Nama must do more than kick developers
The State's 'bad bank' has shown it can get tough, but can it take unpopular decisions? asks Ronald Quinlan
'It is now of fundamental importance that Nama evolves further beyond this start-up phase and becomes the proactive, externally focussed, entrepreneurial, confident business it needs to be (even when its actions may not immediately be popular politically or in the media)."
That was how former HSBC chief Michael Geoghegan put it in his report to Finance Minister Michael Noonan last month as he sought in the most diplomatic of terms to sound the alarm bell in relation to the future operation of the State's so-called 'bad bank'.
Surprisingly, in pointing out Nama's worrying deficiencies, Mr Geoghegan didn't raise the hackles of its chief executive Brendan McDonagh or chairman Frank Daly.
"Nama understands the need for this evolution," he noted before adding that a failure to 'evolve' would be likely to cost the Irish taxpayer "a number of billion euro".
But while Nama may claim to understand the need to evolve or change, does its present management have the wherewithal -- or indeed the stomach -- to manage that process, given its record to date? That is a question that Mr Geoghegan understandably didn't address in his report to Mr Noonan.
For instance, will Mr Daly go before the Dail's Public Accounts Committee to explain how Nama will pay a new batch of developers six-figure salaries and expenses to finish off the projects begun by the developers whom it put into receivership and liquidation -- at great expense -- in its start-up phase?
Because make no mistake about it, that's precisely what Mr Daly and Nama will be required to do if the agency is to become the "entrepreneurial, confident business" that Michael Geoghegan says it needs to be in the interests of the Irish taxpayer.
That's where Mr Geoghegan's observation that Nama may need to take actions that "may not immediately be popular politically or in the media" will come into play.
So far, Mr McDonagh and Mr Daly have enjoyed something of a honeymoon period in the press, thanks to the countless breathless reports of Nama's latest dramatic moves against developers.
Indeed, such has been the agency's apparent appetite for putting the boot into the likes of Bernard McNamara and Ray Grehan that it has quietly earned the nickname of the 'National Retribution Agency (NRA)' in development circles.
However, riding the wave of popularity that receiverships, multimillion-euro judgments and the forced sale of Bentleys, helicopters and paintings brings it in the press cannot go on indefinitely.
Maximising the amount of money it can recover for the taxpayer will require different tactics and a different attitude towards developers -- be they the ones from whom it is currently trying to recover money owed or the ones that it will need to recruit in the future to finish out or manage the properties on its books.
That Nama's current management has the capacity to manage such politically and publicly unpopular relationships has (with the exception of only a few high-profile cases) not been borne out by the evidence to date.
Indeed, only last week the news broke that the agency had effectively reached the end of its tether with Johnny Ronan's and Richard Barrett's Treasury Holdings, and demanded the repayment of €900m by the end of this month.
That Treasury had signed a memorandum of understanding with Nama as far back as December 2010 but never progressed to the point of a final, formal agreement doesn't surprise any of the developers who spoke to the Sunday Independent.
Shortly after the news broke of his bankruptcy in the UK, Glenkerrin Homes chief Ray Grehan spoke out about the agency in this newspaper, saying: "Nobody knows what the game is in Nama -- I don't think they know themselves.
"They have buried themselves in paperwork. As a result, they're very slow with their decisions and I don't think they're able to keep up."
For its part, Nama dismissed Mr Grehan's claims on the basis that he wasn't what it termed an "objective observer".
Given that the Galway-born developer found it necessary to declare bankruptcy in the UK to escape what he described as the "Nama noose" and the repayment of over €300m in debt, it may have a point.
But by simply persisting with an agenda whereby developers who don't adjust completely to its 'reality' are put into receivership or have massive judgements registered against them -- moves that are frequently interpreted in the media as examples of decisive action -- Nama isn't doing anything to solve the bigger problems with which it was supposed to deal.
Not too long ago, when the public's desire for heads on plates was at it height, Frank Daly opined that it was possible to identify 250 individuals who, together, had managed to destroy the Irish economy.
Now that the shouting is finally beginning to die down and people are looking for solutions, it will be interesting to see if Mr Daly and Nama are as adept in identifying those who might be able to rebuild it.