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Archive for September 11th, 2011

On Thursday night last, the Minister for Justice, Equality and Defence, Alan Shatter appeared on the new season of the under-rated Vincent Browne show where the topic du jour was the continuing friction between Ireland and the Vatican over the abuse of children. Minister Shatter gave a praise-worthy performance and clearly explained the basis for Taoiseach Kenny recently accusing the Vatican of frustrating the Irish public inquiry into the abuse of children by “the religious” – priests, nuns, monks, the Brothers and Sisters. What Taoiseach Kenny had meant when he said “a report [the recent Cloyne report] into child sexual-abuse exposes an attempt by the Holy See, to frustrate an Inquiry in a sovereign, democratic republic. As little as three years ago, not three decades ago” was that the ambassador fromVatican City toIreland, the Papal Nuncio, had responded to a request from the Murphy Inquiry three years ago in such a way as to show an intention to frustrate the work of the Inquiry.

The Papal Nuncio was asked by the Inquiry in 2009  “does he have any information about the matters under investigation by Cloyne Inquiry [the Murphy Inquiry into child abuse in the Cork dioceses of Cloyne]” and the response was “the Vatican does not determine the handling of cases of child abuse in Ireland and is therefore unable to assist in the matter” An example of the Vatican’s concealment cited by Minister Shatter on Thursday was a letter from the Papal Nuncio in 1997 to the Irish bishops which made it clear that the Vatican did not approve of a so-called Framework Document published the previous year, 1996, which made it mandatory that the abuse of children be reported to the civil authorities. So for the Papal Nuncio to claim just three years ago that the Vatican “does not determine the handling of cases of child abuse” when it had made its displeasure known to, not to be disrespectful, its employees, the bishops about the reporting of crimes to the police, was undermining the Irish Inquiry.

Minister Shatter went on to say that the Papal Nuncio didn’t furnish the 1997 letter or provide other information available to theVaticanon child abuse inIreland. The point was made that the Papal Nuncio in 2009 might himself not have had the information but as the ambassador for the Vatican in Ireland, he would have been expected to check if there had been such information that might have been helpful. He didn’t, and that is why the Government considers it appropriate to level such damning accusations at theVaticantoday. This friction looks set to continue for some time.

What puts the above in mind is the appearance by NAMA at the Oireachtas committee hearing on Friday during which the agency was quizzed about aspects of its operations. From this armchair-perspective the agency appears to be exposing itself to accusations of casuistry and not being completely open with the committee. NAMA’s responses on bonuses, the Paddy McKillen legal case and the disposal of assets all seemed incomplete, and the language appeared defensive to the extent that minimal information was forthcoming.

NAMA claimed on Friday to have approved over €4bn of disposals of assets – loans and property – which means that the agency is well on its way to meeting its self-imposed target of paying down €7.5bn of its debt by the end of 2013 – by “its debt” I mean the bonds NAMA used to buy the loans from the banks which the ECB presently holds after the banks exchanged them for cash with the ECB.

But the €4bn – and if I heard the NAMA CEO correctly on Friday, some €3.9bn of this has already been realized “in cash” – is an incredible sum, close to the value of the total state asset sell-offs recommended by Colm McCarthy and twice the €2bn presently contemplated. It represents decisions where assets were sold for below book value and should make us anxious, though remember that it was always likely that NAMA would sell below book value. NAMA is an agency with less than 200 employees and audited by the Comptroller and Auditor General. I’m willing to believe the people at NAMA making the decisions are decent, public-spirited and trying to do the best the can for the country but with these sums we need more transparency and effective oversight.  Speculation about shenanigans at NAMA in its disposal of assets emerge from time to time – Senator Mark Daly has claimed on several occasions that NAMA is selling assets back to developers at below current market value (though when challenged for details, he has not been very forthcoming) and even Taoiseach Kenny has suggested skullduggery at NAMA. We don’t have a detailed list of NAMA’s sales but two transactions associated with the agency in London have raised eyebrows because of the apparently-low prices achieved.

In yesterday’s Irish Examiner, Professor Brian Lucey argued that NAMA should place all of its assets on eBay to promote transparency, marketing and to just get sales going. Property companies and agencies might be aghast at such a suggestion, not just because they might forego fees but because they understand that many of NAMA’s properties are niche and difficult propositions with all sorts of planning, construction and conceptual issues which might make them unsuitable for a mass market platform like eBay. For example, take the potential market for the €1bn Citi Tower in London’s docklands; the pool of potential buyers will be limited; the property will be outside the investment price range of most of the audience on here and it may represent an investment for which most of you wouldn’t have sufficient expertise. That’s just a fact and not meant to be condescending. But even if NAMA uses the traditional channels for selling complex property developments, many properties in NAMA are common-or-garden propositions that would appeal to a wide audience. eBay is already used to sell real estate, even high end real estate like this mansion on 55-acres in Montana. And there is nothing to stop NAMA putting the more difficult propositions on eBay and referring buyers to sales agents.

But what about the non-real estate property controlled by NAMA. According to NAMA’s responses at the hearing on Friday, there is none that NAMA has foreclosed on, with the single exception of Derek Quinlan’s art collection. But how credible is that?

On 28th July, 2011 the Irish Times reported “the agency had just secured €200,000 worth of jewellery a borrower had bought for his partner”. NAMA has been to the fore of the appointment of receivers/liquidators to the Whelan Group and Pierse Construction, amongst others. In the case of Pierse, there has been at least one auction run byWilson auctioneers. So is NAMA really trying to have us believe that it has not secured any non-real estate property? That’s certainly what the NAMA CEO said on Friday.

And whilst a €1bn office development in London’s docklands might not be suitable for sale on eBay, Rolexes, Ferraris, helicopters and speedboats are. So even if NAMA’s claim on Friday was correct – that it has not foreclosed any non-real estate assets to date – it is to be hoped that when NAMA does effect such foreclosures that the subsequent disposals are transparent. It wouldn’t be positive for the future career/pension prospects of anyone at NAMA to seek to pull the wool over elected representatives’ eyes, just so as to avoid pesky interference in the present-day management of state funds.

UPDATE: 11th September 2011, During the week it was reported that NAMA had sold a subsidiary of the Bowen construction group. The company, BMD, was reportedly sold to a senior management team at BMD itself. There is no announcement on the BMD website and of course NAMA has not provided any news release. Presumably this company was a non- real estate asset. Where was it advertised? The sale price was not reported. There is no suggestion here that the best price wasn’t achieved by NAMA. The buyers were members of the senior management team at BMD. But does NAMA not now need to write to the Oireachtas committee to correct its responses on Friday?

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