Interested in maladministration. Estd. 2005
Letter in today’s Irish Independent.
We are far too easy on our despots
While people throughout the Middle East put their lives on the line to rid their countries of their despots, we in Ireland allow our despots to stroll out the front door with their pockets bulging with our money.
James Rogers
Rosslare,
Co Wexford
On the 27th January last Fianna Fail Senator Mark Daly made a series of very serious allegations on Today with Pat Kenny against the National Assets Management Agency (NAMA).
The allegations are as follows:
That NAMA is breaking the law by failing to hold pubic auctions or competitive tendering for the sale of public assets within its remit.
That NAMA is allowing some properties to be sold back for virtually nothing to the original owners.
That NAMA is facilitating a scam of monumental proportions whereby friends of the original borrowers are putting in false bids for assets thus preventing Irish taxpayers from obtaining the maximum value from the assets.
That the scam is happening wholesale and without any transparency whatsoever.
That the scam, although widely known about within official circles, is being ignored by the authorities.
That within the next six months the best properties will be cherry picked by the ‘scavengers and vultures’ resulting in a very serious loss for Irish taxpayers.
The following is NAMAs response to the allegations:
It (NAMA) had addressed this extensively at the Public Accounts Committee. We would ask any other person to advise us of incidents where they think this may be happening. For our part NAMA is determined to avoid such developments in so far as it can within the law as passed by the Oireachtas.
This infantile (non) response contains one crystal clear message from NAMA – We cannot deny any of the allegations made against us.
Pat Kenny ended the interview by saying:
We can talk about this but we cannot point the finger until we have chapter and verse.
This, of course, is ridiculous, the finger has been very clearly pointed. The allegations are extremely serious, they have been made by a public representative on live radio.
In a real democracy state authorities, including the police, would by now be conducting an investigation with the aim of bringing charges.
In Ireland – Nothing.
This scandal has all the hallmarks of previous scandals such as DIRT and Ansbacher where state authorities were fully aware of what was going on but chose to ignore events.
It proves that despite everything that has happened in the past two years nothing has changed.
For the record I have transcribed the full interview (with some minor editing) with my own comments and emphasis.
Today with Pat Kenny – Thursday 27TH January 2011
Pat Kenny: (Introduction)
It has been claimed that people who owe hundreds of millions of Euros to the banks are buying back their debt at rock bottom prices through third parties and off shore companies. Fianna Fail Senator Mark Daly claims some property is being sold back for virtually nothing to the original owners and that NAMA is not following legislation enacted by the Oireachtas.
Kenny: Exactly what are you alleging?
Senator Daly: It’s not so much an allegation as a fact. Under the NAMA legislation, section 25 of the Act, NAMA had to prepare a code of conduct for the disposal of bank assets within three months of the passing of the Act. The Act says that the sale of properties and assets including bank loans would be governed under the Code of Conduct for the governance of state bodies which was passed in 2009.
In that section 18 said any asset being sold to all the bank loans would have to be sold by auction or competitive tendering process.
Kenny: So we would all know about it?
Senator Daly: So we would all know about it. But the competitive tendering or public auction would obviously involve huge amount of advertising that we would see in all the property supplements but this doesn’t appear to be happening either. What appears to be happening is people who are in the know, the same people who are in the know who got us into all this trouble are aware through the banks, through the receivers what these assets can now be bought at, the haircuts.
In one particular case I’ve come across in the UK the original loan was twelve million, the haircut was six million but the asset itself was undervalued, was worth nine million really and the guy, the original borrower of the loan said to his friends; you pay the banks six million, they’ll be happy and we’ll sell it for nine and they made a nice three million Euro profit.(This is a serious allegation).
And that type of thing is happening wholesale because there’s no transparency.
Kenny: But why would NAMA want to do that, if the thing is worth nine million why wouldn’t they sell it for something approaching that?
Senator Daly: Because no one is trying to maximize the value because once the bank gets the haircut that NAMA imposed on them…(Interrupted).
Kenny: Of course, if NAMA impose a haircut and say this asset is only worth six million and it’s actually worth nine, if they have done that then they’re exposing themselves as having undervalued the property which means that they’re not being very professional about what they’re doing. (Extreme understatement).
Senator Daly: There’s a lot of shady behaviour going on here (VERY SERIOUS ALLEGATION) and if they follow their own rules as set out in the NAMA legislation and had a competitive tendering process or public auctions then they would maximize the value but what is actually happening is, and the banks and receivers have admitted this to me, that the banks have said look once we get what we paid for, the haircut from NAMA, we’re happy.
Kenny: This is utterly; utterly dishonest if that’s what NAMA are at. If NAMA, and I’m only saying if, if NAMA is applying a haircut that is greater than the haircut that the market would suggest it should have then NAMA is not doing its job properly.
Senator Daly: All the receivers, auctioneers and banks want to do is pay back NAMA the money that’s owed. Maximising the value is not really their concern.
Kenny: As a taxpayer it is our concern.
Senator Daly: It is our concern which is why the transparency that I’m looking for. First for all that the rules would be followed, that the law would be followed (Serious allegation).
Kenny: That it would be by public tender or public auction.
Senator Daly: Exactly, and that all the banks and the receivers would go through this process but they’re not even doing that because as you can see you are not looking at papers full of advertising saying NAMA property for sale (Serious allegation).
Kenny: What interests me more, they should do that and that’s something they’ll have to rectify not that you have pointed it out, but what is more sinister is that if they applied a haircut that is too severe, rather than the medium term or long term economic value of the asset which they would be in a position to hang onto because that was the idea they could hold it in a way that the banks felt they couldn’t because of their balance sheets, NAMA could hold it longer.
But if they’re just dispatching stuff to get cash in to show off how well they’re doing for instance but they applied too severe a haircut which means the taxpayer has to put more money into the banks which we didn’t need to do and that is the obscenity if it’s true.
Senator Daly: Well, the obscenity of it is on top of that, the banks once they’re quite happy to get the money that they owe NAMA aren’t going to go after the borrowers, the original borrowers for the balance of the money, they’re just not going to do it and receivers, talking to the banks, have admitted that to me (Serious allegation).
The problem with this is that I’m not an investigator, I’m not the Guards but then again we know of plenty of cases where it’s taken two years to bring people to court for very obvious corporate governance issues.
Kenny: Let’s point this out carefully. NAMA, was expected to make a profit, that part of the whole thing that at the end of the day it might turn a small profit. It was not expected to turn a profit in the short term, it was supposed to hang onto to assets and realize the value. If it’s selling them at under the market value, disposing of them just to get cash in then it is not doing the job for which it was established.
Senator Daly: Let’s be clear on this. When the banks are appointing auctioneers and receivers to realize the money the fault lies with them in that they’re not advertising at a very minimum the property for sale and saying; this is what’s available, this is the current bid that’s on it. The transparency is required because first the citizens and the taxpayers are entitled to know that the assets which they currently own through NAMA are being maximized in value and that is not happening (Serious allegation).
Kenny: And NAMA, if it wants to, like in any commercial auction or tender, they can have a reserve, if it doesn’t meet the reserve, if they feel they’re being scammed in some way…interrupted.
Senator Daly: No, what is actually happening is the original borrowers, in these cases that have been brought to my attention, are arranging for their friends to put in the bids. Nobody else is aware that this place is for sale because no one else knows that the original borrower and the asset is in trouble and therefore this is a scam of monumental proportions (Very serious allegation).
Kenny: NAMA has responded to your claims.
It had addressed this extensively at the Public Accounts Committee. We would ask any other person to advise us of incidents where they think this may be happening. For our part NAMA is determined to avoid such developments in so far as it can within the law as passed by the Oireachtas.
Senator Daly: Now that’s not exactly encouraging, is it? Please come to us with a file that we can send to the DPP. What we’re talking about here is the transparency required and they’re not even following section 35 of the NAMA Act to this must be open and transparent. The concerning part about all this is in the next six months the cherry picks, the best property are going to be bought up by the scavengers and the vultures (Serious allegation).
Kenny: You have not gone public on the particular deals that you are aware of, have you gone to the Gardai with them?
Senator Daly: The problem here is you need smoking guns; you need evidence, emails, cheques, money going over, phone calls. This is all quiet little chats in the corner over a pint. The guy who came to me on this had been approached at a dinner party to be the third party to buy a property in the UK and he would then be given a cut. He came to me because he was so disgusted that the same people who had gotten us into this trouble in the first place are now doing the same thing again (With the assistance of NAMA/the state?).
Kenny: Look, if this scandal is real, the people who are culpable, if these things are being sold to private equity funds or whatever, the valuers are the corrupt people because they’re saying this thing is worth six million to NAMA and then it’s being sold on for nine?
Senator Daly: The legislation says you must have an auction or tendering process and therefore it is now illegal to be selling any asset, the disposal of all these assets, the two billion that has been disposed so far, hasn’t been done properly (Very serious allegation).
This practice is so widespread that embassy staff know about it and it’s on the dinner party circuit around Dublin and elsewhere it is quite well known that there are fellows that are cutting deals.
Kenny: We can talk about this but we cannot point the finger until we have chapter and verse.
Senator Daly: The law should be followed; it should be done by tendering or public auction. The NAMA website should have all the assets, the loans that are up for sale, what they were originally bought for, what the current bid is and no asset should be sold within four weeks of it going on the website that way no one can say there was a scam, there was a deal done.
At the moment we’re not following the law.
Senator Daly: In the next six months the guys who caused all the trouble are going to make billions off the taxpayer because they’re buying property at less than the asset value because they’re arranging for their buddies to put in false bids and they’re buying it for less than the market value (Serious allegation).
Copy to:
Today with Pat Kenny
Senator Daly
NAMA
NTMA
ODCE
Dept of Finance
I see today’s Marian Finucane Show (Sunday) was cancelled. Instead, RTE had a brood of very frightened, headless, chickens in the studio.
They were frantically running around trying to escape the fox of reality that they (finally) see approaching our failed state.
Actually, one of the chickens did have a head. Mary Lambkin, professor of marketing at the Smurfit Graduate School of Business accused Tom McGurk of being sensationalist when he suggested that those responsible for our financial disaster were getting away scot free.
We have NAMA and all sorts of structures and we have judgements being taken, the legal process is being worked through.
It’s a huge complicated problem, there’s an awful lot of people involved but I think there is a sincere and systematic attempt going on to tackle that and I don’t think it is fair to say that people are being allowed to just walk away from these great big debts.
How do I know Lambkin was the only chicken with a head? Because it was obviously firmly attached to the neck sticking out of her arse.
When Anglo Irish Bank went into meltdown it emerged that Irish Life & Permanent had transferred €7.45 billion to the failing bank to temporarily boost the bank’s balance sheet.
Chairman of IL & P at the time, Gillian Bowler, said she was unaware of the transaction.
Bowler is still widely admired in financial and media circles despite this amazing admission of incompetence.
Ms. Bowler, however, had much more to say to Marian Finucane recently (Sunday 16th January) regarding the circumstances surrounding certain transactions between IL & P and the NTMA.
I think this conversation is worth putting on the record.
Bowler: In May 2008 the entire board of Irish Life & Permanent was invited to meet the regulator and it was suggested that there would be a Green Jersey agenda, that all banks would help each other. We said, well, there’s no sign of that, there had been phone calls about that before but there was no sign of it actually happening.
Finucane: This was May 2008:
Bowler: Yes, the entire board was called to the regulators office to discuss the Green Jersey agenda. At the end of it we said we’re not even getting support from our own NTMA, Central Bank whatever you like and they said: Yes, we know that but we’ll see what we can do but really yourselves, AIB, BOI and EBS should be helping each other. We said; fair enough, we’ll go off and do that.
Finucane: What does that mean?
Bowler: Liquidity wise, instead of placing your money, and it’s billions, overnight in Bank de Paris or City Bank which is commonplace, I could give you a list of five banks that we would have used, that we would put the Irish banks first and we started to do so and then we were told that we would need to put, quite rightly, a commercial proposition before the NTMA and so we have what’s called bundles of collateral which is mortgages and securitisations and we gave €250 million.
Well, we gave more than the value because when you give collateral you always give more than the value because there’s a haircut. It’s a discount and in return we got a €250 million deposit which we talked about openly at the time. I think we announced it in our half year results, I could be wrong about that but there was no secret about it, it was above board collateral.
Finucane: Had the NTMA been reluctant to so do, because the article says they were reluctant to so do and that the Dept. wanted them to do it and was why it was decided, did they go to Paribas to put up the proposal for Irish Life & Permanent.
Bowler: I don’t know, I’m only guessing but I would suspect because Somers was extremely successful in running the NTMA…whereas the Regulator, Central Bank and maybe the Dept. of Finance and I’m only speculating because I don’t know this would say – Look, if you can give 10% of the money closer to home it would help them with the liquidity because it was starting to become very tight at that stage. So in return we gave the collateral, it was signed up legally and we made the presentation to the NTMA which we were required to do and subsequently were granted the money which I have to tell you in banking terms is €250 million.
According to an article in the Sunday Independent the existence of such an officially sanctioned support scheme (Green Jersey Agenda) has always been vehemently denied by ministers and officials.
I am confident that the Irish people realise that is it extremely important in the long run to be competitive and prove what they have proved in the past that they are able to cope with difficult periods.
Jean-Claude Trichet, president of the European Central Bank (ECB)
This statement tells me a number of things.
That EU officials have swallowed, hook, line and sinker, the government line that Irish citizens are compliant, loyal citizens more than willing to make any sacrifice to save their economy.
That Irish citizens have full trust in the competence and good intentions of their political leaders.
That EU officials have no inkling whatsoever of how corrupt the Irish political and administrative system is.
That the Irish financial crisis is under control and resources can now be safely switched to dealing with Portugal and Spain.
That they have no idea what’s coming down the tracks.
The Credit Review Group was launched on 6th April last.
The purpose of the quango is to ensure that small and medium-sized enterprises (SMEs) have access to credit from the banks who are participating in the NAMA scheme.
Borrowers can approach the CRG if they believe they have been treated unfairly by any of the banks availing of NAMA.
But, according to an RTE news report, the CRG cannot force banks to change their minds on any loan decision but banks will be required to comply with recommendations.
This is typical banana republic logic.
On the one hand we’re told that banks must comply (with recommendations) but they cannot be forced to do so.
This arrangement allows the state to say they’re getting tough while continuing to allow the banks do as they please.
The banks win, the new quango wins (big salaries and pensions) but, as always – the people lose.
On November 18th last (3rd report), John Thredowen, head of office at the Credit Review Office had the following to say in regard to the financial health of AIB.
Allied Irish Banks are now approaching the finalisation of their restructuring and they’re out with their staff and about to approach the market to say – ‘we’re open for business’.
A couple of days later AIB announced that investors had withdrawn €13 billion from the bank.
John Thredowen is head of just one of over 800 quangos that costs the taxpayer over €13 billion per annum.
RTEs Richard Crowley had a very difficult time getting a simple answer from our lying Minister for Finance, Brian Lenihan, last Sunday (This Week, 21st).
The question was simple – How much are we going to borrow from the EU/IMF?
Crowley: How much are we looking for?
Lenihan: Blah, blah blah, blah…
Crowley: What’s the figure Minister, how much are we looking for?
Lenihan: Blah, blah, blah, blah…
Crowley: How much are we applying for on this loan?
Lenihan: Blah, blah, blah, blah…
Crowley: How much?
Lenihan: Blah, blah, blah, blah…
Crowley: Roughly
Lenihan: Blah, blah, blah, blah…
Crowley: Are we talking tens of billions?
Lenihan: Yes, we are talking tens of billions.
Crowley: So it could be 70, 80, 90 billion?
Lenihan: No, nowhere near that.
We’re borrowing €85 billion.
On the reasonable assumption that the EU/IMF are fully aware that an interest rate of 6.7% will destroy what’s left of our economy there can only be two reasons for such an imposition.
It’s the first shot in a negotiating process.
Or
The EU/IMF have decided that Ireland is expendable, that it’s economic and social destruction could serve as a useful warning to countries like Portugal and Spain to get their act together.
Recent comments by David McWilliams on pension losses.
This has all to do with, I wouldn’t say corruption, it’s to do with the extraordinary nod and wink culture in Ireland.
So much of Irish pensions were put into Irish banks by people who were paid by the Irish banks to put the pensions into the Irish banks.
Clients were told the pensions were safe by people who were being paid by the banks to say they were safe.
Yes, it’s called nod and wink in Ireland. Other jurisdictions call it by its name.