Treasury in €20m China deal, NAMA tells court
Developers Johnny Ronan and Richard Barrett bought €20m worth of Chinese property shares from their own company for just €100,000 in cash and an unsecured loan, NAMA has told the High Court.
The sale happened before NAMA took control of €1.7bn of loans owed by the Ronan and Barrett-owned Treasury Holdings property empire.
NAMA says the move to buy €20m worth of shares for just €100,000 in cash and an unsecured loan took place after Treasury became aware that its loans were to go to NAMA.
The deal -- known as the Treasury Asia Investments Limited or "Tail" transaction -- closed before the loans were transferred to NAMA.
News of the deal emerged after Treasury Holdings went to the High Court in an effort to reverse NAMA's appointment of receivers to Treasury properties worth hundreds of millions of euro. Treasury is in court looking for permission to launch a full legal challenge that could reverse the receiverships.
NAMA is opposing the application.
NAMA is not claiming that the 'Tail' deal was illegal -- but it says it wanted it reversed in order to maximise the sums it can recoup for taxpayers from the €1.7bn of Treasury loans it holds.
In an affidavit, NAMA's Mary Birmingham said the asset transfer had been a point of contention from the beginning of the relationship with Treasury.
NAMA spent two years unsuccessfully trying to convince Mr Ronan and Mr Barrett to reverse the transfer, before appointing receivers to key Treasury assets, she said.
She said executives at Treasury were made aware on a number of occasions that NAMA would not sell its Treasury loans until the sale of the China shares was reversed.
"The making good of the Tail transaction has been a central requirement of NAMA at all material times," she said in her affidavit.
However in an affidavit for Treasury, its group finance director Niall O Buachalla said he was "at a loss to understand" what had occurred in Treasury's relationship with NAMA to lead to NAMA's decision to appoint receivers.
He said the shares were sold at market value and paid for with the loan note still held by Treasury.
In written evidence submitted to the court, Treasury's Richard Barrett said NAMA's treatment was "utterly misleading, unreasonable, and commercially sharp to an extraordinary degree".
He said NAMA did not engage in any substantial talks with either of two "bona fide investors" that Treasury lined up to buy the loans held by NAMA. Instead, NAMA sent in receivers just when a deal might have been closed, according to Treasury.
The move damaged plans for a potential major new office development Treasury was working on for Bank of New York Mellon in Dublin, according to Treasury. A building commission from the US bank for new offices could have been the biggest construction project of 2012, according to Treasury.
In documents submitted to the court, bad bank NAMA launched a robust defence of its actions, including raising the issue of asset transfers.
It claims Treasury is "hopelessly insolvent," and depends on NAMA for funding, including for €100m of fresh loans over the last two years.
Treasury's owners had put no new money into the business over the same period, according to NAMA. Lawyers for both sides will appear in court again today in front of Ms Justice Mary Finlay Geoghegan.
NAMA will argue that the two potential deals lined up by Treasury to sell the NAMA loans to a third party were both commercially unviable.
The agency claims neither deal would have benefited taxpayers, but could have benefited Treasury's management and shareholders by about €80m over a period of years.
Under both proposals, buyers offered significantly less than the debt owing to NAMA and it was concluded neither was in the best interests of NAMA or the taxpayer, according to the NAMA evidence.