Monday 11 December 2017

Ireland has become new Klondike for risk-takers

The real Johnny Logan has nothing at all to do with Nama
The real Johnny Logan has nothing at all to do with Nama
Richard Curran
WHAT'S ANOTHER YEAR? The real Johnny Logan has nothing at all to do with Nama
Richard Curran

Richard Curran

THE serious allegations made against Nama, or more specifically some of its former officials, have thrown a whole new spotlight on the State agency. The high level of secrecy from its inception has been a cause of frustration for many.

But wouldn't it be ironic if the allegations were true, and taxpayers carrying the Nama risk are kept in the dark, while prospective bidders for assets are given far too much information.

Property insiders from Ireland weren't the best people to inhabit the agency. Lots of foreigners with property experience from abroad might have been better. Nama should have been full of guys who had never heard of any Irish developers -- people who thought Johnny Ronan was a Eurovision winner and the Bailey brothers a comedy act.

The Nama spotlight raises other concerns completely separate to whether a small number of staff may have broken the law or not.

'I would like to have seen guys working in Nama who thought Johnny Ronan was an Irish winner in the Eurovision...'

Have we enough information about the processes behind the purchase and sale of assets with taxpayer money?

While the focus now is on Nama, similar questions about transparency should be asked in relation to the sale of tens of billions of euro of IBRC assets, both before and during the liquidation.

Undoubtedly former management of IBRC wanted to get the best price possible for what they sold and at least IBRC reported half-yearly accounts. Transparency levels reduce when a massive liquidation is going on.

The special liquidator, KPMG, got valuations done on the assets and will also undoubtedly want to get the best possible price. However, we don't know what they were or even what the book value of those assets was because it no longer publishes the same kind of detailed half-year accounts. Not knowing what they were worth on the bank's books, what the valuation said they were worth or what they sold for, is hardly a recipe for assessing whether it was a job well done.

Of course we will get the final total figure for what the liquidator receives, but that tells us little about how individual purchases played out.

Nama will end up acquiring the assets that are not sold. Again, this will be based on valuations for each loan. The cycle will continue of not knowing how much Nama is paying for what it buys.

One of the problems in relation to IBRC assets is that many of them are actual trading businesses. Unlike Nama's predominantly property sales, it is very difficult to place a value on a business. It involves taking a bigger risk for a buyer and there tend to be fewer bidders. Those with detailed knowledge of the firm or the sector have a clear advantage. That is always the case in business anywhere, at any time.

There is no real way of getting around that fact. Anyone is entitled to bid for the assets. In fact restrictions in place for Nama clients, where they cannot buy back their own loans if the loan has got into trouble, didn't seem to apply under the IBRC liquidation.

Ireland has become the new Klondike for those with enough resources and appetite for risk. If the Nama allegations are proven to be correct, having the right information doesn't do any harm either.

Irish Independent

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