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Nama 'enriches a golden circle', fears senior TD

Public Accounts chair hits out at decision by bad bank to write Bailey brothers' firm €13m cheque

A decision by Nama to commit €13m in funding to a company controlled by the Bailey brothers for the completion of the Charlestown shopping centre in Finglas, Dublin, has been called into question by the chairman of the Dail's powerful Public Accounts Committee (PAC).

Speaking to the Sunday Independent, Fianna Fail TD John McGuinness said Nama's decision to back the Baileys and other developers could fuel the public's perception that the State's so-called bad bank was merely helping to enrich what he described as another "golden circle" rather than acting in the best interests of the Irish taxpayer.

Asked what he made of Nama's support for the Baileys' company Bovale in view of the record €22.17m settlement the Meath-based developers had reached with the Revenue Commissioners in relation to outstanding tax liabilities in 2006, Mr McGuinness said: "There is the whole question of moral hazard. Clarity is needed. While the completion of the Baileys' development looks okay, who will be the overall beneficiary of the completed project and how does the taxpayer fit into that? We put an enormous amount of money into the banks with very little coming out the other end either in support for small and medium businesses or for beleaguered mortgage holders. We turn around now and put essentially what is taxpayers' money into the completion of these projects. It raises the question of moral hazard in the public's eyes. The optics of this are not good."

Last Friday, Nama pointedly refused to respond to specific questions from the Sunday Independent relating to its agreement of a business plan with Bovale and its support for the Bailey brothers' Charlestown development.

Defending the agency's stance on the matter, a Nama spokesman said: "We don't discuss individual projects or debtors but the position is that projects which are the subject of applications for Nama financial support go through a rigorous process before a final decision is taken on whether to extend such support or not. Key issues include whether there is adequate security in place to cover the additional funds extended to the debtor, whether the investment will lead to a better return for the Irish taxpayer than would otherwise be the case and the employment benefits of any investment."

Notwithstanding Nama's position, Mr McGuinness said the taxpayer was entitled to be given "precise and accurate information" on the deals it is agreeing with the developers on its books.

Mr McGuinness was also critical of the paucity of detail given in a speech by Nama chairman Frank Daly in Galway two weeks ago, in which he stated the agency's intention to pour some €2bn into the completion of developments across Ireland between now and 2016.

Commenting on this, he said: "It was one of those statements that was taken up by the press and presented as a good news story, which undoubtedly it is if you spend €2bn in an economy. But the facts around that story as to where the money is going to be spent should have accompanied that speech or in an explanation afterwards. As far as the public see it, it is a further golden circle being enriched. If it isn't [a golden circle], that has to be explained to them."

Also critical of Mr Daly's speech was Fine Gael TD and member of the Dail's Committee on Finance, Public Expenditure and Reform, Liam Twomey.

He said: "Nama are going to be asked before the finance committee in July. There are a lot of questions raised by the recent €2bn announcement. There wasn't a lot of clarity in the speech in which it was announced by Frank Daly. This has been announced before that Nama intends to invest the money it brings in, but we're not sure where it's going to go. There seems to be no hard and fast detail other than they're going to spend it. We need clarity."

Also on the agenda for next month's meeting of the finance committee will be 60 questions submitted to Nama by the Sunday Independent last month, all of which the agency has so far pointedly declined to answer.

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Referring to the questions which we published on May 13, Mr Twomey said: "We discussed the 60 questions in two private sessions of the finance committee over two weeks and found the vast majority of them to be rock solid.

"I think Nama should answer all of them. They shouldn't be hiding."

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