Monday 26 September 2016

It's not often I agree with Wallace - but Nama should hold fire on Project Arrow

Published 29/10/2015 | 02:30

Independent TD Mick Wallace
Independent TD Mick Wallace

Project Arrow. The name could have been lifted from an adventure story in those boys' comics that were popular years ago - the kind my older brothers used to read by torchlight under the bedcovers, and trade with their friends.

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In fact, it's code - adopted for confidentiality purposes - for a tranche of property loans in the process of being sold by Nama, somewhat controversially, to US company Cerberus. The reason for rumbling disquiet is because a previous deal with venture capitalists Cerberus is currently under criminal investigation in a number of jurisdictions.

There is no suggestion of wrongdoing by either Cerberus or Nama. But there are misgivings that something shady happened during Nama's sale of its massive Northern Irish loanbook last year - as suggested by the discovery that £7.5m from the transaction was creamed off into an Isle of Man bank account.

Financial impropriety is suspected, and that's why the US Department of Justice, the PSNI and Britain's National Crime Agency are all looking into it. Senior people from Nama have already met and cooperated with the National Crime Agency.

Under the circumstances, any reasonable person might consider it unwise for a state body to conduct further business with Cerberus until the various inquiries are concluded and their findings made public. Those running Nama - chief executive Brendan McDonagh and chairman Frank Daly - appear to be burdened with no such doubts.

Full steam ahead, they have anointed Cerberus as the preferred bidder for another hefty deal, and a decidedly huffy tone is being adopted towards anyone waving red flags. Clearly, since Nama's board seems disinclined to press the pause button, Finance Minister Michael Noonan needs to intervene and do it for them.

As Nama points out, it is the purchase end of the Northern Irish contract which has sparked questions. That transaction - also glorying in a comic-strip inspired name, Project Eagle - involved a 73pc write-down to Cerberus. The assets were sold for £1.2bn (original valuation £4.4bn), £7.5m of which turned up mysteriously in an Isle of Man bank account. Could it have been intended as a fee in return for lubricating the deal? Under parliamentary privilege, Peter Robinson's name was mentioned among five potential beneficiaries - an allegation denied by the North's First Minister.

Much is unclear. What we do know, however, is that in July, Independent TD Mick Wallace alerted the Dáil to that £7.5m payment diverted from Belfast law firm Tughans and "reportedly earmarked for a Northern Ireland politician or political party". Tughans, which was acting for Cerberus, parted company from managing partner Ian Coulter on foot of a dispute over the money.

The account was under Mr Coulter's control.

And now we see Nama doing business with Cerberus again. Nama is naturally keen to sell its assets and press on with its wind-down phase.

Undoubtedly, the so-called 'bad bank' is generating value for citizens, having already redeemed more than €22bn of the original €30.2bn issued to buy loans from banks.

However, NAMA ought to take stock at this juncture, and await the conclusion of those inquiries into Project Eagle; which means putting Project Arrow into hibernation. Irritating to deal-brokers on a deadline, presumably. But to continue under the prevailing conditions is just plain wrong.

There is, of course, an estimated €800m to be gained from the sale of this latest portfolio - a desirable addition to the national coffers. To put it in context, the 2016 Budget is predicated on €500m worth of spending and tax cuts. Nevertheless, clarity must be reached on the first sale before proceeding with the second.

It's not every day I find myself in agreement with Mick Wallace, but he is on the money when he urges NAMA to hold off.

He is not alone among opposition politicians in his stance, but he has shown himself particularly alert to the implications.

"In the interests of the Irish people (Mr Noonan) should stop this sale or at least suspend it until there's a result from the investigations," he told RTE News last week.

Project Arrow's portfolio comprises mainly small, non-performing loans.

Nine in 10 are based in the Republic, and 23pc in Dublin.

The original value was €6.25bn but the agreed sale price is thought to be some €800m - a write-down explained by the fact that just 2.5pc of the loans are performing. Also, loans on lands around Westport House in Mayo were removed from the tranche, as were a number of properties suitable for social housing.

There were three shortlisted bidders for the portfolio but one subsequently withdrew, leaving Cerberus and one other.

"We consider that the Project Arrow loan sale has obtained the best achievable return for the State from these assets," said Nama's Frank Daly. So NAMA is pleased about the Project Arrow deal. And Cerberus is not just "pleased" but "excited" about continuing with its "participation in Ireland's economic recovery through this mutually beneficial transaction".

That's as may be for both parties. But public confidence is not best served by it right now.

Nama is quick to cite business confidentiality but slow to embrace openness. Indeed, it chose to announce the Project Arrow sale at 4pm last Friday with a bank holiday looming.

Furthermore, it seems strange there are investigations afoot elsewhere, but in Ireland the attitude from both Daly and McDonagh is 'nothing to see here, move along'.

Maybe so. But it serves neither transparency nor accountability - which should not be optional extras for a state body of such significance.

Irish Independent

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