High price of due process outlined in McKillen case

 

TO MANY, developer Paddy McKillen’s claim that the National Asset Management Agency (Nama) should at least have been willing to engage with him about the transfer of his Anglo loans might be reasonable.

This is a point that has been advanced by Dr Joe Stiglitz on McKillen’s behalf.

But an affidavit filed for this week’s High Court case by Nama board member Steven Seelig gives an insight into why the agency has been loath to follow this route.

“If every one of the 1,500 borrowers sought to meet Nama to explain their case, it would become inoperable,” Seelig said with some justification.

“Even if one-third, or 500 borrowers, went through the process outlined by Dr Stiglitz and each took one day to explain their case, it would take 1½ years, at least, for the meetings and many more years for loans to be transferred to Nama.”

Seelig added that such a delay would “create a systemic risk, require the blanket bank guarantee to remain in place for far longer, and likely increase the cost of Ireland’s sovereign debt”.

“The sovereign would also have a creditability issue, whereby it would be seen to be failing to deal with the systemic issue in order to follow due process for borrowers who contributed a large part in creating the problem.”

Seelig argues that Nama deals with “due process very efficiently” by inviting banks to argue a case of eligibility through the State-appointed expert reviewer – senior counsel John McBratney.

McKillen’s Bank of Ireland loans went to McBratney, who found them eligible for Nama.

Seelig’s points are well made but the lack of transparency around Nama and its operation hardly helps its case.