NAMA in 2012 – Review of the Year, Part 3 of 3

This is the final part of a 3-part review of NAMA’s activities in 2012. Part 1 which covers January-April 2012 inclusive is here. Part 2 which covers May-August 2012 inclusive is here. And this is Part 3 which covers the last four months of the year.

September 2012 – he wasn’t a NAMA developer but Ivan Yates’s bankruptcy in Wales was a surprise after AIB’s failed bid to bankrupt the former politician in the Irish courts.  There was speculation that the public St James’s Hospital in central Dublin was going to acquire the private Mount Carmel hospital from NAMAed Gerry Conlon, but by year end, there was no progress as the health service scrambles to rein in a €500m overspend. It was reported in the Sunday Independent that NAMA had written off €50m owed for the development of Greystones Harbour, Minister Noonan later told the Dail that the report was wrong though the Independent continued to stand by the report which brought into focus NAMA’s debt writeoff policies in the case of consortia because in Greystones, Michael Cotter’s troubled Park Developments was jointly developing the project with Sisk, and it was understood the NAMA loans were to the Sispar consortium but it is Sisk alone that now appears to control the loans. NAMA opened a campaign against John McCabe with receivers appointed to McCabe companies and a barrage of High Court applications against various individual members of the McCabe family.  Meanwhile reports emerged that Jerry himself had been the victim of an advance-fee type fraud whereby he had paid fees to a Swiss/Dutch/Middle Eastern company to help refinance his companies’ loans. Paddy McKillen is hit with a €25m legal fees bill in the UK after his failed marathon case, a reported €5m was paid but Paddy is now appealing the decision with a hearing scheduled for February 2013; it wasn’t all bad news for Paddy in September with the Northern Ireland environment minister giving the green-light to develop  a major extension to the Ards Shopping Centre in Newtownards, county Down. Treasury Holdings’ woes intensified as KBC’s application to have the property group liquidated was boosted when NAMA supported the application after revelations of the sale of a Far Eastern company to Richard Barrett for a price which was later reported to be on the low-side of valuation estimates.  Ray Grehan might have been declared bankrupt in the opening week of the year, but that hasn’t stopped NAMA pursuing him through the UK courts over the disposal of a Knightsbridge apartment in central London – “the case continues”. We had some light relief when it emerged model Glenda Gilson had been hit with a €73,000 tax bill which prompted the best anacoluthon headline of the year on here – “Model who kicked NAMA developer in testicles is fined by tax authorities”. NAMA dismissed speculation on here that it had moved to offload its US loan portfolio through a US company, DebtX. David Arnold becomes the second NAMA developer to put his art collection under the hammer, with British auction house Bonham’s getting the business; weeks later NAMA says it controls art collections with an overall value of €7.5m.  It went from bad to worse for former NAMA employee Enda Farrell who faces up to five years in prison or up to €5m fine or both for allegedly removing confidential data from NAMA, the Garda investigation which started in September continues. NAMA has receivers appointed to a series of companies in which NCB stockbrokers is involved, apparently as a vehicle for its private clients. NAMA sues a range of the highest profile developers in a series of unrelated applications in Dublin’s High Court with Bernard McNamara, Liam Carroll and wife Roisin, Greg Coughlan and wife Ann and sticks in a few new McCabe applications for good measure. Fianna Fail again attacked NAMA for its “stinking practice” of selling property off-market.

October 2012 – The deputy Labour Party leader Joan Burton let slip on RTE Radio that NAMA faces a loss of up to €15bn but she did a u-turn on that a week later and toed the party line that NAMA would break even. One of the worst – Phil Hogan would be a close competitor – ministers in Government, James Reilly’s woes continue with a NAMA angle emerging in the controversial decision by the Minister to bump up two sites in his own constituency to be developed as primary care centres. The property at Dublin Street in Balbriggan was owned by NAMAed Seamus Murphy who is an associate of Minister Reilly but the Minister tells the Dail that Seamus won’t benefit from the sale, that NAMA will, which begs the question how the Minister would know this information as NAMA doesn’t disclose confidential information and the implication is that the Minister discussed the finances of the site with his associate which muddies the murky waters even further. It emerges the Minister discussed a site in Balbriggan with NAMA in April 2012 but it remains unclear, the Minister denies it, if the specific site was discussed with NAMA; apparently An Tanaiste Eamon Gilmore had an internal investigation into the matter which concluded there was no political interference based on the documents examined.  Michael O’Flynn puts nearly €100m of property on the market in London. It emerges that NAMA is selling an average six properties per day worth a total of €8m.  Treasury Holdings is finally liquidated which puts at a practical end the prospect of an appeal against the judicial review findings over the Summer – NAMA breathes sigh of deep relief, but that judicial review judgment stands ready to be used by other less distressed developers. The newly launched Property Price Register means we can now see what has sold and at what price, and it seems NAMA’s deferred mortgage scheme hasn’t been as successful as the Agency claimed, though the Agency stands by its sales figures and later in October, expands its offering of properties with the product from 115 to 295. NAMA is back in court against its former employee Enda Farrell and his wife Alice Kramer, it emerges that confidential information was initially forwarded by Enda to Alice who worked at Ernst and Young and this bypassed NAMA’s security which didn’t obstruct the sending of information from the Agency to one of the firms regularly used by the Agency. Alice then forwarded the information to a personal email address, and from there, it seems Enda disseminated it far and wide. NAMA  stretches the bounds of credibility by claiming no damage has been done to the Agency by this apparent leak. A nasty year at the troubled Longford estate Gleann Riada is capped with reports of an explosion in which luckily there were no casualties, a local MEP gets involved and as the year draws to a close, it is unclear who exactly is taking responsibility for remedying defects on Alastair Jackson-developed estate. Northern Ireland’s finance minister Sammy Wilson is delighted that NAMA is investing nearly €125m with Northern Ireland developers, though mostly on developments located in other parts of the UK. A High Court judge referred to the Attorney General for consideration of its constitutionality, part of the NAMA Act, section 101 which deals with NAMA’s responsibilities with respect to assurances given by the original lender if NAMA wasn’t aware of such assurances – as the year draws to a close, the Attorney General appears not yet to have issued her view on the section. NAMA obtains judgments of €270m against members of John McCabe’s family. It emerges that NAMA has sold €1.9bn of loans so far, with Maybourne, Cyril Dennis and Donal Mulryan – and possibly David Daly and Bill Durkan – accounting for the bulk of these. It emerges that Walbrook Partners LLP, a recently formed UK company is the buyer of the 17% stake in NAMA formerly owned by Irish Life, Minister Noonan refuses to provide any detail on the transaction. The court case in Connecticut with NAMA and the Dunnes warms up with each side foiling and parrying against the other – Gayle Killilea-Dunne is very unhappy at what she claims is the damage wrecked by NAMA on her reputation and prospects, NAMA maintains that she has improperly benefitted from transfers from her now- deeply indebted husband – the case is scheduled to be heard a remarkable 20 months hence in September 2014. NAMA appears before the finance committee in the Oireachtas and is predictably grilled about the Enda Farrell affair, both the sale of the house in Lucan offmarket and the alleged removal of confidential information; NAMA is defensive but says the sale of the house in Lucan took place after an “independent valuation” and that recipients of confidential loan information don’t have any advantage conferred on them. It emerges NAMA has approved €6m of rent abatements in 2012, Paddy McKillen wins right to appeal his comprehensive London High Court defeat and the battle is set to recommence in February 2013.

November 2012 – attention is drawn by Sinn Fein to the waste of the State operating two property management companies, NAMA and IBRC where disparities in practices, cost discrepancies and internecine competition for customers and resources just mean the State is pouring more resources down its banking bailout than it needs to. Minister Noonan rules out a merger of NAMA and IBRC for the time being however.  NAMA manages to look righteous as all Hell breaks loose on bankers’ salaries and pensions, with sacrifices at the Agency contrasting with refusals to cooperate with Minister Noonan at IBRC. NAMA Top 10 developer Michael O’Flynn finally has his day in court with junior minister Lucinda Creighton over comments she made in 2011. In the course of a brief High Court hearing, a settlement was reached and a statement was read out in court and a contribution, later put at around €50,000 by sources, was made by Minister Creighton to Michael O’Flynn’s legal costs with the contribution apparently passed on to the Crumlin Childrens Hospital. In Northern Ireland, one of NAMA’s most expensive properties, an office block on Bedford Street in Belfast city centre comes onto the market with a price tag equivalent to €50m. A €20m expansion of Gerry Barrett’s Scotch Hall development in Louth is announced, but where and when is the remaining €1.98bn of NAMA’s promised €2bn going to be spent- we had an answer from the IMF to the latter question in December: “it will be back-loaded”. NAMA slashes prices by over €100,000 on some property subject to its deferred mortgage initiative. Tom McFeely’s former residence on upmarket Ailesbury Road in Dublin finally comes onto the market, after the scrappy Priory Hall developer loses his appeal against the repossession amid a firm NAMA denial of his claims that it had offered him alternative accommodation. Broadcaster Pat Kenny’s property dealings came under the spotlight after the Ritz Carlton hotel in Powerscourt was placed in examinership, with Pat standing to lose tax credits if the hotel collapses, his other dealings particularly with Derek Quinlan partnerships remain under wraps but he is likely to be nursing losses. Paddy McKillen faces a severe dilution of his stake in the Maybourne group with the Barclay-backed board announcing a cash call which eventually is met by Paddy paying for his entire allotment of shares and also making it clear he has the finance for Derek Quinlan’s allotment should that become available – seems Paddy does have a pot to piss in, after all.  It emerges that €3bn-turnover, 16,000-employees faces liquidation after it fails to settle a €22m debt owing to a NAMA developer, the doughty Dunnes chief Margaret Heffernan writes strong letters of protest to the NAMA chairman Frank Daly who curiously doesn’t hand them over to the Gardai, though perhaps there are exemptions to such correspondence in NAMA’s lightweight anti-lobbying rules; in the end Dunnes settles the debt within hours of the liquidation hearing and Judge Peter Kelly is not happy with Dunnes Stores attitude to court rulings. Tragedy befalls a NAMA developer, Hugh O’Regan whose life ends on a roadside in Wicklow – there is an outpouring of sympathy from the public and development community; Paddy Kelly said “there is no compassion, it’s as though we don’t care for each other anymore. There is a poison in our country, where did that come from?” NAMA finally publishes a version of the report by Deloitte into the Enda Farrell purchase of property and it seems that all NAMA had when the sale was effected was a valuation “opinion”, Minister Noonan tries to draw a line under the affair by refusing to answer questions in the Dail about the valuation opinion. A constant headscratcher during the year had been the very low spend by NAMA on lawyers and in November, the mystery was solved – NAMA was booking the lionshare of its legal costs to its balance sheet where it expects to recover these costs from the developers’ loans, one particular source of amusement is the €8,000 booked as payable to McCarter and English, the US firm leading the fight against Sean Dunne and wife, with Sean owing €185m to NAMA and €164m to non-NAMA banks, the prospects for NAMA recovering these costs particularly in the US where there seems to be a bar on one side being awarded costs against the other, seems remote.

December 2012 – the Enda Farrell affair has not gone away yet and the question of NAMA’s legal and other costs in the matter need to be settled with the wife Alice Kramer disputing the costs, claiming she was unaware of the content of the emails sent to her by her husband. Two NAMA developers declare €100m losses apiece, in the case of Frank Boyd’s Killultagh Estates the loss is a real annual loss, in the case of Michael O’Flynn’s Tiger Developments, it is claimed the loss is offset by transactions elsewhere. One of NAMA’s senior property people, Kevin Nowlan leaves the Agency to return to the family firm, WK Nowlan but despite this, Kevin has been called to be deposed in the Dunnes case in Connecticut which will entail quizzing by the Dunnes lawyers in January 2013. NAMA redeems a further €1.5bn of its bonds bringing to €3.5bn the total redeemed in 2012 and €4.75bn the total redeemed to date which means that NAMA just needs redeem a further €2.25bn in 2013 to meet the target of €7.5bn that Minister Noonan unilaterally had copperfastened into the bailout agreement with the Troika in May 2012. An IMF staff report on Ireland reveals a couple of snippets which NAMA would probably prefer not be disclosed to the public, that it will be selling €3bn of Irish property in 2013-4 and that it is backloading its €2bn investment towards the end of the four year period which itself ends in 2016. NAMA has receivers appointed to companies in which Goodbody Stockbrokers have an interest, presumably on behalf of private clients.

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