This morning at 11.30am, there is a press conference scheduled at the NAMA HQ in Dublin to launch the 2011 Annual Report – previewed here. The NAMA CEO Brendan McDonagh and the NAMA chairman Frank Daly will present the report, just as they did last year. They will however be joined on this occasion by the Minister for Finance, Michael Noonan, and the optics of the Minister’s presence should not be overlooked – in the past year, NAMA has been brought firmly within the political compass, and that is something about which we should be worried. It is not just bankers, developers, audit firms, law firms and the media that have failed this country, but history shows politicians share much of the blame, and you should be concerned as politicians encroach upon what was supposed to be an independent asset management company which could pursue its own decisions in support of the objectives given to it in the NAMA Act.
But let’s review the past year
(1) And let’s start our review with the review of NAMA by the former HSBC boss who was criticised in last week’s US Senate report on money laundering. It seems that it was Minister Noonan who commissioned the review in September 2011. The NAMA Act provides for an overarching review of the Agency but that is not scheduled until 2013. This was a special review, and demonstrated to NAMA that the Minister now had the whip hand.
(2) NAMA advisory board, the Minister decided to create an advisory board with Michael Geoghegan, Northern Ireland quango king Denis Rooney and NAMA’s own Frank Daly. The role of the board is to advise on remuneration and appointments and NAMA strategy, but it is obviously a half-way house for the Minister to impose his will on NAMA.
(3) NAMA departures and appointments, two NAMA directors have resigned in the past year and only one has been replaced with the appointment by Minister Noonan of John Mulcahy, less than 12 hours after the deadline for applications had closed. The other vacancy has not yet been filled by Minister Noonan whose responsibility it is for NAMA board appointments, despite the resignations taking place in October and November last year.
(4) Anglo promissory note, NAMA was directed to hand over €3bn of cash to zombie bank IBRC in March 2012 on foot of a formal Direction from Minister Noonan. Some thought this act represented a crossing of the Rubicon in political interference in NAMA, as the transaction had little to do with what NAMA was intended for, when it was conceived in 2009.
(5) Change to Troika agreement for debt repayment, Minister Noonan removed any flexibility in NAMA’s repayment of debt by the end of 2013, when he unilaterally agreed with the Troika in May 2012 that NAMA would repay €7.5bn of its senior debt by the end of 2013. This was previously an internal target in NAMA which would have been flexible. That flexibility has been removed, and for what?
(6) Ministerial interference, we learned earlier this year that Ministers had gotten involved in NAMA decisions on commercial property in Dublin. From Minister Richard Bruton’s intervention – he says it was with the IDA – on the BSkyB letting at Burlington Plaza to Minister Phil Hogan’s intervention at Google, it now seems it is open season on ministers contacting NAMA, directly or indirectly, so as to influence decisions.
(7) Senators and TDs contacting NAMA, remember when TDs and indeed ministers had conniptions in deciding whether or not they could contact NAMA without breaking NAMA’s anti-lobbying rules? There’s no such anxiety now, with NAMA providing TDs and Senators with a dedicated phone number and email address, email@example.com
(8) Budget 2013 and Upward Only Rent Reviews, this was the greatest possible budget for NAMA. Although NAMA rejects the notion it lobbied government to abandon plans to reform UORR laws, and merely drew the government’s attention to the catastrophic effect the reforms might have on NAMA’s asset values, the Agency did “get its way” when the plans were formally dumped last December. With the reduction in commercial stamp duty, the capital gains tax incentivisations and reliefs on motgage interest, this was a Fantasy Budget which NAMA might have written itself.
(9) Relationship management, in January 2012, NAMA recruited what it called a “Relationship Manager”, Martin Phelan formerly the communication director at the Construction Industry Federation. Martin is now “Head of Relationship Management” at NAMA and there have been recent advertisement(s) for Relationship Officer(s). When asked last week in the Dail for the budget, headcount and purposes of this department in NAMA, Minister Noonan would merely say “The function of relationship management, which relates to the Agency’s engagement with members of the Oireachtas and other key stakeholders” and he refused to provide budget or headcount on Data Protection grounds.
(10) And finally, let’s not forget that Minister Noonan’s very own Director of Elections in his Limerick constituency in 2011 was none other than Brian McEnery of Howarth Bastow Charleton, accountants and insolvency practitioners who also happens to be on the NAMA board, though it should be said his appointment predates Minister Noonan’s ascension into office.
Yes, a year on, NAMA is a far more politicised Agency and that will be further evidenced by Minister Noonan’s presence at the press launch of the Annual Report this morning. You won’t see the other “third party independent investors” who own 51% of NAMA, but you will see the long shadow from Merrion Street. As NAMA board member and former IMFer, Steven Seelig remarked in a working paper he did at the IMF in 2004, political interference in asset management companies generally doesn’t end well.
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