Nama director holds €37,000 in BoI shares
Conflicts of interest being 'managed' claims Nama
Published 25/04/2010 | 05:00
NAMA board member Michael Connolly faces a potential conflict of interest over his ownership of 20,000 Bank of Ireland shares worth almost €37,000, according to the bank's share register.
Bank of Ireland is to move €12bn worth of property loans to Nama. The decision on what sort of discount Nama will pay for all of the loans will have a major effect on the bank's financial position. The first tranches of €1.9bn worth of loans had a discount, or "haircut", of 35 per cent -- far less than the hit taken by the other major banks.
Revelations about Connolly's stake in Bank of Ireland come after the Sunday Independent uncovered a series of other potential conflicts of interests in the past two weeks.
Nama's head of property, John Mulcahy -- the man who will decide which development projects are viable and which should be bulldozed -- holds €2.3m worth of shares in property firm Jones Lang LaSalle, where he ran the company's Irish operation.
Under Nama rules, Mulcahy may not involve himself in any decisions which may relate to Jones Lang LaSalle.
However, this greatly limits Nama's ability to function effectively -- as Jones Lang LaSalle is one of Nama's five national valuation companies. It is also one of the state agency's four US valuation firms.
"All I can state is that there was full disclosure by all employees who joined Nama. We ensured full disclosure," Nama chief Brendan McDonagh told the Oireachtas Finance Committee, where he was grilled about the Sunday Independent revelations.
"He [John Mulcahy] would not be permitted to take part in any allocation of work to his former company -- this applies to anyone who joins the NTMA or Nama.
"This is a house rule and how we manage conflicts of interest. Effectively, there would not be any inference of favouritism towards a former employer," Mr McDonagh added. "We had to recruit people with experience from the market. Many people would have potential conflicts of interest and the question is how we manage them. We have an internal procedure to manage them."
Mr McDonagh was asked by Joan Burton whether John Mulcahy would be allowed to remain as an "active" shareholder of the company. "No, he is not allowed to be an active shareholder in that company.
"To be realistic, it's a publicly quoted company and once a senior employee declares a shareholding, that is what is required under the Nama Act. All employees are required to make a full disclosure of their assets, liabilities and interests. It does not mean to say the conflict is not managed. It is," he responded.
Following McDonagh's appearance in front of the Oireachtas Committee, the Sunday Independent revealed that a second Nama executive held shares in a property firm. Newly appointed portfolio manager Donal Kellegher was listed as a shareholder in Savills plc, the listed British property firm that bought Hamilton Osborne King, which it renamed. Now Savills Ireland is one of Nama's five national valuers, following a tendering process finalised last december.
"Nama has spelt out its position vis a vis conflicts of interest to you previously. There is no change in the position," according to a spokesman for the state property behemoth last Friday. "On your Michael Connolly point in particular . . . just to note that all directors are required to do disclosures under Ethics in Public Office Acts, which applies an even higher standard than that under sections 30 and 31 of the Nama Act."