Friday 30 September 2016

Beneath the bluster, Ronan's questions for Nama should be heard

Published 27/09/2015 | 02:30

The Battersea Power Station property includes a large site around the station
The Battersea Power Station property includes a large site around the station
Developer Johnny Ronan

Can somebody please persuade Johnny Ronan to hire a press advisor?

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Mr Ronan's testimony to the Banking Inquiry was undoubtedly the property story of the week. His fierce criticism of the National Asset Management Agency (Nama) would have been a big story in itself, but the way he signed off his evidence guaranteed it would be front page news.

Unfortunately, by ending with the German phrase "Arbeit Macht Frei" (helpfully translated into Irish for the Gaeilgeoirs among us) Mr Ronan ensured that the rest of his evidence would be forgotten.

To invoke the "Work Sets You Free" quote that is synonymous with the Holocaust, was crass, insulting, and downright stupid.

There are some things that you simply cannot do, and one of them is comparing the loss of your business to the systematic murder of more than 6 million Jews in World War II.

One would hope that Mr Ronan's team would have been able to tell him that that one line would overshadow everything else included in his evidence. Yet it would appear that did not happen.

As a result, instead of discussing the questions he raised about Nama the media spent the last two days excoriating him for the holocaust comparison.

Try to step back from that row however, and Mr Ronan makes a series of allegations: that Nama wanted a €10m fee from SP Setia just hold a meeting about the future of Battersea Power Station in London, that Nama put the word out that Mr Ronan's companies were looking for €4bn worth of development finance, essentially that Nama vindictively put Mr Ronan's Treasury Holdings out of business. Nama has repeatedly said it is focused on achieving the best returns for the taxpayer.

None of these can be proven. They seem outlandish, and they are effectively Mr Ronan's word against Nama's.

One point that Mr Ronan is right on though, is that Nama does operate with excessive secrecy.

Nama, even after becoming subject to the Freedom of Information Act, is more or less a black box.

Too often, the agency is able to hide behind the cloak of "market sensitivity" to avoid closer scrutiny. It is true that agency chief executive Brendan McDonagh and chairman Frank Daly seem to be up on from the Oireachtas Public Accounts Committee every other week, but the general attitude of the agency seems to be "trust us".

Considering the agency is being funded by tax payers, that is not good enough. Nama is viewed with huge suspicion by the wider public. They see it as a faceless organisation that has facilitated developers and investment firms lining their pockets both here and around the world. That maybe unfair, but that is the perception nonetheless.

There is also the question of what happens next for Nama. The agency is supposed to be out of business by the end of this decade. That was its mandate when it was set up.

Nama has made a big deal of repaying 80pc of its so-called Nama Bonds by the end of next year, That will be an admirable achievement if it happens. But what happens after that?

Nama has made it clear repeatedly that it does not plan on becoming a developer. The agency has sold off huge chunks of its portfolio - I reported earlier this month that it had offloaded enough land for 11,000 homes around Dublin - but it has also retained some peculiar assets.

Chief among them is the freehold of Project Wave - an office development on the quays in central Dublin.

The site is being developed by Sean Mulryan's Ballymore in conjunction with Singapore developer Oxley. But why has Nama retained the freehold? The agency has said previously that retaining the freehold for now doesn't mean it won't sell it in the future. But for an agency that is supposed to be out of business in the next few years, it seems a curious decision. There is no suggestion that Nama will continue beyond its indicated life cycle, but industry sources are concerned this may end up happening.

Mr Ronan's main criticism of Nama centres on the sale of the Battersea Power Station site in London to SP Setia in 2012. He claims Battersea would have delivered profits of at least €4.2bn if it had been retained.

We can never know the answer to that hypothetical, but look at it this way. Battersea has been a development site for 30 years. In that time, nothing has been built on it.

SP Setia is building homes there and all seems well, but two weeks ago Bloomberg News reported that apartment sale prices in the area had fallen sharply in recent months. The latest incarnation of Battersea is not in trouble, but is not as lucrative as it seemed a few years ago.

Mr Ronan's criticism of Nama should have been thought provoking and, to some extent, it was justified. But the careless use of one phrase has negated any impact he might have made.

A word of advice Johnny, hire a PR. You've made some good points, but an end of testimony flourish has hurt you far more than it hurt Nama.

Sunday Independent

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