In December 2010, fourteen months ago, and after NAMA had acquired most of the €74bn of loans which it was eventually to acquire, the NAMA chairman Frank Daly issued a pre-Christmas message in which he said “as a result of the Agency’s insistence, a number of borrowers whose loans have been acquired by NAMA have reversed or are in the process of reversing transfers of over €130 million worth of assets which they had previously sought to transfer beyond the reach of NAMA or the relevant Banks”. And remember that December 2010 was 7-9 months after NAMA had acquired the first tranche of loans from the NAMA Top 10 developers which were worth a staggering €15bn, and four months after the Agency acquired the second tranche with the 20 next-biggest loans which totalled €12bn.
It is difficult to put NAMA’s December 2010 figure in context – was €130m a “good” result for NAMA? The media would have you believe that developers were squirreling wealth away on an industrial scale, and that this malfeasance mostly involved putting property in the wife’s name (it is a feature of the Irish property world that developers are almost exclusively male). So €130m might be perceived as small in the context of loans for assets worth €74bn – surely borrowers of €74bn had at least a few billion of unencumbered assets to protect? And the view on here is that if developers who ran up debts of €74bn only managed to transfer €130m to their wives (or girlfriends or elsewhere beyond NAMA’s reach), then they were either too stupid to see the downturn coming or too honest to act so as to deprive creditors – neither seems likely, though there’s possibly a modicum of truth to both, so the implication is that spousal transfers should be far greater than €130m.
Fast forward 14 months to February 2012, and remember that NAMA has now examined 95% of the developers’ business plans, according to the NAMA chairman last week, and remember these business plans are required to disclose details of asset transfers in the past five years, and in the Dail yesterday, Minister for Finance Michael Noonan told the Fianna Fail finance spokesman Michael McGrath that NAMA had now succeeded in reversing €160m of transfers – in other words an additional €30m when compared with December 2010. The €160m of reversed transfers represent 31 developers. Minister Noonan says there are another 17 developers being pursued. The Minister is reported to have said that NAMA is pursuing five “cases” through the courts for the reversal of transfers – it’s not clear if this is five developers or just five legal actions, remember that NAMA has initiated legal actions in Canada, the US and the UK against the Grehans, so there could well be “five cases” there alone. There are pending legal actions inIreland against Sean Dunne and the directors of Capel Developments, but it is understood that these are related to judgment orders, rather than reversals of any transfers. The David Daly case did have an element of spousal transfer of cash, but David Daly has now refinanced his loans, so that is no longer a NAMA issue presumably.
Again we have little context to be able to judge if this is a good or bad result for NAMA. If NAMA is indeed hounding developers and if the media image of widespread transfers is correct, and developers with €74bn of loans had a few billion of unencumbered assets to protect, then it somehow seems like a small number. In light of the TAIL transaction at Treasury Holdings which we learned about yesterday where €20m of shares were supposedly transferred to the founders of the company for what on the face of it appears to be well below value – disputed apparently by Treasury who seem to claim the transaction was at open market values – and two years after the transaction, NAMA has still not gone to the courts to reverse the transaction, despite referring to it in its affidavits as “a grave concern” and “making good of the financial damage caused to Treasury by the TAIL transaction has been a central requirement of NAMA at all material times” and “at no stage has NAMA accepted the propriety of what was done in the TAIL transaction” then you might indeed wonder if the €160m of reversed transactions is anything but a paltry start to reversing developer transfers.
Deputy McGrath’s question and Minister Noonan’s answer in the Dail yesterday should be available later today and will be published here verbatim when available.
UPDATE: 23rd February, 2012. It seems NAMA is sticking by its view expressed here, that there is “no pot of gold” in developers’ transfers. Deputy McGrath’s question was actually dealt with on Tuesdaythis week, not Wednesday, and can be found here, and is reproduced verbatim below. “Deputy Michael McGrath asked the Minister for Finance if he will provide details of the number of individual cases that comprise the €160 million of asset transfers by National Asset Management Agency debtors to family members which have been now reversed by the agency; if all of these reversals have been achieved without the necessity for court action; the number of individual cases in which NAMA is pursuing similar reversals; and if any court action is planned or currently underway to achieve this objective.
Minister for Finance (Deputy Michael Noonan): NAMA advises me that in the case of 31 of the 188 debtors under its direct management, it has secured agreement to reverse asset transfers with an aggregate value of €160m. In another 17 cases, assets transfers have been identified and NAMA is confident that its current discussions with debtors will conclude with additional transfer reversals or the granting of charges to it over unencumbered assets. In 5 other cases to date, NAMA has initiated legal action to reverse asset transfers. NAMA also advises me that in the case of 32 of those debtors, no asset transfers to relatives appear to have taken place in the past five years.
A number of directly-managed debtors have borrowings with no recourse other than the secured asset and in those instances debtors have no legal obligation to reverse asset transfers or offer additional unencumbered assets. Finally as regards the other debtors under its direct management, NAMA has either already enforced against the debtors concerned or is engaged in further investigation and legal review of possible asset transfers. Some of these cases will ultimately lead to additional reversals or the granting to NAMA of additional charges over assets which are currently unencumbered.
In the case of the 598 debtors whose debt is managed by the participating institutions on NAMA’s behalf (par debt of €13 billion), the business plan cycle is approaching completion. It is expected that the current engagement with these debtors will yield additional reversals of asset transfers to relatives by the time the process has completed.
NAMA has already stated that the maximum amount it expects to recover as additional security is of the order of €500 million.”
NAMA Wine Lake 
@NWL, NAMA did admit in the various affidavits that the TAIL transfer was “not illegal”. Maybe that’s why it was never pursued in court.
@WSTT, the Treasury affidavits have been requested and will be posted if they become available. It is absolutely the case that there is no public allegation of illegality with the TAIL transaction, though NAMA refers to it as a “grave concern” and of central importance to NAMA’s engagement with Treasury and there is the claim that it financially damaged Treasury Holdings finances. Perhaps the Treasury affidavits will address NAMA’s claims.
@ NWL
Thanks for trying to hold these guys to account. If you weren’t who would?
Not too many Journo’s in the print press keeping as close an eye as you.
In saying that, I hear the Examiner has an expose on developers lifestyles next Saturday. But there are not enough mathematically/financially literate journos writing about Nama.
And that about sums it all up really. The Developers are using every manner of trick, con and shell swap in the book to squirrel assets away beyond the reach of their creditors. It’s clear that the menagerie of family transfers, share deals, front companies, and loans seen in the Quinn vs Anglo case is by no means the exception. We see similar behavior in the Vita Cortex scandal.
My own opinion is that Irish businessmen have embraced the Enron corporate model in its entirety. The “business friendly” environment we are lauded to have here in Ireland is little more than a thieves charter for con-men, all acting under the advice of the Irish lawyers and accountants who ultimately architect these labyrinthine schemes. Boards of directors are only the tip of the rotten iceberg.
If NAMA are interested I can point them in the direction of a few Ferraris and Jaguars, ownership of which may have changed in recent years.
Very good post NWL,
Asking “where has all the money gone” is a worthwhile exercise. If somebody has seen an analysis, please post a link.
From what I can see many billions of euro was used to purchase Irish property between 1996 and 2007. Needless to say the compounding effect of price increases weights the bulk of purchase amounts towards the end of this spectrum. So who made off like bandits? (my guess) 1. the government and local authorities 2. people divesting (e.g the Doyle family iirc) 3. Developers (?)
Should we believe ‘Developers’ threw every last penny into the next project? In the NAMA set-up stage, when talking about what the discounts might be was fashionable, there were gov. ‘loyalists’ talking about 70% LTV were max loan amounts lent and talk of high discounts was for the birds. Detail on this kinda went quiet, but I had the impression that deposits were small in the final years of the boom.
So is there substantial developer stashes out there? My guess is yes. This is mostly why I have argued that NAMA should have moved quickly against developers – locked everything down. Leaving distressed developers in charge of companies that are broke but still have some assets is open to abuse. (Mick Wallace selling his Italian vineyard to his brother to cover debts could be seen as something a little dodgy).
Although, in all likelihood unrelated, Seannie Fitz’s quick sale of Anglo’s Austrian private bank at a time when Anglo was falling apart does stink. Kathleen Barrington had some good pieces on this in the SB post. Unfortunately she seems to be working for Joan Burton, so no more articles :( This is a link to one of her articles: http://kathleenbarrington.blogspot.com/2011/02/how-fitzpatrick-sent-600m-deposit-book.html
@Ahura M, There was a stink from the Austrian Bank OK, which is why it was sold. But it was not related to Ireland. We were into borrowing not depositing. Did you ever holiday in Sicily?
Yes nothing to do with borrowing. And I didn’t intend to give the impression that it was anything other than possible ‘hot’ deposits. There is the potential for FSF (friends of Seannie Fitz) may have been advised to stash money.
I wouldn’t say such friends would exclusively be developers, but some might be. The business case for selling and the timing of the sale looks very strange
Maybe the most straightforward explanation is, in fact, the correct one. The dial has not really moved on the number of transfers reversed because there hasn’t been that many. As I recall the original euro130m related to only 3 borrowers according to Frank Daly at the PAC in early JAN 2011. Even at that, all of these transfers were disclosed by borrowers in their business plans.
Since then there has been forensic investigation at many levels over time in Nama (independent reviewers, legal analysis of sworn statements of affairs, probably private investigations). If the number has only crept up it must be because nothing significant has been located. You may be full sure that Nama would have a fanfare if it were otherwise. It’s not from want of effort because it is one of the agencies biggest priorities.
Truth is that most borrowers faced with the monolith that is Nama statutory powers have taken the conservative course and not engaged in shenanigans.
Put it another way – with all the business plans now reviewed there is no evidence to suggest that Nama’s widely publicised view in late 2010 that “the majority of borrowers engaged in transfers” has any merit or is borne out by the figures. I have no doubt that these figures were reheated yesterday and put on the 9 o’clock news to deflect from the TAIL story.
Gullible journalists will spin them today to give the desired impression that all borrowers are crooked. But if 30 from 180 have made transfers (c 15%). And 27 of them (not the original 3 who constitute euro 130 million) can only manage euro 30 million combined (= average of a million and change) is this where the Chairman and CEO should be spending their time ?
Especially when the market is throwing up impairments of more than a billion + euros a year (maybe more) ???
@Ahura
You are on the right track with the Austrian bank–the bodies are likely to be buried there.
There’s the corporate assets of indebted companies and there’s the personal assets of directors and their families. Is there not a huge grey area between the two, especially if company law has been transgressed? Is NAMA going after personal assets?
There is no grey area under Company Law. Companies are distinct legal personalities from Directors. Why should Nama go after the assets of Directors and their families? If company law is breached then that is a matter for the courts to decide. Not the people in Nama. That’s the rule of law and the separation of powers.
If you are asking questions about Company Law then answer me this? Based on the excellent material from the Treasury case posted on here, who in Nama takes Company Law responsibility for effectively allowing a hopelessly insolvent set of companies to continue trading so that Nama might have a shot at getting their money back on their secured assets while at the same time knowing that the company is racking up unsecured creditors who will be the first casualties?
By the way Nama constantly co mingle this issue of unencumbered assets with transfer of assets. Getting a charge over unencumbered assets doesn’t advance the extent of your economic recovery against a debtor at all but does give you more control. (which Nama is not short of under the Act) Recourse is recourse particularly for a borrower who is an individual.
To join both points together – what fool would give a charge over unencumbered personal assets to support an insolvent company that Nama intends to wind down (after the kind of disposals outlined in the affadavits) to Nil (and Nama keeps all the proceeds)? This can only be described as a backstreet liquidation process away from those pesky other creditors that might get in the way ? Where is that kind of process outlined in irish company law?
Great work NWL to get these docs into the public domain. Really brings these issues into focus with some real life examples.
Interesting points, and applicable also in many cases outside of NAMA. Am I correct in thinking that (in the absence of action or legislation) the commercial courts are effectively deliberating on these issues on a case by case basis?
In a situation I am aware of involving the Revenue and Anglo (as was) no action is being taken by any authority although accounts are years behind, the auditors are long resigned, and there’s a list of trade creditors who’ll never see a penny. The ODCE is not interested. The only recourse is the courts, if you have the money.
With so many NAMA big sharks to fry all the little piranhas are getting away.
Recouping as much of €74 billion should be at the forefront of everyone’s agenda including NAMA, the courts and the legislature.
This country is in economic strife and in that context whatever legislation needs to be enacted to recoup that €74 billion needs to be put in place.
Nama hasn’t yet wised up to the fact that the only way you will get any amount of your money back (be it e20 billion, e30 billion or e74 billion) is if the marketplace gives it back to you. No legislation will change that. What won’t help in any significant way is kicking the lard out of borrowers, visiting financial ruin on anyone even remotely connected with borrowers, turning away international investors who are willing to bid the Market price only because you bought it for more in 2009 etc. In fairness legislation won’t help either.
Colm McCarthy said once something very relevant to this debate, even though it was not about Nama. Anger is all very well but anger is not a policy. Were not short of anger. As a country we are short of cash.
Would you be convinced of this by looking at the way Nama operates?
In the context of this country’s economy, attempting to recoup the full amount of what was borrowed from this country’s banks should be the priority throughout this entire mess.
I take your point that given the current circumstances international investors for example will not be prepared to pay €50m+ for an acre of land in Dublin 4.
The “marketplace” was very quick to give us the bill for its debts, but is a bit reluctant to come up with the payments.
Its well past time for fellas like yourself to cop on that there is no “marketplace” and never was. There was just a shower of chancers and the “marketplace” was their rationalisation for getting us to allow them to do whatever they wanted without any consequences. Now its their rationalisation for not paying what they owe. What a joke. Scientology doesn’t have anything on this nonsense.
Very true. The policy of this country should be to get as much cash back as it possible can. It can start by squeezing the 50 or so people who collectively owe it tens of billions of euros. Then we won’t be so angry anymore.
Nama precluded legal firms under 25 million annual tunovers from applying for legal services,thus limiting the applicants to less than eight or possibly four.
What safeguards are in place to prevent prcatise managers colluding to fix prices prior to tender thus ensuring high legal costs for the citizens.
Small is beautiful. E. F, Schumacher
Excellent point. Surely the only relevant size criterion to at least apply is one of the level of professional indemnity that you carry. They may be entitled to take skills and headcount into consideration down the line but surely not to exclude firms from bidding.
Small is Beautiful E.F Schumacher Perhaps this tender process might be referred to the national competition authority as many other excellent firms might offer their services at a lower cost and might be more effective. By excluding 99% of legal firms is Nama interfering/manipulating the market.
@Capoliman
Colm McCarthy also stated that market rents be allowed to all commercial tenants and create a floor on the rents and property prices asap. This would allow the market to move on–instead we are left with a two-tier dysfunctional zombie commercial property market.
@ OMF, @gerhard dengler
In terms of which problem we tackle first, second and third etc. which part of this PQ answer from NAMA requires clarification ?-
“At a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform, the Chief Executive of NAMA pointed out that, having been through the business plans of debtors which account for close to 75% of NAMA debt, he does not consider that there is a “huge pot of gold” that can be recovered through legal proceedings to reverse asset transfers by NAMA debtors.” (NAMA reply).
Meanwhile over the past two years the country has missed huge opportunities to get real sizeable cash in from interested outsiders.
This stuff about transfers is all a major distraction from the assessing the real job of NAMA – getting cash into the exchequer. They will mix it up with the idea of getting charges over unencumbered assets. These new charges are actually new concessions by borrowers which will be then be aggregated to smear all borrowers as thieves and crooks. Hopefully most contributors on NWL will be able to tell the difference and let the data speak for itself.
@ Capoliman
Simon Kelly stated in his book “Breakfast with Anglo” in twenty years in the Irish property business he never saw an overseas investor. Now we are a basket case there will be no phantom overseas investors. The game is up.
@ Capoliman,
“Meanwhile over the past two years the country has missed huge opportunities to get real sizeable cash in from interested outsiders.
This stuff about transfers is all a major distraction from the assessing the real job of NAMA – getting cash into the exchequer.”
Your analysis differs from mine. In some cases ‘additional recoveries’ will be the majority of the recoveries. Or take the case of David Daly’s wife where assets of 80m were moved for tax reasons in 2009 – “During the case, the court heard that Mr Daly had transferred €80 million in assets, which included €17 million in cash, to his wife for tax reasons. Nama wanted these assets transferred back to Mr Daly’s ownership so they would be available to the agency. In negotiations, Nama had indicated that it was prepared to settle for €10 million of the €17 million in cash. Ms Daly did not agree to this. That proposal is now off the table and the agency could seek the full amount.” (link: http://www.irishtimes.com/newspaper/finance/2011/0914/1224304082979.html). Chasing this makes sense (I wasn’t pleased that NAMA seemed willing to settle for less!)
Do you have details of these “huge opportunities to get real sizeable cash in from interested outsiders”? You do know that NAMA have plenty of resources to cover it’s range of activities.
@Ahura M
Mr Daly paid 100 million+ for the River Island store on Grafton st. The return on this investment was 2%. Normal/long term high street yields are 6%. This implied the rents would treble and therefore Grafton street would overtake Fifth Avenue New York as the highest rented street in the world.
Welcome back John Corcoran. I see that you are now transgender!
@ Wendy Howell
NAMA is subject to EU public procurement rules but, surprise surprise, legal services are not subject to the full force of those rules. In the normal course an unwarranted and excessive turnover requirement could be classed as disproportionate and discriminatory.
Many commentators on the blog have complained about the award by NAMA of contracts to parties with current or (recent) past connections to people who work for NAMA.
There may also have been cases where contracts were awarded without observing legal transparency requirements?
If anyone feels strongly enough about it, there is the possibility of making a complaint to the EU Commission here:
http://ec.europa.eu/eu_law/your_rights/your_rights_forms_en.htm
or one could also make a written complaint to the Comptroller & Auditor General or the Public Accounts Committee.
Where is our so-called free press in keeping these guys to account? Perhaps one of the saddest things to emerge from all this is the descent of the Irish Times to craven property rag.
Btw the State is currently looking to employ a new C&AG
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