Business Irish

Thursday 28 August 2014

Nama adviser rakes in fees of €5.8m

Firm paid to value loans has carried out auditing work for many of the biggest developers on agency's books

Published 07/11/2010 | 05:00

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ONE of the largest recipients of Nama fees has previously carried out auditing work for many of the country's biggest developers whose loans have been transferred to the agency, the Sunday Independent can reveal.

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As the country faces €6bn of punishing cuts and tax rises to be announced next month, news emerged last week that the agency is paying legal fees of up to €485 per hour -- about 50 times the minimum wage -- while even trainee solicitors' fees can amount to €100 per hour or €750 for a 7.5-hour day, according to a report by the Comptroller & Auditor-General (CAG).

KPMG was paid €5.8m by Nama between November 2009 and June this year for valuing loans. Along with legal firm Arthur Cox and accountancy firm Deloitte, KPMG is among the advisers who stand to earn €2.64bn in fees and expenses over Nama's 10-year lifespan.

However, KPMG has also provided auditing services to various firms controlled by developers, including Liam Carroll, Johnny Ronan and Richard Barrett and Sean Mulryan, founder of the Ballymore Group.

In July of this year, the firm audited the accounts of Bloomburg, an investment company controlled by Liam Carroll, whose Zoe Group property development empire collapsed into insolvency last year, leaving in its wake debts of more than €1bn that were owed to various banks.

KPMG is also the auditor of Real Estate Opportunities -- the firm founded by Mr Ronan and Mr Barrett that has debts of €1.8bn -- and the Ballymore Group, another developer whose loans were also among the first tranche of €16bn that were transferred to Nama.

It is also named as the auditor in the most recent accounts of several companies controlled by developer Paddy McKillen, including May Property Holdings, Berkeley Properties and Finbrook Investments.

McKillen's loans were not among the first tranche that were transferred into Nama and last week he lost a legal challenge attempting to stop the transfer of €2.1bn of loans to the agency. Tomorrow the Commercial Court will decide the grounds on which he can appeal the court's judgment on the matter.

KPMG, also audited the most recent accounts of Becbay, the company jointly owned by the Dublin Docklands Development Authority -- for which the firm also worked -- Bernard McNamara, Derek Quinlan and private clients of Davy stockbrokers.

Becbay paid €412m for the now infamous 24-acre Irish Glass Bottle site, which valued 24 acres in Ringsend at €17.2m an acre. Loans related to the site were believed to have been among the first tranche that were transferred to Nama.

There is no suggestion that either KPMG or any other accountancy firm retained by Nama has advised the agency concerning projects related to the affairs of its clients or former clients.

Nama's legal advisers, Arthur Cox -- which billed the agency for €911,250 last year -- have also previously worked for the Treasury Holdings tycoons in relation to the development of the National Conference Centre, according to information on the Arthur Cox website. The CAG's report states that from September 2009 onwards, Arthur Cox is billing Nama for €40,000 per month.

In addition, Rory Williams, a former partner in the firm's corporate department, now sits on the China board of Treasury Holdings, having joined the firm as its Head of Legal in 2001, according to his biography on the Treasury Holdings website.

However, there is no suggestion that Arthur Cox has advised Nama concerning projects related to the affairs of its clients or former clients.

While news emerged in July that accountancy firm Deloitte had been called in by Nama to advise on a business plan filed by Real Estate Opportunities, it is also named as the auditor in the most recent accounts of Galway developer Gerry Barrett's firm Edward Holdings and Seamus Ross's firm Menolly Homes, another leading developer.

The CAG's report stated that in March, Deloitte seconded five personnel, who reported to the head of portfolio management, to Nama for eight weeks at a cost of €33,000 per week. The figure was later discounted to €220,000 and excluded VAT.

These are by no means the only examples of such working relationships. As this newspaper revealed earlier this year, Nama's head of portfolio management John Mulcahy formerly worked for property advisers Jones Lang Lasalle and was a shareholder in the company.

Sunday Independent

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