NAMA is once again in the news. This time over the sale of its northern loan portfolio. Regular readers of this blog will know that the Fianna Fáil Government established the National Asset Management Agency (NAMA) in 2009 as part of its response to the economic crisis. Acting as a ‘bad bank’ NAMA took over all of the loans – “good” and “bad” – of all property borrowers arising from those banks bailed out by the Irish taxpayer.
As a consequence of the decisions of successive Irish government’s bad banking debt was then turned into public debt with citizens taking on the financial burden of debts amounting to over €64 billion. NAMA was intended to recoup the losses to the Irish taxpayer.
Sinn Féin TDs, particularly my good self, Mary Lou MacDonald, Pearse Doherty and Peadar Toibin have consistently raised concerns about NAMA. At the beginning of June the Irish government was forced into establishing a Commission of Investigation into the Irish Bank Resolution Corporation (IBRC) over concerns about the write down of debt in the selling off of public assets held by that bank.
In the Dáil debate I said: “It’s also important to state that the concerns around IBRC are not confined to that bank. Similar concerns surround the operation of the National Asset Management Agency (NAMA).
NAMA also has been handling billions of euro in debts arising from the economic crash, mainly from the collapse of the construction industry. NAMA has been ordered to wind up faster than its 2020 remit demands.
Sinn Féin is concerned that this may result in a failure to get full value for the taxpayer and that NAMA is undertaking a firesale of assets to meet an arbitrary deadline. So, the distinct impression that citizens are left with after weeks of exposure to the IBRC scandal is that a culture of secrecy exists at the heart of this Government.”
On Thursday independent TD Mick Wallace raised similar and valid concerns around NAMA and the sale of its northern loan portfolio to a US vulture capitalist firm called Cerberus Capital Management back in April 2014.
This sale by NAMA included loans owned by debtors – property developers and investors - from the North who had borrowed from Anglo-Irish bank, AIB and Bank of Ireland. Their loans were secured by assets held across the island of Ireland, Britain and in parts of Europe.
The value of these loans had a par value of £4.5 billion and the whole purpose of NAMA selling this loan portfolio was to recoup the losses to the Irish taxpayer who shamefully, have been forced to bail out the banks who lent the money in the first place. But of course that is not what happened.
What we now know did happen was that NAMA sold the £4.5 billion of loans to Cerberus - it is alleged for only £1.5 billion.
Before the sale even took place Sinn Féin Finance Spokesperson Pearse Doherty questioned the Minister for Finance Michael Noonan in the Dáil on whether or not NAMA had jumped too soon and received the best value for the portfolio on behalf of the taxpayer.
Pearse asked, "Fire sales at the cusp of property price and economic recovery ring every alarm bell there is.”
Asking further he quizzed the Minister on, “…the number of bidders; the date the bidding process commenced; if he instructed NAMA to dispose of their entire North of Ireland portfolio; the criteria used to establish the successful bidder; and if he will disclose the ultimate price paid for the portfolio.”
In response Michael Noonan said that, “the sale of the loans relating to debtors in the North was conducted on NAMAs behalf by the corporate finance advisor Lazard. The sales process commenced in January 2014 and the decision to dispose of the portfolio was taken by NAMA in response to an improvement in market conditions. As part of the process, Lazard identified and engaged with those parties which, in its expert view, had the capacity to engage in a transaction of this scale. NAMA recently announced its intention to proceed with the sale of the portfolio, subject to contract, to affiliates of Cerberus Capital Management, L.P. The process is, accordingly, on-going and it would be inappropriate to comment any further on the matter given that the transaction has not yet concluded.”
Needless to say the sale went ahead. Cerberus got a bargain and the people got taken for fools by the Government and the golden-circle, yet again.
On the day the sale went through NAMA Chairman, Frank Daly, and NAMA CEO, Brendan McDonagh issued a public statement which said;
“This transaction represents a significant achievement for NAMA. It is NAMA’s biggest single transaction to date and we are satisfied that the sales process will deliver the best possible result for the Irish taxpayer. NAMA management of this portfolio has been measured and supportive taking into consideration the particular circumstances in the Northern Ireland economy. We are assured by Cerberus that they will adopt a similar approach.”
I’m not sure everyone would agree with that assessment.
One year on we are being told of serious concerns being experienced by local businesses and entrepreneurs in the north, many of whom were in fact “good” borrowers, who agreed their repayments with NAMA before it sold off the northern portfolio, and who have yet to miss a repayment.
Sinn Féin warned of this at the time and Cerberus promised to work with local business and gave assurances, “to act in the best interests of Northern Ireland and, like Nama, would not seek quick fixes by embarking on a “fire sale” that would drive down property prices.”
However, despite such promises Cerberus certainly do appear to be seeking quick fixes and embarking on a “fire sale” to secure the par value of the loans of £4.5 billion. This is to the detriment of the local economy, particularly in these increasingly challenging times as the Tory party inflict deep cuts to the local economy. We must avoid at all costs any further assault or negative downward impact on small business, employers and the wider economy.
Cerberus cannot come to Ireland as profiteers and not be scrutinised or held to account. We can assure them that is what will happen.
Further allegations raised by Deputy Mick Wallace TD in the Dáil which suggest a cabal involved in insider trading and political cronyism, must be fully investigated by the Assembly, PSNI, DPP and other relevant authorities.
I welcome the statement from the Deputy First Minister Martin McGuinness, who has called for an intensive investigation into these matters.
I also welcome the decision by Daithi McKay, the Sinn Féin Chair of the Assembly Finance Committee, who has said that he intends to convene an emergency sitting of the committee to consider its response to the NAMA allegations. Cerberus was previously invited by the Assembly Committee to give evidence but didn’t. Daithi intends calling them again. He also plans to call NAMA officials and the Law Firm mentioned in the current controversy to speak to the committee, and I understand that he intends inviting Mick Wallace to appear before the committee also.
The disclosures around this latest controversy involving NAMA underlines the need for a Commission of Investigation to be established into the management and decisions of NAMA by the Irish government.
As a first step, and in light of the revelations and allegations over the last 24 hours it is imperative that the Minister of Finance Michael Noonan comes into the Dáil on Tuesday and makes a full statement on the handling of this sale by NAMA and states whether he is assured that the sale was value for money and not open to abuse.