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Archive for September 22nd, 2011

Three weeks ago, it was reported on here that Wicklow independent TD Stephen Donnelly had managed to prod NAMA into getting a move-on with examining the developer business plan which covered Greystones Harbour, which is being developed by Sispar. And last week, another Wicklow TD, Fine Gael’s Simon Harris reported some success of his own in his communications with NAMA.

In the recent Tidy Towns competition – for the non-Irish audience, “Tidy Towns” is an annual competition, run since 1958, that promotes clean, litter-free, well-maintained towns and villages throughout the country –  Greystones was criticised for the poor state of one of its buildings, the former La Touche hotel (pictured here).

The La Touche hotel site is “beneficially” owned by developers Thomas Hayden and sons Wayne and Paul Hayden. The site is subject to a loan from AIB and a receiver, Jim Luby from McStay Luby, was appointed in May 2008. Back in 2008, the receiver was reported to be seeking a price of €15m for the 2.2 acre site. Planning permission has apparently been granted for 85 large apartments, a 10-bedroom hotel and six ground-floor retail and office units. It seems that the loan is now in NAMA.

The report from the Tidy Towns in 2011 was generally positive about Greystones but in relation to the La Touche hotel said “regrettably the remains of the La Touche hotel looked in a terrible state, and the graffiti on the hoarding further degraded the area” and “some dereliction was noted especially at the La Touche site”

Step forward Deputy Harris who reported on 8th September, 2011 on his website that he was to write to NAMA seeking an update on the agency’s plans for the site. “NAMA have a duty to ensure that properties and sites within their control are maintained” said the Deputy.

And on 15th September, 2011 the Deputy reported on his website that he had secured commitments from NAMA. “Following my discussions with NAMA, it has been agreed that significant works will occur at the site in the near future. All existing window hoardings are to be removed and replaced. In addition to this all external balconies to the front and rear of the original hotel building are to be repaired and repainted. All external boundary walls are to be painted, while all external signage, lights and satellite dishes are to be removed” said the Deputy.

Deputy Harris said this evening that “NAMA have recently established a dedicated email address through which members of the Oireachtas can email queries and seek information.”

The issue of lobbying NAMA has long been a subject of interest on here. There is no suggestion whatsoever that Deputy Harris has done anything other than try to better the lives of his constituents but it can surely only be a matter of time before politicians, TDs and Senators intervene with NAMA in ways that mightn’t be so publicly-spirited. They may intervene on behalf of potential buyers of NAMA sites, or developers in their constituency. And again that may be above board also, after all buyers and developers are people too! But it seems that there is no real safeguard against the harmful lobbying envisaged when NAMA was being created. Section 221 (3) of the NAMA Act permits lobbying in the public interest. Section 221 (4) permits lobbying by people whose employment allows them to lobby which seems to include anyone that might have an interest in so doing. So it seems that pretty much everyone is exempted from the draconian penalties – financial and custodial – set out in the NAMA Act.

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The NAMA chairman, Frank Daly today delivered a speech to the grandly-named Corporate Governance Association of Ireland , an organisation which has (if you divide its 2010 subscription income of €13,900 by its annual membership fee of €250 per individual) less than 60 individuals as members. The Association claims that it “seeks to promote best practice in governance across the commercial, public and voluntary sectors by developing Codes of Good Governance in partnership with like-minded organisations as well as providing candidates for board positions.” Frank was there to give his views on corporate governance and transparency and the full speech is available here.

As with most NAMA presentations, there was a segment which gave an update on the agency’s activities; nothing at all new to report but as far as I can recall this is the first NAMA speech by its chairman or CEO which didn’t take a swipe at developers and their “extravagant mindsets” and their generally wily ways. Today, Frank restricted himself to simply saying “most debtors, I should point out, are co-operative and are at various stages of discussion with us on their business plans which, in the majority of cases, will result in agreement on asset disposal schedules and debt repayment targets and, where appropriate, securing unencumbered assets and reversing asset transfers to relatives.”

Frank returned to his position on transparency first expounded at the NAMA appearance before the Oireachtas committee two weeks ago when he claimed that NAMA could be either transparent or commercially focused but not both. Today he said: “On a daily basis, we are in discussion with international investors, private equity firms, large property companies and others who are, by and large, sharp operators whose track record suggests that they do not miss too many opportunities. The suggestion seems to be that NAMA should show its hand openly, including showing it to those with whom it is negotiating the sale of loans or facilitating the sale of property. This would be commercial folly, the business equivalent of scoring an own goal from the half-way line – a spectacular, generous but self-defeating gesture.”

The view on here is the above position is fair enough in terms of future transactions, but that NAMA should reveal details of past transactions. Yes, that may compromise, to a limited extent, future transactions by revealing NAMA’s competence and ability but at least the taxpayer which has a €30bn risk-investment in NAMA will get a sense of what the agency is doing and how well it’s doing it. It is truly amazing that in this country of ours, we will analyse in the finest detail the €100m disposal of Aer Lingus shares, or the privatization of the National Lottery or the sale of shares in the ESB or Bord Gais (all of which might come to a grand total of €2bn), but to date NAMA has disposed of €4bn of loans/properties and the only sale on which we have (sketchy) details is the €99.9m Montevetro off-market transaction.

Frank did argue that NAMA is the most transparent of Irish public bodies which is to an extent correct, but it is also unique in that its objective is to manage €30bn of assets (€72bn at face value) and it is likely to dispose of much of its portfolio. It is truly amazing that NAMA has not been publicly held to account on the detail of its historical transactions. And let’s not omit Senator Mark Daly and his allegations which bob up on the surface every few months. NAMA remains outside the general provisions of the Freedom of Information Act, even if there was a limited advance last week when thestory.ie had success in having NAMA held to be a public body for the purposes of serving environmental requests.

Elsewhere in the speech Frank calls for reform to the audit profession and for its activities to be more forward-looking. Curious that Frank didn’t mention the godawful standard of loan documentation that apparently went unchecked until NAMA undertook its due diligence in 2010. Maybe the audit profession might reform how it does what it’s supposed to do today. There’s a reminder here of the auditors of our banks from 2006 onwards.

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