Lack of transparency at Nama beggars belief

Remarkable how open Nama can be when it is having its collar felt by an Oireachtas committee

 Nama chairman Frank Daly and chief exective Brendan McDonagh  arriving at the Public Accounts Committee in Leinster House, Dublin, in early July. Photograph: Dara Mac Dónaill/The Irish Times

Nama chairman Frank Daly and chief exective Brendan McDonagh arriving at the Public Accounts Committee in Leinster House, Dublin, in early July. Photograph: Dara Mac Dónaill/The Irish Times

 

There’s an old joke about the driver who gets lost in Kerry and pulls over to ask for directions. “If I were you, I wouldn’t start from here,” replies the local. The same could be said about the National Asset Management Agency, which was established by the State in 2009 at a time of deep crisis. It was an imperfect construct from the start.

Nama paid €31.8 billion to five Irish banks for €74.4 billion worth of face value toxic property development loans, with a view to freeing up the institutions to begin lending again to the regular economy. We now know that establishing Nama didn’t have the desired effect. Lending by the main Irish banks is only now beginning to flow six years on from the crash.

This wasn’t the fault of Nama – the problems of the Irish banks were grossly understated at the time. Nothing on the scale of Nama had ever been tried before and it is regularly described as the world’s biggest property management group. Events of recent weeks around the sale of its Northern Ireland assets – dubbed Project Eagle – have thrown the light on the level of transparency at Nama.

When he appeared before the Oireachtas banking inquiry in April, Nama’s chairman Frank Daly said it “operates at the highest end of the transparency spectrum”. He has said on other occasions that it provides more detailed information than probably any other agent of the State, or some banks here. He might be right but there is still much we don’t know about Nama and the work it does.

The Project Eagle sale to US investment fund Cerberus was announced on April 4th, 2014. In the statement released that day, Nama said the “terms of the transaction are commercially sensitive and are not being disclosed”. Eight weeks later, Nama’s chief executive Brendan McDonagh and Daly appeared before the Public Accounts Committee to discuss its annual report for 2013. McDonagh mentioned the sale of Project Eagle in remarks to the committee.

Later Fine Gael’s Eoghan Murphy quizzed him about how much Nama had sold the assets for – the portfolio had a par value of €5.7 billion. McDonagh’s reply was that it was “speculated” that the figure was €1.6 billion. Some time later, committee chairman John McGuinness repeated the question and got the same answer. McGuinness said he wasn’t interested in speculation and asked for the actual figure. “It sold for €1.6 billion,” was McDonagh’s immediate response.

Suddenly, the terms of the transaction were no longer commercially sensitive. Nama was happy to put all the relevant figures in the public domain last week when it went before the PAC to answer questions about the sale following Mick Wallace’s explosive disclosures in the Dáil.

It is remarkable how open Nama can be when it is having its collar felt by an Oireachtas committee. It took another Oireachtas committee to unearth that some 100 of Nama’s 800 debtors have exited the agency.

Many other questions remain unanswered. Although they were being asked to stand over a potential bill for Nama of €30 billion, taxpayers were not allowed to know the identities of the property developers who had loans transferred to Nama.

The agency has long cited commercial and contractual obligations, along with restrictions in legislation, but few, if any, of these parties will repay their par loans in full – that is the original amounts they borrowed from the banks. That bill will be paid in one shape or another by taxpayers.

So why shouldn’t taxpayers know who has benefited from these write-offs? Especially as we’re talking about billions of euros. Some information is published by the debtors in the published accounts of of their private companies. Last week, Derek Quinlan, one of Nama’s biggest debtors, went before the banking inquiry. He spoke of being “saddened” by the impact of the property crash on ordinary folk. But he did not thank taxpayers for their dig-out on his vast debts. He told the committee he was forced to leave Ireland to maximise the return for his “creditor banks”.

Nama is one of those institutions but we don’t know how much he owed and we don’t know what has been recouped from various transactions. Quinlan pointedly refused to discuss his dealings with Nama.

There was confusion over Nama’s sale of loans connected with Cork developer Michael O’Flynn until the row with his new lender, Blackstone, hit the High Court. O’Flynn is expected to let fly when he appears at the banking inquiry later this month.

And who knows if Johnny Ronan repaid his par loans in full or just the amount that Nama paid for them? In April, his side boasted that Ronan had delivered a profit for taxpayers but Nama remained tightlipped on the transaction. It is a bizarre situation.

Nama has done much good work over the past five years but the lack of transparency on certain aspects of its activities serves only to give oxygen to a widely held view that it is nothing more than a bailout for developers. @ciaranhancock1

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