Developers are laughing all the way to Nama
HARRY CROSBIE, one of our more ebullient developers, was on the Saturday Night Show, hosted by Brendan O’Connor, on RTÉ at the weekend talking about the children’s hospital at the Mater, of which he is chairman, writes VINCENT BROWNE
He spoke about the plans to build the hospital and the facilities it will provide and how wonderful it all would be.
He got in to talking about the other projects with which he is involved, including the O2, the Point Village, the Grand Canal Theatre, Vicar Street and the convention centre.
He was asked about how much he owed and about his involvement in Nama and he became evasive.
He denied he owed half a billion euro but said he could not be specific about these matters because Nama required him not to speak of his dealings with it.
He then went on to speak quite a bit about his dealings with Nama and he said some astonishing things. Now it could be that what he said was untrue, but it is very unlikely that he was deliberately deceptive, for, aside from anything else, that would get him into big trouble with Nama.
It could also be that what he said was honestly mistaken. However, that too is unlikely for Harry Crosbie is an able, intelligent fellow, who knows his business and could be trusted to know fully the terms of his relationship with an institution such as Nama, which has enormous relevance for what he and many others are doing.
But before I get to what Harry Crosbie said on Saturday night I want to quote what the late Brian Lenihan said in the Dáil on October 14th, 2009, when speaking in reply to the debate on the second stage of the Nama Bill.
He said: “Another misplaced claim that has been made during the course of the second stage debate is that this Bill represents a bailout for developers. This is just not so.
“Let me be clear – Nama is not designed to be and will not be permitted to operate in practice as a bailout mechanism for developers who have operated irresponsibly.
“The amount a borrower owes will not change because of the transfer of a loan from his bank to Nama. The agency will have a statutory duty to maximise the taxpayers’ return and will therefore be expected to use its entire means to this end. The Bill also provides the agency with the wide range of powers it needs to pursue borrowers and enforce security.
“In some cases this will mean that borrowers’ personal assets will have to be assumed by Nama. In such circumstances, I cannot understand how the misconception that Nama will bail out developers continues to run.”
Now back to Harry Crosbie on Saturday night.
He said Nama had been very helpful in helping to complete the Grand Canal Theatre development by affording working capital to complete the project.
He said Nama had also funded the completion of the Point Village, where there will be offices, residential units, a cinema and other facilities. And then he said: “We will pay back what they [Nama] paid”.
Just to explain that: he borrowed some hundreds of millions from the banks; Nama took over these loans from the banks, but at a discount, and Harry Crosbie will pay back, not what he initially borrowed, but what Nama paid the banks on the transfer of the loans.
In other words, Nama is a device to bail out the developers.
Remember what Brian Lenihan said just two years ago: “The amount a borrower owes will not change because of the transfer of a loan from his bank to Nama. The agency will have a statutory duty to maximise the taxpayers’ return and will therefore be expected to use its entire means to this end.”
According to Harry Crosbie the amount the borrower owes will and has changed and the purpose of Nama is not to maximise the taxpayers’ return (incidentally, I believe the word “taxpayer” is ideologically loaded and I use it here just because Brian Lenihan used the word).
I phoned Nama and asked to speak to their press office. I was told they did not have a press office, that their communications were being handed by Gordon MRM. I got to talk to the managing director and owner of Gordon MRM, Ray Gordon, who told me: “The priority of Nama is to recover the amount Nama paid for the loans”.
He went on to say that Nama would pursue the full amount in many cases, depending on the level of co-operation they had received from the borrower but often there was no point. He said the focus of Nama on recovering the amount Nama paid for the loans had been stated in the latest annual report and in statements made recently on behalf of Nama.
So there you have it.
In spite of all the promises made just two years ago that Nama would not be a bailout agency for developers, Nama is a bailout agency for developers. The developers will not be pursued for every penny they’ve got, they will escape debts of hundreds of millions in many instances, while people in negative equity in their homes will be pursued for every penny they’ve got.
And, we, the people of Ireland, will pick up the tab.