In Leaders’ Questions today Mick Wallace appealed once more for a thorough independent review into what he called the “rotten” workings of NAMA.
Amongst other serious claims he said there have been £45m in “fixer fees” by a company that the Government hasn’t disqualified from purchasing the Project Arrow portfolio.
Full transcript of above video:
I am a little taken aback by the position which the Tánaiste is taking on NAMA. I raised this issue with her before the summer recess, when I marked her card that all was not well with NAMA. I told her that it would do her no favour to do nothing about this. Since then, a lot more questions than answers have been thrown up. At a meeting of the Committee of Public Accounts on 9 July, the CEO of NAMA, Mr. Brendan McDonagh, argued that the sale of the Project Eagle portfolio represented the best commercial option for NAMA as, according to him, there had been little or no investor interest in acquiring either Northern Ireland assets or the associated loans. This is not consistent with statements contained in the NAMA Northern Ireland advisory committee’s minutes of the meeting of 7 October 2013. At that meeting representatives of CBRE gave a summary of the Northern Ireland real estate market. NAMA was represented at that meeting by, among others, Mr. Frank Daly. CBRE said that, positively, rent and yield forecasts across the commercial property sector were predominantly stabilising or strengthening and added that US investment funds were showing interest.
Cerberus has been able to sell loans for double what it paid for them in a very short period. Why could NAMA not do that? If due diligence with NAMA in Dublin for Project Eagle cost €1.8 million, can the Tánaiste explain why the same work in the North should cost €21 million? That is what Cerberus paid over for four weeks’ work. NAMA had to do more work on due diligence than the people working for Cerberus, including those in Brown Rudnick and Tughans. NAMA sold Project Eagle to Cerberus for approximately 27p in the pound. The missing 73p has been picked up by the Irish taxpayer, those in the South, not the North – this is not just a Northern problem. This is a serious Southern problem.
Cerberus went to some of the major developer players. Before it bought the portfolio, a group of individuals went around to the big developers and asked them whether they would buy their loans back for 50p in the pound. What happened? They jumped at it. However, they had to pay a fixer’s fee. The £7 million in the Isle of Man that we have been talking about was only for openers. A total of £45 million has been paid to fixers.
Given that Cerberus is under criminal investigation in two countries for Project Eagle, why has that company not been disqualified from Project Arrow? How, in God’s name, can the Government tolerate that? This is a portfolio with a par value of €7.2 billion which NAMA is threatening to sell for something in the region of €1 billion. Some 50% of the portfolio is residential in Ireland, in the South, and we have a housing crisis. How can the Government allow Project Arrow to go ahead? It looks like Cerberus is going buy it.
NAMA has made out that Frank Cushnahan was not privy to sensitive information or anything that was confidential with regard to Project Eagle. There was a meeting on 7 October 2013. Project Eagle was discussed in detail. This included external member feedback. If the external members, who included Frank Cushnahan and Mr. Rowntree, were given feedback, how is this consistent with the proposition that they had no confidential information? It was interesting that the chairman added that he wanted to remind members that the matter was extremely politically sensitive and that absolute confidentiality was required. It is nonsense to suggest that Frank Cushnahan did not have confidential information regarding Project Eagle. It is nonsense for NAMA to suggest that the problems are all about the purchase. There are serious problems about the sale of Project Eagle by NAMA to Cerberus and it stinks to the high heavens.
Is the Government prepared to look at this? Too many questions have not been answered. It is a serious concern for the public because it has cost them dearly. Is the Government prepared to investigate it and initiate an independent investigation? It is seriously required.
Tánaiste Joan Burton replied:
I thank the Deputy. I can understand that he has considerable detailed knowledge of this matter as he raised it on a previous day. As has been said, it is being investigated by the Police Service of Northern Ireland, the agencies dealing with serious crime and fraud in the UK and the Northern Ireland Committee for Finance and Personnel.
Does Deputy Wallace not believe that, in the first instance, he should give the information he has in his possession? Perhaps he could go to the committee and set out the information that he knows of in open session.
I believe it is important in terms of the Northern Ireland committee that if Deputy Wallace possesses such detailed information – as he has indicated – then perhaps he should give some consideration to doing that. I am unsure whether Deputy Wallace has done it in private. I am not aware that he has done it in public because I have not seen any reference to it.
Alternatively, the appropriate committee that deals with NAMA in this House is a cross-party committee, including members of Sinn Féin, chaired by the Opposition, properly, and including Independent Members. I put it to Deputy Wallace that if he wants further examination of the detail of what he is describing and his opinions on the matter, then perhaps he should look to speak to the Committee of Public Accounts, either in private or in public. It is the committee that deals with NAMA.
As Deputy Wallace is aware, NAMA was set up under fairly extraordinary legislation following a series of through-the-night meetings in this Chamber when it was established by the late Brian Lenihan, the then Minister for Finance. It was specifically structured – I am saying this to Sinn Féin Members as well – so that politicians would not be involved actively in any way in the management. More than almost any other structure, when it comes to legislation that this Dáil has passed, any active involvement, even at ministerial level, was actually precluded from the structure, such was the sensitivity of the case and the desire of the late Brian Lenihan, the then Minister for Finance, to avoid any direct involvement of politicians, office-holders or others in the affairs of NAMA.
I was the Labour Party finance spokesperson in the Dáil at the time. While I disagreed with the then Minister on many issues about NAMA – I see other people who were there at the time – I actually agreed that it was quite important that serving politicians were not involved in the business of NAMA. That was the structure put in place by the Dáil to avoid the situation that arose previously, leading up to the crash, when there had been an unhealthy and close connection between some politicians and the housing and development market and, perhaps, with banking institutions and all of that. We still have to hear from the banking inquiry, but I imagine it is the view of many people that many of those connections were unhealthily close. They led to bad decision-making and very bad outcomes, as Deputy Wallace has just said, for Irish taxpayers, something about which we are all extremely concerned.
I strongly suggest to Deputy Wallace that, if he has information, he should make that information available to the authorities and the committee in Northern Ireland investigating the matter. In respect of NAMA, Deputy Wallace clearly has a list of significant questions he wants to put to the agency. I strongly suggest that he uses the mechanism of the Committee of Public Accounts and the other committees of this House to progress his questions.
[Leas Ceann Comhairle interrupts: “You should not be naming people like that, Deputy. Are you concluding now?”]
The Tánaiste comes from an accountancy background and she is the leader of the Labour Party. I cannot believe that she is happy for all this stuff to be simply tossed around here between ourselves in committees. This requires a proper independent investigation, preferably by people from outside the country.
In the contribution sent in by Cerberus, whose representatives refused to go before the Northern Ireland committee, the firm stated:
The terms of Brown Rudnick’s engagement by Cerberus included the payment on a success fee only basis. Brown Rudnick agreed to share the success fee with Tughans. The involvement of Brown Rudnick, their involvement of Tughans (and their respective payments on a success fee basis) were known to NAMA in advance of Cerberus being selected as the preferred bidder and its acquisition of the Project Eagle portfolio.
NAMA cannot wash its hands of what has happened with Project Eagle. It just does not stack up. The proceeds of the sale of Project Eagle are the proceeds of crime and the Criminal Assets Bureau should now get involved. CAB could get an interim freezing order in the High Court within a few days and stop the profits being taken offshore. We know, for example, that Cerberus staff were forcing borrowers to pay them back loans urgently and were telling frightened borrowers to talk to Cardinal Capital, another American hedge fund, as it had been lined up for the refinancing side of the loans which had been legally taken over by Cerberus. We will not get the truth of this until the Government is happy to initiate a proper independent inquiry. I ask Tánaiste please not to leave as part of her legacy the fact that she did nothing about NAMA’s workings.
They are rotten. NAMA has behaved in a rotten manner. [Dep. Bernard Durkan interrupts “That is a serious allegation”] I know, and I would not make it lightly. The whole NAMA process requires serious independent scrutiny. I am sure the Tánaiste does not have the answer to my final question, but she might look for it for me. What role did NAMA’s Ronnie Hanna, head of asset recovery, play in the sale and purchase of Project Eagle?
I am only asking for some information. We are not going to find it in this House or the committees. The Government will not get answers from NAMA; it will have to investigate it.
Burton replies once more:
[Dep. Peter Mathews interrupts: “Is the Tánaiste interested in it?”]
Without labouring the point, this House decided, in establishing the NAMA legislation, to have the strictest barriers between politicians’ contact with NAMA, including office holders. The rules were stricter than those in place in any previous legislation of which I am aware. The record will show that I did not particularly care for the NAMA model, which was brought forward by Fianna Fáil. However, the former Minister for Finance, Brian Lenihan, set out a mechanism whereby politicians would not be involved in the works and doings of NAMA.
I refer to the mechanism we use in the Dáil. Deputy Wallace has made a series of allegations and I do not know their total significance in the scheme of things. He referenced a number of people, organisations and committees and actions by CAB. I am not in a position to give him any kind of judgment on those issues or the facts he put forward. I suggest that perhaps he first make that information known to the investigating authorities, in particular the police in the North, and the UK authorities, and perhaps, if relevant, to the American authorities which are making inquiries.
Deputy Wallace might also be in a position to assist the Northern Ireland authorities. It is a matter of judgment for him as to whether he is prepared to do that.
I have been to the Garda and the National Crime Agency. We need an independent inquiry here.
I suggest that Deputy Wallace think seriously about using the availability of the Committee of Public Accounts. To be perfectly honest, he is suggesting another commission of inquiry without having established the broad level of facts. If a commission of inquiry was announced tomorrow, how long will it take and where will the public debate and examination take place? Commissions of inquiry have become a political go-to that we need one to decide whether it rained in Dublin today or yesterday.
Amid further interruptions Wallace counters:
We need the truth
Burton with the last word:
Simply reaching for that has become an automatic default response of the Opposition and, to be honest, it has not done the preliminary work. Deputy Wallace should offer his insights to the investigating authorities in the North and the UK.
Read more on Mick Wallace’s NAMA revelations and his legal battle with Peter Robinson on his own site here.