Nama property deal '˜seriously deficient', watchdog finds

The £1.2 billion sale by Ireland’s state-owned bank for bad loans following the economic crash, the National Asset Management Agency (Nama), led to a recorded loss for Irish taxpayers of £162 million.

The Irish Parliament’s Public Accounts Committee (PAC) said the 2014 transaction was not well-designed and adviser Frank Cushnahan should have been removed.

It also said key elements of the sale were influenced by one of the bidders, US firm Pimco.

The PAC report said: “The sales strategy pursued by Nama included restrictions of such significance that the strategy could be described as seriously deficient.

“Nama has been unable to demonstrate that by pursuing such a strategy that it got value for money for the Irish State in relation to the price achieved.”

Nama was established in 2009 to take control of billions of euro of bad property loans which were undermining the finances of the Irish banks.

Many of the loans taken over from Irish debtors related to Northern Ireland property.

The entire Northern Ireland portfolio was sold to Cerberus, a US investment fund.

The PAC report follows parliamentary hearings prompted by a critical Comptroller and Auditor General report last year.

The report said Nama incurred losses on its Northern Ireland debts of 800 million euro from 2010 to 2014, including the sale known as Project Eagle.

The Irish state ultimately recovered only 36% of the original value of the loans.

Businessman Mr Cushnahan was a member of the Northern Ireland Advisory Committee (NIAC) to Nama. During 2011 and 2012 he admitted providing financial consultancy services, mainly on a non-fee basis, to six Nama Northern Ireland debtors.

PAC chairman Sean Fleming noted: “These debtors’ connections accounted for approximately 50% by value of the Project Eagle loans.

“It is the opinion of the committee that Nama’s failure to effect Mr Frank Cushnahan’s removal from NIAC, following his disclosures in relation to consultancy services on behalf of a number of Nama’s Northern Ireland debtors, was a failure of corporate governance by Nama.”

Mr Cushnahan has consistently denied any wrongdoing in relation to the deal.

The PAC chair also said the committee considered it was not appropriate for Nama, as the contracting body, to meet Cerberus representatives the day before the Project Eagle bid closing date.

“It could have given the perception that Cerberus was benefiting from preferential treatment.”

In a statement highly contested by the minister, Mr Fleming said it was not “procedurally appropriate” for Finance Minister Michael Noonan to meet senior Cerberus representatives the day before the Project Eagle bid closing date.

Mr Noonan said: “It is disappointing that unjustified and unfounded views have made their way into the final iteration.

“I refute absolutely the validity of any suggestion that I or my officials acted inappropriately in meeting with Cerberus in March 2014.”

According to the PAC chairman, when the Nama board was deciding to set its minimum price for the sale, it already had an indicative offer on the table from Pimco.

Mr Fleming added: “When you compare the Pimco offer to the actual sales process approved by Nama, there are remarkable similarities in terms of sales strategy, sales price, sales process and financial conditions.

“I believe that Nama was influenced by the Pimco offer when deciding on the minimum reserve price and key elements of the sales process.”

He said the confidentiality of the sales process was later lost through media reports and Nama refused entry to the competition to eight of 10 firms expressing an interest in joining the sales process.

Ultimately only two firms submitted bids.

Mr Fleming also said the decision to destroy contemporaneous notes of board meetings has undermined Nama’s ability to explain and account satisfactorily to the PAC for its decision-making processes.