axiomatic that any agreement arising out of this will require Nama’s approval and, one presumes, some share in the pain. The agency has also shown forbearance in regard to the Battersea Power Station project which is in breach of its loan agreements.

In the absence of any explanation to the contrary from Nama, taxpayers are left to deduce for themselves how these actions – as against a more robust approach to recovering the money that Treasury owes them – is in their interest.

The argument can be made that supporting the floating off of the Battersea power station is likely to deliver a real return to the taxpayer. Equally, the case can be made that given the high-quality tenants that occupy Treasury’s flagship properties in Sandyford, it would be an act of madness to force a sale of them in the current market to repay the taxpayer, given the long-term approach that is the raison d’etre of Nama.

Perhaps so, but Nama has done little to earn the benefit of the doubt in this regard. The genesis of the agency and its subsequent activities have taken place behind the shield of obsessive official secrecy which sheltered much of the Government’s role in bringing the economy crashing down.

The Government and Nama have not done enough in the intervening period to deserve the unqualified trust of the public.

As a result it is only prudent for taxpayers to assume that the accommodating stance apparently being adopted towards Treasury Holdings will be extended towards its other troubled customers. They can also assume that no justification will be offered or deemed necessary. And that has the whiff about it of the bailout for developers which many claim is Nama’s true purpose.

White hears data pitch

Minister of State for Equality Mary White yesterday asserted her heartfelt support for the collection of data on discrimination in Ireland, before escaping the Dublin Castle conference on equality research before anyone could tackle her to the ground about the Equality Authority’s much-reduced purse.

Siobhán Carey, assistant director general at the Central Statistics Office (CSO), was nevertheless heartened by the Minister’s fine words and began an initial stab at converting her caring sentiments into cash.

“I’m delighted to hear about your deep commitment to data. I’ll be back to you about that,” she said, as soon as the Minister wrapped up. “Data doesn’t grow on trees – someone has to make it happen,” Carey noted.

We can hope, however, that despite the fiscal constraints, the CSO’s interaction with Government is less bruising than Carey’s own encounter with anti-Irish discrimination in the UK. Having had the misfortune to arrive in the middle of an IRA bombing campaign in 1992, she was wittily informed by a ministerial adviser at a civil service meeting that an Irish academic was an oxymoron.

“Perhaps he didn’t think I knew what an oxymoron was,” she surmised. “Luckily, everyone else in the room jumped on him.”

Irish discrimination research has more hurdles to climb than just shrinking budgets however. ESRI researcher Dr Fran McGinnity recalled how she and her colleagues conducted the very first field experiment on hiring policies in Ireland between April and October 2008, sending out pairs of fictitious CVs in response to advertised job vacancies.

The research found that candidates with Irish-sounding names were twice as likely to be called for interview than candidates with the same qualifications but distinctly unCeltic monikers. The ESRI squeezed in the research just in time: any later and the collapse of the jobs market would have meant there were no advertised vacancies to test.

T2 mandate no surprise

This week’s decision by Minister for Transport Noel Dempsey to mandate the Dublin Airport Authority to operate the new Terminal 2 came as no surprise.

The only wonder is that it took so long. While the Government always held out the possibility of an independent operator being appointed to run the facility, thereby creating competition with the existing terminal run by DAA, the reality was inevitably going to be different.

DAA owns the building and was responsible for its design and construction. It is now in hock to the tune of about €1 billion, largely due to building T2, so appointing an independent operator was never likely.

Building T2 was the easy bit. DAA now has to fill it, at a time of recession, to service its hefty debt obligations. It’s not clear who would pick up the tab in the event of a default. In that regard, we can only hope that T2 flies.

Today

Euroconstruct will explore the “new realities” for construction at a conference in Dublin Castle, while a snapshot of the economy will come from April trade figures to be released by the CSO.

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