Business Irish

Thursday 17 August 2017

Nama's sell-off strategy gives big advantage to foreign hedge funds

Selling off assets in huge chunks militates against Irish purchasers who should be given a chance

Claim: Michael Ring says he cannot interfere in the process of disposing of assets
Claim: Michael Ring says he cannot interfere in the process of disposing of assets
Colm O'Rourke

Colm O'Rourke

Last week the Minister for Sport Michael Ring tried to silence me on raising my serious reservations about the operation of Nama and the lack of action by the minister in securing sports facilities for the future.

Nama likes to spin the line that the way it is doing business by selling off huge quantities of property portfolios to foreign hedge funds is getting maximum return for the Irish taxpayer. By selling in such volumes, however, the only ones with the money to purchase are foreign-controlled vulture funds. The only reason they are buying is because they think they will be able to sell on at either lucrative, or very lucrative, profits.

The recent controversy in the North with Cerberus is a case in point. They bought the entire Nama portfolio for less than a third of its original €5.7bn value. They did not do it because they had any affinity with Northern Ireland or Southern Ireland either. They take their money and move on.

The exact same thing has been happening with Lone Star, Blackstone and many more in the Republic. They have the money to buy these vast portfolios and then they sell at a quick profit. It is bizarre then that nobody at the Dail hearings, on Nama's Northern Ireland dealings last week, asked why Nama is pursuing a policy of selling assets in such huge amounts that it is leaving it outside the scope of all but a few international hedge funds.

Why can't these portfolios be sold off individually or in smaller quantities to give Irish people a chance? If there were big auctions in every town in the country where local properties in Nama were being sold off it would give the locals an opportunity to bid. And if young people who are looking for apartments and starter houses got bargains from these property portfolios being broken up, then would that not be better?

Not only that, but sales of property in every town in the country would give business to local auctioneers, solicitors, hotels etc. These professionals are not part of the golden circle in Dublin who are now handling most of these huge property transactions.

The thing with most spin is that if it is said often enough, people begin to believe it. Why are people not up in arms about this scandal? Why are opposition politicians not raising it at every opportunity? Obviously Fianna Fail is still fearful that it should stay quiet as it would be set upon for causing all the trouble originally.

It does seem that Nama has decided to sell some of the best assets of the State to outsiders rather than give people in this country a chance to get back on their feet. Irish developers don't have the commercial clout to compete with the big foreign buyers. Public opinion has helped in this regard - that is up to now, as the general view was that a shady group of developers bankrupted the country. There may have been a few in that category but I know a lot of people who traded in those years who never had any intention other than to repay their debts in full as they had done all their lives.

Circumstances changed. Developers are not criminals, they did not go into banks and demand money with menaces. In fact most of the time the banks were asking if they wanted more. The same with a lot of ordinary working people who were getting unsolicited letters in the post from their bank asking them if they wanted various amounts of money and all that was needed was a phone call to confirm it. Those were the times we lived in. The result of all of it took a very severe toll on many families as dealing with financial institutions was intensely stressful.

Secondly, I wish to deal with the minister's claim that he cannot interfere in the process of disposing of assets. Under the National Asset Management Agency Act 2009 under Section 2, b (viii) purposes of the Act, it says, "to contribute to the social and economic development of the State". Does the minister not know this section is in place or does Nama exist totally outside the control of the elected Government?

This section allows both Government and Nama to earmark properties that would be of social benefit to the whole community, such as the Spawell site. Could the minister or indeed any minister tell us all if there is any school, any hospital, any sports organisation or any community group that has benefited from the application of this part of the legislation?

Does the Minister for Sport or ministers in general believe that selling some of the best of the country's properties to foreign vulture funds "contributes to the social and economic development of the State" more than giving preferential treatment to amateur sports organisations which are giving their energies to improving community and social life? It was at least partly because of such social cohesion in Ireland, helped by clubs of all sports, that we were spared the worst of the divisions that existed in other countries.

Now is a time of great opportunity for both State and Nama to recognise that, coming out of a very difficult financial situation, they have shown the most incredible short-sightedness while at the same time making the most amazing claims.

The public is weary of these issues but needs to start thinking about what is happening before the last set of keys to the State are handed over to the sharks.

Sunday Independent

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