Monday 19 March 2018

Seven things you need to know about the C&AG report on NAMA

The Treasury Building on Grand Canal Street Lower where NAMA is based. Photo: Tom Burke
The Treasury Building on Grand Canal Street Lower where NAMA is based. Photo: Tom Burke
John Downing

John Downing

There are just seven things you need to know about the report by the taxpayers’ watchdog, the Comptroller & Auditor General, on the National Assets Management Agency. John Downing guides you through the maze of acronyms and jargon.


Don’t be phased by the “alphabet soup.”  NAMA is the National Asset Management Agency, a body set in 2008 by the late Finance Minister Brian Lenihan to manage the Irish banks massive bad loans and the grossly over-valued property portfolios acquired by borrowers for exorbitant sums. NAMA’s job was to get the loans and properties as cheaply as possible and sell them for as much as they could get to cut taxpayer losses.  The Comptroller & Auditor General (C&AG) is the taxpayers’ watchdog who looks into how public money is spent and whether citizens get value.



At issue is the gigantic book of loans on properties in Northern Ireland called “Project Eagle.”  These properties had an original face value of €5.7bn and were eventually sold off in 2014 to the US vulture fund, Cerebus Capital Management. The Government has always argued that NAMA’s work, selling off indebted properties, means it had to be very secretive. This probe by the C&AG is very extensive, probably the biggest outsider look-in on NAMA’s workings. Some 40,000 documents were trawled from NAMA files.



A huge question raised by the C&AG is why NAMA sold the Northern Ireland portfolio in one single block. Previously, it tended to split things up and sell them off over time. This was a “big bang,” which the C&AG says, cost Irish taxpayers “hundreds of millions.” NAMA looked at splitting things up, according to property type or individual debtors.



NAMA say they opted for a one-off sale because of legal complexities dealing in another legal jurisdiction and deteriorating relations with debtors. NAMA also hugely contests the C&AG finding that it lost taxpayers “hundreds of millions.” They contest the calculations used to back the C&AG arguments. This is complex stuff based around valuation methodologies and other formulae.



The C&AG deals with questions around the bidding process itself which NAMA insists was always competitive. Three of the firms expressing interest pulled out. One firm said they were pulling out because another US consortium, PIMCO, got unfair advantage. PIMCO had been the first firm to approach NAMA proposing a big block buy. The firm was later excluded from the process.



The C&AG are concerned about potential conflicts of interest. A member of the NAMA’s Northern Ireland Board, Frank Cushnahan, was advising seven of the debtors who had 50pc of the loans involved. He also at one stage advised PIMCO. There are big questions around this.



We don’t know what form the government inquiry will take. But we do know it will be tip-toeing through a minefield. There is the cross-border element with much of the action happening in British legal jurisdiction. There are a number of other inquiries also going on. It will take a lot of work, time and expense to get a result.

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