Wednesday 18 September 2019

Brendan O'Connor: Nama being undone by its own culture of secrecy

The list of 60 questions put to Nama by this newspaper were both legitimate and pertinent, writes Brendan O'Connor

Sometimes you have to sit back and let things play themselves out before you can really understand what was going on. In May, this paper sent 60 entirely reasonable questions to the notoriously secretive State agency Nama.

Sometimes you have to sit back and let things play themselves out before you can really understand what was going on. In May, this paper sent 60 entirely reasonable questions to the notoriously secretive State agency Nama. Even by its own standards of precious secrecy, Nama's reaction, at the time, seemed extreme. Not only did it refuse to answer even one of the questions, it also, in an entirely unrelated move, escalated an on-going dispute about a previous piece we had in this paper by telling us that it was taking it to the Press Ombudsman.

Let me stress that the previous piece being brought to the Ombudsman was not connected in any way to the serving of the 60 questions on Nama. It just all happened at the same time. So get the picture clear in your head before we go on. Nama is arguing with us about an article. We, as part of our ongoing campaign to find out more, on your behalf, about this State agency, ask it a comprehensive list of questions for another article. Nama refuses to answer even one of the questions and in and around the same time tells us that it is bringing the previous matter to the Press Ombudsman. The questions were about stuff like probity and Nama staff's potential conflicts of interest, among other things

There was other odd behaviour from Nama around this time. For instance, we had agreed Nama would provide us with an article detailing its public service ethos etc. Such an article was never forthcoming. This is surprising. When a State agency that cops a lot of flak from the public, the media, and politicians does not avail of an opportunity to blow its own trumpet in a newspaper with close to one million readers, a newspaper that has been one of its most vocal critics, you would wonder why.

Nama did not officially know at that point about a scandal bubbling underneath the surface. So, we can only assume that Nama did not know at that point that many of the questions that this paper, in our innocence, had posed, spoke directly to this scandal.

So it seems Nama did not know, when we asked it if there had been any other cases (besides the purchase of a penthouse in the Merrion Hotel by Martin Naughton from a Nama-appointed receiver without that property being placed on the market) of Nama assets being sold in off-market deals, that one of its employees had, while employed as a portfolio manager with Nama, bought a house in Lucan from the Nama portfolio.

But when we asked in May if Nama "had any rules to stop executives leaving and joining private equity or vulture funds who may be seeking to buy up Nama assets", Nama was aware that that self- same portfolio manager, Enda Farrell, had been hired by private equity firm Forum Partners to "scour the Irish market for distressed debt deals", as this newspaper put it. And well Forum might hire Farrell.

Enda Farrell clearly had a good eye for picking up a distressed asset. In trying to get beneath Nama's code of secrecy, this paper would have been much better off dealing with Enda Farrell than the various spin doctors and others with whom we were dealing. Apparently Farrell used to email his wife all kinds of sensitive information from Nama. He even sent her the full list of all the debts owned by Nama and the properties against which those debts were charged.

You may wonder why his wife would want to read boring stuff like that. We can only speculate, but presumably Farrell's missus would have been curious about the content of the 30 emails that Farrell sent her over the course of a number of months full of "highly confidential and commercially sensitive information", especially since the accountancy firm she worked for had got millions from Nama for services rendered.

She may also have had a personal interest, given that she was in the market for a house herself.

In July of last year, Farrell had discussed with his colleagues in Nama the notion that he might buy a distressed property from the Nama portfolio. He says that during his training in Nama, he was told this would not be a problem. He says he got informal clearance to do so. Now, when he ultimately bought the house six months later or so, some reports says that Farrell furnished Nama with the name and address of the person from whom he was buying the property. But apparently the name did not ring any bells with Nama's compliance and supervisory departments, despite the fact that vendor Thomas Dowd was Nama-ed. On the other hand, Farrell says that he did not inform Nama of the "specific nature" of the purchase. Farrell did not think to tell the people he was buying the house off (who ultimately represented Nama) that he worked for Nama.

Hard to say what all that means but whatever way you look at it, it's not good. Either a guy in Nama was able to go around using insider information as a basis to pick up distressed property and he told Nama roughly what he was at and it didn't realise what he was saying to it. In which case you have to worry for the management at Nama. Or else a guy in Nama picked up distressed property off the books of Nama and didn't bother making it clear to Nama what he was at. Either way it stinks, and it clearly shows that Nama does not meet the standards it sets for itself.

The fact that this guy was also emailing his wife with Nama's secrets without anyone realising it for months is even more alarming. It suggests that the people in Nama are only human beings and that some of them are not to be trusted. I'd be willing to bet that Enda Farrell's wife is not the only unauthorised person to be privy to Nama's secrets, wouldn't you? If it was that easy for one guy to just pop all this highly sensitive stuff into an email and send it off, who's to say that more people haven't done it? They're only human.

Even more alarming is that Nama says it only became aware of Enda Farrell's property deal in August. Six months or so after it happened. So God knows what else is going on there that it doesn't know about yet. Because Nama can be deluded. For example, in April, it dismissed any concerns that Farrell's new employers, Forum Partners, might benefit from Farrell's inside knowledge of Nama. At the time, a Nama spokesman told the Sunday Independent that "no properties are sold without a competitive bidding process and that all properties are independently valued before any sale. All sales are also reviewed by the Comptroller & Auditor-General's office". Hilarious now when you look back on it. At that point Farrell had already done a side deal to buy a property from Nama, for himself, while still working for Nama, without that property being advertised. He had also given away all Nama's secrets to his missus, while still working for Nama. And here Nama was cocksure that this guy would suddenly develop a huge loyalty to Nama now that he didn't work for it anymore. God bless Nama's innocence and its faith in human nature.

Several of the questions that Nama refused to answer from this paper in May were to do with conflicts of interest and off-market property deals. We now know that these questions were not only legitimate, but they were very pertinent and they were questions that Nama should have been asking itself at this time. As the strange case of Enda Farrell spins itself out, even Nama itself must now accept that its culture of secrecy does not work. Nama should now accept that if it is to be the highly paid custodian of billions of State assets, and if we are to trust it to dispose of these assets in the best manner, it must become more transparent.

Otherwise, like the Church, or State institutions of old, or Fianna Fail back in the day, corruption will have the capacity to thrive.

Sunday Independent

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