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Posts tagged ‘Committee of Public Accounts’

Two developers paid €200,000 a year by NAMA

Two developers whose loans are in NAMA are being paid €200,000 a year by the agency.The Dáil’s Public Accounts Committee was told that between 110 to 120 developers are being paid by NAMA and it emerged that in some instances, developers can also get commission.

NAMA chairman Frank Daly said it was a commercial decision to pay developers who co-operated with the agency.The majority receive between €70,000 to €110,000. However, two major developers are in receipt of €200,000.

Payment to developers was made on a case-by-case basis in the best interest of getting a return for the taxpayer, Mr Daly said. He would not reveal the identity of the two developers in receipt of €200,000 each, due to confidentiality restrictions.Developers who sell properties for more than the price NAMA paid can get a 10% commission of the surplus if they reach financial milestones.

Fullarticle at source: http://www.rte.ie/news/2011/1026/nama.html

Comment:

Unbelievable two developers are been paid by the taxpayers the
princely sum of 200,000Euro.No matter how you spin this one this just outrageous these
developers gambled and lost and they should be put out of business instead, we
the taxpayers are paying them a salary for life it would seem .This is not
justice and the politicians that have sanctioned should be shot. This NAMA is
nothing more than a bailout for privileged people on the inside track and who
have the connections that push the right buttons.Insiders to you and me.We all heard the horror stories from friends and family where the bank are coming the heavy .Kicking people out of their business ,overdraft’s canceled,and bullying tactics are at such unprecedented  levels the Central Bank has to step in and warn the banks to behave. This is just wrong, if any other person gets into trouble with the banks they do not get a salary from the bank to cooperate with the Bank? No way !

How can Labour support this outrageous state of affairs??

Jesus why are we putting up with this outrageous con job?

For god sake wake up Ireland!

So you’re concerned that a property in NAMA is becoming a hazard….

 
By namawinelake 

URL: http://wp.me/pNlCf-16P

Limerick deputy Willie O’Dea will return to the new Dail next week though with a much reduced share of the vote in his Limerick City constituency. Given the carnage wrecked on the Fianna Fail party in this election, Willie might now be breathing a sigh of relief but only a few months ago Willie the barrister was nearly having conniptions worrying about a building site in Limerick owned by a Liam Carroll company, a site that was falling into disrepair and becoming a health hazard as well as a magnet for criminality. The site was likely to have gone to NAMA but what was troubling Willie was concern that if he made any approach to NAMA, that he would fall foul of the NAMA rules on lobbying. Former tourism minister Mary Hanafin also seemed unsure about NAMA’s anti-lobbying rules and the representations she could make to NAMA in respect of the troubled hotel sector. Neither politician was alone in their confusion so their colleagues in the Committee of Public Accounts addressed the issue last November 2010 when they were questioning the NAMA CEO and chairman. The following is an extract from the session:
Deputy Michael D’Arcy: I will touch upon the question of developers and banks being negligent. When I say negligent, I am referring to certain premises and sites being left in neglected states. NAMA’s role differs from ours, yet we are receiving reports from the general public concerning dangerous sites. Mr. Daly mentioned how it is an offence to lobby. To whom should a public representative go if he or she is receiving complaints about neglected estates that are in the possession of banks, developers or NAMA?
Mr. Frank Daly: When I referred to lobbying, I did not mean the normal type of information that a public representative might want to pass on to NAMA. There would be no difficulty in that respect.
Deputy Michael D’Arcy: If the information is of that nature.
Mr. Frank Daly: Yes.
Mr. Brendan McDonagh: We would welcome it. If people can give us information, we can take matters up with the borrower directly to determine the situation. We have noticed that everyone assumes every estate in a neglected condition is NAMA’s, but many of them are not or they are funded by other banks.
Deputy Michael D’Arcy: Many of them are NAMA’s.
Mr. Brendan McDonagh: I accept that.
Deputy Michael D’Arcy: Clarification is good. People seem to be terrified to ask NAMA a question for fear of prosecution.
Mr. Frank Daly: No. That is not lobbying. Lobbying is when someone tries to influence a decision of NAMA for personal benefit. Passing on information is not remotely like that.
One site that has received widespread attention has been 16 Moore Street in Dublin, scene of the signature of the surrender order which put an end to the 1916 Rising. There is a campaign to preserve the building which is earmarked for demolition as part of NAMA Top 10 developer, Joe O’Reilly’s redevelopment of the area. The campaign has gained some traction with the involvement of descendants of the participants in the Rising including James Connolly Heron, the great grandson of effective commander in chief of the Rising, James Connolly. There is a Facebook campaign which has attracted over 4,000 members, in the Oireachtas politicians have questioned the redevelopment and in January 2011 housing minister Michael Finneran made a statement in support of the group and there has been a letter-writing campaign. The building itself looks practically derelict today and there are concerns for its safety.
Another group is concerned at the deterioration of the former Hume Street hospital just off of St Stephen’s Green in central Dublin which was to be developed by Michael Kelly whose loans might now be in NAMA. And up and down the country there are many new developments which stand unfinished and there are other redevelopments which have stalled with the implosion of the property bubble. So what can you do if you have concerns, particularly if you believe the property is subject to a loan taken over by NAMA?
(1) You can contact your local council
(2) You can contact NAMA but you’re likely to get a response similar to this one received from NAMA by supporters of the Save Hume Street from Destruction  campaign:
“Please be advised that the National Asset Management Agency acquires loans and not the assets underlying the loans. Accordingly a property underlying a loan acquired continues to be the responsibility of the debtor. Your email makes reference to section 141 of the Agency’s Act [grants rights to NAMA to enter property secured by a NAMA loan, for the purposes of securing the property]. Please be advised that NAMA is aware of the various rights available to it pursuant to the terms of the NAMA Act and will exercise such rights, where appropriate and at its discretion. Please be advised that the National Asset Management Agency is statutorily obliged to keep confidential all information in relation to the debtors whose loans it has acquired and can’t confirm or deny whether any specific asset has been acquired.”
(3) It seems that you might be able to meet with NAMA. The 16 Moore Street campaign group is reported to be meeting with both the NAMA CEO and chairman on Thursday this week and no doubt they will let us know the outcome through their Facebook page.
(4) You can contact the developer or the bank if you have the details
(5) You can contact An Taisce if the building is listed (your local council should be able to help with establishing the building’s status)
(6) You can contact the Gardai with complaints of criminal behaviour
(7) You might consider writing to the press, for example to Frank McDonald the Environment Editor of the Irish Times
(8) You can consult the Derelict Sites Act 1990 and the Planning and Development Act 2000 to see if there is any action you can take
Remember that NAMA has a commercial remit – we all want it to make a profit. So it might be asking too much of NAMA to expend time and money on a property that may be demolished eventually anyway. That said, as the Moore Street campaign shows, you can get NAMA’s attention if you have the support backing you up.
This entry will be updated with further news from the Moore Street campaign and others and with news of hazardous NAMA sites.

source:

URL: http://wp.me/pNlCf-16P

NAMA under Fine Gael: drastic changes expected

By namawinelake 

“A terrible noise exactly like thunder was heard in the outer room of his apartments : it was the crowd of courtiers deserting the antechamber of the dead sovereign to come and greet the new power of Louis XVI”
This was the account given by Marie Antoinette’s chambermaid of the immediate aftermath of the death of Louis XV – all the courtiers and hangers-on were making a mad dash from one end of the palace where the king had just expired to the other end to ingratiate themselves with the successor. And whilst I wouldn’t want to pre-judge the outcome of the voting count today, I would be shocked if anyone other than Enda Kenny was to be our next Taoiseach and Michael Noonan the next Minister for Finance. And I would say the ingratiating started many months back.
Of interest here is the fact that the FG director of elections for Limerick (Michael Noonan’s constituency) is none other than insolvency expert Brian McEnery of Horwath Bastow Charleton . Brian also happens to be one of NAMA’s nine board members and I would imagine that Michael Noonan is very well briefed indeed on the challenges facing the agency. And it will be the Department of Finance that has most political say in how NAMA operates in future, though other ministries like the Department of the Environment Housing and Local Government and Justice and Law Reform will also have a role to play.
So what changes can we expect at NAMA:
(1) Personnel. NAMA is probably most associated with its chairman Frank Daly and CEO Brendan McDonagh. Sections 22 and 40 of the NAMA Act provides the Minister for Finance with wide discretion as to the bases for removing the incumbent NAMA CEO and other board members including the chairman. Will FG want a change of personnel. Have some already ingratiated themselves to the new administration and convinced the putative Minister for Finance that a different set of hands would do a better job? There are certainly rumours in this area.
(2) Stopping NAMA 2: “We do not believe that transferring the land and development loans of Irish banks of less than €20 million to NAMA is in the best interests of the Irish economy” FG has said that it will stop the transfer of the sub-€20m exposures from AIB and Bank of Ireland to the agency. What that immediately means is that the stress tests presently ongoing will need examine the values of some €12bn of sub-€20m loans.
(3) Outsourcing: “We will force NAMA to outsource management of at least 70% of its assets to 3-4 competing private asset management companies” FG is keen to get third party asset management companies to take on NAMA’s loans. Indeed a long-held concern on here is that NAMA with 100 staff is ill-equipped to directly handle 175 developers (which might represent 5,000 development companies and 20,000 projects) and their €50bn of loans at par value. On top of this NAMA must manage the banks and Capita with their dealings for smaller value loans. Capita has a long and coloured history of ingratiating itself with parties in power.
(4) NAMA strategy: remember it boils down to the six actions (sell, lease, manage, develop, demolish, mothball). It seems there is a clamour for NAMA to generate more sales. These are likely to be in the UK and elsewhere abroad though NAMA needs to be careful about opportunists who expect a “NAMA knock-down”. But I expect there will be more sales here and given the condition of the market, I expect sales at levels not seen before, bargains some might say but that would be to ignore the distressed condition of the existing market which is being artificially distorted without true price discovery.
(5) Transparency: “The details of all non-performing loans acquired by NAMA will be available for scrutiny on a Public Register”
(6) Paddy McKillen’s loans: NAMA was supposed to have made a decision whether or not to proceed to acquire Paddy’s loans last Wednesday. And we are still waiting for the Supreme Court to issue its determination on the three outstanding strands to Paddy’s appeal (to do with the fairness and constitutionality of NAMA and its procedures). Will Michael Noonan decide that Paddy’s loans will destroy value at the banks if transferred? Will he persuade NAMA to release its grip on Paddy’s and other objectors’ loans?
(7) NAMA report and accounts for quarter three, 2010 which were delivered to outgoing Minister for Finance, Brian Lenihan on 31st December, 2010. Will Michael Noonan now ensure they are promptly published?
(8) Dismantling upward-only rent reviews in commercial leases. This manifesto commitment is really rattling the property industry that sees 20% declines in commercial property values and a repulsion of investors fearful of those declines. At the extreme on the other hand, certain retailers and other commercial tenants are literally praying it happens quickly because with existing rent levels their businesses will die. Whatever FG does, it needs to do it decisively and clearly. Otherwise this uncertainty of this Sword of Damocles will hurt the property industry and do nothing for commercial tenants.
Of course the bigger challenge facing the new Minister for Finance will be dealing with the national debt burden including a renegotiation of the IMF/EU bailout deal, the restructure of the banking sector and dealing with the results of the stress tests ongoing at the banks. But I would expect the Minister’s fingerprints to become transparent on the operation of NAMA within days.

Source: URL: http://wp.me/pNlCf-15X

competence of companies that provided information underpinning key policy decisions

Is it time to investigate the competence of companies that provided information underpinning key policy decisions in our financial crisis?

By Namawinelake

Looking back at the financial crisis over the past three years, it is striking that at practically all milestones the information upon which key decisions were made has turned out to substantially wrong, in particular the assessment of the problems in the banks and more specifically still, the losses on property loans.
If, back in September 2008, it was known that the banks’ assets were not worth €500bn as claimed but were worth substantially less, would the Government have campaigned to introduce a guarantee of bank liabilities then worth €440bn? If, at the start of 2009, the Minister for Finance knew of the likely losses in what would later become the five NAMA Participating Institutions, would he have started a recapitalisation programme that may see €80-90bn ultimately taken from State coffers (through borrowing) and shovelled into these black holes? If, at the start of 2009, when Dr Peter Bacon was reporting on the desirability of an asset management agency, he knew that the haircut to be applied to loans would be 60% rather than 30%, would NAMA ever have seen the light of day? It seems to me that these three key moments in our State’s economic history are characterised by the Government acting on poor information. Of course it is to be recognised that information can modify over time and there was a deterioration in the economic environment, both here and internationally, from 2008 which will have affected more up-to-date values. But even taking account of the passage of time, was the information produced by the institutions and external advisers, at such colossal cost to the State, so significantly inaccurate that it is time to investigate the competence of those companies that produced the information?
What prompts this entry is a letter dated 23rd December, 2010 from the current Financial Regulator, Matthew Elderfield, to the Committee of Public Accounts, which has just now been published, in which he encloses copies of the invoices paid in respect of advice received by the Financial Regulator in respect of the Bank Guarantee Scheme and “the discharge of other related supervisory duties”. The invoices are partly redacted by the Financial Regulator to remove the names of consultants and the companies’ banks details for payment of the invoices. The second redaction is understandable but isn’t the identity of the consultants that were seemingly paid substantial sums (€1,000-plus and expenses per day typically) of public interest?
I have extracted the invoices from Matthew Elderfield’s letter for ease of review and they are as follows (sorted by invoice date – click on the description for a copy of the invoice):
DateCompanyAmt (ex VAT)Description
27/11/2008PwC1,670,000Work on six State-gteed banks
31/01/2009PwC1,139,150Work on 5 NAMA banks and JLL fees
19/02/2009Deloitte95,720Review of directors loans
06/03/2009PwC23,415Secondment 11 days Feb 2009
03/04/2009E&Y16,667Secondment Feb 2009
03/04/2009E&Y16,667Secondment Mar 2009
03/04/2009E&Y16,667Secondment Dec 2008
03/04/2009E&Y16,667Secondment Jan 2009
28/04/2009KPMG1,034,080Investigations Mar/Apr 2009
23/06/2009PwC214,480Ref to “Engagement letter April 2009”
30/07/2009KPMG218,219Investigations and “potential ASPs” Apr-Jul 2009
21/09/2009PwC239,310Impairment provisioning INBS
30/10/2009PwC225,750Impairment provisioning EBS
20/11/2009Deloitte196,789″Assistance”
06/01/2010Deloitte56,9992 secondments for 21 days
19/02/2010E&Y87,394″Professional services”
03/03/2010PwC464,500Due diligence
03/03/2010PwC483,100Due diligence
20/08/2010E&Y34,000″Professional services”
6,249,574

There are three invoices of particular interest and they are:
The PwC invoice from 31st January 2009 which includes a charge of €691,250 in respect of “Jones Lang Lasalle Valuations”. And this has continuing relevance for NAMA because JLL’s managing director at the time, John Mulcahy, is now NAMA’s Head of Portfolio Management and arguably NAMA’s most senior property man. It should be emphasised that it is not disclosed on the invoice the remit that JLL operated to when providing their services, so for example they may not have examined loan documentation which, following NAMA’s legal due diligence exercise, proved to be execrable. It should also be stressed that property values continued to drop in late 2008 and 2009.
The two PwC invoices dated 21st September, 2009 and 30th October, 2009 which relate to the impairment provisioning in INBS and EBS. Knowing that the last estimates (in October 2010 – yes, the NAMA CEO did indicate lower estimates last week at the CPA but those are on incomplete loan transfers) of final haircuts for INBS and EBS were 70% and 60% respectively, how competent was PwC’s work in 2009? NAMA’s valuation date is 30th November, 2009 so there may well have been some deterioration in values with the passage of time but November 2009 was only a matter of a few months after the reviews.
A notable omission from the invoices is work on impairment provisioning for AIB, BoI and particularly Anglo. Didn’t the acting Financial Regulator, Mary O’Dea,  think to commission such work? Though on the other hand, given how inaccurate the work appears to be for EBS and INBS in the context of present estimates, perhaps she saved us unnecessary fees.
With NAMA’s acquisition work coming to an end and with yet another review of loans by the troika of Barclays Capital, the Boston Consulting Group and Blackrock Solutions, is it not now time to review the competence of the work undertaken in 2008 and 2009?

source http://wp.me/pNlCf-Xp

The Bonus lottery continues

How does a €700,000 a year NAMA chief tell a developer to cap their salary at €200,000?
namawinelake | January 10, 2011 at 10:50 am | Categories: NAMA | URL: http://wp.me/pNlCf-Ve

Previously NAMA CEO, Brendan McDonagh’s salary has been reported to be €500,000 per annum. Yesterday, Ireland’s Sunday Business Post, without citing sources, claimed that his actual salary was €430,000 per annum and a bonus of up to 60% on top. The newspaper claims details of the salary will be published in the National Treasury Management Agency annual report later this year. Should the NAMA CEO be awarded a full 60% bonus, that would bring his salary to €688,000. Not bad for a 42-year old accountant with a quasi-civil service career history at the ESB and NTMA. On the other hand NAMA will have €90bn of loans (at par value) under management in the next couple of months and the last time I looked, the heads of comparable property funds held salaries in the €millions.
It would be very interesting to see the performance metrics used to determine the NAMA CEO’s 60%-max bonus. Profitability of the agency? Mightn’t that encourage hoarding of assets and the sale of low-lying fruit? Recovery of loans but by reference to what NAMA paid or the loan’s par value?
Whilst NAMA claims not to set individual developers salaries, there appear to be credible claims that in practice maximum developer salaries are implicitly being set in the €192-200,000 range. NAMA has asserted that it has cut developer “overheads” by 50% but it is for the developer to decide how to deliver a project within the overall allocation. Some developers have produced business plans which included more substantial salaries – €1.5m in one case, which according to NAMA chairman, Frank Daly “didn’t get past first base”. Of course sooner or later the salaries and rewards of NAMA developers will get into the public domain, perhaps through company reporting and we will then see the rewards on offer.
Developers waiting for sympathy from the public for their reduced circumstances will be waiting some time, such is the general outrage at the consequences of the financial crisis and the role of developers (as borrowers whose debts are now in trouble and necessitating bailouts for the banks from the pockets of the nation). €170,000-a-year part-timer, Frank Daly at NAMA has suggested that it might be patriotic for developers to work for nothing and others have suggested the minimum wage. That’s all very well but what moral high ground does NAMA occupy when it is paying its CEO a guaranteed €430,000 per annum and a bonus of up to 60% on top?
Of course NAMA didn’t cause the financial crisis and is tasked with addressing an element of the crisis. So that differentiates NAMA from its borrowers. On the other hand, some developers with non-recourse loans or ring-fenced corporate limited liability have the option of telling NAMA to get lost whilst they move onto other projects that might keep them in the lifestyle to which they were at one time accustomed. That’s the uneasy truth.
And because it’s very popular, I leave you with the latest version of the public sector salary league showing those whose salaries are more than the Taoiseach’s. The list isn’t exhaustive and I expect that several officers of quangos and indeed others like the Attorney General should be on here but alas their salaries appear not to be in the public domain.

source :http://namawinelake.wordpress.com/

Comment:

Yesterdays Sunday Indo tells us that Fine Gail and labour are fighting over who gets the plumb job of Finance Minster in the next government but have you noticed that none of them have commented on these fat bonus and the possible outlawing such payments on top of what can only be described as outrageous payments to top servants of the people of Ireland especially when hospital beds are been closed and the minimum wage is been cut .This is just more proof that the established political parties will be looking after their own cronies all we will get after the next election if we vote in these self serving politicians from the established political parties will be more of the same gombeenisem.

Brendan McDonough keeping Lenihan’s secretes at NAMA

-Ireland final in buck-passing nears climax: NAMA CEO versus the Financial Regulator

namawinelake | January 9, 2011 at 3:32 pm | Categories: NAMA | URL: http://wp.me/pNlCf-Vb

This coming Thursday 14th January at 11.30am will see NAMA CEO, Brendan McDonagh returning to the Committee of Public Accounts (CPA) for an uncomfortable questioning session which will focus on the responses given by Brendan at the CPA hearing on 18th November 2010. In particular he is to be quizzed on his response to Deputy Michael McGrath’s series of questions on the quality of information provided to NAMA by the banks in 2009. There was an emerging controversy just before Christmas with the CPA seeming to claim that they felt they were misled by the NAMA CEO whose responses to the Committee in November seemed to confirm that there were machinations at the banks which deserved Garda investigation. The buck-passing referred to in the title refers to the subsequent efforts by Brendan and the Financial Regulator, Matthew Elderfield to dodge responsibility for progressing a new investigation into the banks’ provision of information to NAMA.

Here’s how the buck-passing early rounds played out:

2009 – Banks provide information to NAMA on loans which informs the NAMA draft Business Plan. Banks issue press releases on NAMA discounts – this is AIB’s which includes “Based on the Minister’s estimated average industry wide discount of 30% (which as we have already stated is expected to exceed the estimated maximum for AIB)” (AIB’s is now estimated at 60%) and Bank of Ireland’s on 17th September, 2009 has seemingly been removed from its press release website but is available elsewhere from their website here which says “On the basis of these positive variations, taking into account the extensive work that has been done internally over the past year, and the illustrative methodology set out in the Supplementary Documentation published by the Department of Finance, Bank of Ireland believes that the discount applicable to Bank of Ireland loans potentially transferring to NAMA could be significantly less than the estimated aggregate discount of 30%.”

July 2010 – NAMA produces second Business Plan which shows a substantial deterioration in outlook from a Net Present Value of €4.8bn to €1bn (though there were scenarios at minus €0.8bn to plus €3.8bn).

August 2010 – NAMA Chairman, Frank Daly, criticizes the information provided by the banks

18th November, 2010 – Brendan tells the CPA “The first port of call in terms of looking at that must be the Financial Regulator, who has responsibility for supervising and knowing what goes on within the banks. We will provide whatever assistance we can to anybody. I can assure the Deputy that we have established the facts and will make that information available to any regulatory authority, if appropriate. This is where we are now. Other people have questions to answer on what was done in the past.”

24th November, 2010 – CPA writes to Matthew apprising him of Committee proceedings and Brendan’s responses. This letter does not appear to be in the public domain.

26th November, 2010 – Matthew writes to the CPA acknowledging their letter and stating “My office expects that Mr McDonagh will contact the Central Bank with information which substantiates a claim that NAMA was provided with false or misleading information by the banks”

6th December, 2010 – Matthew writes to the CPA again and states “It is a matter for NAMA to determine, following a consideration of its obligations, both the requirement to report and the relevant authority to which the report is made..” The letter suggests that Matthew has not received information from NAMA on which he can act.

17th December, 2010 – Although not yet available on the CPA’s document website, there was a report in the Irish Times that Matthew wrote a third letter to the CPA which reportedly said “We received a response from Mr McDonagh this week. Nama’s letter does not refer any matter to us in respect of the conduct of any regulated entity,” and “Further, Nama’s letter informs us that it does not have a valid basis to suspect that there has been any criminal offence or other contravention of the Nama Act.”. The CPA felt they had been misled and have ordered the NAMA CEO back to their Committee lickety-split to answer for himself and that brings us to the session scheduled for this coming Thursday.

So who is responsible for investigating possible wrongdoing by the banks in 2009 in their provision of information to NAMA (and potentially their shareholders)? Here are some statistics which are far from vital:

So in the red shirt you have Brendan McDonagh, the 42-year old management accountant who has spent his career with the ESB and the NTMA and today is reported to earn €500,000 per annum as he directly manages 100 staff (with another 50 reportedly on the way) and an army of third party service providers. Whilst not a career civil servant, he is likely to be well-schooled in the art of passing the buck.

And in the blue shirt, you have Matthew Elderfield, the former chief executive of the Bermuda Monetary Authority (BMA – the financial authority for an island group with a population of 68,000 (less than the size of Galway) and with an annual GDP of €4bn). Matthew was famously reported to have taken an awful cut in salary when he took over as our Regulator on 4th January 2010 – Matthew was reportedly being paid €340,000 a year here in March 2010 and his Bermudan salary was put at US $730,000 (€540,000) – not bad for a man who, according to the 2008 and 2009 BMA accounts, was managing 130 staff whose annual payroll costs totalled USD $23m. A recent interview in the Independent claimed Matthew had taken a pay cut of 15% after he arrived which might place his salary today at €290,000 (just below Central Bank governor Honohan on €300,000 a year). Matthew’s previous career included 8 eight years at the UK’s Financial Services Authority where he was reportedly responsible for supervising Northern Rock before its bailout in 2007. His career would suggest he is the under-dog in this buck-passing competition.

The view on here is that NAMA has protesteth far too much at the quality of information provided to it in 2009. After all, it was NAMA’s business plan and they employed, at vast expense, experts to assist them in the early days which would realistically have involved testing the assumptions and information used in the business plan. NAMA got its operating costs spectacularly wrong by 40% (€2.6bn in 10-year NPV terms in 2009 and €1.6bn in the same terms in 2010). So NAMA might have dealt with its inaccurate draft business plan in a more responsible way – yes the information from the banks was wrong but the due diligence on that information at NAMA was grossly inadequate. And the owner of the business plan is not the banks, not the developers, not the third party service providers, not the Department of Finance – the owner is NAMA and the agency should accept its responsibilities.

On Thursday next we will get to observe what should be the final in the buck-passing championship as we should find out whether it is NAMA’s or the Financial Regulator’s responsibility to progress any new investigation into any misleading or false information provided by the banks to NAMA in 2009.

source : http://namawinelake.wordpress.com/2011/01/09/all-ireland-final-in-buck-passing-nears-climax-nama-ceo-versus-the-financial-regulator/

Comment :

We are not going to get any information from this current lot at NAMA they are been protected by Lenihan and as long as he is pulling the strings we will get nowhere.

The Guys are in the top jobs because Lenihan can rely on them to keep their mouths shut!

We will have to wait until we get a new government and hopefully we will have a group of independent TD’s  that will force all information out into the open and then we might get some accountability and some answers .

NAMA, the banks and the Gardai

Badge of An Garda Síochána

Image via Wikipedia

 

from  Namawinelake

With reports of a file about to be sent from the Gardai to the Director of Public Prosecutions on Anglo Irish Banks (and how is it that FG leader Enda Kenny claims to have knowledge of the detail of the file – do Gardai brief politicians on investigations?) and talk of there being five people in the frame for criminal prosecution in respect of activities at the failed bank, it brings home to us the criminal dimension of the financial crisis, though it should be said that the two year investigation may not result in any criminal charges whatsoever.
A month ago, NAMA came before the Committee of Public Accounts and the NAMA CEO, the owlish Brendan McDonagh, faced some intense questioning on aspects of the operation of the secretive agency. The transcript of the hearing is now available and it shows that Fianna Fail deputy Michael McGrath had a bee in his bonnet about the banks and whether they had misled NAMA in 2009 by providing loan details which informed the draft NAMA Business Plan in October 2009 (which showed an average discount or haircut of 30% off the par values of the loans that NAMA would pay the banks). Michael’s point was that the haircut now estimated to apply to the banks is 58% (October 15th, 2010 estimates) and this near-doubling in the discount might mean that the banks set out to misrepresent the value of their loans so as to obtain an advantage. The relevant exchange is here (the emphasis is mine and the Chairman was Fine Gael deputy Bernard Allen):
Deputy Michael McGrath: I will be brief. I welcome the delegation from NAMA. I would like to pick up on the point made by Deputy O’Keeffe on the quality of the information it got from the banks in 2009 and which fed into the draft business plan in October 2009. Some of the information must have come from fantasyland because if one considers the reality NAMA found when it went in and did a loan-by-loan analysis and a detailed probe, some serious questions need to be answered about the intentions behind some of the information it was given.
For example, in the draft business plan it was anticipated at that time that €77 billion worth of loans would be acquired and that €62 billion of that would be repaid by borrowers over the lifetime of NAMA, 40% of the loans were performing and the loan-to-value ratio was 77%. We know the reality is entirely different. The level of performing loans is 25% and the loan-to-value ratio, as Mr. McDonagh mentioned, is closer to 100%, something which is a matter of fact and which did not change because of the deterioration in the economic environment. How could they have gotten it so wrong?
In his response to Deputy O’Keeffe, Mr. McDonagh referred to a lack of systems but I would take a far more cynical view, namely, that the banks were concerned with trying to extract the maximum possible price from the taxpayer for the loans which we were acquiring.
Mr. Brendan McDonagh: In terms of that, I do not disagree with the Deputy. The reality of our detailed loan-by-loan analysis showed up what it was. People sitting on the boards and senior management in those companies had responsibilities. I recall that when the Minister went into the Dáil on 16 September 2009 and introduced the NAMA Bill there were Stock Exchange statements by the two major banks into the market telling it that they expected their discount to be even less than 30%. The reality has turned out to be different. The Deputy is completely right. There are questions to be asked and answered.
We went in, found what the situation was and reported on it. The discounts are much higher than what could have been anticipated. Based on the information provided at the time, and given what we have been dealing with in terms of the banks over the past ten months and the due diligence which is coming through, they are finding out things about borrowers and loans that they should have had at their fingertips before. They did not have this and there are huge systems failures on the back of that.
Deputy Michael McGrath: I think it is much more than that. If NAMA had not taken such a rigorous approach in going in and analysing every single loan individually and had taken the information it was given at face value, it would have dramatically overpaid for the loans it was acquiring.
Mr. Brendan McDonagh:  Absolutely.
Deputy Michael McGrath: That would have been at the net expense of the taxpayer. It seems to me that there was a clear pattern of false and misleading information being fed into NAMA by the main banks in Ireland during 2009. That has to be investigated. I do not know who has the function to refer that information to the Garda, the National Bureau of Fraud Investigation or the Office of the Director of Corporate Enforcement, but it needs to be done. Some of the data would have changed with the deteriorating economic environment. I can understand the percentage of performing loans changing, for example, and Mr. McDonagh referred to that in his opening remarks. However, getting the loan-to-value ratio so wrong across the board should have rung alarm bells that there was something more going on. It needs to be investigated by the Garda and the Director of Corporate Enforcement. I do not know whether NAMA can make information available to them but there is a clear, systematic pattern of false and misleading information being fed into NAMA and that cannot go unaccounted for.
Mr. Brendan McDonagh: I do not disagree with anything the Deputy said. The first port of call in terms of looking at that must be the Financial Regulator, who has responsibility for supervising and knowing what goes on within the banks. We will provide whatever assistance we can to anybody. I can assure the Deputy that we have established the facts and will make that information available to any regulatory authority, if appropriate. This is where we are now. Other people have questions to answer on what was done in the past.
Deputy Michael McGrath: Is that process under way? Has the regulator looked for information on all of the details that were provided to NAMA?
Mr. Brendan McDonagh:  Absolutely. The European Commission is working hand in hand with the Financial Regulator on the auditing of every single loan evaluation that is happening. The regulator has access to all that information and what it does with that is a matter for it.
Chairman: In view of Mr. McDonagh’s comments, the committee should write to the regulator now, make it aware of the comments and ask it to inform the committee of the appropriate action it proposes to take.
Deputy Michael McGrath: Absolutely. I recognise that it is a very serious charge to make but the evidence is overwhelming that the information being provided to NAMA was fundamentally false and misleading.
Chairman: We will do that.
Deputy Michael McGrath: The regulatory authority needs to investigate and involve, as appropriate, the Garda and the Director of Corporate Enforcement. I welcome the Chairman’s suggestion.
[exchange ends]
Now it seems that the Committee is unhappy with NAMA for a number of reasons. At the hearing itself NAMA was asked to identify developers being transferred to the agency and it refused – it wouldn’t even name the Top 10 stating that it was NAMA policy to generally accord developers the same level of confidentiality they would have enjoyed at the original financial institutions. I think NAMA would have been on more solid ground if it had put a stop to leaks that characterized its existence in the earlier part of this year. The Committee also wanted details of NAMA’s payscales and NAMA declined to provide the information on the day and subsequently wrote to the Committee to say that, in common with the established practice of the NTMA, it would not be revealing salaries, even to the Committee. The Committee chairman, Deputy Bernard Allen, characterized the letter it received last week as telling it to “get stuffed” but the actual text of the letter is in fact pretty neutrally worded.
But what the Committee is most unhappy about is their impression that they were “misled” by the response of the NAMA CEO to questions about the banks. The Committee is now reported as saying that after Mr McGrath asked Gardaí to investigate the matter, that Mr McGrath was “set up” (Deputy Ned O’Keeffe) and the Irish Times says “the committee is to recall Brendan McDonagh in January 2011 over media reports that he has “backtracked” on comments made to the committee last month”. The Independent reports “Ned O’Keeffe said it had now been reported that NAMA had no evidence to back up these claims — and that Mr McDonagh’s comments had been misinterpreted”
My own impression is that NAMA’s defence of its draft Business Plan produced in October 2009 has been a sorry episode for the agency. It seems that it sought to blame everyone else except itself for the disparity between the estimates then compared with today. The banks in particular have been demonized – perhaps justifiably, but it was NAMA’s business plan and it seems that there was little validation of the figures incorporated into it. And whilst the discount on the banks’ loans has grown from 30% to a 58% estimate, the estimate of NAMA’s operating costs has dropped 40% from €2.6bn to €1.6bn. Surely the infernal banks weren’t responsible for NAMA getting its operating costs so wrong. And the suggestion that banks sought to defraud the taxpayer by over-valuing loans also looks suspect because NAMA was always going to involve an intensive valuation process overseen independently by the EU. The NAMA CEO’s nodding in agreement at Deputy McGrath’s suggestions at the Committee hearing might have portrayed NAMA in a favourable light to the Committee and the general public, but to others it just shows an abnegation of responsibility for NAMA’s own business plan. And indeed it is noteworthy to see the NAMA CEO try to pass the parcel for any misinformation provided by the banks to the Financial Regulator.
In any event, it will be interesting to see the fireworks in the New Year when the NAMA CEO is recalled (and the NAMA Act does confer that right of demanding attendance on the Committee).

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