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Ireland's political and cultural magazine
November/December 2020 25
NAMA shrugs again
State’s bad bank fails to take responsibility
for another inept hit to the public purse as it
improperly sells to someone connected to the
original debtor, blaming IT systems.
NEWS
T
HE RECENT and rare appearance of
NAMA Chief Executive, Brendan
McDonah, before the Oireachtas
Public Accounts Committee (PAC)
failed to deliver a credible
explanation as to how the aency handled the
disposal of a lucrative portfolio of loans which
was sold at a sinificant loss.
The Committee was convened to discuss the
investigation by the Comptroller and Auditor
General (CAG), Seamus McCarthy, into the dis
-
posal in 2012 by NAMA of Project Nantes, which
was part of the larger Avestus portfolio. Avestus
included valuable properties in Europe and the
US which in turn were part of the loans of former
Revenue Commissioner, Derek Quinlan and the
Quinlan Partnership.
According to the CAG, the agency, contrary to
its code of practice, “did not seek current inde
-
pendent valuations of the Project Nantes loans
or of underlying property collateral. Furthermore,
NAMA did not pursue a competitive sales pro
-
cess”.The final valuation was short by some €29
million, the CAG said.
Instead, NAMA negotiated exclusively with a
US-based fund, Clairvue, which was introduced
to the agency by Avestus, the owner of the dis
-
tressed loan portfolio before it transferred to
NAMA.
What emerged from the CAG’s investigation is
that Avestus was informed by the agency of the
“residual amount NAMA needed to raise through
the Project Nantes loan sale in order to achieve
its repayment target. The Clairvue oer was very
close to that amount”.
At the request of NAMA, Clairvue made a dec
-
laration that it was not connected to the debtor
i.e. Avestus, before it purchased Project Nantes.
However, it emerged in 2018 that the loans
were purchased by a Luxembourg-based com
-
pany in which a former Avestus director was in-
volved. This revelation by then-TD, Mick Wallace,
prompted the CAG investigation.
In his response to the PAC on 8 October last,
McDonagh confirmed that NAMA made a loss
of €10 million on the sale of Project Nantes and
that it had made a miscalculation in setting a tar
-
get of €125.5 million for the portfolio. He said the
mistake was due to the fact that “the transaction
occurred early in NAMA’s life cycle when we had
no central IT systems and relied on multiple
spreadsheets with volumes of data”.
PAC member and FF TD, Marc MacSharry,
sought to interrogate McDonagh and his col
-
league about the weakness of the valuation
process and the research carried out by NAMA in
relation to the disposal.
“At what point during the normal company
searches that can be done did NAMA become
aware that somebody was a director and share
-
holder of both Avestus and Clairvue-Nantes?”,
MacSharry asked.
McDonagh said that Avestus and Clairvue had
signed a declaration stating that the buyer was
not a connected party (to the debtor) but con
-
ceded that “it would have been better if Avestus
was upfront…”. However, he said “the man was
not, nor had he ever been, a NAMA debtor and
Avestus was never a NAMA debtor”.
“The only failing was a moral failing on the
part of Avestus because it should have been up
-
front with us and said that one of its colleagues
had been asked to be a director of this entity by
Clairvue but that he was not a NAMA debtor”, he
said.
SF TD, Matt Carthy, asserted that NAMA was
‘played’ by the individual and companies in
-
volved and should be “angry as hell” at the out-
come.
“A guy who was operating for a company that
it employed was also a director of the company
for somebody who was purchasing the portfo
-
lio that was for sale through a non-competitive
process..I do not understand why Mr McDonagh
is not as angry as hell with this individual and
the companies involved because they played
NAMA”.
According to McDonagh, he is angry and un
-
happy that Clairvue-Nantes did not inform NAMA
that “one of their colleagues who was not a
NAMA debtor was being asked by Clairvue to be
-
come director of this Luxembourg entity which
bought the portfolio”.
Fortunately for McDonagh, he was not more
closely questioned on the role played by the
NAMA oce which dealt directly with Clairvue in
relation to the sale.
When Clairvue purchased the Project Nantes
portfolio in 2012 its US executives wanted to
issue a press release to mark the successful ac
-
quisition. The NAMA oce involved said that the
agency did not wish such publicity as “the loans
were not openly marketed”. NAMA told Clairvue
that “it should be satisfied they acquired the
loans at arguably below market value”.
For some members of the PAC there were
echoes of the Project Eagle debacle when the
massive Northern Ireland portfolio of distressed
loans was sold by NAMA in 2014 to US fund, Cer
-
berus, in extremely controversial circumstances.
McDonagh deflected the issue by insisting
that he was prohibited from discussing Project
Eagle due to the ongoing and lengthy inquiry
by Judge John Cooke into the controversial sale.
One of the reasons it has gone on for so long has
been the delay by NAMA in handing over crucial
documents to the State investigation.
by Frank Connolly
The final valuation was
short by some €29m,
the CAG said, as NAMA
negotiated exclusively with
US-based Clairvue
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