Friday 24 January 2020

Noonan denies political pressure on Nama over Project Eagle

Finance Minister Michael Noonan Picture: Tom Burke
Finance Minister Michael Noonan Picture: Tom Burke
Cormac McQuinn

Cormac McQuinn

Finance Minister Michael Noonan has denied political pressure was put on Nama in relation to its controversial Project Eagle sale.

He has also insisted he has "full confidence" in both Nama and the Comptroller and Auditor General (C&AG), which last month published a damning report on the sale of the property agency's Northern Ireland loan  book.

The C&AG’s report found that Nama incurred a potential loss to the taxpayer of £190m (€223m) in the deal.

Nama has rejected the findings claiming it’s based on an incorrect assumption of the discount rate used in the sale. It also criticised the C&AG probe saying it was carried out by staff with no market experience of loan sales.

The C&AG has insisted its staff had qualifications necessary for the probe.

Mr Noonan is this afternoon appearing before the Dáil's Public Accounts Committee (PAC) where he is being quizzed on his knowledge of Project Eagle.

He said he shared a view with the Northern Ireland Executive that care was needed in Nama's management of its portfolio in Northern Ireland and any potential sales process.

"The fact that I, and my counterparts in the North, were cognisant of a potential sale and mindful of the potential impact on the Northern Ireland economy should not be surprising. 

"However, this should not be misconstrued as political pressure on Nama," Mr Noonan said.

He added: "As has been pointed out by the Nama Chairman [Frank Daly], there was no political pressure on Nama regarding this sale."

Mr Noonan said that in each of his interactions with his Northern Ireland counterparts he stressed that Nama was independent in its functions; that it was obliged to run a competitive sales process and that Nama must be satisfied it had achieved the best price.

One bidder for the Project Eagle portfolio, Pimco, withdrew from the sale after it learned that former Nama adviser Frank Cushnahan was allegedly among those in line for a success fee if the sale went ahead.

Mr Noonan addressed suggestions that he should have stopped the sale when this emerged in March 2014.

"Suggestions that I, as the Minister for Finance, should have interfered with Nama’s commercial decision and called a halt to the Board approved sales process fundamentally misunderstands Nama’s independent mandate and my role as the Minister for Finance," Mr Noonan said.

He said there was "no legal basis" for him to halt the sale or to direct Nama to break up the portfolio into smaller lots.

He added: "The Chairman of Nama informed me that he was about to consult with its financial adviser" and if the advice was favorable the Nama Board would make a considered commercial decision to continue with the sales process.

"There is nothing to suggest from this that Nama was not operating in line with the purposes of Act by proceeding with the sale process," Mr Noonan said.

"This being the case there was no legal basis upon which I could have directed Nama to discontinue the sales process.  Department of Finance legal advice has confirmed this position."

Mr Noonan continued: "It is important for me to be clear here when I say that even if I had had the legal basis to interfere with the Nama Board’s considered decision, at that time, there was no evidence that such interference would have been in the interest of the taxpayer.  And I am still of that view.

"In fact, neither the C&AG’s audit of Nama’s annual accounts nor the recently published value for money report have asserted that the sales process should have been halted," he said.

Mr Noonan said: "I believe that I have properly upheld both the letter and the spirit of Nama Act."

Mr Noonan addressed the debate over the value achieved by Nama in the sale which was sparked by the publication the C&AG report.

He acknowledged that Nama and the C&AG have "differing opinions and positions" but said: "I have full confidence in both of these important state actors. 

"Their differences of opinion do not alter the continuing confidence I have in Nama, nor the standing of the C&AG.  I am confident that by focusing on the salient issues the PAC can help navigate the technical issues under discussion," he added.

Mr Noonan spoke of the creation of Nama during the financial crisis saying it was a "very bold step" taken by his predecessor Brian Lenihan to reduce instability and uncertainty in the banking system.

"We should take a moment to imagine where our economy would be if Nama hadn’t been established as an independent commercial entity and hadn’t been as successful as it has been in reducing the State’s contingent liability," he said.

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