Yesterday’s news management by NAMA has not gone unnoticed, and the small matter of a valuable property owned by a NAMA developer being sold off-market to a NAMA employee has not been “buried” and will be the subject of further scrutiny. The so-called “independent valuation” and NAMA’s reference to the sale of a principal private residence in Lucan when court documents show an address for defendants in Meath all merit further investigation. But the sale of the property in Lucan to former NAMA employee, Enda Farrell was overshadowed yesterday by NAMA’s revelation that it believes there was a breach of its security and that sensitive commercial information has been leaked outside the Agency which may do billions of euro of harm to developers – the pooled reporting of Aodhán Ó Faoláin and Ray Managh refers to damage to “the agency and the public” but strangely omits developers. Perhaps sometimes we need reminding that developers are humans, and love their children too!
The Data Protection Commissioner Billy Hawkes (pictured above) has been notified of the breach, according to NAMA, as have the Gardai. Ireland’s data protection rules suggest that NAMA should now be contacting those whose confidentiality was compromised. As of last night, it appears that developers have not yet been contacted.
The details of loans that NAMA says were leaked apparently included the name of the borrower, the property securing the loan, the sum outstanding on the loan, the status of the loan (impaired, performing) and the price paid by NAMA for the loan. This information would enable any prospective purchaser of NAMA property or loans to know NAMA’s “bottom line” – the amount the Agency paid for the loan. It would also enable buyers to contact the developer directly and negotiate a deal around the price paid by NAMA for the loan, and if the purchaser knows the loan is impaired, they would have extraordinary advantage over a purchaser without such information.
NAMA says it is not commenting on the matter because it is now before the courts. However NAMA may need to start commenting to its debtors to whom it owes a duty to protect their information, particularly information which could harm the interests of debtors if it falls into the wrong hands.
The ex-NAMA employee, Enda Farrell is now working for Forum Partners, the company which featured in the Treasury Holdings saga recently. Treasury said the reason it HAD to sell two Far Eastern companies to Richard Barrett was that a term in a loan from Forum Partners to Treasury China Trust (TCT) stipulated that a change of control at Treasury Holdings would render the loan to TCT payable on demand. It would be interesting to establish when on the timeline below, the term in the Forum Partners loan was created. There is no suggestion of chicanery but the association between Forum and a NAMA debtor inevitably comes under the spotlight after revelations of the type yesterday.
January 2012 Apparent date of purchase of property in Lucan by Enda Farrell
7th March 2012 Forum Partners announce the appointment of Enda Farrell
2nd August 2012 NAMA “became aware” of the sale of the property in Lucan to Enda Farrell
3rd August 2012 NAMA initiated investigation by internal auditors, Deloitte
5th August 2012 Sunday Times journalist John Mooney reveals the sale
3rd September 2012 NAMA and NTMA institute High Court proceedings against Enda Farrell and his wife Alice Kramer
12th September 2012 NAMA issues statement
There has not been any apparent comment on the NAMA claims by Enda Farrell or his wife Alice Kramer. At present we are only getting NAMA’s side of the story.
The reaction on here to the alleged leak is one of shock, shock that this type of scandal hasn’t arisen before now. NAMA is nearly three years old and it is testimony to the selection and recruitment process and the management of the Agency by its CEO Brendan McDonagh that, with 214 employees and an army of third party suppliers of services, that breaches of confidentiality haven’t been uncovered before now. But despite the best systems in the world, you cannot absolutely prevent the type of leak alleged by NAMA. But now that a leak might have occurred, it will be a test of NAMA to see how it deals with the matter. The Agency seems to have been in-your-face robust with Enda Farrell and Alice Kramer promptly going to the High Court, seeking and getting an unusual Anton Piller order that allows retrieval of information without prior notification and NAMA is wasting no time in pressing its legal rights. It has also referred the matter to the Gardai and Data Protection Commissioner. The Agency initiated an investigation within 24 hours of becoming aware of the issue.
But NAMA must now quickly address the impact of the alleged leak on all of its stakeholders. NAMA may need to change its sales processes and may need reconsider with its debtors the general publication of certain loan information. NAMA does not have a lot of time to get these responses right.