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Archive for December 21st, 2010

RTE transmitted a capable current affairs programme last night which examined the wealth and lifestyles of several top NAMA developers who owe the agency an average €1-2bn. As a close follower of NAMA, I must say that it was the first Prime Time programme on NAMA where I haven’t found myself shouting at the TV screen at the mistakes voiced by presenters, journalists, junior ministers and commentators, and all in all it was an interesting insight into some of the residual private and commercial wealth enjoyed by NAMA developers such as Bernard McNamara, Michael O’Flynn, Gerry Gannon, Seamus Ross, Joe O’Reilly, Sean Mulryan, Derek Quinlan, Paddy Kelly & family and the Treasury duo – Messrs Ronan and Barrett. I couldn’t dispute any of the details.

The programme gave a fascinating insight into the wealth (particularly property wealth) enjoyed by the developers and notably their wives – no interior shots of the houses but the opulence of the properties wasn’t in doubt and RTE made full use of camera masts to provide elevated images of the properties. Transport was also on show – be it Gerry Gannon’s 4-year old silver Range Rover (reg 06-D-7884, shouldn’t RTE be pixelating developer number plates?) and his wife’s red 2008 SL Mercedes (UPDATE: 26th December, 2010 now apparently for sale), Bernard McNamara’s newish S-class Mercedes or Johnny Ronan’s old Maybach (worth about GBP 100k in the UK today where there is a second hand market). And speaking of second-hand values, Michael O’Flynn’s AgustaWestland 8-seater helicopter was valued at €3.5m+ by RTE.

All in all though,I found it difficult to understand the point of the investigation. That developers still have access to immense wealth? That developers made substantial transfers to spouses? That developers still collect impressive rents on their properties? That developers employed offshore companies to manage risk in their businesses? All with an over-arching implication that developers are stiffing NAMA (and by extension the nation). None of this was really new and we didn’t need what looked like expensive covert filming or vaguely threatening background music , not to mention what is now the usual imagery of wealth, the upturned Bollinger champagne bottles, the crystal cut glass champagne flutes, cognac glasses and a bunch of well-fed developers playing Monopoly on the top floor of an unfinished office block – no we didn’t need any of this to confirm what has been reported elsewhere in detail. It is just about noteworthy that 12 months after NAMA finally came into being, developers whose debts are now owned by the State, still enjoy fantastic wealth whilst the citizens have contributed billions to recapitalizing the banks after losses on these loans.

So you would have expected the programme to have given NAMA a hard time, particularly since the NAMA chairman Frank Daly did provide an interview. But for whatever reason the questioning was pretty light, for example

(1) Yes NAMA may have initiated the voidance of the transfer of €130m of property (are those peak values or today’s by the way and are those properties subject to substantial non-NAMA mortgages and liens?) by three (yes, just three!) developers out of 850 developers whose loans have been absorbed. The value of this property is not to be used to set off against the debt now due though, it is to be used for future development. And by the way the €130m of property hasn’t all been transferred back yet – how long does it take to execute a conveyance? Seven days? Prime Time say there was “no evidence” of property being transferred to avoid creditors or NAMA.

(2) NAMA has taken action against one developer (Paddy Shovlin’s partnership with the Fitzpatrick brothers). One action?

(3) On the other hand NAMA is reported to have taken over all the rent rolls it can. The programme made much of the fact that NAMA occupies Treasury Buildings in the centre of Dublin and pays rent to its landlord (Treasury Holdings/Paddy McKillen) but is NAMA not using that rent to offset debts owed to it by the developers. Ditto with the Office for Public Works buildings including those owned by Liam Carroll and Bernard McNamara. The programme’s implication was that developers were still pocketing substantial rent whilst debts to NAMA went unpaid. But is that really the case?

(4) And Prime Time could certainly have dug on the question of business plans. My information is that none have been signed by NAMA *and* the developer. NAMA say that 30 have been “approved”. What does that mean?

Possibly the most newsworthy segment of the programme and it was over in a flash was a comment by Simon Kelly, son of Paddy Kelly who said (35:30 in to the recording)

“I suppose I personally owe the banks about €200m on all the properties that have gone into NAMA. The Kellys will be, you know, €900m so like again under half of that portfolio, just under half of that portfolio will be on our combined shoulders. It’s a vast amount of money. We signed for the loans personally and that’s meant now our day of reckoning has come.”

With NAMA taking over loans at an average 58% haircut, the clear implication is that the developers feel they are in debt to NAMA for what NAMA paid for the loans and no more. Perhaps that was the real revelation from last night’s programme but alas it went unexamined.

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