Year in review: Farrell case scuppered gains hard won by NAMA in 2012
The Enda Farrell case did the most damage to NAMA in 2012, and was seized on by its many doubters as evidence that the entire enterprise is flawed.
The case has left National Asset Management Agency (NAMA) chiefs, Brendan McDonagh and Frank Daly limping into 2013, despite a year that in many ways marked a turning point for the agency.
The Farrell controversy initially kicked off when it was revealed that the former NAMA executive had bought a Dublin house from a borrower whose debts were controlled by the agency.
The real concern was not the price that Mr Farrell paid for the house or even how the amount paid might have been affected Farrell's status as NAMA insider.
The bigger concern was that the executive was able to buy a property on NAMA's books without the agency knowing anything about it.
When further investigation revealed that the same executive had leaked a large volume of information to potential buyers of NAMA assets oversees the case stepped up another gear.
This rocked the agency and it revealed patently inadequate controls over staff and over access to information.
Damage limitation efforts led to tighter rules on the purchase of property by staff, and prompted months of reassurances that the state agency has plugged any gaping procedural holes. But the damage was done, and with it went any appreciation of the numerous gains hard won by NAMA earlier in the year.
Indeed for much of 2012 NAMA was a good news story, not least because it has started to make a modest profit.
On the financial front the omens are good. NAMA is now making more money from rents on its vast property empire than it makes from selling off assets.
This points to the potential of creating a sustainable business or businesses that could one day be sold or floated on the stock market, rather than relying purely on asset prices to repay the agency's start-up costs.
The year also saw a final decisive victory for the agency over Johnny Ronan and Richard Barrett when their Treasury Holdings empire collapsed into a liquidation.
It happened with a good deal of help from KBC but the settlement will be of most benefit to NAMA, not least by drawing a line under whole series of over-lapping legal actions between NAMA and the Treasury owners.
The good news reached a high in May when Finance Minister Michael Noonan was able to turn to NAMA managers to fund a mini-stimulus programme for the construction sector.
Indeed, not all that mini. NAMA was able to come up with €2bn in cash to help kick start the beleaguered construction sector, potentially creating as many as 35,000 jobs over two years. In addition, a further €2bn was freed up to provide "vendor financing".
Putting the cash to work will be the main job for NAMA in the year ahead.
The acquisition of loans from the banks was completed in 2011, and assessment of borrowers' viability concluded this year, so 2013 will be heavily focused on generating returns from asset management, management of debtors and on maximising the proceeds raised from disposals.
Kick-starting the construction sector with €2bn of investment is in NAMA's gift. How it acts in 2013 could well determine if the sector is revitalised, or continues to lag below sustainable levels.
The agency has also promised in 2013 to provide as much information on its portfolio and activities as possible within current legislation.
In July this year the coalition revealed that the agency, which is sometimes accused of being too secretive and lacking transparency, would be subject to Freedom of Information legislation.
If conditions of secrecy allowed the Farrell case to arise, making transparency a reality needs to be a priority in future.
Applying the workings of the organisation to proper public accountability is long overdue, regardless of commercial sensitivities.
Next year will mark NAMA's first major financial milestone – repayment of €7.5bn of bond debt committed to under the state's agreement with the Troika.
Chief executive Brendan McDonagh has already expressed confidence NAMA will meet the deadline.
Like every Government agency and department in these straitened times, keeping costs at a minimum is also a must.
The agency's projected operating costs are expected to drop to €140m – down from the €167m this year.
As has been the trend, 'primary servicer fees' – the money paid to the banks by the agency to manage debtors loans – and costs reimbursed to the National Treasury Management Agency are expected to be the two main items in its projected budget for the year ahead.