One of Ireland’s most senior judges today delivered a rebuke to NAMA for apparent delays in dealing with a matter before the courts. The remarks are reported by Mary Carolan in the Irish Times. It is not clear when the remarks were made as the case quoted was apparently not before the courts today according the Court Service legal diary. The redoubtable Mr Justice Peter Kelly is reported to have said that a “number” of cases that have come before the Commercial Court have been delayed as a result of delays of “an inordinate period” at NAMA.
The case reported by the Irish Times concerns a €40m claim lodged in February 2011 by Neil Durkan’s, Durkan New Homes Limited against Phil Hogan’s Department of the Environment . Durkan had apparently agreed to build 215 social housing homes for the Department in return for the Garda station on Harcourt Terrace in central Dublin. Durkan claim it completed its side of the bargain but the Minister welched on the deal because of delays with occupying a new Garda station at Kevin Street. It seems likely from the reporting that NAMA is involved in Durkan’s loans to build the social housing and was being consulted over a settlement offer by the Minister. This in itself is amusing : a NAMA-backed developer suing a government department since the government practically owns NAMA.
The upshot of it all is that Minister Hogan made a settlement offer. The offer had to be agreed by NAMA, presumably because the agency had acquired the loans used to build the social housing. It is not clear when the proposal was sent to NAMA but it is claimed that on 30th May 2011, it had been with NAMA for several weeks and on that date, 30th May, NAMA was asked to make a decision, presumably by Durkan. And a month later, the agency has still not made a decision or communicated that decision to either Durkan or the Minister. The Irish Times report says that last week NAMA responded to Durkan to say the matter was being considered “higher up” in NAMA.
Both the Minister and Durkan are reported to have written to NAMA asking for a decision. It is not reported if there has been any response by NAMA. As a result of NAMA’s apparent delays in responding, the case is to proceed with discovery of documents which will add to costs in the case, which it is suggested will ultimately be borne by the taxpayer.
The above is quite damaging to NAMA. The agency is by all accounts working very hard at a senior level to deal with developer business plans and everything that goes with managing a portfolio of €73bn of loans. The NAMA CEO is reportedly working 75 hours a week and reports reaching here suggest senior personnel at NAMA are working 12 hour days. Other reports suggest a degree of management dysfunction at a lower level in the organisation. But there is no suggestion that NAMA staff are sitting around all day playing solitaire on their computers. So it is understandable that there will be delays at NAMA in processing requests. But for NAMA not to provide a holding letter, perhaps providing a timescale in which a decision might be made or indicating the points at issue or resources needed or tasks to be undertaken to reach a decision, seems inexcusable and indeed disrespectful to the Court. That the taxpayer will ultimately pick up additional costs (because either the Minister will pay them or Durkan will, and Durkan may deduct them from loans outstanding) is also troubling.
NAMA presently has 140 staff and recently stated that it is recruiting an additional 60 to bring the overall complement to 200. NAMA is directly managing the top 180 developers owing €62bn of loans at nominal value. Capita and staff at banks are managing the remaining 670 developers who owe €10bn. It has long been an issue on here that NAMA is just not sufficiently resourced to handle this quantum of loans, particularly in the early years as procedures are established and business plans agreed. FG in Opposition said they would farm out NAMA’s operations to 3-4 asset management companies, and indeed then-Opposition leader Enda Kenny asked on 23rd March 2010 in the Oireachtas how NAMA could function with so few staff when other asset management companies with similar value assets employed 1,000s. Enda might be getting his answer if this delay criticised by Judge Kelly is representative. And Judge Kelly stated that there were a “number” of other cases where NAMA’s delays were “sterilising” the work of the Commercial Court. NAMA can’t afford many such critics or criticisms.
UPDATE: 12th July 2011. Ireland’s Evening Herald reports that NAMA has responded to last week’s criticism in the above case and has “responded “very quickly” to the proposals and a meeting was also held with the agency”. Apparently NAMA’s late engagement in the matter has not resulted in a settlement and the case has been set down for a hearing in 2012, but at least the agency is being seen to engage with a matter before the courts.
NAMA Wine Lake 
Ahem, to coin a phrase….. LOL JUDGES!
This judge is from the same profession and organisation which allows cases and tribunals to drag on for decades, with legal fees spiralling into the stratosphere with every letter drafted. Admittedly NAMA is proceeding at glacial speed, but since the courts are frankly tectonic in their operation, I doubt that NAMA is causing any serious slowdown in these cases.
This complaint strikes me as akin to an old tortoise (complete with wig) giving out to a lame duck for not hopping fast enough out of his tortoiships way. “Places to be young fowl”, he would say, “Cannot have young layabouts like you holding up Important Business”.
He would then continue, slowly, hauling his well padded shell towards retirement station. He must catch the last redundancy train before the referendum clouds begin to rain! The duck meanwhile, is none too hurried. As it is technically a contract employee on a defined contribution pension, it can be expected to to be picked up by a Rolls Royce when it decides to retire for the evening.
Judge Peter Kelly is about the only judge in the commercial courts that I would have any time for. He was very good on the Liam Carroll insolvency and he has shown a tendency from time to time to go against the tide.
That said, the fact of the matter is, we are still in the halcyon days of NAMA. The longer this gravy train continues the more obvious it is going to become that it was the wrong train, leaving on the wrong journey, to the wrong destination. That is a lot of wrongs. One look at the UORR fiasco tells me that NAMA remit is far too narrow. It is not job focused, neither is it focused on economic recovery, only the recovery of the foolish property boom. We have a bunch of NAMA executives looking at portfolio’s as if they owned the property themselves and they are acting to make the figures look good as they draw down their lavish salaries. Later on, it will become apparent that predictions of drastic losses were all to accurate I am thinking of Mr Gurdgiev and even Mr. Mathews. The public are footing the bill for NAMA, we are also footing the bill for the bank bailout, we are footing the bill for the MOU and now, surprise, surprise, it looks like we are to foot the bill for the barristers, accountants, valuers on all sides of the NAMA equation as they toss things back and forth.
History will show that NAMA the guarantee, bank nationalisations, loss of sovereignty, and the MOU are all inextricably linked in a causal chain.
NAMA, Irelands version of TARP cash for trash should never have been approved by the EU but the DoF swore blind that “the only game in town” was required to fix the banks “liquidity” problems. Neither should it have been allowed to set up as a toxic SPV structure, similar to what Greece used to conceal its financial insolvency. This structure also gives it massive powers of concealment which strangely mirrored the concealment practiced by the very banks whose liquidity problems they were supposedly “fixing”. Information concealed from citizens on whose behalf NAMA purports to act.
How and why did the EU tell us this monstrosity does not put a coach and four through EU competition law? How can any private citizen compete with NAMA? How can any non NAMA hotelier compete with NAMA? How can any developer or small builder compete with this thing. For me, and many people it illustrates the “make it up as we go along” approach the EU adopted on the wider crisis.
The EU institutions failed to reign in Irelands profligate banks, then when it came to blanket guarantees and NAMA, it was more than willing to go along with our finance minister. It was more than happy to go along with the bad decisions, because the fatal blanket guarantee suited the Germans, it suited the French, acting as a free insurance policy for their own banks. Well, “free” so far!
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