Wednesday 17 January 2018

Rattled NAMA must be more open following Farrell affair

George Garvey

THE alleged activities of former NAMA employee Enda Farrell are rapidly shaping up to become the secretive organisation's biggest scandal.

Since it was revealed on August 5 that Mr Farrell and his wife, Alice Kramer, had bought a house from property developer Thomas Dowd whose bank loans had been purchased by NAMA, the unanswered questions have continued to pile up.

When the purchase of the house in Lucan was first revealed, Mr Farrell, who had been employed by NAMA as a portfolio manager from 2009 until March this year, said the organisation had been notified of the deal by Mr Dowd earlier this year and that it had approved the transaction.

Even then the affair left a bad taste. Not alone had Mr Dowd's bank loans been purchased by NAMA, but Mr Farrell had paid just €410,000 for a property that had been bought by Mr Dowd for €1.4m in 2004.

It would appear Mr Farrell didn't tell Mr Dowd he was a NAMA employee and, when Mr Dowd sought approval of the transaction from NAMA, the organisation failed to realise Mr Farrell was one of its employees.

Things got much worse when NAMA went to the High Court on September 12 and revealed that, while investigating the purchase of the Lucan house by Mr Farrell, it had uncovered evidence of the possible unauthorised removal of information from the organisation.

NAMA obtained High Court orders against both Mr Farrell and Ms Kramer the previous week directing them to deliver up all materials containing commercial information relating to the organisation.

Finance Minister Michael Noonan told the Dail on September 25 that a follow-up investigation by NAMA's auditors Deloitte had uncovered evidence of the possible leaking of sensitive information.

The full extent of the leaks became apparent when NAMA went to the High Court again earlier this month. Mr Farrell told the court on October 8 that he forwarded 29 emails to his wife between October 2011 and February. Ms Kramer then forwarded the emails to Mr Farrell's personal Yahoo email account.


The emails are understood to contain details of every property controlled by NAMA. Such information would be extremely valuable to anyone seeking to buy property from NAMA.

Mr Farrell subsequently sent 15 emails containing commercially sensitive NAMA information between April and July. Among the recipients were property investment groups including Forum, which employed Mr Farrell after he left NAMA. Mr Farrell left Forum last month, while Ms Kramer has resigned from Ernst & Young.

A further twist this week revealed Mr Farrell had been questioned by gardai about the alleged NAMA leaks. The 2009 legislation under which NAMA was established provides for draconian sanctions against employees who breach their duty of trust. Anyone found guilty of such a breach could be fined up to €5m and jailed for five years.

The long-term consequences of the Farrell affair for NAMA are likely to be profound. Despite having paid more than €31bn of public money buying property-backed bank loans with an original value of €74bn, making it by some calculations the biggest property company in the world, NAMA is subject to little public scrutiny. When he was drafting the 2009 NAMA Act the then Finance Minister, the late Brian Lenihan, excluded NAMA from the terms of the Freedom of Information Act. He also made it a criminal offence to lobby NAMA.

While such unprecedented provisions were justified at the time as being necessary to protect the new organisation from interference, there was no effective oversight not just of a large proportion of the liabilities of the State but also of the economically vital property sector.

This made it vital that NAMA had to be not just squeaky clean, it had to be seen to be squeaky-clean.

The Farrell affair threatens to fatally undermine the consensus protecting NAMA from greater political scrutiny.

Now that NAMA appears unable to effectively police the activities of its employees, its critics have been provided with the ammunition they hope will batter down the walls of secrecy.

And that might be no bad thing. It is becoming increasingly clear that wrapping NAMA in a cocoon of Kremlinesque secrecy was an excessive reaction to the admittedly horrific circumstances in which we found ourselves in 2009.

With our economic well-being vitally dependent on NAMA doing its job properly, greater openness is important if it is to retain the public support necessary to complete its task.

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