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Archive for December 24th, 2010

Well this story may well develop legs. On 18th November, 2010 NAMA’s CEO, Brendan McDonagh and three of his colleagues appeared before the Committee of Public Accounts (CPA). There were a few testy exchanges and then the Fianna Fail deputy Michael McGrath launched into a surprisingly eager line of questioning about the information provided to the banks (the transcript and context of the exchanges are here). This is an extract of what I think is the relevant section:

Deputy Michael McGrath: It seems to me that there was a clear pattern of false and misleading information being fed into NAMA by the main banks in Ireland during 2009. That has to be investigated. I do not know who has the function to refer that information to the Garda, the National Bureau of Fraud Investigation or the Office of the Director of Corporate Enforcement, but it needs to be done.

NAMA CEO, Brendan McDonagh: I do not disagree with anything the Deputy said

What happened subsequent to this was that the Committee wrote to the Financial Regulator, Matthew Elderfield “to ask it [Financial Regulator as an agency] to inform the committee of the appropriate action it proposes to take”. I haven’t seen that letter but the response from Matthew is available and here’s what he said on 26th November, 2010:

There was then a second letter from Matthew Elderfield to the Committee on 6th December, 2010 which is as good an example of backside-covering as you are likely to find anywhere, and sets out Matthew’s understanding of the allegations and next steps.

And then last week, the Irish Times and Independent reported on the Committee being very upset at the NAMA CEO for having “misled” them. The Committee was angry about a number of matters relating to NAMA but there wasn’t very much detail reported last week as to why the Committee felt NAMA has “misled” it.

But today, finally, the Irish Times reports of a third letter from Matthew Elderfield dated 17th December, 2010 to the Committee which apparently says “Nama’s letter informs us that it does not have a valid basis to suspect that there has been any criminal offence or other contravention of the Nama Act” (the third letter does not yet appear to be available from the Committee’s document access webpage). I have not yet seen this third letter but from what has been reported about its contents, it is easy to see why the Committee would feel it was misled. Indeed you might go further and characterize the NAMA CEO’s response to Deputy McGrath as a lie – would you disagree?

NAMA celebrated its first birthday last Sunday and I must say I have been amazed that during the past twelve months NAMA has avoided major cock-ups. Indeed during the loan acquisition phase it has been pretty successful – yes the transfers took longer than expected but the agency has accomplished a monumental feat in transferring €27bn of loans in a way which has secured EU approval, and has transferred a further €43bn which is still either subject to EU approval or final due diligence/valuation in Q1, 2011. John Mulcahy’s alleged sojourn on a sometimes-developer’s yacht, the revision of the NAMA plan and the pathetic level of detail published, NAMA salaries, developers’ transfers to spouses and criticism from many quarters including financiers, politicians and developers not to mention the general public – NAMA has survived these slings and arrows. But now we have the NAMA CEO arguably lying to a Dail committee. On record.

For a variety of reasons the Committee won’t let this matter, ahem, lie.

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