Verdict raises serious questions over how 'bad bank' is run
NAMA's rare victory in the HIgh Court yesterday raises major questions over how the agency conducts itself on our behalf.
Despite the win, the court's verdict must give those charged with overseeing the so-called 'bad bank' serious cause to consider how it's being managed.
The owners of Treasury Holdings aren't the sort to provoke much sympathy from the public. Former billionaires Johnny Ronan and Richard Barrett long enjoyed the high life thanks to a largely debt-funded property empire.
One of NAMA's bugbears is that when the markets turned, Treasury's indebted company concocted a deal to sell assets in China to the pair for little more than an IOU.
Unsympathetic though the two men might be to the many citizens, Justice Mary Finlay Geoghegan concluded that they were entitled to a fair hearing when dealing with NAMA but didn't get it.
All told, the detailed ruling handed down by the judge is much more damning of NAMA -- noting its "unfair" processes and "unreasonable" actions -- than it is of Treasury.
It means that setting aside the very particular details of why Treasury lost, the findings raise serious questions over the management and oversight of the State's biggest single investment vehicle.
Worryingly, it's not the first time the courts have found that NAMA has fallen down when it comes to respecting the rights of citizens. NAMA argued in court that as a commercial entity it should be able to act like a bank when it comes to how it treats debtors.
The court rejected the claim, adding that as a state agency NAMA must act like other arms of Government., and has a duty to act "fairly" in making decisions that affect the rights of those before.
But NAMA won't like that, it would prefer a freer hand when it comes to dealing with some of the undoubtedly tough cases from which it is owed money.
Unlike a bank, NAMA has the full power of the State behind it so it needs to be fair and transparent.
That's a particular concern, because if NAMA fails that test, it will be taxpayers that will pick up the tab.
Yesterday's judgment is timely. Unlike many cases that churn through the courts, all of the issues remain live.
Treasury took its case against actions taken by NAMA in December 2011 and January of this year.
To all intents and purposes, Judge Finlay Geoghegan is commenting on NAMA's current processes and procedures.
Her judgment makes clear that NAMA's most senior officers, including chief executive Brendan McDonagh and chairman Frank Daly, were close to the decision-making process that has now been found wanting.
Worryingly, yesterday's ruling is the third verdict of its kind where NAMA process has been found wanting by the courts.
In the Supreme Court, developer Paddy McKillen successfully argued that NAMA had acted improperly when it transferred loans of his out of the banks before the agency was officially up and running.
A separate action by developer David Daly in the High Court established that as a state agency, NAMA should have given him a fair hearing before taking a decision to demand repayment of his loans.
Taken together with yesterday's decision, the rulings must raise fears that at least some NAMA processes are not fit for purpose.
With 800 developers on the agency's books there must also be fears that the processes that have been found wanting are storing up a major problem of future legal claims, even when we know NAMA will be under pressure to break even on its massive €30bn start up costs.