Paddy McKillen sues NAMA (again!)

Developer and businessman Paddy McKillen is these days making the sort of contribution to the legal industry that he once made to the construction sector. Paddy is suing a range of people in Dublin’s High Court for defamation. He is seeking an injunction against the Sunday Times which apparently obtained details of his loans at IBRC. He is awaiting his appeal in a long-running battle with the Barclay brothers over control of the Maybourne group of hotels in London.

And yesterday, he launched an action against NAMA in Dublin’s High Court. The reference is 2013/4252 P and Paddy is represented by Lyons Kenny solicitors in Dublin. The respondent is “National Asset Management Agency” and as is usual with recently-filed cases, there is no solicitor on record for NAMA.

As this is Ireland, we know neither the cause nor remedy sought.

Paddy and NAMA have previous form. Paddy launched the first major legal challenge to NAMA in 2010 when 15 of his companies went to court in Dublin to stop NAMA taking over their loans. What followed was a marathon process which saw experts such as Nobel laureate Joseph Stiglitz providing evidence to a High Court which eventually rejected all of Paddy’s arguments. Paddy appealed the case to the Supreme Court where the outcome was technically a score-draw in that Paddy won the right to be consulted by NAMA before his loans were acquired but he didn’t have an absolute right to stop the Agency acquiring his loans. NAMA subsequently decided not to acquire most of Paddy’s loans, but it is understood the Agency acquired some loans associated with Paddy where Paddy was part of a consortium. By the way, we still waiting to hear what the final legal bill was in this case, and NAMA has been ordered to pick up Paddy’s costs.

Comment will be sought from Paddy’s spokeswoman but the betting is there won’t be any comment at this stage.

Separately, Paddy is understood to be one of IBRC’s biggest borrowers with personal loans estimated at €300-370m and corporate loans estimated at €550m. The Special Liquidator at IBRC is presently entertaining approaches by borrowers to refinance their loans at 100% – that was the idea, Minister Noonan’s reponse this week does not fill us with confidence. The Barclay brothers – worth €3bn according to last week’s Sunday Times Rich List  – have made it known that they are interested in buying Paddy’s loans and may be prepared to pay a premium on top of their market value. Paddy didn’t even make it onto the Irish-born Rich List which had a threshold of just €41m, though you wonder how accurate the Rich List is.

UPDATE (1): 27th April, 2013. It is understood that Paddy is seeking damages on a number of points including breach of privacy, confidentiality, and breach of section 221 of NAMA Act (lobbying NAMA). It is understood that it is alleged in the claim that interests connected with the Barclay brothers lobbied NAMA with a view to having loans connected with the Maybourne hotels foreclosed, which would have forced Paddy to seek refinancing or see his 36% share in Maybourne diluted in favour of the Barclays. It is understood to be further alleged that NAMA provided interests associated with the Barclays with confidential information on loans in which Paddy had an interest, that such contacts generally breach NAMA’s anti-lobbying rules and that NAMA didn’t act on those breaches. No comment from NAMA as at present.

UPDATE (2): 27th April, 2013. We still don’t have the detail of the application, but trawling back through Oireachtas committee hearings, the NAMA CEO did appear particularly uneasy during this exchange with the Fianna Fail public expenditure and reform spokesperson, Deputy Sean Fleming last October 2012. Deputy Fleming was concerned at unchallenged evidence given in the High Court action in London last year where Paddy was fighting the Barclay brothers over control of the Maybourne hotels. The evidence suggested that NAMA had discussed details of loans connected to Paddy with interests connected to the Barclays. The NAMA CEO said “I do not believe that what has been maintained is correct” in response to Deputy Fleming reading out certain emails, but Deputy Fleming countered that NAMA had not challenged the emails in the London court. The full transcript of last October’s hearing is here, but this is the extract that appears most relevant.

Deputy Sean Fleming:  There is a document on the public record of the courts in England. Therefore, there is nothing confidential about this. It is not sub judice. It is a previous case. I want to read an extract from the public court record of what was stated in the summing up, and I can provide this to anybody who wishes to have it after the meeting. It is on the public court record. It states Mr. Hennigan and Selina Dicker from NAMA then spoke to Mr. Peters, Mr. Hooper and Mr. Faber on 27 January. It further states that on 28 January Mr. Peters e-mailed Mr. Hennigan and Ms Dicker saying, “Thank you for time yesterday on our conference call”. It states, “Richard, Dick and I found it most helpful”. It further states, “Clearly, you have a wealth of knowledge regarding Coroin Limited and its shareholders in some of the latter’s much wider debt and security positions than we would have possibly hoped to have obtained in the relatively short period of time we have been involved”. It also states, “We appreciate your most kind offer to assist us in getting up the learning curve”.

Mr. McDonagh can tell me if I am wrong on this but it could appear from this that NAMA representatives were discussing a company’s business with other people, perhaps to the detriment of one of its clients. I read that extract from the court record. Is Mr. McDonagh aware of this?

Mr. Brendan McDonagh: We are aware of the transcripts. We read the transcripts every day of—–

Deputy Sean Fleming:   Has Mr. McDonagh any problem with what, on the face of it, appears to be a breach of confidentiality, with some of his staff – this was recorded in open court – clearly discussing people’s business with third parties? Has he a problem with that?

Mr. Brendan McDonagh: First, the loans concerning that hotel at the time – I have to be careful what I say because this is subject to appeal – were NAMA loans and second, what the Deputy read is a counter party’s view of a conversation, and I do not believe that what has been maintained is correct.

Deputy Sean Fleming:   NAMA’s representative in the court contradicted that and it is on the public record subsequently. I have not read the full transcript of the court proceedings. What Mr. McDonagh has just said to us is that he, as the chief executive of the NAMA, contradicts the version in that e-mail that was sent to his staff member. He does not accept the accuracy of what his staff member received. Did his staff member not contradict that during the examination in court?

Mr. Brendan McDonagh: I do not believe so.

Deputy Sean Fleming:   Yet Mr. McDonagh contradicts it here months later.

Mr. Brendan McDonagh: All I can say to the Deputy is that based on my view of what he read out, I actually do not believe that to be the case.

Chairman:   Can I clarify one thing before we proceed with this because it is the subject of an appeal. Deputy Fleming is using the transcript from the court and is taking—–

Deputy Sean Fleming:   It is a matter of public record.

Chairman:   I know that but the Deputy is taking a particular reference point from one witness who has contributed to the case. Has he read the full transcript of both sides or positions that were given on this?

Deputy Sean Fleming:  I am not here to answer your questions.

Chairman: If the Deputy is going to pursue a line of questioning—–

Deputy Sean Fleming:   I asked Mr. McDonagh the question and—–

Chairman:   I know but—–

Deputy Sean Fleming:   —–I said, if the Chairman was listening, that I did not read the full transcript. I said that 30 seconds ago.

Chairman:   I would be mindful that the Deputy has not read the full transcript and—–

Deputy Sean Fleming:   I said that.

Chairman:   —–is selecting sections from it.

Deputy Sean Fleming:   I asked Mr. McDonagh to tell me if I was wrong on this. I opened the conversation on this by saying that I had not read the full transcript and that I was just going to quote this from it. Mr. McDonagh said he disagreed with the transcript and that is fine. That was not said in open court but he is saying it here now. All I will say on that, and I will conclude on this point, is that these issues possibly highlight a point I made at previous meetings, possibly with Mr. McDonagh at the Committee of Public Accounts. I think NAMA and the IBRC are in a similar space from the point of view of the Irish taxpayer and I believe if would be better – Mr. McDonagh cannot decide on a policy issue, he has to work within the legislation but we are a policy committee – if the two organisations were under the one umbrella and working together rather than, on occasion, working to separate agendas.

Chairman:   I will take Mr. McDonagh’s concluding remark and then call Deputy Spring. Does Mr. McDonagh wish to add any further comment?

Mr. Brendan McDonagh: No, Chairman.