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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.
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