Costs to the taxpayer of NAMA’s Northern Irish sale does not inspire confidence
AMIDST all the uncertainty surrounding NAMA’s €5billion adventure with its tales of an Isle of Man account and grotesque allegations of payments to Northern Ireland politicians, one fact must not be lost. Every euro that NAMA loses on these loans is a euro lost to the Irish taxpayer.
It is a euro less to spend on better childcare facilities for mothers and fathers, or PRSI cuts for entrepreneurs, or tax cuts for you.
Intriguingly, though, while a lot of euros may have been lost, no one in government appears to be in a hurry to ask too many questions.
Our latest NAMA tale began with a letter from the Northern Ireland finance minister to Michael Noonan. The letter included a note from a US law firm called Brown Rudnick who stated that a client of theirs was interested in acquiring Northern Ireland NAMA loans. A full month later, and after, according to Frank Daly, the Department of Finance had consulted with NAMA, a l etter of response was sent from Michael Noonan on July 25, 2013.
Minister Noonan said that direct contact should be made with NAMA and underlined that NAMA’s policy was that assets should be openly marketed. It was a more than a month later in September 2013, where it is said that Brown Rudnick made an ‘unsolicited approach’ to NAMA expressing that one of its clients, a firm called PIMCO, was interested in acquiring €5billion of Northern Ireland NAMA loans.
On December 12, 2013, the NAMA board decided to put the entire Northern Ireland NAMA €5billion loan portfolio to market.
ON January 8, 2014, the National Assets Management Agency appointed a firm called Lazard to launch and oversee the sales process. After this curious things began to happen.
Firstly the principal private secretary to the minister for finance for Northern Ireland sent a copy of a letter of intent on January 17, 2014, to NAMA, summarising an agreement between PIMCO and the Northern Ireland Executive.
It is not clear if any other form of communication was made by the Northern Ireland Finance Minister when he sent this copy, but NAMA stated it did not engage with it.
Quite why this bizarre letter from the Northern Ireland finance minister was sent after the sales process had commenced is unclear. And noone appears to be in much of a hurry to tell us either.
Instead the mood in NAMA and the Department of Finance continues to be one of ‘move along quickly there now, nothing to see here!’.
But there may be something to still see ... or rather a great many answers to puzzling questions have yet to be seen.
For example on March 10, 2014, PIMCO informed NAMA that it had discovered that as part of the fee arrangement it had with Brown Rudnick and local solicitor firm Tughans – which, it is said, had been engaged by PIMCO since September 2013 – that a fee payment was to be made to Frank Cushnahan, a former member of the Northern Ire- land NAMA Advisory Committee.
Frank Cushnahan resigned from that committee on November 8, 2013 for personal reasons.
As a result of this revelation, PIMCO was later informed by NAMA that it should withdraw from the bidding process.
Undeterred by this, Brown Rudnick were engaged by another client to pick up where PIMCO had left off, in the form of a firm called Cerberus.
This company, which was ulti- mately the successful bidder, was forced by NAMA to confirm in writing that no payment by it in connection with its participation in the bidding process would be made payable to a current or former member of the Northern Ireland NAMA Advisory Committee.
There is much we do not know about all this.
What we do know is that in the eyes of many observers, the best return for the taxpayer for these loans may have been adversely affected by the controversial factors surrounding this deal.
This is particularly so, if rumours surrounding the deal discouraged other bidders from getting involved, thus making it less competitive.
The real worry is that the Irish taxpayer was, when i t came to these Northern frolics, the biggest loser of all.
We can only hope as taxpayers that the Northern Ireland NAMA sale is not indicative of a deeper malaise in how transactions have taken place.