NAMA 'can't touch' developers' wives
No power to seize assets moved before agency set up
Published 09/10/2010 | 05:00
NAMA cannot claw back millions of euro in assets belonging to developers who transferred properties to their wives and families just before the State's 'bad bank' was set up.
The National Asset Management Agency only has the power to pursue assets transferred to relatives since December 2009 as part of its efforts to recover billions of euro owed by indebted developers.
It cannot seize properties and other assets transferred before that date, the Irish Independent can reveal.
The revelation is in contrast with the strong statements being made by Finance Minister Brian Lenihan. He has said that while the Government couldn't prevent developers from moving abroad they would not be able to escape their debts.
Yesterday, a NAMA spokesman said the agency would use all powers at its disposal to collect monies owed by developers.
"Our preference is to work with debtors with a view to their loans being repaid," he said. "However, where that is not possible, then we will use all the means at our disposal within the law to pursue debtors."
Mr Lenihan included a provision in the NAMA legislation to give the bad bank power to "set aside" or reverse transactions that favoured family members and allowed developers to avoid using them to repay their debts.
But it is now clear that this will only apply to assets in a developer's name after December 2009.
In recent years a number of high-profile builders have transferred properties into their spouses' names.
Bernard McNamara, who has debts of more than €1bn, transferred his shareholding in one of his companies to his wife Moira in September 2009.
Builder Seamus Ross, of Menolly Homes, put three Dublin properties into his wife's name between February and July 2009. Gerry Gannon, who part-owns the K Club golf resort in Co Kildare, also transferred properties into his wife Margaret's name last year. Other developers, including Joe O'Reilly, who built the Dundrum Shopping Centre, and Liam Carroll, also put properties in their wives' names last year.
There is no suggestion these transfers were made to avoid paying debts now in NAMA.
NAMA does have the power to follow assets in circumstances where a developer is declared bankrupt. It can then seek to go after any assets that were transferred to safeguard them from creditors up to two years prior to being declared bankrupt.
It has also emerged that NAMA will run into trouble when chasing assets that have been transferred to certain countries that have not signed treaties with Ireland to recognise court judgments. This would include money deposited in places such as the Channel Islands or other offshore havens like the Cayman Islands.
As NAMA this week faced its first major legal challenge with Paddy McKillen's action to prevent it from transferring his €2.1bn loans to the powerful agency, cases against 12 developers who owe €300m and are refusing to cooperate with it are looming.
NAMA is directing the five banks -- AIB, Bank of Ireland, Anglo Irish Bank, Irish Nationwide and the EBS building society -- to take legal actions against these borrowers.
NAMA boss Brendan McDonagh has said it would be asking the courts to shut them down. If it wins these actions, it will prompt a number of asset sales and potential bankruptcies.
The agency has already put €500m worth of properties, mainly in the UK, on the market as part of its efforts to recover the bad debts. It is also in the process of approving plans for individual developers to either sell their assets or work out their debts over a fixed time period.
Mr McDonagh has an 80-strong team who have so far taken loans totalling €56bn from the five banks being bailed out by the Government. A final batch of loans will be transferred by the end of this year, bringing the total to €73bn.
Over the next 10 years, NAMA's objective is to recover the €40bn owed by developers to the five financial institutions bailed out by the Government. This week, ratings agency Fitch, said it had a "reasonable" chance of breaking even but much would depend on how it can weather the litany of legal challenges in the months ahead.