Nama 'perks' for builders add to sense of injustice
Developers enjoying allowances on top of huge salaries -- and all at taxpayers' expense, writes Ronald Quinlan
DEVELOPERS who work for Nama will be entitled to claim expenses and may even stay in their palatial homes as they draw salaries ranging from €70,000 to €200,000, the Sunday Independent can reveal.
Confirmation of the generous allowances being given by the State's so-called 'bad bank' is sure to provoke fresh anger from a public reeling from the revelation by Nama chief executive Brendan McDonagh last Wednesday that his agency has approved salaries of €200,000 for two of its biggest developers.
Appearing before the Dail's Public Accounts Committee (PAC), Mr McDonagh also confirmed Nama's intention to approve salaries ranging from €70,000 to €100,000 a year for between 110 and 120 developers on its books before the end of this year.
Confirmation of the multimillion euro pay bill has unsurprisingly been met with a furious reaction from a public already carrying the massive cost of bailing out the banks that were broken through reckless speculation in the property market.
Asked if it was right that Nama should allow developers to be paid up to €200,000 a year, 89 per cent of those surveyed in the latest Sunday Independent/Quantum Research poll said that they did not. "I think it's totally unfair. Ordinary people are paying for their [developers] mistakes and they are now making huge wages to work in Nama," one female respondent to the poll said.
The news that the developers on Nama's books will also be entitled to claim expenses, and possibly even to stay in the palatial homes they acquired during the boom, is sure to add to this sense of injustice.
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Referring to the entitlement of developers to claim expenses, a spokesman for Nama said: "The business plan for their [developers'] business will include resources from the income generated by the business to support the running costs of that business and this will include resources for payments for the key personnel that Nama judges to be necessary for the successful implementation of that plan and other costs including properly vouched for business-related expenses."
Asked if those developers working with Nama would be obliged to trade down from their present homes to more modest properties, the spokesman pointedly declined to say that this would be required in all cases.
"Typically their present homes will be brought into play as part of the business plan and the loan recovery process and trading down and sales of such homes has already begun," the spokesman said.
While such an assurance might go some way towards tempering the anger of hard-pressed taxpayers, Nama's decision to incentivise developers through the payment of a 10 per cent commission on future sales of the assets underpinning their loans will be a harder sell.
Outlining how the commissions will be paid, Mr McDonagh told the PAC that if developers recovered the acquisition price paid by Nama for the loan plus an additional 10 per cent, they would be allowed to keep 10 cent for every euro repaid above that "financial milestone".
The Nama chief again insisted there was no debt forgiveness for developers on the agency's books, saying they were obliged to repay the full €74.2bn owed. But Mr McDonagh readily conceded that achieving full repayment of this amount would not be possible in the current market where property values had fallen by 60 per cent.
He said there was "no pot of gold" beyond the properties securing the loans. "Gratuitous" court actions would be a waste of taxpayers' money if developers had no other money, Mr McDonagh added.