NAMA Archives - Village Magazine

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NAMA Shrugs Again

by admin 25 February, 2021 0 Comments

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. By Frank Connolly (November edition, Village) NAMA Chief Executive, Brendan McDonagh, appearing before the Oireachtas Public Accounts Committee (PAC), failed to deliver a credible explanation as to how the agency handled the disposal of a lucrative portfolio of loans which was sold at a significant 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 offer 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 conceded 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 outcome. “A guy who was operating for a company that it employed was also a director of the company for somebody who was purchasing the portf 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 unhappy 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 office 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 office 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, Cerberus, 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.

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State land could provide 114,000 dwellings

by Mel Reynolds 26 February, 2019 0 Comments

Both NAMA (The National Asset Management Agency) and Local Authorities have been criticised for ‘land-hoarding’, ‘sitting’ on sites particularly in Dublin and the Greater Dublin Area (GDA) and not developing land that could be used to address the current housing crisis. Despite the amount of land under their control, Minister Eoghan Murphy has recently asked the Attorney General if powers to effect Compulsory Purchase Orders (CPOs) could be upgraded to encourage those with vacant homes and land to sell quickly. The enhanced powers are part of a new strategy on vacant homes and land due to be announced by Government in June (1). The Minister’s strategy is puzzling given that the State itself has been using less than one percent of its current zoned development land-banks for housing every year. Public land potential: Local Authorities, NAMA and Government A year ago the Department of Housing pub- lished ‘the Rebuilding Ireland Land Availability Survey’ which included details of State-owned land. This report confirmed that Local Authorities own zoned residential land with capacity for 37,950 dwellings (on 1,211 hectares) and that this represented just a portion of State-owned land (2). However, based on individual returns from seven Local Authorities, the figures are much higher. Local Authorities own zoned land with capacity for 48,724 dwellings nationwide (1,317 hectares). Dublin City Council owns zoned residential land with capacity for more than 18,000 dwellings and in County Dublin there is the potential to build 29,278 dwellings. When it comes to the NAMA, the picture is similar. It currently controls the loans on enough development land to build 65,399 dwellings (1,691 hectares); in County Dublin NAMA controls land with the potential for 43,075 dwellings. (3) Nationwide the State controls development land with the capacity for 114,123 dwellings (3,008 hectares) – more than 17% of all zoned residential land by area and more than one quarter of the potential housing capacity in the country. In addition, according to the Irish Times, at least 334 sites or buildings controlled by the Government are lying idle across the State, some of them for more than 30 years. The worst offender is the Health Service Executive with 137 unused buildings or sites. The other 197 sites are shared between nine Government departments, and include Garda stations, courthouses, military barracks and customs posts. Almost half of all County Dublin residential development land is State-controlled and between NAMA and Local Authorities there is the capacity for 71,425 dwellings (1,212 hectares). These figures exclude holdings owned by the Housing Agency and other State and Semi-state bodies. In Dublin City three out of every four vacant residential zoned sites are either owned by Dublin City Council or NAMA debtors. REFERENCES 1. “Government ponders increasing compulsory purchase powers” Irish Times, 14 May 2018; https://www.irishtimes.com/news/ireland/irish-news/government-ponders-increasing-compulsory-purchase-powers-1.3185489 2.“Almost 40,000 social homes could be built by local authorities” Irish Times Nov 2017; https://www.irishtimes.com/news/social-affairs/ almost-40-000-social-homes-could-be-built-by-local-authorities-1.3301442 3. NAMA Residential Delivery Updates (December 2017): https://www.nama.ie/development-funding/nama-residential-delivery-updates/. There is a reduction of 238 hectares from end-2017. There are number of factors for the reduction, including: the land has been built on, The land has been sold, the land has been re-zoned, the debtor has repaid or refinanced their debts and their loans are no longer in NAMA. In 2017, 2,503 were completed by debtors/ receivers funded by NAMA. 7,200 since counting began in 2014. Public Housing: Demand and Supply In the four years since 2014, 7,200 new dwellings have been completed by NAMA debtors and Local Authorities built 818 social homes. In the past twelve months 17,914 new households experienced rental distress and signed-on for Housing Assistance Payment (HAP). Official figures report that Local Authorities built 780 social homes (4) and a further part-State funded 1,078 were built by not-for-profit Approved Housing Bodies (5). However, when ‘turnkey’ units purchased from the private sector from developers are removed, Local Authorities built just 394 homes last year. 11 Local Authorities including South Dublin County Council built no (zero) homes. Approved Housing Bodies (AHBs) built only 270. In contrast in 2017 10.5% of all new homes sold were purchased by AHBs or Local Authorities nationwide as social housing. One year’s supply of purpose-built social housing is meeting less than two weeks of subsidised housing demand. Last year eleven Local Authorities built no social housing, including South Dublin County Council, which has more than 7,500 on housing waiting lists. Dublin County Council built just 232 homes and have more than 40,200 on housing waiting lists. Official targets for 2018 social-housing builds and acquisitions have been increased by just 11% on last year’s levels(6) (expect less than 450 Local Authority builds this year nationwide. By the end of 2018 one in three tenancies will be in receipt of some form of State rent assistance, making up almost 1950m. At current rates of increase by 2019 this annual spend on rent assistance will increase to over 11.1bn per year. In addition to zoned residential development land, the State owns massive landbanks, significant parts of which may be suitable to be re-zoned to residential use in the longer term. Even if a large percentage of the land controlled and owned by the State is not suitable for development, there is still more than enough to build 10,000 social homes per year, a recommendation of the All Party Oireachtas Committee on Housing and Homelessness in 2016 (7). The price of local authority housing (in Dublin City) should be 1175,000 for one-bed units, 1183,000 for two-bed units and 1200,000 for three-bed units. According to Simon Coveney: “The St Michael’s estate regeneration team proposal, ‘Our Community a better way: campaign for fair rental homes’, [launched on 26 April in Buswell’s Hotel] comprised 300 homes, of which 150 of which were social and 150 were cost-rental. The State would fund the capital cost of all units at a cost of 156 million. There would be a mix of one, two and three-bedroom apartments costing on average 1175,000, 1183,000 and 1200,00, respectively. Average monthly rent on a cost-rental basis would be 1900”. REFERENCES 4. Overall social housing provision | Department of

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Nada from Nama

by Frank Connolly 26 September, 2018 0 Comments

The revelation that the National Asset Management Agency (NAMA) has failed to disclose “relevant material” to the Commission of Investigation into its controversial sale of its 11.5 billion (£1.24 million) Project Eagle loan portfolio in the North in 2014 will not come as any surprise. Many NAMA watchers have been wondering how the Commission, headed by retired High Court judge, John Cooke, has been progressing given that it is now more than a year since it was established. It took the previous two years to convince the reluctant former Minister for Finance, Michael Noonan, and then Taoiseach, Enda Kenny, to concede to a formal inquiry into the portfolio sale to US fund Cerberus despite the dramatic and shocking allegations of corporate and political corruption that first emerged in July 2015. At that time, Independent TD, Mick Wallace, told the Dáil that a sum of £7m had been lodged in an Isle of Man bank account in connection with the sale and that it was intended for political and business interests associated with Project Eagle. NAMA executives were not exactly forthcoming about the background to the loan disposal and rejected out of hand the conclusions of the Comptroller and Auditor General (C&AG), in September 2016 that the agency had incurred a loss of a potential €223m (£190m) from the sale. The C&AG, Seamus McCarthy, resisted intense pressure from Noonan, the Department of Finance and NAMA executives and board to withdraw his damning report which then formed the basis of an inquiry by the Public Accounts Committee in late 2016. Its report was even more damning of the agency and of Noonan’s role in permitting the sale to proceed despite knowledge of questionable fee payments relating to it. The finance committee at Stormont carried out its own investigation in 2015 to which many of the parties to the deal gave evidence – although the NAMA chairman, Frank Daly and chief executive, Brendan McDonagh declined an invitation to attend as did the senior staff and advisors of the agency most intimately connected to the Project Eagle sale. Although it was essentially a ‘value for money’ exercise the C&AG report highlighted serious conflicts of interest in the sale process, not least relating to the role of Frank Cushnahan, the former member of the Northern Ireland Advisory Committee of NAMA. The C&AG reported that NAMA underestimated the value of the loans, applied too high a discount and had failed to act when it discovered details of some £15m in “success fees” promised to Cushnahan, US law rm Brown Rudnick and Belfast solicitor, Ian Coulter of Tughans by US fund PIMCO before it withdrew from the sale in March 2014. Since then Cushnahan, Coulter and a former head of asset recovery at the agency, Ronnie Hanna, have been questioned by the National Crime Agency in connection with the deal while former first minister, Peter Robinson and his son Gareth, have also come under scrutiny for their role in the extraordinary Project Eagle affair. Hanna and Cushnahan were arrested in May 2016 while Coulter, a former head of the Confederation of British Industry in the North who was responsible for transferring some £5 million to the Isle of Man in late 2014 after the sale to Cerberus was completed was also subjected to a grilling by the NCA team. Property developer John Miskelly who admitted to the BBC some years ago that he had legitimately paid large sums of cash to Cushnahan, and had secretly taped his exchanges with the business consultant, was also arrested in 2017 as part of the NCA probe. Last month, it emerged that charges may now be brought against two of the nine people under investigation and there is intense speculation as to who, if anyone, will finally be brought to account over a property disposal that helped to Enrich Cerberus and associated accountancy, legal and other professionals at the expense of the public purse. Also intriguing is the recent decision by the DPP to withdraw charges against a former NAMA official who was accused of disclosing confidential information from the agency. In this case, NAMA executives made the complaint which led to the arrest of its former staff member Paul Pugh in 2013. Pugh was charged with intentionally disclosing loan and other details relating to builder, John McCabe and his UK company, McCabe Builders. Pugh was accused of sending the information to Gehane Tew k of London based Connaught & Whitehall Capital UK in June 2012. When the case came to court in recent months the DPP and investigating gardaí said that they were not proceeding with the prosecution for reasons that were not fully explained to the judge or the public. It appears that the NAMA executives whose complaint prompted the arrest of Pugh in the first place are now less than enthusiastic about pursuing the case, despite the five-year investigation into the matter. Not for the first time, NAMA has failed to disclose its reasons for not pursuing this case to conclusion. Frank Connolly

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Unruly

by David Langwallner 30 March, 2016 0 Comments

What is meant by the Rule of Law and is such a concept honoured in Ireland today? I believe that the rule of law though arguably an unqualified good is not being adhered to in this state save mostly by the judiciary and that the legal system and erratic observance of legality by state officials renders our democracy fragile. In my view Ireland draws close to that amorphous notion, a failed state that cannot in reality uphold the rule of law. This opinion piece will not be a comprehensive pathology but will point out many of the salient practical features which show how the rule of law is breaking down. The Rule of Law: Theoretical Incoherence? We first need to probe the many senses in which the rule of law is described. Joseph Raz, a legal positivist who believes in “perfectionist liberalism” has suggested that the rule of law is merely a kind of shorthand description of the positive aspects of any given political system. From a different vantage point the fundamentalist Christian legal philosopher John Finnis considers that the rule of law is: “[t]he name commonly given to the state of affairs in which a legal system is legally in good shape”. Another philosopher Brian Tamanaha chimes to negative effect that the rule of law is “an exceedingly elusive notion” which leads to “rampant divergence of understandings” and is similar to the amorphous concept of Good in that “everyone is for it, but has contrasting convictions about what it is”. At bottom, there is no consensus: it is elusive at best: a form of smokescreen or professional hypocrisy at worst. But let us endeavour to be constructive. For example Carothers, though sceptical, adds a worthwhile positive definition of the rule of law as: “a system in which the laws are public knowledge, are clear in meaning, and apply equally to everyone. They enshrine and uphold the political and civil liberties that have gained status as universal human rights over the last half-century. In particular, anyone accused of a crime has the right to a fair, prompt hearing and is presumed innocent until proved guilty. The central institutions of the legal system, including courts, prosecutors, and police, are reasonably fair, competent, and efficient. Judges are impartial and independent, not subject to political influence or manipulation. Perhaps most important, the government is embedded in a comprehensive legal framework, its officials accept that the law will be applied to their own conduct, and the government seeks to be law-abiding”. Now let us stress-test certain aspects of this detailed expurgation against the patient – in this context Ireland Inc. Yes of course rights exist in our still fine, if shopworn, constitutional matrix and are enforced by the courts in many instances but there is also an undue deference to the executive that has led to the non-enforcement of social and economic rights particularly the right to housing by the courts. There is an excess of judicial caution on other rights-based claims, particularly where issues of financial iniquity and the countervailing amorphous blob, public policy, are implicated. There is also widespread violation of privacy by the state and its police force, in particular. The overly sanguine way we as a nation have accepted, in effect, what has been police and state criminality with respect to privacy for the last thirty years without widespread outcry is baffling. At least there are signals of an upsurge in civil disobedience, which when peaceful, as Habermas, the German sociologist of critical theory and pragmatist, would contend, leads to a vitalisation of democracy. Not here. Further, the scandal that is our banking structures, the disgrace of the banks varying interest-rate repayments in breach of agreements, the sometimes unconscionable evictions, are not conterminous with the rule of law. NAMA is a mess formulated by the neoliberal club which did its best to avoid a proper new deal for the Irish people. The banking inquiry was a poorly performed French farce. What is desperately needed is a right to housing. Eviction should be rare, require rehousing, and should only follow meaningful intervention by an arbitrator who can determine whether the consumer can repay and whether the bank – with or without the enlistment of a vulture fund – is bundling the mortgage at a bargain-basement rate to private-law profiteers. Further, many of our state institutions have major structural problems. The Garda are not progressive in training and intent: they do not seek justice or the truth, but rather a result. They, at times spin, embellish or at worst, manufacture evidence – and, to be candid, at times act criminally and in violation of the rule of law. Finally, there are limited independent checks and far too close a nexus between politicians and the police. The recent moving of the deckchairs by the Garda Commissioner will not change the culture or training of the force, its group think or, arguably, its competence. It needs a radical ovehaul and a redirection so primarily promotes truth- seeking, investigative process. The impartiality and independence of our judiciary needs at times to be severely questioned because there is far too close a nexus between politics and judicial appointments. Though most are appointed on merit, many of our judges are appointed for their proximity to political parties. Further, some judges have an aggrandised sense of themselves: certainly they are not servants of the state as that is not a judicial function, but rather, they are the servants of the constitution which is a bulwark to protect the people against state excess. Judges also need, in the interest of public confidence as to their impartiality, to declare their share-holdings and indebtedness to the banks. Moreover, parts of the government left itself open to the accusation, during the bugging crisis, that it was also mired in corruption. In the strictest sense it observed the rule of law but, in manner, it laid itself open to the criticism levelled elsewhere by the late great Christopher Hitchens of being crypto-fascist, pursuing a

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Cerberus conflicts are biggest financial and political issue facing NI Executive

by Frank Connolly 27 March, 2016 0 Comments

An investigation by BBC’s ‘Spotlight’ programme broadcase on, 29th February, into the sale of NAMA’s huge property portfolio in Northern Ireland has revived an embarrassing issue for the outgoing government. Village readers will recall how distressed commercial and residential properties, previously valued at £4.5 billion, were sold to US vulture fund Cerberus, for just £1.2 billion in April 2014. An article in December documented how the sale was now the subject of investigations in the US and the UK and by the Law Society and the Stormont finance committee in Northern Ireland. At the centre of the controversy is former NAMA official, Ronnie Hanna, who resigned as the agency’s Head of Asset Recovery six months after the sale of the portfolio known as ‘Project Eagle’. Hanna was named in the Dáil by independent TD, Mick Wallace, as one of a small group of people who met multi-billion-dollar-backed US investment funds to promote the sale of the portfolio, accompanied by Frank Cushnahan, a former member of NAMA’s Northern Ireland Advisory Committee. It was also sensationally claimed at the Stormont hearings in September last that Cushnahan; Belfast accountant, David Watters; former partner in Tughan’s solicitors, John Coulter; property developer, Andrew Creighton; and former DUP leader, Peter Robinson, were to receive substantial sums from the Project Eagle sale. All denied the allegations. Cushnahan and Coulter, along with US law firm Brown Rudnick, were to take €15 million in fee payments from another US investment fund, Pimco, if its bid for the property portfolio was successful. Pimco withdrew from the process in early 2014 after its compliance officers advised that such payments would be illegal, under US law. In March 2014, NAMA informed finance minister, Michael Noonan, of the dodgy fee arrangements being offered in connection with what is the largest ever disposal of public assets in the history of the state. Instead of calling an immediate halt to the bidding process the finance minister advised NAMA to plough ahead with the sale. Noonan seemed implicitly to consider that the ethical problems were at the other end, in Belfast. And that the Belfast office didn’t really reflect on the Dublin office. The problem for Noonan and NAMA is that if Hanna is involved in wrongdoing that brings the culpability right back into the Dublin office and the remit of the Irish government. Cushnahan and Coulter then encouraged Cerberus to enter the race in the clear expectation that fee payments would be made if its bid was successful. The Spotlight programme revealed that Cushnahan misled his former colleagues in NAMA by continuing secretly to work on the Cerberus deal without their knowledge. Cushnahan confirmed in a clandestinely recorded discussion last year with Belfast property developer, John Miskelly and accountant David Gray, associate of Waters, that he was due to get a “ fixer’s fee” from the Cerberus deal. He said that he and Coulter had done “all the work on the deal” but his role was kept secret because of objections from NAMA to his involvement. Cushnahan said that Coulter moved £6 million into a holding account for him so he could be paid. During the recorded discussion, reference is made to assistance provided by Ronnie Hanna to distressed developers. There is also a description of how Peter Robinson’s son Gareth advised Miskelly to go to Cushnahan about his NAMA-controlled debts. Miskelly confirmed to the BBC that the recordings were an accurate reflection of the lunch meeting with Cushnahan and part of an effort by him to expose the financial misconduct surrounding the sale of the Project Eagle portfolio which is under investigation by the US Securities and Exchange Commission and the National Crime Agency in Britain. Miskelly claims he has handed evidence of wrongdoing to both. Cerberus has denied any wrongdoing in respect of the purchase, while refusing to provide answers to detailed queries due to the ongoing criminal inquiries. Similarly, Cushnahan; Hanna who runs a private consultancy in Belfast; and Robinson, have declined to comment further. Robinson surprised many when he announced his retirement as first minister as hearings into the Project Eagle sale were taking place last Autumn. Village documented in January how Gerry Adams had in effect telegraphed Robinson on his need – in the context of ethical issues relating to the NAMA debacle of which Adams was apprised – to reinstitute the then suspended Northern Executive. Robinson and former finance minister, Sammy Wilson, were involved in discussions with Noonan and NAMA to try to minimise the exposure to personal guarantees of a number of prominent developers in Belfast and across the North in respect of their debts taken on by the agency. Last year, it emerged that Robinson held meetings with former US president Dan Quayle, chairman of Cerberus, and had discussions on the sale with Noonan, without disclosing them to his deputy first minister, Martin McGuinness. It now transpires that Cushnahan was on three sides of the deal having worked for NAMA, some of the bidders as well as for the distressed developers. The latest explosive revelations prompted Sinn Féin leader, Gerry Adams, to repeat a call for a Commission of Investigation into the NAMA sale. Frank Connolly

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Cox’s conflicts

by Village 25 April, 2012 0 Comments

Pádraig Ó Ríordáin, a partner with Arthur Cox solicitors, is recent governments’ go-to lawyer for finance and now aviation. After a seven-month search by Fine Gael’s scrupulous Minister for Transport, Leo Varadkar, the appointment, over the becalmed Christmas period, of high-flyer Pádraig Ó Ríordáin to the role of chairman of the Dublin Airport Authority (DAA) generated some turbulence.

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Politics

Ireland should renege on €30bn NAMA bonds

by Village 19 April, 2012 0 Comments

Let’s leave our useless banks with worthless IOUs, writes Mick O’Broin. Even before it emerged that the National Assets Management Agency (NAMA) was definitively bailing out developers, its dealings with banks were problematic. NAMA is, as Enda Kenny said from the opposition benches, “another blank cheque to bailout the banks”. And, like the bank bailouts in general, there has been a variety of voices pointing out the illegitimate nature of the public debt generated by NAMA.