Garda probe claims banks misled NAMA on loan values
Published 02/12/2010 | 05:00
GARDAI and the Financial Regulator are investigating allegations that banks provided "false and misleading information" to NAMA about the value of their toxic property loans.
The move follows a complaint by Fianna Fail Cork South Central TD Michael McGrath, who made the accusation in the Dail.
Garda Commissioner Fachtna Murphy told Mr McGrath that he had asked a senior official to make contact with NAMA's chief executive, Brendan McDonagh, and chairman, Frank Daly, in relation to claims that were made at a Public Accounts Committee meeting last month.
At that meeting, NAMA said it had been given information by the banks that led it to believe that a 30pc discount on their loans would be the correct price to pay. But when it carried out its own investigation, it found that a 58pc discount was the proper price -- which meant the banks were paid around €20bn less for their loans.
Mr McDonagh said he did not disagree with Mr McGrath's comments that NAMA had been given "false and misleading information".
Mr Daly said: "The figures [from the banks] were certainly misleading. You can speculate as to what was behind it."
Mr McGrath wrote to Commissioner Murphy, the Financial Regulator, Matthew Elderfield, and the Director of Corporate Enforcement, Paul Appleby, to ask them to initiate an investigation into the claim.
Yesterday Mr McGrath welcomed the response to his complaint.
"I believed the onus is now on NAMA to make the full information available to the authorities so that this can be fully investigated," he said.
"Clearly, the information supplied by the banks needs to be compared with the true picture that NAMA discovered when it carried out detailed due diligence work."
Mr McGrath said that if NAMA had accepted in good faith the information provided by the banks, it could have overpaid for the loan book to the tune of €20bn.
"The picture that was portrayed by the banks to Nama didn't materialise when they did the detailed work. They found a very different picture indeed," he said.
In a letter, Mr Elderfield told Mr McGrath that his office expected to be contacted by NAMA's chief executive with information on the claims.
"I have requested my staff to contact Mr McDonagh in the week commencing November 29 if we have not heard from NAMA," he wrote.
However, sources told the Irish Independent that Mr Elderfield would be writing to NAMA next week.
NAMA said it had nothing to add to its comments at the committee and repeated that it would co-operate with any inquiry into these matters.
Mr Appleby said he had no remit to investigate this complaint as NAMA was not governed by the Companies Act.