COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 13 Oct 2016

Special Report No. 94 of the Comptroller and Auditor General: National Asset Management Agency Sale of Project Eagle (Resumed)

Mr. Seamus McCarthy (An tArd Reachtaire Cuntas agus Ciste) called and examined.

Mr. Brian Rowntree called and examined.

Chairman

Today the committee will continue its examination of the Comptroller and Auditor General’s Special Report No. 94 on the National Asset Management Agency, or NAMA as it is better known, and its sale of Project Eagle. Project Eagle was the code name given to the sale of NAMA’s Northern Ireland loan portfolio.

We have already had meetings with Comptroller and Auditor General on his report, with NAMA and with the Minister for Finance, Deputy Michael Noonan, and his officials. Today Mr. Brian Rowntree is before the committee and I would like to thank him sincerely for making himself available. Mr. Rowntree was a member of NAMA's Northern Ireland advisory committee, NIAC, at the time of the sale of Project Eagle. The NIAC was established by the NAMA board in January 2010. It comprised four NAMA board members, NAMA’s head of asset recovery and two external members. The main purpose of the NIAC was to make recommendations to the NAMA board on matters pertaining to Northern Ireland in the context of NAMA’s objectives and functions and to make recommendations to the board concerning NAMA’s strategy for Northern Ireland assets.

We are also joined today by the Comptroller and Auditor General, Mr. Seamus McCarthy, and his colleague, Ms Mairead Cosgrove.

I remind members, witnesses and those in the Public Gallery to switch off their mobile phones. I wish to advise witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter but they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the provisions within Standing Order 186 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policies. Finally, members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.

I invite Mr. Rowntree to make his opening statement.

Mr. Brian Rowntree

I thank the Chairman and Deputies for the invitation to attend this meeting today. My opening remarks will simply lay before the committee the facts as they apply to me as a member of the NIAC at the time of Project Eagle, the sale of the NAMA Northern Ireland loan portfolio. I wish to confirm that the complete sale of Project Eagle was a matter for the main board and senior executive team of NAMA. A decision was taken by the NAMA board to oversee this process under strict controls and we, as the Northern Ireland advisory board, were in no way consulted, referenced or updated on the detail on the bid and sale process and the resulting compliance issues. I respected this decision and at no time during, prior to or subsequent to the sale process did I make any personal or corporate interventions to the NAMA board or executive team, to the bidders in this process, PIMCO and Cerberus, political representatives, political parties, civil servants, other investors' or potential bidders' representatives or developers. At all times I respected the corporate governance provisions surrounding the Project Eagle sale process, the commercial confidentiality of the process as well as the corporate integrity of the NAMA board and senior executive team.

As a member of the NIAC I was updated on the original interest expressed by PIMCO but only in general outline terms and no specifics of the interest were discussed with us as a committee. After this outline briefing no further outline updates were offered and none were sought by me. At subsequent NIAC meetings the committee was simply told that Project Eagle was still a live process. I was never informed of the Cerberus bid and I was notified of the sale agreement and the NAMA board sign-off the day before the public announcement of its completion. Mr. Frank Daly, the NAMA chairman, rang me to inform me of the successful conclusion to Project Eagle.

At NIAC meetings we were not made aware of direct or perceived individual conflicts of interest as noted by individual members. Declarations of conflicts were noted in writing at the start of each meeting by each person attending and we had to regularly update our own personal register of interests. All such records were held centrally by the NAMA corporate governance directorate. NAMA put in place a robust corporate governance framework which applied to all component parts of its operation, including the NIAC, and as members we were subject to regular training and update discussions on governance provisions. At all times I respected and adhered to this strict governance framework. An organisation with such a commercially sensitive mission as NAMA's can only be effective and respected when all stakeholders adhere to the principles of good governance.

The NIAC was not a decision-making forum and we all understood this from day one. The committee was purely a consultative and advisory framework on strategic aspects of NAMA business and dealings that had particular reference to the socio-economic indicators for Northern Ireland. The NIAC did not engage or seek to engage in the details of individual debtor portfolios and individual debtor cases were not discussed. The discussions at the NIAC were high-level, strategic impact discussions on the direction of travel for NAMA in respect of the assets secured against the consolidated debts. Members of the committee were fully aware that NAMA did not own such assets but were equally aware that the ownership and control of the debt resulted in de facto control of the assets.

With this in mind, the NAMA Northern Ireland advisory committee reached agreement with the main NAMA board not to engage in a fire sale of Northern Ireland assets so as not to adversely impact further on the Northern Ireland property market. With this in mind, it was also understood by the committee that the Northern Ireland Executive would not control but would be informed of the work of NAMA in Northern Ireland.

Through the NAMA Northern Ireland advisory committee also undertook high-level strategic asset studies. Such research was indicated as strictly confidential and the university undertaking the study also engaged with other banks and lenders on comparable research to provide a confidential high-level consolidated report indicating the opportunity for selected asset type development to extract realistic value from the loan book, both current and projected.

It is important that the allegations surrounding the Project Eagle sale are investigated in full and that any such investigations look also at the corporate governance controls, both executive and non-executive, surrounding the bid process. It is important that integrity is the key principle in any such investigations and any confirmed breach of integrity must have supporting accountability and sanction. I fully support the essential desire and drive for the facts and truth surrounding the allegations leading to the sale of Project Eagle.

Chairman

I thank Mr. Rowntree. The procedure is that members of the committee who have indicated will put some questions to Mr. Rowntree and, hopefully, he will be able to answer as best he can from his own direct knowledge. Members indicated in the following sequence: Deputy Cullinane; Deputy Catherine Murphy; Deputy Kelly; and Deputy Connolly. I call Deputy Cullinane.

Deputy David Cullinane

I thank Mr. Rowntree for accepting the invitation to attend and for his opening remarks. I welcome him to the meeting. What is Mr. Rowntree's understanding of the terms of reference and the remit of the Northern Ireland advisory committee of NAMA?

Mr. Brian Rowntree

From my understanding, we were issued with a set of terms of reference by the main NAMA board at the very start. We worked to a direction of travel which was laid out by the main NAMA board. The majority of members of the Northern Ireland advisory committee were main NAMA board members. As an advisory forum, it was primarily driven from the main NAMA board. The forum, as I have already outlined, was seen as a consultative forum with no decision-making powers or capacity. The forum was one where, in the main, matters pertaining to discussions at the main board that had an impact on Northern Ireland were primarily discussed. There was not a huge degree of interrogation of other areas of activity within the Northern Ireland advisory committee and the minutes of the meeting indicate that. I have commented on the research which was something I was very keen on because we needed an evidence base to talk about the impact of what was happening in Northern Ireland. The land issues in Northern Ireland were totally different to those in the Republic of Ireland. We did not have a huge overhang of surplus housing. We had a history of people trading in land. As a consequence we had multiple debt portfolios around certain areas of land. One could see those debt portfolios increasing around the same land holdings because those lands were being traded-----

Deputy David Cullinane

How many times a year did the Northern Ireland advisory committee meet? How did those meetings go? Will Mr. Rowntree talk us through the structure? What was discussed at a typical meeting? What type of meeting was typical?

Mr. Brian Rowntree

They were very regulated environments. They were very formal, with agendas set by the chairperson. There were very carefully controlled discussions in the room. We had meetings that gave rise to discussions about whether they were proceeding to put a portfolio into administration or were considering the administration of certain aspects of the portfolio. They would give us that information. They would not name the debtor but they would say they were moving on certain aspects of the portfolio that could have an impact on Northern Ireland. We discussed issues around the valuation of lands. These were not specific valuations but how land in general was moving in Northern Ireland and whether there had been any considered uptake in interest in lands in Northern Ireland. We looked at the aspects of commercial, industrial and residential in broad terms, not in key, specific terms. Meetings tended to last between two and two and a half hours.

Deputy David Cullinane

Two and a half hours. I want to get to a part of Mr. Rowntree's speech where he talks about conflicts of interest or individual conflicts of interest. In his opening statement, Mr. Rowntree said, "At the NAMA Northern Ireland advisory committee meetings we were not made aware of direct or perceived individual conflicts of interest matters as noted by individual members".

Mr. Brian Rowntree

That is correct.

Deputy David Cullinane

He went on to say a declaration of conflicts that is noted in writing at the start of each meeting by each person attending. How does that work in practice?

Mr. Brian Rowntree

We were given a sheet in our work papers for the meeting which we completed and handed to the executive member responsible for governance.

Deputy David Cullinane

Did this happen as members were sitting at the meeting or was it-----

Mr. Brian Rowntree

It was at the start of each meeting.

Deputy David Cullinane

It was at the start of each meeting. So members filled in this declaration and gave it to whom?

Mr. Brian Rowntree

We gave it, through the chair, to the person who was responsible for the corporate governance. There was a board secretary managing the committee.

Deputy David Cullinane

Mr. Rowntree had his own personal register of interest that he updated on a regular basis as well.

Mr. Brian Rowntree

Yes. Like any public-----

Deputy David Cullinane

What is that? Is it electronic format or a file?

Mr. Brian Rowntree

They asked us to update our register of interests, like any public authority would do, on an annual basis. Once we made our initial declaration we updated it on an annual basis to make sure we were compliant.

Deputy David Cullinane

It was personal to each individual.

Mr. Brian Rowntree

That is correct.

Deputy David Cullinane

What I am taking from what Mr. Rowntree is saying is that he filled in his declaration of conflict of interest if there was any. It was done by Mr. Rowntree.

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

It was handed to somebody, through the chair, who had control of it but Mr. Rowntree was not aware of other people's declarations.

Mr. Brian Rowntree

No member of the committee was aware of another's conflicts of interest.

Deputy David Cullinane

Does Mr. Rowntree think that is appropriate?

Mr. Brian Rowntree

We are really here to deal with facts but in my experience - and I can only go on experience - I have never operated this way.

Deputy David Cullinane

Will Mr. Rowntree expand on what he means by that?

Mr. Brian Rowntree

Conflicts of interest must be an open-book situation.

Deputy David Cullinane

I accept what Mr. Rowntree says to the effect that conflicts of interest should be an open book. In a "Spotlight" programme shown on 29 February 2016, he said, "It would be fair to say that the information that I witnessed and I heard in NAMA offered commercial opportunity." When he was asked by the presenter, "How valuable would that information have been to a bidder on the Northern Ireland NAMA portfolio?", Mr. Rowntree went on to say, "What I would say was that information that we discussed of a commercially sensitive nature in my view would have added some value to their made application because it would have given them some steer on a [strategic] capacity to work out that overall portfolio."

Mr. Brian Rowntree

That is correct.

Deputy David Cullinane

Given that one of Mr. Rowntree's colleagues had an association with six debtors, who made up 50% of the loan book, and that Mr. Rowntree sat at the meetings with this same individual and given what he just said about the declared conflicts of interest, does he feel a bit let down that the information was not shared with him and others who sat at those meetings?

Mr. Brian Rowntree

I cannot answer for anyone else. That is their responsibility. I refer Deputy Cullinane to my closing remarks that I fully support the essential desire for the facts and truth surrounding the allegations about the Project Eagle sale process.

Deputy David Cullinane

When we now know that-----

Mr. Brian Rowntree

I believe-----

Deputy David Cullinane

I am not asking Mr. Rowntree to comment on the behaviour of any individual but on what is now accepted and acknowledged. We had the Minister here last week who was also made aware of conflicts of interest and, as Mr. Rowntree knows, we have the report from the Comptroller and Auditor General which also talks about the conflicts of interest. I will get to those in a few minutes. It has been established that there was a relationship between one of the external board members and six - possibly seven - debtors. That information was disclosed. It says it was disclosed.

Can we display executive summary No. 54 on page 17 of the Special Report No. 94 of the Comptroller and Auditor General? Is that possible?

Chairman

Yes, it is on its way.

Deputy David Cullinane

Will Mr. Rowntree bear with me? I want to be specific.

Mr. Brian Rowntree

That is no problem.

Deputy David Cullinane

It is executive summary No. 54. "During NIAC meetings and in annual statements of interests, one external NIAC member, Mr Frank Cushnahan, declared his involvement as an advisor, mainly on a non-fee basis, to six NAMA debtors and to a third party". It goes on to say that when the Comptroller and Auditor General's examination team looked at this, it was estimated that the loans of the six debtors represented about half the value of the Northern Ireland loan book.

It says that during NIAC meetings and annual statements of interest, one external member declared his involvement as an adviser. I assume when he did this it was the piece of paper Mr. Rowntree was talking about, but he was not made aware of that.

Mr. Brian Rowntree

Those were personal disclosures. Conflicts of interest are a personal declaration. It behoves anyone in public life to acknowledge whether he or she has an actual or perceived conflict of interest in respect of any matter that is both actionable in the meeting or potentially a matter of subject under review by the organisation so it must be declared.

Deputy David Cullinane

It states here that Mr. Cushnahan did declare an interest in respect of a relationship with six debtors. There may not have been sufficient examination of what that meant but the declaration was made. In the "Spotlight" programme, Mr. Rowntree said there was commercially sensitive information that would be of value to an overall portfolio and that there were things that he witnessed and heard in NAMA that would have offered commercial opportunity. I am trying to put myself in Mr. Rowntree's shoes. If I was a member of the NIAC and was involved in discussions at whatever level or however sensitive and one of the people I was sitting next to had the same position as Mr. Rowntree and had a relationship with debtors that made up 50% of the loan portfolio that I was not made aware of, I would feel personally let down. I am not asking Mr. Rowntree to comment on an individual's behaviour but I am asking if he feels let down because the information was not shared with him. Does he believe it should have been shared with him?

Mr. Brian Rowntree

My first knowledge of that was when I read the report of the Comptroller and Auditor General. It is a decision of the NAMA board how to make available those conflict of interest issues. They are personal declarations and need the permission of the persons who have declared them to share them. Whenever I made the statement to "Spotlight" I was not aware of the declarations. I was talking about another matter that is contained within my statement here today.

Deputy David Cullinane

Is it not extraordinary that Mr. Rowntree was not made aware of any of this as a member of the board? I am trying to get at the process. We want to establish whether the processes within NAMA were robust enough to withstand potential breaches of process. When there is a conflict of interest and when a conflict of interest arises, we must make sure in every organisation that there are best and robust practices in place. It does not seem to have been the case in this situation because it is now established there were conflicts of interest. The Minister for Finance in the South was here last week and he said he accepted the process had become corrupted. That aside, surely Mr. Rowntree must have a view as a former member of the NIAC of whether the process was robust enough in respect of declarations of interest.

Mr. Brian Rowntree

Someone in the main board or the senior executive team made a conscious governance decision not to share that information with members of the NIAC. I cannot think or speak for that person. That was done outside the room------

Deputy David Cullinane

Does Mr. Rowntree believe that was the right thing to do?

Mr. Brian Rowntree

It is not best practice from my perspective as an experienced chairperson at senior level. It is not what I would see as open book provision. This is a very commercially sensitive organisation and the declarations belonging to the individual are personal and must be respected. Therefore, a decision was taken to respect and not to share; otherwise, I presume it would have been shared with us.

Deputy David Cullinane

I thank Mr. Rowntree for his honesty. I want to deal with a related point before coming back to that substantive point. He spoke in his opening statement about being subject to regular training and update discussions on governance. What does he mean by regular training and what did that involve?

Mr. Brian Rowntree

We had regular updates on any issues that impacted on changes to governance in respect of the organisation. In line with good public sector best practice, we also had refresher training on corporate governance provisions to remind us of the continuing requirement.

Deputy David Cullinane

Who carried out that training?

Mr. Brian Rowntree

The governance team and the legal secretary I think.

Deputy David Cullinane

How many times a year was that done?

Mr. Brian Rowntree

Once every two years.

Deputy David Cullinane

Were the two external board members part of that?

Mr. Brian Rowntree

Everyone was invited to attend. They were told to make themselves available for training on whatever dates possible.

Deputy David Cullinane

Everybody would have been very aware of their responsibilities.

Mr. Brian Rowntree

Absolutely. I can honestly say, hand on heart, no one associated with the NAMA provision would not have understood the robustness of the governance framework they were trying to put in place.

Deputy David Cullinane

If Mr. Rowntree had an association with six debtors who made up 50% of the Project Eagle loan portfolio, he would have known that was a conflict of interest and a problem.

Mr. Brian Rowntree

In my personal circumstances?

Deputy David Cullinane

Yes.

Mr. Brian Rowntree

I would not have been a member of the committee.

Deputy David Cullinane

Mr. Rowntree would have resigned?

Mr. Brian Rowntree

I would not have put myself forward. I would have seen myself as being conflicted.

Deputy David Cullinane

When NAMA became aware of that, and at some point it was made aware, does Mr. Rowntree believe that a sufficient course of action was taken? The Comptroller and Auditor General was quite critical of how it dealt with this-----

Mr. Brian Rowntree

That is a decision-----

Deputy David Cullinane

I know that is a decision for NAMA. I was just trying to get Mr. Rowntree's view as a former NIAC member.

Mr. Brian Rowntree

I cannot really speak for the main NAMA board. The one question I would retort with is: did the main NAMA board share declarations of interest belonging to each individual board member as well? Were those made public? Were they a matter of public record? If there is a governance provision that controls declarations of interest that run through the spinal cord of the organisation, that has to be respected throughout the whole organisation.

Deputy David Cullinane

Mr. Rowntree is saying that the same process could have been applied in terms of the declarations being made by way of paperwork before meetings. That possibly was applied at board level too.

Mr. Brian Rowntree

Correct. I would hope they were consistent in their process of applying to the NIAC as much as the main NAMA board.

Deputy David Cullinane

We do not know that but we will ask NAMA and get clarification. That is an interesting point.

Mr. Brian Rowntree

It is a matter worth clarifying.

Deputy David Cullinane

Mr. Rowntree made another important and honest point in his opening statement, "It is important that the allegations surrounding the Project Eagle sale are investigated in full" - we all accept that - "and that any such investigations look also at the corporate governance controls, both executive and non-executive, surrounding the bid process".

Mr. Brian Rowntree

Correct.

Deputy David Cullinane

What does Mr. Rowntree mean by "corporate governance controls"?

Mr. Brian Rowntree

I read the Comptroller and Auditor General's report. It was a best value study. The scope and terms of reference are limited in that regard. To have an all embracing report, one needs to consider the governance framework surrounding the bid process. This was a bid that emerged from an approach to NAMA in the early stages. There was not a collective decision to go out to an invitation to tender for bidders and run a short list and do the necessary provisions. In a sense, it is defending a different position. It requires examining the corporate governance provisions that surrounded the overall exercise internal to the board, internal to the executive team and external to those in the process.

Deputy David Cullinane

Why would Mr. Rowntree say the investigation should also consider the corporate governance controls? That would suggest he sees something there that needs to be investigated?

Mr. Brian Rowntree

If there is an allegation surrounding what we see as a breach of conflict of interest, that is a corporate governance provision.

Deputy David Cullinane

It is about the conflict of interest.

Mr. Brian Rowntree

No. It goes further.

Deputy David Cullinane

Can Mr. Rowntree elaborate on that?

Mr. Brian Rowntree

If the allegations imply that someone stood outside their terms of reference as a committee member, that is way beyond conflict of interest. If the allegation implies that someone stood outside their terms of reference and went further by offering some added value to a bidding process, that is also outside conflict of interest. Those are corporate governance provisions and need to be included in a consolidated and corporate report, independently controlled and verified.

Deputy David Cullinane

He went on to say, "It is important that integrity is the key principle in any such investigations and any confirmed breach of integrity must have supporting accountability and sanction".

Mr. Brian Rowntree

Correct.

Deputy David Cullinane

What does Mr. Rowntree mean by integrity?

Mr. Brian Rowntree

I think all of us in this room understand the value of integrity. It is the spinal cord. When I read the article published on 2 July, naming me as a person who had absolutely nothing to do with this, I was quite furious, as anyone would be. I was also furious that these allegations have emerged because we should be able to defend this position. We should have robust-----

Deputy David Cullinane

Does he believe that people associated with NAMA, or any individual associated with NAMA, did not show integrity or breached integrity?

Mr. Brian Rowntree

No. I think that has to be confirmed. That is why I said I fully support an investigation that will get to the truth and the facts of this issue because we do not want to run an investigation that examines allegations and assumptions.

We need an investigation that comes up with facts, and the facts themselves must be evidenced and based on the truth of the situation.

Deputy David Cullinane

We have the facts on Mr. Cushnahan. The Comptroller and Auditor General's report actually is evidence based. It took a number of years to publish and to investigate this report. It looked at supporting documentation, minutes of the Northern Ireland advisory committee, NIAC, and NAMA and involved a lot of discussion with NAMA officials. It is based on fact. What we do know from the Comptroller and Auditor General's report, and this has been confirmed by NAMA chairman, Mr. Daly, is that he became aware not just of the relationship between Mr. Cushnahan and debtors; he became aware of what has become known as success fees. These success fees were with PIMCO. They were in three parts, one for Brown Rudnick, one for Tughans and one for Mr. Cushnahan. We are also aware, from paragraph 55 in the Comptroller and Auditor General's report, of the relationship that Mr. Cushnahan had with Tughans, that he shared its premises and that there were two NIAC meetings there. Did Mr. Rowntree attend those two NIAC meetings?

Mr. Brian Rowntree

I did indeed, yes.

Deputy David Cullinane

Was Mr. Rowntree aware at that point that Mr. Cushnahan-----

Mr. Brian Rowntree

That he had an office in Tughans, yes.

Deputy David Cullinane

Was Mr. Rowntree aware-----

Mr. Brian Rowntree

I think he extended the invitation to us at the previous meeting to attend and use the premises. That was taken up by the executive team. The committee had no decision-making power. The decision to locate the meeting there was a matter for the executive team of NAMA.

Deputy David Cullinane

We now know there was a success fee or fixer fee, call it what you like, of £15 million, which was to be shared between Mr. Cushnahan, Tughans and Brown Rudnick. This has been accepted now as a potentially corrupted process by the Minister also. That led to PIMCO eventually withdrawing. How does that make Mr. Rowntree feel as a former board member?

Mr. Brian Rowntree

I was surprised and shocked. I would like a report way beyond what the Comptroller and Auditor General has done. He has produced a best value report. We now need a consolidated corporate governance report that looks at issues of breach of corporate governance. In my statement I also said this needs to be supported by an accountability framework and supporting sanctions. If those breaches of corporate governance are sufficient to look at any other issues that need to be called into question by this committee or the main NAMA board, we need an evidence base to go forward.

Deputy David Cullinane

When did those two NIAC meetings take place in Tughans office?

Mr. Brian Rowntree

I forget. They were probably in or around October or September 2012 and it may have been the April meeting in 2013.

Deputy David Cullinane

Then Mr. Rowntree would have been very surprised when he was eventually made aware. NAMA was made aware by PIMCO on 10 March 2014 of the success fee that involved Mr. Cushnahan, Brown Rudnick and Tughans, but Mr. Rowntree was not made aware of this. The first he heard of it was when it was in the public domain.

Mr. Brian Rowntree

Yes, exactly. Again, I need that evidence because what we are getting are statements. I need evidence to show exactly what underpins the allegation around success fees. What exactly does this mean? What are the implications that underpin success?

Chairman

We will move on to the next questioner.

Deputy Catherine Murphy

To come back to corporate governance, in Mr. Rowntree's opening statement he said that NAMA, as an organisation, put in place a robust corporate governance framework. Is this method not at odds with the fact somebody on an advisory committee could operate for six debtors? Does this not show a flaw in corporate governance? Mr. Rowntree said he would not have sat on the committee.

Mr. Brian Rowntree

I would not have put myself forward with that conflict in place.

Deputy Catherine Murphy

So it is a very strong conflict.

Mr. Brian Rowntree

In answer to the Deputy's question, if I may, I believe NAMA made every best effort to put in place a robust corporate governance framework. I believe the appointment of someone with those levels of conflict, perceived or real, whatever we want to call them, does make it more difficult for that person to manage the relationship within the committee, and it makes it more difficult for the committee itself to manage its relationship with the person and the information control therein. It is back to the original appointment.

Deputy Catherine Murphy

In a good corporate governance situation, if those interests were declared would they not have almost automatically excluded the person on the basis of the conflict of interest?

Mr. Brian Rowntree

The terms of reference for the appointment are outside of the corporate governance provisions. The corporate governance provisions kick in when the person is appointed. The terms of reference for the appointment themselves maybe should have excluded that, if it was worthy of consideration.

Deputy Catherine Murphy

To go back to the point made and expand on it little, with reference to page 17 of the review of the Northern Ireland Assembly Committee for Finance and Personnel of the sale of NAMA properties in Northern Ireland and the paragraph referenced earlier, which states the committee also noted from the BBC Northern Ireland "Spotlight" programme that Mr. Brian Rowntree stated:

...that the NIAC members had access to information which was of a ‘commercially sensitive nature’ and which offered ‘commercial opportunity’ and would have been of some value to a bidder for Project Eagle. This is of particular significance as it appears to contradict the position adopted by NAMA to date.

What was the nature of the information? Much of what Mr. Rowntree stated in his opening statement tended to say there was a lot of general information.

Mr. Brian Rowntree

Correct.

Deputy Catherine Murphy

What was the nature of the information that would have given somebody that commercial opportunity?

Mr. Brian Rowntree

I would not have made that statement on "Spotlight" if I had not affirmed that I was in a room where I had discussions around commercially sensitive information. I would not have gone public by stating that on a BBC "Spotlight" programme. This refers to a piece of work which was evidence based work undertaken by a university doing land assembly analysis. Before it would even undertake or engage with NAMA it had a series of caveats around confidentiality of the information. These were explained to the committee. If this is not commercially sensitive I do not know what is. This data was not only location and type of properties, this data also had the details of planning permissions which were current, about to expire and the potential for renewal. It also had details of housing and residential needs overlaid on top of it. It also had details in consolidated form of holdings by other banks. One would have got a picture of the complete landbank available in Northern Ireland and one would have looked at the opportunity locations within this portfolio.

Deputy Catherine Murphy

Were some of these properties with loans in NAMA? I presume they were.

Mr. Brian Rowntree

Yes, I think from memory that NAMA accounted for approximately 30%.

Deputy Catherine Murphy

Would it have been identified that they were properties with a NAMA loan attached?

Mr. Brian Rowntree

The information was provided to the university by NAMA so they were shown as NAMA properties. A separate section of the report was privileged only to NAMA, which showed the NAMA impact analysis across all those platforms.

Deputy Catherine Murphy

I want to refer to page 132 of the report of the Comptroller and Auditor General. At the end of the page it states:

With regard to the proposed acquisition of the NI Debtors Portfolio, PIMCO confirmed the following:

They have not completed any due diligence or engaged directly with any NAMA debtors in this regard;

PIMCO’s analysis was conducted by way of reverse engineering NAMA’s Balance Sheet and cross-referencing the publicly available information on NAMA’s portfolio.

I am curious because this is jumping out at me. Could NAMA have put together that portfolio? Was it credible? Is it believable that PIMCO would be able to put together a portfolio with reverse engineering on NAMA's balance sheet and cross-referencing, or does it indicate there was other information?

Mr. Brian Rowntree

I cannot comment. I was not part of the discussions with the main board. What it says to me is that it had some process outlined as reverse engineering NAMA's balance sheet, so it had to have some underpinning intelligence, be it some intelligence itself or evidence based, to look at a reverse engineering component.

Deputy Catherine Murphy

I am looking at when the approach appears to have come almost packaged to NAMA via the two finance Ministers. It looks to me - if I am reading it correctly - as though there was a significant amount of information in advance of engagement with NAMA in putting together this portfolio. Would that be how Mr. Rowntree would read it?

Mr. Brian Rowntree

Purely from a commercial context and from my own past commercial experience, I would certainly not have bid blind for something.

Deputy Catherine Murphy

Yes.

Mr. Brian Rowntree

I have never known anyone to bid for any business opportunity blind. I do not know what its evidence base was. I believe that is where we go back to the controls and the corporate governance provisions that would outline and underpin the evidence provisions that supported the bid process.

Deputy Catherine Murphy

Okay, was the university undertaking that-----

Mr. Brian Rowntree

Yes, the University of Ulster.

Deputy Catherine Murphy

Would the University of Ulster have valued the assets or would it have given an indication?

Mr. Brian Rowntree

I do not think the values were critical in this because what was being looked at was the opportunity. The report was about looking forward, not about looking back. The report looked at the identification of potential and looking at how value could be added to Northern Ireland's balance sheet in developing out these opportunities. There was significant investment by NAMA and other banks in looking at moving forward the landbank, the opportunity sites and the void properties. Suddenly, we had a change of direction which was to really have a fire sale of the loan book, as opposed to a working out arrangements on the opportunity sites.

Deputy Catherine Murphy

Can the witness indicate when the work was completed by the university?

Mr. Brian Rowntree

It was in around 2012 to 2013. It was in or around March 2013 but a lot of work was done in 2012.

Deputy Catherine Murphy

Obviously Mr. Rowntree was aware of the terms of reference for NAMA for an open process and getting the best return for taxpayers, etc.-----

Mr. Brian Rowntree

Correct.

Deputy Catherine Murphy

He says in his statement that he was updated on the original interest expressed by PIMCO. Was Mr. Rowntree surprised that what was being proposed was a deviation and that it was going to be a one-bidder process?

Mr. Brian Rowntree

It came offside, that is all I will say. I had no indication there was going to be a sale of the loan book. In fairness, there was never any prior discussion in the room about selling the complete loan book.

Deputy Catherine Murphy

Right.

Mr. Brian Rowntree

There was no strategic discussion around moving the complete loan book out of Northern Ireland, that was completely offside. It was discussion that was ring-fenced by the main board and it took it forward. It was then suddenly removed from the Northern Ireland advisory committee.

Deputy Catherine Murphy

When Mr. Rowntree states that he was updated on the interest expressed by PIMCO, was PIMCO named at that stage?

Mr. Brian Rowntree

Yes, it was. That is correct.

Deputy Catherine Murphy

Was it fairly soon after that when the information would have become available from the university?

Mr. Brian Rowntree

From memory it was all within the one period, yes.

Deputy Catherine Murphy

That completes my queries, I will leave it there. I thank the witness.

Mr. Brian Rowntree

I thank the Deputy.

Deputy Alan Kelly

I appreciate that Mr. Rowntree is appearing before the committee and I thank him for giving his time. Can he clarify why he offered to go on the advisory board?

Mr. Brian Rowntree

I applied to go on the main NAMA board. I responded to an open competition. I thought I had the skills, expertise and knowledge that would support-----

Deputy Alan Kelly

So Mr. Rowntree got the second division gig?

Mr. Brian Rowntree

I did not get premier league football, I got championship.

Deputy Alan Kelly

Was Mr. Rowntree disappointed?

Mr. Brian Rowntree

Not really. I wanted to add some value to the Northern Ireland committee.

Deputy Alan Kelly

Why did Mr. Rowntree want to go on the main board?

Mr. Brian Rowntree

I think there was an opportunity to do something in Northern Ireland, something innovative and strategic with the proposal.

Deputy Alan Kelly

Like what?

Mr. Brian Rowntree

I had a primary interest in housing. I was the then chairman of the Northern Ireland Housing Executive, the largest social housing landlord in western Europe. I thought there was a situation here where I could foresee where we are today and the issues that were going to emerge. It must be remembered that where one has lands that are bogged down financially and in terms of capacity, to roll those out is not a five-year plan - once it becomes stagnated it is a ten to 15-year plan. I thought that here was an opportunity to look at something where we could match commercial and industrial opportunities while also looking at giving some capacity and some enhanced initiative around residential.

Deputy Alan Kelly

So the witness felt he could add value to it?

Mr. Brian Rowntree

Absolutely, I would not have applied unless I thought so.

Deputy Alan Kelly

On behalf of NAMA, on behalf of the people?

Mr. Brian Rowntree

When one is looking at strategic discussions, in forward planning terms, that is where you need to be - not just looking at the operational side, you need to be looking at the vision and strategy to take this forward.

Deputy Alan Kelly

On behalf of NAMA or on behalf of people in Northern Ireland, or both?

Mr. Brian Rowntree

On behalf of both. It is the Northern Ireland advisory committee, I had no right nor entrée to talk about matters to do with the Republic of Ireland, I was looking at Northern Ireland and how we would move this forward.

Deputy Alan Kelly

Mr. Rowntree has said that when he was provided with information he would not have been provided with debtors' details. He was provided with other forms of information with regard to the debtors, but not the detail of who they were.

Mr. Brian Rowntree

Administration and such information that would have been in the public record very shortly. It would tell us what was happening.

Deputy Alan Kelly

I want to tease this out a bit. Northern Ireland is not that big a place. I am intrigued as to the type of information that was discussed. If one looks at the type of information, and if it was just all generic, broad-stroke discussions on the strategic future of how this would impact on Northern Ireland, I do not know if there would be any need for many meetings. I am intrigued at the level of detail here because whatever detail was discussed, and if it was fairly generic that is fine, but in Northern Ireland it would require only a small bit of detail to identify what people were talking about.

Mr. Brian Rowntree

Northern Ireland is a village, as most parts of Ireland are a village also.

Deputy Alan Kelly

I know, that is my point.

Mr. Brian Rowntree

If a person sneezes in Connacht then someone in Munster knows. That is just the way it is. But what must be respected is the corporacy of that room and to make sure one is not engaging in discussions with those who can benefit from those details. There were only three or four meetings per year, maximum. We had reference to the programme of Government in Northern Ireland, the impact of available funds from Government in Northern Ireland, the impact of banking capital in Northern Ireland and the downturn in the housing and commercial property market. We had high-level strategic discussions, which were informing the direction of travel about the loan book. The majority of people on that committee were not from Northern Ireland and part of our time was spent in educating those people as well.

Deputy Alan Kelly

Frankly speaking, the advisory board would not discuss debtors-----

Mr. Brian Rowntree

No.

Deputy Alan Kelly

-----but would discuss the possibility of certain loans being dealt with?

Mr. Brian Rowntree

Correct.

Deputy Alan Kelly

What level of detail would be given?

Mr. Brian Rowntree

They would just give us an outline of a case, without getting into specifics of the individuals, the reasons and rationale behind it, the information that would be in the public domain within a week or so and the administrative process that was being put in place.

Deputy Alan Kelly

Was Mr. Rowntree ever able to identify who these debtors were?

Mr. Brian Rowntree

Yes one would be able to identify them.

Deputy Alan Kelly

You would be able to identify them.

Mr. Brian Rowntree

Yes, but in fairness to NAMA it never went into the detail but if certain corporate entities were mentioned then one would have an a idea who they were.

Deputy Alan Kelly

So Mr. Rowntree would know in advance, even though-----

Mr. Brian Rowntree

Correct.

Deputy Alan Kelly

Even though they did not-----

Mr. Brian Rowntree

But we respected that-----

Deputy Alan Kelly

The witness was able to make up the jigsaw?

Mr. Brian Rowntree

Absolutely, if you are from Northern Ireland you know it.

Deputy Alan Kelly

Okay, that is interesting. Mr. Rowntree said in his opening statement that the Northern Ireland Executive was informed. How did that work?

Mr. Brian Rowntree

After a number of the NAMA meetings in Northern Ireland, the chairperson and the senior executive, the person representing the Executive team, along with anybody who wanted to attend, met the Finance Minster and gave him a briefing on what was happening. Without going into too much detail, they gave him a briefing on where the key considerations were in relation to NAMA's anticipated actions in Northern Ireland and to reassure that there was no intention of fire sale. This aspect of fire sale kept coming up on a regular basis.

Deputy Alan Kelly

That is my next question. I am intrigued by the fact that meetings took place subsequent to the NIAC meetings.

Mr. Brian Rowntree

These meetings were with the Minister for Finance.

Deputy Alan Kelly

Were they with the Minister for Finance directly?

Mr. Brian Rowntree

Yes.

Deputy Alan Kelly

They were with the Minister for Finance and his officials.

Mr. Brian Rowntree

There was one official and his political adviser.

Deputy Alan Kelly

Would these meetings happen after each NIAC meeting?

Mr. Brian Rowntree

They happened after the majority, but not all.

Deputy Alan Kelly

We must find out the detail of those. I take it there were no details on them.

Mr. Brian Rowntree

There were no details. They were very short meetings.

Deputy Alan Kelly

Who goes to these meetings?

Mr. Brian Rowntree

Mr. Frank Daly, chairman, and one or two board members who wanted to attend. I attended one or two. They were general meetings where the chairman did all the speaking on behalf of the organisation.

Deputy Alan Kelly

Did NIAC add value or was it just a talking shop?

Mr. Brian Rowntree

I listened to what the chairperson said on it being a talking shop. If we had continued with the work of the University of Ulster we would have seen a dividend.

Deputy Alan Kelly

I can decode that point rather easily. There was a volte-face over the question of a fire sale. There were serious concerns after the meeting with the Minister for Finance on this question but then it was decided that the whole lot was to go at once. How did that make Mr. Rowntree feel?

Mr. Brian Rowntree

I was surprised and I am still surprised to this day. I respected the decision of the main NAMA board, however. We were not a decision-making forum and we were told that a decision had been made to sell the loan book.

Deputy Alan Kelly

It effectively said that the whole strategy of avoiding a fire sale in Northern Ireland, because of concerns over the impact on the market, was to be changed.

Mr. Brian Rowntree

We did not want a fire sale.

Deputy Alan Kelly

It must have come as a complete shock to the committee that, after all the discussions and analysis, everything it had tried to ensure did not happen then happened in one go.

Mr. Brian Rowntree

The original discussions were about the fire sale of the assets. The conversation quickly went into banking terms in respect of the loan book and the sale of the loan book itself. Its assets and the securitisation of assets in support of the loans were no longer matters for debate. The debate was on selling the loan book. The work the University of Ulster did was around the assets. The NAMA board must have some note in the minutes of its discussions about the change of heart in Northern Ireland, from an emphasis on a controlled and strategic platform to deal with the asset book to one dealing with the sale of the complete loan book.

Deputy Alan Kelly

Having been on NIAC, Mr. Rowntree's assessment is that there must have been a change of direction at board level in NAMA.

Mr. Brian Rowntree

Correct. When it was approached by PIMCO it must have seen some added value in looking at the loan book.

Deputy Alan Kelly

Would it be fair to say that, once an offer came in, it changed their view?

Mr. Brian Rowntree

Absolutely.

Deputy Alan Kelly

In the "Spotlight" programme, Mr. Rowntree said the the data provided by the university would have created commercial value if they were made public.

Mr. Brian Rowntree

There were caveats, though, in the form of huge numbers of confidentiality agreements from the university for the very reason that it was commercially sensitive.

Deputy Alan Kelly

Did Mr. Rowntree feel that, if the information were to have got to any individuals or groups considering buying loans, it would have been of some aid to them?

Mr. Brian Rowntree

It offered commercial potential. I have never seen a document with a vision from the University of Ulster that offered such capacity for doing some strategic planning around an asset base.

Deputy Alan Kelly

It was something Mr. Rowntree rated highly.

Mr. Brian Rowntree

I called for this. I asked at committee for an evidence-based report. At the Northern Ireland committee, we discussed it and were informed by NAMA that it did not have any supporting evidence for the Republic of Ireland asset book. We wanted to advance this for Northern Ireland.

Deputy Alan Kelly

Mr. Rowntree requested this.

Mr. Brian Rowntree

We and the University of Ulster requested it. I pushed for it in the committee.

Deputy Alan Kelly

This substantial and high-quality document was brought to the NIAC with a lot of confidentiality attached. Then the intentions of NAMA, as regards Northern Ireland, changed.

Mr. Brian Rowntree

Yes. Huge efforts were put in to securing the co-operation of and input from all the banks and other lenders in providing data.

Deputy Alan Kelly

What was the length of time between the information coming to the NIAC and PIMCO's original answer?

Mr. Brian Rowntree

The minutes will say for sure but I believe the engagement commenced around 2011 and it was in 2013 that we had a draft document, something that looked like a finished product, for consideration.

Deputy Alan Kelly

The NIAC requested the document and received it. Subsequently, NAMA changed course and decided on a sale process in which it was all to happen in one go.

Mr. Brian Rowntree

It could have been that the document informed the decision of the board and persuaded it that it was too slow and long a process.

Deputy Alan Kelly

Could it be that it informed the decision of a purchaser?

Mr. Brian Rowntree

That would assume a breach of confidentiality and of corporate governance. I would not want to assume that at this stage.

Deputy Alan Kelly

I am not assuming that at all, but this information is valuable.

Mr. Brian Rowntree

As I said on "Spotlight", this information had commercial capacity and if the board of NAMA was informed of it, its members would understand its commercial capacity.

Deputy Alan Kelly

If a purchaser had this information he or she would be in a better position to put together an offer for the loan book.

Mr. Brian Rowntree

If I was conducting a due diligence exercise on behalf of an intended buyer and I had that document, I would be smiling.

Deputy Alan Kelly

I appreciate Mr. Rowntree's honesty. Thank you.

Deputy Catherine Connolly

I will take up where the last speaker left off on the report from the University of Ulster. Can Mr. Rowntree repeat what he just said?

Mr. Brian Rowntree

If I was conducting a due diligence exercise on behalf of an intended buyer, and I had the capacity to acquire that document, I would be smiling. It would give me a clear indication as to the potential of the landbank, not just for my loans but for other loans. A lot of these loans were what were known as "cocktail" loans which meant they had supporting loans from other banks.

Deputy Catherine Connolly

If that information was made available to another member of the committee, or to PIMCO or Cerberus, in the form of a photocopy or photograph, it would be very helpful information to have.

Mr. Brian Rowntree

If there was a breach of corporate governance around the control mechanisms for the document it would be open season.

Deputy Catherine Connolly

Was the report ever published?

Mr. Brian Rowntree

No, it is not a public document.

Deputy Catherine Connolly

It is not available.

Mr. Brian Rowntree

I do not believe it is. I believe NAMA has a copy.

Deputy Catherine Connolly

How many people would have had sight of the document?

Mr. Brian Rowntree

The Northern Ireland Advisory Committee and the board of NAMA would have had sight of it.

Deputy Catherine Connolly

Would everyone on the Northern Ireland Advisory Committee have had sight of it?

Mr. Brian Rowntree

Yes. I assume the board of NAMA would have seen it because someone would have had to approve the fees. NAMA dedicated a resource to support this work so one would assume it had access to the draft or the finished product.

Deputy Catherine Connolly

Mr. Rowntree means money was applied.

Mr. Brian Rowntree

Yes, funds were allocated. Under contractual provisions the board would have had access to the data.

Deputy Catherine Connolly

Okay. Mr. Rowntree said that he asked for this report.

Mr. Brian Rowntree

I was pushing for this evidence-based report.

Deputy Catherine Connolly

It contained a vision with a long-term view as to how to use the NAMA loans in Northern Ireland. Is that right?

Mr. Brian Rowntree

Yes. I have experience in land assembly, in moving residential housing platforms forward. These would not be done on a three-year cycle, but on a five to 15-year cycle in the main - five-year short-term provisions for immediacy and 15 to 20 years for longer-term provisions. This is effectively about the capacity for people to live. A mapping exercise of that nature gives an indication as to where the need is and how that can be mapped over what is available. If lands are not available, the need has to be displaced somewhere else. That is the reality of it.

Deputy Catherine Connolly

Where was that report discussed? Was it discussed at Mr. Rowntree's committee's meetings?

Mr. Brian Rowntree

It was discussed at the Northern Ireland advisory committee, NIAC, and people from the University of Ulster came in and made PowerPoint presentations to us. To go back to the confidentiality issue, for the University of Ulster to acquire the data from other lenders, it had to have express confidentiality agreements in place before that information was released. Whenever a person says that there was no confidential information at the committee, the Deputy understands the remarks I made on the "Spotlight" and my remarks today. If that is not confidential, I do not know what is.

Deputy Catherine Connolly

Right. There were 20 committee meetings.

Mr. Brian Rowntree

Over the four-year period.

Deputy Catherine Connolly

Yes. I have looked at the minutes and the University of Ulster report does not jump out, but perhaps I missed it.

Mr. Brian Rowntree

It is among the documents.

Deputy Catherine Connolly

It does not jump out.

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

Two of those were held in Tughans and, as Mr. Rowntree said, and one took place in April.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

One was on 22 April and the last one before Mr. Cushnahan departed was on 7 October 2013.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

To go back to the issue of governance, Mr. Rowntree said he was impressed to a certain extent with the governance in place.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

The first meeting of his committee took place on 12 May.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

There was a paragraph on conflicts, lobbying, confidential information and so on. It was noted that any and all information to the committee was confidential.

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

That meeting was held in May and the next one was held in July during which there was a question about whether section 202 of the NAMA Act regarding confidential information applies? Would Mr. Rowntree remember that at this point?

Mr. Brian Rowntree

I remember the discussion.

Deputy Catherine Connolly

What does Mr. Rowntree remember about that discussion?

Mr. Brian Rowntree

The chairperson at that stage was Peter Stewart and there was just a clarification as to whether those provisions applied.

Deputy Catherine Connolly

There was not clarity for the first few meetings as to-----

Mr. Brian Rowntree

No, around some of the legalities.

Deputy Catherine Connolly

In regard to confidentiality.

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

It was stated that section 202 therefore applies to all members of the committee, including external members.

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

That was the feeling at that point.

Mr. Brian Rowntree

Yes, indeed.

Deputy Catherine Connolly

They were looking at this again in September and there was confusion about it and they were going to seek legal advice. It was requested that clarification from an external adviser be sought in regard to the application of section 202 of the NAMA Act.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

The only point I am making there is that almost from May onwards up to November, there was a question over whether section 202 applied.

Mr. Brian Rowntree

I did not raise those concerns.

Deputy Catherine Connolly

No, Mr. Rowntree did not, but in regard to governance there was no clarity as to what applied.

Mr. Brian Rowntree

No, but that was a matter of legal clarity rather than governance clarity.

Deputy Catherine Connolly

All right.

Mr. Brian Rowntree

I think that they would have assumed that the provisions that applied to all board members would have equally applied to committee members in the interim. They were looking at legal clarification in support of the governance framework.

Deputy Catherine Connolly

They were trying to sort that out.

Mr. Brian Rowntree

I believe that was well intended.

Deputy Catherine Connolly

In regard to Mr. Rowntree's conflicts of interest, he declared twice in these 20 meetings.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

Will Mr. Rowntree us what the procedure was when he declared, because it is not clear to me. It clearly stated that he declared.

Mr. Brian Rowntree

I wrote them down and handed them to the-----

Deputy Catherine Connolly

What would have happened then at the meeting? Would Mr. Rowntree have left the meeting if somebody-----

Mr. Brian Rowntree

No. They would have explained that they did not see them as a matter that conflicted with the agenda and would ask that we proceed.

Deputy Catherine Connolly

If it did conflict, would Mr. Rowntree have left the room?

Mr. Brian Rowntree

Yes, absolutely.

Deputy Catherine Connolly

Can Mr. Rowntree remember if Mr. Cushnahan ever left the room in regard to a matter?

Mr. Brian Rowntree

Never.

Deputy Catherine Connolly

Never.

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

Although there are about five or six disclosures by Mr. Cushnahan, he never left the room, even though-----

Mr. Brian Rowntree

He was never requested to leave the room.

Deputy Catherine Connolly

Never. Although now we know that he represented six debtors and a seventh debtor in regard to-----

Mr. Brian Rowntree

None of us were aware of that. That information is in the hands of those, I presume, who controlled the meeting and no one requested him to leave the room, which was in order if they felt that there was no conflict applicable to the agenda. That was in order.

Deputy Catherine Connolly

To return to the University of Ulster report again, which is a key piece of evidence today that has emerged in regard to it, it was commissioned by NAMA, it was paid for or-----

Mr. Brian Rowntree

It was partly commissioned by NAMA. It was commissioned by other banks as well; other banks were involved in this.

Deputy Catherine Connolly

It had a long-term vision on what to do with these properties on a sustainable basis.

Mr. Brian Rowntree

This was a well-intended piece of work from a university that was looking forward, not looking back.

Deputy Catherine Connolly

Why was it not published then?

Mr. Brian Rowntree

I believe it was highly sensitive. I would not have seen this as being a published document. I would have seen it as something that would have informed both governmental policy and bank policy in going forward.

Deputy Catherine Connolly

It would also perhaps have informed NAMA policy.

Mr. Brian Rowntree

Absolutely, if I was in a senior position in NAMA, I would have loved to have been able to take this document and work through it.

Deputy Catherine Connolly

Accepting that document and the vision, did it recommend a selling off of the property in Northern Ireland?

Mr. Brian Rowntree

No. What it looked at was the market for certain house types, certain commercial property types and location with respect to need. In terms of the position here in Ireland and then the reflection on Northern Ireland, it was a continuation of east coast strategy - the activity streams along the east cost.

Deputy Catherine Connolly

It is a crucial document looking at strategic development.

Mr. Brian Rowntree

If one is trying to manage a land portfolio, primarily that is what it was in Northern Ireland, one needs an evidence base to support one as to what those lands are, where they are located, the potential for those lands and, most importantly, the anticipated interest in those lands.

Deputy Catherine Connolly

Did Mr. Rowntree say that we did not have that in the Republic?

Mr. Brian Rowntree

No. They confirmed that they were working on that at the time. They worked with the Department of the Environment to put in place some procedures for Ireland.

Deputy Catherine Connolly

There was nothing to compare it with in the South.

Mr. Brian Rowntree

No. It did not exist here.

Deputy Catherine Connolly

Mr. Rowntree was one of two external members, is that right?

Mr. Brian Rowntree

Correct, yes.

Deputy Catherine Connolly

Mr. Rowntree never had a query about holding the meetings in Tughans?

Mr. Brian Rowntree

Those decisions were made by the executive team.

Deputy Catherine Connolly

Mr. Rowntree was not aware of any-----

Mr. Brian Rowntree

Absolutely. Wherever they told us to meet, we met. I remember suggesting at one stage that maybe we could meet in a certain hotel as it had good parking facilities, which was quite selfish of me, but I was told "No, that would be associated to some debtor". I was told that was not a runner.

Deputy Catherine Connolly

They were particularly sensitive in regard to that matter.

Mr. Brian Rowntree

One of the executive team told me that.

Chairman

When Mr. Rowntree gave that response I smiled at the thought of NAMA being in a property for several years of one of its biggest debtors. I find that funny in terms of its head office.

Deputy Catherine Connolly

The same sensitivity was not apparent in regard to Tughans.

Mr. Brian Rowntree

They must have had their own reasons. They obviously had some parameters that they worked to and they were satisfied that those parameters were not breached, so they were quite happy to meet in Tughans.

Deputy Catherine Connolly

Mr. Rowntree has said this strategic change came suddenly.

Mr. Brian Rowntree

Yes, out of the blue.

Deputy Catherine Connolly

I preface that by saying one of the points the Comptroller and Auditor General made in his report was that there was a turnabout. He was not commenting on whether that is right or wrong, but he did not see any evidence justifying that strategic change. Is Mr. Rowntree saying something similar now?

Mr. Brian Rowntree

I am in total agreement.

Deputy Catherine Connolly

Total agreement.

Mr. Brian Rowntree

If the Deputy were to read to the minutes of the NIAC, she would note there was never a discussion around disposing of the overall loan book prior to the approach from PIMCO, so this was an offside approach and it took us all by surprise.

Deputy Catherine Connolly

Mr. Cushnahan resigned in November 2013.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

The last meeting had been held in Tughans' premises in October and then he gave in his resignation. Was it ever discussed as to why he resigned or what reason was given?

Mr. Brian Rowntree

The chairman said he resigned for personal reasons.

Deputy Catherine Connolly

For personal reasons.

Mr. Brian Rowntree

We accepted that and we wished him well.

Deputy Catherine Connolly

Then Mr. Rowntree continued on as the one external member.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

There is correspondence here that they were going to replace Mr. Cushnahan but that never happened.

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

Was it ever discussed why he was not replaced?

Mr. Brian Rowntree

No. There were no discussions or anything else.

Deputy Catherine Connolly

When did Mr. Rowntree learn about the success fee?

Mr. Brian Rowntree

Probably whenever this committee learned about it.

Deputy Catherine Connolly

Regarding the sales process, from which PIMCO has withdrawn, was Mr. Rowntree aware of all of that?

Mr. Brian Rowntree

I have no knowledge of anything after the briefing we got in October-----

Deputy Catherine Connolly

On 13 October.

Mr. Brian Rowntree

Yes, on the PIMCO issue. We got no more information at the meeting on any aspect of the sale. I never even knew that Cerberus was the successful bidder.

Deputy Catherine Connolly

Okay. I will put a hypothetical question to Mr. Rowntree in terms of his role as a member of the advisory committee, which he probably cannot really answer.

If Mr. Rowntree had become aware of a success fee, how would he have dealt with the issue?

Mr. Brian Rowntree

I would have reported it to the chairperson. As a member of the committee of a public body, I am bound by the corporate governance provisions that apply and to which we signed up. If there are disclosures to be made, they must be made.

Deputy Catherine Connolly

Would Mr. Rowntree have gone to the police?

Mr. Brian Rowntree

No; I would have gone the chairperson. It is NAMA's responsibility to examine the issue.

Chairman

Mr. Rowntree made a reference to the report of the University of Ulster which had been commissioned by NAMA and other banks. It was not a project commissioned by NAMA.

Mr. Brian Rowntree

No; it was a joint report by Ulster Bank - eventually Northern Bank - Santander and, I think, Nationwide. It was a consolidated report to give credit on where the consolidated corporate loan book stood in Northern Ireland. As Deputy Alan Kelly said, Northern Ireland is a village. In many ways, therefore, the loan book and the risk were shared with other banks.

Chairman

Mr. Rowntree received a presentation-----

Mr. Brian Rowntree

On numerous occasions - at least three or four.

Chairman

Did Mr. Rowntree receive copies of the report to take away?

Mr. Brian Rowntree

I think we were handed printouts of the slides, but they were collected after the meeting.

Deputy Catherine Murphy

On the work done by the University of Ulster with NAMA and the other banks, is that how 50% of the assets or loans were outside Northern Ireland? It would not have included any of that information, or would it?

Mr. Brian Rowntree

It was on Northern Ireland assets. We would not have seen the other bank information. That was right. Why would they have shared anything with us? We saw the consolidated data on a grid map. We saw the overarching data.

Deputy Mary Lou McDonald

I thank Mr. Rowntree for being here and giving very valuable and helpful information. The University of Ulster project was called the Ulster University Jordanstown land development model. It was not a one-off escapade by the university but a detailed, elaborate process which involved NAMA and other banks, as Mr. Rowntree set out.

Mr. Brian Rowntree

Yes. Like all universities, it was seeking to extend its research capacity around the proposal and work for individual banks on a strategic plan to support the university in a visionsing exercise around very challenging situations involving land in Northern Ireland.

Deputy Mary Lou McDonald

The work was financially supported, as agreed by the main board, to the value of £20,000.

Mr. Brian Rowntree

I knew that there was a figure that had been approved by the main board.

Deputy Mary Lou McDonald

Mr. Rowntree has set out how the Northern Ireland advisory committee received regular updates. It is also fair to say the main board was equally informed of the development of the work.

Mr. Brian Rowntree

I would have presumed so.

Deputy Mary Lou McDonald

The records reflect that fact.

Mr. Brian Rowntree

That is great. It means that there was continuity and that it was not a one-off exercise for the committee.

Deputy Mary Lou McDonald

Perhaps refreshingly in terms of most of our witnesses to date, Mr. Rowntree attaches a very high premium to evidence-based approaches.

Mr. Brian Rowntree

I have chaired several senior public bodies and you cannot allow your board to make decisions blind because they will come back to haunt you. One needs an evidence base to stand over the robustness of the decision-making process and, more importantly, the validity of the need for the decision to be made.

Deputy Mary Lou McDonald

Did the evidence available to Mr. Rowntree as a committee member, perhaps not least through the University of Ulster study, suggest there was significant scope and strategic space in respect of the assets held in Northern Ireland? I get the sense that Mr. Rowntree could see a shape or a pathway forward in the use and disposal of the assets.

Mr. Brian Rowntree

We saw an east-west divide primarily, as one would have expected. We saw a rural and heavy urban divide. I ensured, through the Northern Ireland Housing Executive, that we gave our housing need studies and we laid the data over them. This really gives the capacity in terms of residential property and shows hot spots and hot spot activity. Lenders want to ensure maximisation but also immediacy of return on their spend. Therefore, in many ways they want to locate their spend around hot spots. The data identified these hotspots but they also showed, if one spread it out, where one could displace some of the demand to other areas to give regeneration capacity in other regions. This would have an impact on public transport provision, private sector development, commercial activity, etc. There are also lands which are more difficult, if not impossible, to develop. In commercial terms, in its entirety, one must ask what compensating loss one is prepared to bear on the non-development lands and the premium one would pay for the development portion.

Deputy Mary Lou McDonald

From this contribution, the committee gets some of the shape and contours of the discussions that would have taken place at the Northern Ireland advisory committee.

Mr. Brian Rowntree

It goes back to what Deputy Alan Kelly said. I did not want to join a committee that was dealing with the operational issues of NAMA and the businesses cases. NAMA employs hundreds of staff, hundreds of fellow accountants sitting in a room looking at business cases. It is not a good use of anybody's time to sit in a committee discussing debtor portfolios.

Deputy Mary Lou McDonald

I will come to that issue.

Mr. Brian Rowntree

What you need to do is raise the bar and raise your game, examine the big strategic aspects of the proposal and see how you envision the future to gain a reward on the portfolio.

Deputy Mary Lou McDonald

In the light of this, was it wise to bundle the assets in the North and sell them in one lot? Is that the call Mr. Rowntree would have made?

Mr. Brian Rowntree

I would love to be able to answer the question, but I was not in the room. I was not a party to the decision.

Deputy Mary Lou McDonald

I am not asking Mr. Rowntree to second guess the main board.

Mr. Brian Rowntree

I did not have the evidence base in front of me to make that final call. Even the Comptroller and Auditor General has examined the calculations and underpinning valuations to which they worked. I would have asked whether it was about the assets or the loan book. The decision was about selling the loan book.

Deputy Mary Lou McDonald

I am coming to that issue. It is the most significant point Mr. Rowntree has made today. He is not going to give me a view, as a person who had access to the study. The records reflect what he said, that he overlaid the Northern Ireland Housing Executive data. He had a deep look at the assets and what was available in the North, mindful of the concerns about fire sales. Had he been in charge-----

Mr. Brian Rowntree

I was not in charge. If I had some influence on the decision making process, I would have wanted to see an investment in people as much as in cash reward.

Deputy Mary Lou McDonald

Mr. Rowntree does not accept Mr. Frank Daly's description of the Northern Ireland housing committee as a talking shop.

Mr. Brian Rowntree

Today I asked whether it had lent itself to being a talking shop.

Deputy Mary Lou McDonald

I know; we hear that. When Mr. Rowntree became a member of the committee, was his role to consider the assets in the North, for example, a hotel in Lurgan or a shopping centre in Belfast? Was that his focus?

Mr. Brian Rowntree

Yes; that was my vision in dealing with the committee.

Deputy Mary Lou McDonald

On the terms of reference of the committee-----

Mr. Brian Rowntree

We were very much aware that NAMA did not own the assets but controlled the loans. However, as I said in my opening remarks, by controlling the loans, one de facto has control of the assets.

Deputy Mary Lou McDonald

Mr. Rowntree made a most insightful set of remarks on the Project Eagle decision because we have fallen into this, even on this committee, by saying the Northern assets got bundled and sold. In fact, that is not what happened. The Northern debtors-----

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

-----were bundled.

Mr. Brian Rowntree

Yes. The loan book was sold because, with the bid process, the approach was to buy the loans. The assets were secondary in that discussion.

Deputy Mary Lou McDonald

As we have reflected, 50% of the assets were not in fact in the North at all. There was 17% in Scotland.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

And so on.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

Obviously, as the Northern committee, it stands to reason that it was not considering properties in the outer Hebrides in its deliberations.

Mr. Brian Rowntree

We cannot really add much strategic value to those discussions.

Deputy Mary Lou McDonald

Who is to know, Mr. Rowntree? Perhaps in another life.

So PIMCO makes the approach, not on the basis of the Northern assets, but the Northern debtors. In fact, one has two strategic shifts. Is that correct?

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

One has a shift in terms of Northern assets - what to do, deal with them singularly, work them our or sell them in a collective way. Shift number two is not about the assets in the first instance, it is actually about the debtors.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

Yes.

Mr. Brian Rowntree

I think underpinning that is that in the initial thinking of the committee, and I presume the main board and the senior executive team of NAMA, their rationale would have been the only way out of this is to work out the asset base. Then offside comes this approach which says set aside the asset base and let us look at the loan book.

Deputy Mary Lou McDonald

Yes. Mr. Rowntree has given evidence here today that he had no prior indication, inkling or discussion that such a manoeuvre was about to happen.

Mr. Brian Rowntree

Never.

Deputy Mary Lou McDonald

It came at him sideways.

Mr. Brian Rowntree

I have no recollection of it and I do not think that the minutes as set forth, which the Comptroller and Auditor General has looked at, gave any indication that this matter was reflected on or discussed at any previous occasion.

Deputy Mary Lou McDonald

Mr. Rowntree is a very experienced person.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

Am I correct to say that Mr. Rowntree is an accountant by profession?

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

How does it sit with him professionally that such a fundamental set of changes would be made with such scant records, if any, to reflect discussion, analysis and evaluation? I ask him for his professional view on that.

Mr. Brian Rowntree

Without giving a professional view, let me look at this not as an accountant and not even as a housing person but let me look at this as a person who has a history of public service and a history of social intervention. Here we were where we had literally a meltdown in the financial circles in 2008 and we were on a very slow path of recovery. We were working on how to bring some added value to society, how do we remove the continued dependency on the public sector to pick up this tab and pick up this intervention required as a result of the financial collapse. I think that what we saw was some strategic discussions around Northern Ireland and how we might do something successful, and how we even might engage. Yes, it would be a slow burn and there is no doubt about that but I think if one could have gained momentum, then things could have emerged. Suddenly we had a discussion which was then around, we have an approach on the loan book and we are getting rid of the loan book. The assets and the work through of those assets and the added value to the community and society really is not our concern.

Deputy Mary Lou McDonald

NAMA is bound by the NAMA Act.

Mr. Brian Rowntree

Correct, to achieve best value.

Deputy Mary Lou McDonald

It must get value for money for the taxpayer and expeditiously deal with the assets. There is also that piece in it around social dividend as well.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

Presumably Mr. Rowntree was conscious of that.

Mr. Brian Rowntree

That is what I was referring to.

Deputy Mary Lou McDonald

Let me bring Mr. Rowntree back to another point that has occurred to me. Given the fact the strategy was to bundle debtors, which captured a lot of assets in the North, and then reflecting again on the conflict of interest that Mr. Cushnahan had - Mr. Cushnahan had a relationship and this is a matter of fact, so I am not asking Mr. Rowntree to speculate - with seven debtors, does that not mean the scenario becomes all the more problematic in respect of a conflict of interest?

Mr. Brian Rowntree

I think that those are matters for NAMA to comment on. I was a member of the committee. The regulatory provisions that surround the committee are in the control of NAMA and the requirements to behave within the code of conduct, and with the provisions of good corporate governance, relate to each individual member.

Deputy Mary Lou McDonald

And fall to them. Did Mr. Rowntree know about the fixers' fees or the success fees, which is his stated position?

Mr. Brian Rowntree

I had absolutely no knowledge.

Deputy Mary Lou McDonald

I accept that and we have that now as a matter of record. Does Mr. Rowntree think that he should have known?

Mr. Brian Rowntree

I think that as a member of the committee if there had to have been any indication that there was something wrong in the PIMCO approach, since we were advised as a committee at the very early stages on the approach from PIMCO, if the PIMCO approach had to have been set aside it might have been good governance to update us as to why it was set aside.

Deputy Mary Lou McDonald

But that did not happen.

Mr. Brian Rowntree

Because they did tell us about the initial approach so, therefore, one would assume-----

Deputy Mary Lou McDonald

So there were not consistent in their approach.

Mr. Brian Rowntree

-----they would have come back and told us that they were set aside and maybe give us some rationale as to why.

Deputy Mary Lou McDonald

Did Mr. Rowntree know that Cerberus had stepped in?

Mr. Brian Rowntree

Never was told.

Deputy Mary Lou McDonald

Mr. Rowntree had notice of the finalisation of the deal at the eleventh hour, as I said.

Mr. Brian Rowntree

I got that phone call the night before or the day before when Frank Daly rang me to say that it had been announced and he was ringing the First Minister after he spoke to me.

Deputy Mary Lou McDonald

It strikes me as very strange behaviour from the chairman of a committee with whom Mr. Rowntree had worked for a considerable length of time at that stage.

Mr. Brian Rowntree

I think that it is good governance in many ways in the way Frank Daly acted. Total control of this rested with the main NAMA board and then he also was respecting those governance provisions by retaining that within the board's structure. I respected that. I would not have expected Frank Daly to do anything other than adhere to those good governance provisions.

Deputy Mary Lou McDonald

Very often when these matters have been discussed, Mr. Rowntree, the assertion has been made that Project Eagle and all of the controversy associated with it is "a Northern matter." I take from Mr. Rowntree's evidence a very clear statement that control, decision-making and ultimately responsibility was vested in the board of NAMA, which was located not in Belfast but in Dublin.

Mr. Brian Rowntree

Yes. Let me take the Deputy back on that, if I may. The original terms of reference, which Deputy Connolly referred to, indicate that this was not a decision-making forum. It clearly set that down. The decisions were made by the main NAMA board.

In relation to Project Eagle, it is very clear, and even the minutes give testament to this, that the control and responsibility for that process rested with the main NAMA board, and within the senior ranks of the executive team supporting the board. The decision was then taken by the main NAMA board to set aside any discussion on Project Eagle with the Northern Ireland advisory committee. I would go as far to say, therefore, that the committee itself is removed then at that point from the sale of Project Eagle because there is no reference to anything in relation to Project Eagle thereafter. One has to then go to the main NAMA board to seek resolution of the considerations that are under review by this committee and by others.

Deputy Mary Lou McDonald

NAMA contends that if there were problems, and we know there were clearly governance failures and matters more serious that are not for this committee in respect of this transaction, that the problems resided exclusively on the part of the buyer and not on the part of the seller. I do not wish to put words in Mr. Rowntree's mouth but from his testimony today I think that he raised questions at least in respect of that NAMA position.

Mr. Brian Rowntree

All I would say in response to that is I am sure that whenever this situation arose, and there were concerns acknowledged around the process, I am sure matters were referred internally to the NAMA audit committee - its own audit committee. I am sure that audit committee had the good grace and the benefit of legal opinion to support its views on it. I am sure then the movement forward by the board, in concluding the deal, was supported by some evidence base that said that this all is in order on our side of the equation.

In any transaction, like buying a house, there are two parties to the transaction - the buyer and the seller. Both have to have legal cover.

Deputy Mary Lou McDonald

Mr. Rowntree was working on the assumption, which is not unreasonable, that the decisions made in respect of what transpired around PIMCO and the decision to carry on would be informed by a view of the audit committee and legal opinion. Would that be his expectation?

Mr. Brian Rowntree

I would presume that good governance would dictate that.

Deputy Bobby Aylward

Nearly every question I was going to pose has already been asked so I will only touch on them again. I compliment Mr. Rowntree on his precise knowledge of Northern Ireland. It is obvious from his presentation that his major concern was about keeping the economy in Northern Ireland going or improving it.

Mr. Rowntree mentioned a fire sale. Was his reason for going on the NIAC that he did not want fire sales or quick sales that could do damage to the economy in Northern Ireland?

Mr. Brian Rowntree

If we look at this in its more plural context, the discussion took place at the early stages of the committee - at the first two meetings. It was not just NAMA selling land; there were other banks that had land portfolios, particularly Ulster Bank, which had a sizeable exposure in terms of the debt. We then had public sector lands that were being sold as part of the programme for Government. What would the impact be of a fire sale from NAMA which was probably a 30% or 35% stakeholder in the lands that were securitised against loans? What impact would that have had across the piece? It would have done nothing but drive down the value of lands; that is the first thing. It also might have stagnated sales for a long time. So the potential would have been removed from the equation.

Deputy Bobby Aylward

As has been explained already, the loan book was sold off instead of the assets. We have questioned representatives of NAMA and others. Does Mr. Rowntree believe that instead of selling the loan book in one big lump, it would have been better to sell the assets over four or five years? Would more money have been realised in the long term if it had been done gradually rather than selling off the whole lot in one go?

Mr. Brian Rowntree

I cannot really comment on that because I was not privy to the detail of the sale. I will get back to what I-----

Deputy Bobby Aylward

Mr. Rowntree knows Northern Ireland, knows how it works and knows its industries.

Mr. Brian Rowntree

I believe, going back to what Deputy McDonald said in respect of NAMA's own legal statutes, that consideration should have been given to a social dividend.

Deputy Bobby Aylward

Instead of jumping at this loan book sale, should NAMA have examined alternatives? Would it have done better if it had considered a longer-term approach and looked at the bigger picture, rather than just taking this opportunity and getting rid of it all in one go?

Mr. Brian Rowntree

Hindsight is a wonderful master. Let us look at this from a broader perspective. Could it have made it a condition of the sale of the loan book that there would have been a social investment in support of the sale process? I do not know, I just place that on the table.

Deputy Bobby Aylward

Could NAMA have done that?

Mr. Brian Rowntree

I presume that was in the terms of reference for the documentation. We must remember the initial approach led to a bid document going out from NAMA. So if one were to bid against that, one would have to meet those terms of reference to acquire the loan book.

Deputy Bobby Aylward

Now that the loan book has been sold off to Cerberus, does that have any effect? How will Cerberus handle that loan book from here on?

Mr. Brian Rowntree

I cannot comment on that.

Deputy Bobby Aylward

In the next four or five years, how does Mr. Rowntree envisage the Cerberus involvement in Northern Ireland and elsewhere proceeding?

Mr. Brian Rowntree

There are mixed views as to how Cerberus has performed. Some people are quite pleased that they have been released, as they call it, from the shackles of NAMA. Some people say that. Some people also say that they have been treated very aggressively by a very aggressive vulture fund in service. Those are individual testaments from individual sources in corporate entities, but we are not seeing a huge amount of development on the ground.

Deputy Bobby Aylward

Would it be correct that there has not been much change since Cerberus took over?

Mr. Brian Rowntree

I would not have thought so. I would not have thought that there have been extensive development frameworks taking place.

Deputy Bobby Aylward

Is it affecting the economy in Northern Ireland? Is the involvement of Cerberus slowing down the economy?

Mr. Brian Rowntree

The economy in Northern Ireland is something we are going to have to look at across a wider platform because of other measures. What we have is an economy that is growing, expanding and developing. However, like everywhere else because of other political reasons it will be more difficult as we go forward.

Deputy Bobby Aylward

One of the reasons NAMA gave for deciding to sell off the loan book was the deteriorating relationship with debtors and political considerations. Based on where he sits now, what does Mr. Rowntree believe it meant by that?

Mr. Brian Rowntree

From political considerations-----

Deputy Bobby Aylward

NAMA claimed that the relationship was deteriorating with debtors in Northern Ireland and that was one of the reasons it decided to sell the loan book in one go. It was also stated that there were political reasons involved. From Mr. Rowntree's perspective, in view of what is happening inside Northern Ireland, why would it claim that its relationship with debtors was failing? The political considerations might have some sway.

Mr. Brian Rowntree

I think it is because the landbank in Northern Ireland was different from the landbank in Ireland. Those in the South had an overhang of housing and greater opportunity sites than we had. There was going to be a slower burn. It might have had the intention to go for a quick fix on this one. It takes a different strategic approach to work the Northern Ireland landbank out. That would have been taken as read. It is a mixed bag of tricks in many ways.

Also on the political side, yes, there was political angst regarding an immediate fix. However, we were not going to get an immediate fix around this. There never was going to be an such a fix. I pose the question: if there had not been a NAMA, where would the Northern Ireland landbank have been today?

Deputy Bobby Aylward

That is a good question. Mr. Rowntree said he knew nothing about PIMCO, Cerberus or anything like that; he was just there as an adviser on Northern Ireland. Did he find it strange to learn afterwards that the same advisory and legal companies were used by PIMCO? There was a success fee of many millions and Mr. Cushnahan was involved in that so there was a three-way pay off. Was Mr. Rowntree surprised to learn that Tughans and the other legal advisers were still involved with Cerberus when it went on to buy the portfolio?

Mr. Brian Rowntree

It is a commercial decision of the relevant bidder as to who it uses. I watched Mr. Frank Daly giving his evidence and quite rightly so. It is not a matter of concern to it as to who the bidder uses. It is a matter of whom the bidder contracts with itself. I am sure the bidder had its own reason for contracting with those corporate entities.

Deputy Bobby Aylward

Would success fees be normal in these sorts of deals?

Mr. Brian Rowntree

From my knowledge success fees are something that would be paid to consultants, yes.

Chairman

Before we go, did Deputy Catherine Murphy indicate?

Deputy Catherine Murphy

Could I go back to two questions?

Chairman

Deputy Catherine Murphy has not contributed yet. I apologise, Deputy David Cullinane has indicated next. My mistake.

I ask Mr. Rowntree to clarify one thing he has mentioned quite a bit in the "Spotlight" programme, namely, that NIAC members had access to information of a commercially-sensitive nature and which offered commercial opportunities. That is the point he has been making all the time.

Mr. Brian Rowntree

That is the University of Ulster documentation.

Chairman

Yes. On several occasions, Frank Daly stated to this committee and to the Northern Ireland Assembly committee that external members of the NIAC did not gain any confidential information or any useful insider information from being a member of that advisory committee.

Mr. Brian Rowntree

I am also on record in The Sunday Business Post and the Sunday Independent stating the exact same thing. I had sight of confidential information. Documentation that comes with heavy caveats and confidential provisions surrounding agreements with various lending agencies is confidential in my view. I will not dispute what Mr. Daly's view of confidentiality is. In my determination, that is a confidential document.

Chairman

Mr. Rowntree is reiterating that. On the face of it, two different statements appear to flatly contradict each other and I am wondering if they do. We will put this question to Mr. Daly. Is it possible that, as Mr. Rowntree said, he got commercially sensitive information and it represented a commercial opportunity? We will put it to Mr. Daly that from his point of view maybe he is talking about debtor confidential information?

Mr. Brian Rowntree

Correct. I think that-----

Chairman

Does Mr. Rowntree get the subtle distinction?

Mr. Brian Rowntree

I absolutely do.

Chairman

It is quite possible Mr. Frank Daly might say, "Yes, you had this general information, and yes, you saw the report, but you did not have any debtor sensitive information".

Mr. Brian Rowntree

In fairness to-----

Chairman

Would one be right in saying that?

Mr. Brian Rowntree

Yes. In fairness to the chairperson, Mr. Frank Daly, that only becomes commercially sensitive if one breaches the corporate governance provisions of the room and goes outside.

Chairman

Would Mr. Rowntree slow down and repeat that for me?

Mr. Brian Rowntree

It only becomes commercially sensitive if one breaches the corporate governance provisions of the room and goes outside the structure of the committee. Both of us are right in that regard.

Chairman

It is possible but on the face of it, it does not look like it.

Deputy Mary Lou McDonald

Can I dissent from that analysis?

Chairman

I am not analysing.

Deputy Mary Lou McDonald

I strongly dissent from it.

Chairman

We will tease it out further. That is all I am saying. I just put it because it looks like a conflict. We will have to ask NAMA again on this. I call Deputy Cullinane.

Deputy David Cullinane

I thank Mr. Rowntree for his patience. I have a number of short questions first. How did Mr. Rowntree get on to the committee initially?

Mr. Brian Rowntree

I was appointed.

Deputy David Cullinane

By?

Mr. Brian Rowntree

By the NAMA board.

Deputy David Cullinane

Did Mr. Rowntree have to apply?

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

Mr. Rowntree talked about the University of Ulster survey quite a lot. In terms of the presentations that were made, he mentioned Powerpoint presentations, etc.

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

Were hard copies of the documentation given to board members?

Mr. Brian Rowntree

There were, yes.

Deputy David Cullinane

Could Mr. Rowntree take those hard copies away with him?

Mr. Brian Rowntree

No, I think those were collected. From memory, those were collected in the room.

Deputy David Cullinane

But Mr. Rowntree was given hard copies?

Mr. Brian Rowntree

We were allowed to look at hard copies, yes.

Deputy David Cullinane

Mr. Rowntree also said that no similar study was carried out in the South.

Mr. Brian Rowntree

No. That is what was confirmed by NAMA.

Deputy David Cullinane

Did Mr. Rowntree think that was a bad move on NAMA's part? Would it have been useful, if they had?

Mr. Brian Rowntree

The land area information was not available and it was more difficult to get a view of land assembly in Ireland in more plural terms.

Deputy David Cullinane

What I am trying to do here, and what we must try to do as a committee, is join up the dots and what the Comptroller and Auditor General also tried to do, through timelines and through processes and procedures, was join up the dots. I merely want to look at the established facts, talk Mr. Rowntree through those and see are we are on the same page. Obviously, we had the establishment of the NIAC.

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

Mr. Rowntree was one of those appointed to that-----

Mr. Brian Rowntree

At the very start, yes.

Deputy David Cullinane

-----as well as Mr. Cushnahan. They were two of the external members appointed. Mr. Rowntree said he wanted to be a member because he wanted to bring his own experience. He was excited about the opportunities this presented in relation to shaping the North, housing and all of that, and I accept all of that.

The University of Ulster study, Mr. Rowntree says, was a land development model that offered potential. He was excited about some of the direction it was going in, etc. Is that fair?

Mr. Brian Rowntree

Correct. Yes, indeed.

Deputy David Cullinane

The study offered a vision. Mr. Rowntree said it offered a way forward, and it was based on assets as well.

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

Did Mr. Rowntree also then say that it would be gold dust, and certainly valuable, for somebody who would be looking to put together a portfolio of either assets or loans, and if he or she had that information he would have a smile?

Mr. Brian Rowntree

What I said was if I was conducting due diligence on behalf of a third party, I would smile if I had that document.

Deputy David Cullinane

It would have been gold dust.

Mr. Brian Rowntree

I would not go as far as gold dust, but I would say it has value.

Deputy David Cullinane

It has real value.

As the University of Ulster survey was being examined by the NIAC, at some point we had the approach by PIMCO to NAMA. It was on the basis of a short and exclusive process that shifted from what was the thrust of the University of Ulster survey and where it wanted to go to NAMA's established policy in relation to how it was going to dispose of the assets to a loan sale that was about the debtors. That was PIMCO's model.

Mr. Brian Rowntree

The committee can check the timeline of the reports emanating from the University of Ulster and the timeline of the approach from PIMCO. One will be able to see that within the documentation of the NIAC.

Deputy David Cullinane

But there was a switch. What I am saying is the switch initially came from the PIMCO approach. The PIMCO approach was that PIMCO wanted a loan portfolio sale.

Mr. Brian Rowntree

There was an asset realisation and then we went to a debtor disposal policy.

Deputy David Cullinane

Then we had a process which was opened up to a number of bidders and the Comptroller and Auditor General is critical of whether that was an open and competitive process. In fact, Mr. Daly, when he was here, stated that it was not as open and competitive as it could have been because of political pressures, but we will leave that to one side. We then had the Project Eagle portfolio and it was a loan-based portfolio.

Mr. Brian Rowntree

As I said in my remarks, it is more difficult to defend a situation when one is reacting to an approach than when one is being proactive in putting out an invitation to tender.

Deputy David Cullinane

I am merely establishing the facts in terms of what happened. We then had the Project Eagle.

Mr. Brian Rowntree

They were reacting to an approach.

Deputy David Cullinane

Exactly. Then we had the Project Eagle portfolio. What we then had was the emergence of success fees.

Mr. Brian Rowntree

Yes.

Deputy David Cullinane

Those success fees involved one of those people who had access to the information that Mr. Rowntree said was of value.

Mr. Brian Rowntree

What I said was that we had success fees. There is an allegation that they applied to a member of the committee.

Deputy David Cullinane

Who would have had access to what Mr. Rowntree described as valuable information.

Mr. Brian Rowntree

He was a member of the committee.

Deputy David Cullinane

That information potentially would have contextualised a model of a portfolio of that size as well, would it not? That University of Ulster study information that would have been given talked about land assembly analysis and the data, not only on sites but on planning and residential need, information on banks, etc. It would have contextualised a model that then emerged from PIMCO and was eventually the Project Eagle portfolio. Would that be fair?

Mr. Brian Rowntree

What I said was that this requires a corporate governance review and independent investigation because what Deputy Cullinane is implying is that that can only have commercial value if the corporate governance provisions are breached. If there is no evidence that they were breached, then it has no commercial value.

Deputy David Cullinane

We do not know whether that was breached but what we know is that-----

Mr. Brian Rowntree

That is what a corporate governance review would indicate.

Deputy David Cullinane

I understand that. I will not speculate on whether it was breached or not, but what I am trying to establish is the facts and the timelines. What we know is that, whether there was a breach in that area or not, one of the external members of the committee was in line for a payment from PIMCO, which was one of the bidders in the process. That is what we know. That has been established.

Mr. Brian Rowntree

I did not know that, but that is what I understand subsequent to all of this emerging, yes.

Deputy David Cullinane

Then it became, as the Minister for Finance, Deputy Noonan, said last week, an accepted corrupted process because of that and we know that PIMCO eventually withdrew from the process because of the presence of the success fees. Given that it moved from a solely commercial process to a potentially corrupted process, if Mr. Rowntree was a member of the NAMA board or if he was the chair of NAMA, would he have been more concerned about that? Given the established facts that we have agreed, and when we join the dots, would Mr. Rowntree have been concerned about the process at that point?

Mr. Brian Rowntree

As I said in my remarks to Deputy McDonald, I would have presumed - I would hope this is the case - that they would have sought the assurances from their audit committee who would have then sought the legal cover to allow the sale to complete.

Deputy David Cullinane

We know from the Comptroller and Auditor General's report that assurances that should have been sought were not sought and assurances that should have been given were never given. That is the entire point of the Comptroller and Auditor General's report. They never were sought and they were never given.

Mr. Brian Rowntree

Therefore, the decision to proceed, and the risk, is a matter for the main NAMA board.

Deputy David Cullinane

I am asking Mr. Rowntree's opinion as a former board member. Given what it then knew and what we now know, does Mr. Rowntree consider the decision of the board to continue with the process regardless was the best way forward?

Mr. Brian Rowntree

I was never a board member. I was a committee member of NAMA.

Deputy David Cullinane

I understand that.

Mr. Brian Rowntree

What I will say is that I cannot speak on behalf of the board. I would love to, but I cannot. It would not be appropriate for me to make a statement on behalf of the main NAMA board.

Nothing was ever advised to us as a committee that highlighted that there was a risk with the process. We were just told the process was live and proceeding.

Deputy David Cullinane

I thank Mr. Rowntree.

Chairman

I call Deputy Catherine Murphy.

Deputy Catherine Murphy

I cannot figure out how a fire sale would have been in anybody's interest. Had all of the assets rather than the loan book been sold at the one time, if NAMA decided to sell them, they would have realised less.

Mr. Brian Rowntree

Correct. That is absolute fact, yes.

Deputy Catherine Murphy

That stands to reason.

Had the focus continued on assets as opposed to the sale of the loan book and that had been done in a gradual way, would there have been less risk and would it have produced dividends in terms of what Mr. Rowntree stated earlier about the outworking of the land banks?

Would that have produced a better potential return for Northern Ireland, and perhaps the taxpayer, in compliance with the NAMA Act?

Mr. Brian Rowntree

We do not have the financial equations to underpin the answer the Deputy needs. Any investment in a social dividend comes at a cost to the State and to those who are investing because one is dealing with those who are most vulnerable; therefore, the reward that emerges from these groupings is far less. Taking a mixed economy approach might have been in everyone's interest. I go to back to my earlier remarks. It may have been worth the consideration of a clause within the sale process to have some social dividend.

Deputy Catherine Murphy

Mr. Rowntree said he would not have bought something if he had not done due diligence. I would not either, not that I would been that in position, given the amounts involved. The amount bid for the assets without having done due diligence was remarkably near the amount for which they were ultimately sold.

Mr. Brian Rowntree

I was not a party to the formulation of the calculations that supported the tender or bid acceptance. I am sure those who were seeking to acquire the portfolio did their homework; therefore, on the other side, one has to look at whether the value was maximised. There are differences of opinion between the Comptroller and Auditor General and NAMA on the determination of value, but then one gets into the issue of corporate governance. That is why I said in my opening remarks that it behoved someone to conduct a corporate governance investigation into this process and produce an independent corporate governance report that would look at how the various processes were controlled and regulated, as well as at the validity of the assumptions and decisions made and how they were evidenced.

Deputy Mary Lou McDonald

I refer to the timeline, as advised by Mr. Rowntree. He was informed on 7 October.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

Mr. Daly briefed on Project Eagle; therefore, the name had been selected at that stage. The minutes state the chairman had broadly outlined what a NAMA sale process would entail with value and in an open market and key considerations for the agency. The committee discussed the approach to be taken and views were expressed. Mr. Rowntree raised a number of issues such as the sale of a portfolio of such a scale leading to strategic land locking and the sale requiring value to be achieved by NAMA, with transparency as a protection in this regard. The minutes further state: "The approach from PIMCO implies that a value can be obtained from the portfolio although the NI debtor portfolio also includes British assets" and a discount would be sought and that, therefore, the question of value was key for NAMA - sell versus hold. The discussion included external member feedback on the proposed approach. I ask Mr. Rowntree to reach into his powers of recollection as I would like to get a sense of the discussion which took place. Earlier we agreed that there was a set compass which was asset focused as against debtor working out. Work was done by the Univeristy of Ulster and then, bang, out of nowhere this came. I presume the matters are recorded, as would be expected, in a neutral fashion on the page. Was Mr. Rowntree concerned when this happened? The discount has been a lively topic in respect of the portfolio. That emerged in the discussion. Will Mr. Rowntree talk us through that meeting and exchange?

Mr. Brian Rowntree

It was intense, as the Deputy will appreciate. It is quite confusing because we were being informed of an approach to the main board but there was no real substance as to why the approach was being made. If the Deputy looks at the bullet points to which she referred, the assets are not mentioned in any of them. It is the value of the loans, not the value of the assets that is referred to. We were in a situation where in all of our previous discussions we had looked at where we would take Northern Ireland and where we would work for its betterment and go against the fire sale provision. One could argue that we had a fire sale of the loans here as opposed to a fire sale of the assets.

Deputy Mary Lou McDonald

The chairman advised the committee that an unsolicited approach had been made to NAMA by PIMCO to buy the debtor portfolio, not the assets.

Mr. Brian Rowntree

Yes, not the assets.

Deputy Mary Lou McDonald

The preliminary discussions had taken place and he advised Mr. Rowntree that the board would consider the matter at its meeting on the 10th with a view to possible further engagement and that the respective Finance Ministers, Deputy Michael Noonan and Mr. Hamilton, had discussed the matter at a recent meeting. The minutes reflect the fact that the Minister for Finance's view was that it was a commercial matter for NAMA. They state: "The chairman broadly outlined what a NAMA sales process would entail". Did he tell Mr. Rowntree that it would be what he told us - a "bespoke" process?

Mr. Brian Rowntree

No. This was very high level and no detail was offered. That was at the initial stages and they were going off to look at whether they would respond to one approach or whether they would put this out to a formal bid process.

Deputy Mary Lou McDonald

When he outlined what a NAMA sale process would entail-----

Mr. Brian Rowntree

It was a general explanation of not being seen to respond to an approach but being more aggressive and looking at some documentation or terms of reference that would invite a bid.

Deputy Mary Lou McDonald

Did he say at that stage that PIMCO had been looking for exclusivity?

Mr. Brian Rowntree

He did not say anything about it. No detail was given to us in the room.

Deputy Mary Lou McDonald

Therefore, he did not go into whether it would be a one, two or three-stage process?

Mr. Brian Rowntree

No, nothing. It was quite clear from the chairman at that stage that the Northern Ireland committee was being sidelined in many ways because the decision had been-----

Deputy Mary Lou McDonald

I will come to that point within the boundaries of the Cathaoirleach's nervous system. The minutes state: "The approach from PIMCO implies that value can be obtained from the portfolio". An assumption was made. That is an interesting bullet point because I do not understand what they were getting at with the committee. Was there a bit of a sell to say, "Listen, lads, this makes sense"?

Mr. Brian Rowntree

The issue was that they were saying PIMCO could realise the value of the portfolio. The question has to be: could NAMA have realised it? That was not ours to ask anymore because the decision had been made by the board that they were handling the process.

Deputy Mary Lou McDonald

I refer to this discussion, giving the talking shop its full standing. I should not be sarcastic with Mr. Rowntree and do not mean to be offensive. They are taking the trouble to inform the committee that it is happening. To me that reads that there was a bit of a sell to say-----

Mr. Brian Rowntree

It was also letting us know that it would be full steam ahead.

Deputy Mary Lou McDonald

I entirely agree.

Mr. Brian Rowntree

We were not interested in the debtor portfolio; therefore, on what we were advising?

Deputy Mary Lou McDonald

I thank Mr. Rowntree. Bullet point No. 4 is the most intriguing for our purposes. It states a discount would be sought - naturally, we all live in the real world - therefore, the question of value is key for NAMA - sell versus hold. Mr. Rowntree does not recall who made the point about the discount.

Mr. Brian Rowntree

Probably both of us. Mr. Cushnahan and I were making the point jointly.

Deputy Mary Lou McDonald

Therefore, the discount would have been a key issue.

What was Mr. Rowntree's understanding of the discount level applied generally? Would he have been privy to that?

Mr. Brian Rowntree

It relates to whether they were sold at par - being the value that NAMA paid for them - or whether they were sold at a value to attract and hold PIMCO in the process.

Deputy Mary Lou McDonald

I refer to what the records reflect at that early stage. Even though preliminary discussions had been had with PIMCO - Mr. Rowntree can only speak for himself; Mr. Cushnahan obviously is a different person with a different history in these matters - the issue of discount is there. I assume that Mr. Rowntree would have assumed that on a matter like discounting the debtor portfolio, NAMA would have sought advice, evidence and expertise.

Mr. Brian Rowntree

One would assume that it had an evidence base to support a discounted factor.

Deputy Mary Lou McDonald

So there would be a rationale for the application of whatever discount rate was arrived at?

Mr. Brian Rowntree

It is public money.

Deputy Mary Lou McDonald

It is public money.

Chairman

Could the Deputy help me as I might have missed it at the beginning? What document is Deputy McDonald reading from?

Deputy Mary Lou McDonald

I am reading from the minutes of a meeting of the Northern Ireland advisory committee on 7 October.

Chairman

It is just we did not have it on screen.

Deputy Mary Lou McDonald

Pardon me, I should have said it. Does Mr. Rowntree recall anything else - any nuggets of wisdom - from that exchange I have missed?

Mr. Brian Rowntree

I think both advisers to the committee were also discussing the issue of the guarantees that applied- the personal guarantees, PGs. In particular, I asked whether they would travel or be part of the discount arrangements that would be offered regarding the purchase of the loans - whether they would be set aside.

Deputy Mary Lou McDonald

What was Mr. Rowntree's view regarding what should have happened?

Mr. Brian Rowntree

I thought the loans were taken, that NAMA had the securitisation and that this securitisation would transfer across Cerberus, or to PIMCO at that stage. For NAMA to even consider setting aside the PGs, it would have had to have a rationale for doing so. If it could set them aside at a sale process, why could it not set them aside in terms of a business case settlement? In my view, one would be setting some precedent in doing this. The conversation was at a very high level, no great detail was offered and it was more or less advising us that the board had met and had come to a certain sense of reality around this situation.

Deputy Mary Lou McDonald

The discussion included external member feedback, meaning Mr. Rowntree, on the proposed approach to support the board's decision on the matter at its meeting on 10 October 2013.

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

So the board was seeking Mr. Rowntree's nod or-----

Mr. Brian Rowntree

Yes. We said that here we have an approach, we have no idea of the value of the approach and we do not know what the terms are. Whenever one goes to that length to give that sort of even high-level overview, one would expect some strategic updates but we never got them.

Deputy Mary Lou McDonald

Was it asking for Mr. Rowntree's imprimatur, acquiescence or agreement regarding this approach?

Mr. Brian Rowntree

We were not the decision-making body.

Deputy Mary Lou McDonald

I accept that but-----

Mr. Brian Rowntree

I think it was asking whether we would accept that this was an option worthy of consideration and we said "Yes".

Deputy Mary Lou McDonald

So Mr. Rowntree thought it was worth exploring.

Mr. Brian Rowntree

It is an option. It has to be appraised. It is a case of "sell" or "hold" because there is no confirmation of sale yet. We have already looked at "hold" because we have the asset issues dealt with. The sale issue is for it to look and see the options around the sale.

Deputy Mary Lou McDonald

I assume Mr. Rowntree makes that remark of consideration based on a very rigorous examination of the decision to sell the portfolio and at what rate and value-----

Mr. Brian Rowntree

As a citizen of Northern Ireland, I would want to be assured that best practice was put in place.

Deputy Mary Lou McDonald

Okay. It then gets very interesting. That happened on 7 October. The board met on 10 October, approved it and said it was going to examine the proposal. By early December, the indicative offer from PIMCO was on the table and by late December moving into early January, there was approval to dispose of the thing so it happened very quickly. Maybe that is the way these things happen. I quoted from the minutes of the board meeting on 7 October. Mr. Rowntree met the board again on 9 December.

Mr. Brian Rowntree

Yes.

Deputy Mary Lou McDonald

At that stage, the indicative offer was on the table. At that meeting in December, an update regarding the University of Ulster at Jordanstown project was provided.

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

What I do not see is an update regarding-----

Mr. Brian Rowntree

Project Eagle.

Deputy Mary Lou McDonald

-----PIMCO and Project Eagle.

Mr. Brian Rowntree

No.

Deputy Mary Lou McDonald

It appeared that the eagle had flown.

Mr. Brian Rowntree

The committee is set aside.

Deputy Mary Lou McDonald

Let us tease our way through this because the documentation supports Mr. Rowntree's point. That is the meeting in December. December through to January saw the approval to dispose of the portfolio and the appointment of the sales advisers. It broke in the media in February that something was afoot. The data room was opened in February and there was material with the Comptroller and Auditor General where concerns were raised or observations made. PIMCO withdrew in March while closing date for bids was April. On 3 April, the board approved the sale. During all of that time, there was no meeting of the Northern Ireland advisory committee.

Mr. Brian Rowntree

No, and I think-----

Deputy Mary Lou McDonald

The committee met in October and there was no update at the December meeting. The next meeting was on 28 April in the Ewart Suite in the Hilton Hotel, which I know well, in Belfast.

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

It was a done deal at that stage.

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

So Mr. Rowntree's point is that far from this being a Northern matter-----

Mr. Brian Rowntree

Correct.

Deputy Mary Lou McDonald

-----in fact, the Northern committee was completely written out of the equation in respect of the sales process. Would that be a fair reflection of the facts?

Mr. Brian Rowntree

As I said in my opening remarks, I thank the committee for the invitation and opportunity to set the facts before it. The facts are that the Northern Ireland advisory committee was written out of the equation and the matter was controlled and administered by the main NAMA board.

Chairman

We will take Deputy Connolly and then Deputy Aylward. We are nearly there

Deputy Catherine Connolly

I return to the minutes of the meeting on 7 October. In respect of the time span, the Ulster issue was raised for the first time on 16 December 2011. I have checked the minutes and Mr. Rowntree is correct. There were a number of presentations relating to that in 2012. It was an active discussion up until Project Eagle-----

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

-----at that presentation Deputy McDonald went through with Mr. Rowntree, which I will not go through again. Up to that point, the Ulster project was very active and the committee was getting updates.

Mr. Brian Rowntree

With regard to the point I made to Deputy Kelly, this was a very high-level strategic approach. It is an evidence-based approach. When you are dealing with a portfolio the size of the Northern Ireland portfolio, never mind the larger Irish portfolio, you want as much evidence to support decision making as possible. There were very intense discussions around what that might look like and whether there were any other contributions or interventions we wanted to make. As I said, the position then changed.

Deputy Catherine Connolly

That is right and that is clear when you put the minutes together-----

Mr. Brian Rowntree

Again, I am setting only the facts before the committee today, which are that this was taken off the radar.

Deputy Catherine Connolly

Mr. Rowntree thought there was one approach but really there was a separate approach that Mr. Rowntree only became aware of when this was presented to him on 7 October.

Mr. Brian Rowntree

I think there was only ever one approach. We had the asset approach, which was then set aside.

Deputy Catherine Connolly

What I mean by two approaches is there was something going on in the background in respect of Project Eagle. We know that now.

Mr. Brian Rowntree

I did not know that.

Deputy Catherine Connolly

Mr. Rowntree did not know that but we know that. We know it goes right back because I have a note here from 14 June 2013. It is just a short note about the meeting the day before between Sammy Wilson, the then Minister for Finance in Northern Ireland, and the Minister for Finance, Deputy Noonan. It noted that Mr. Wilson raised concerns about NAMA's operation in Northern Ireland and its commitment. He also queried whether NAMA would consider a full divestment of its Northern Ireland portfolio as this was something it had been approached about. The Minister for Finance, Deputy Noonan, said that it was a matter for NAMA, quite rightly, but that he would raise it later with the advisory committee.

I presume that refers to the other advisory committee, not the Northern Ireland advisory committee.

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

That was in June 2013. Was Mr. Rowntree aware of this?

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

I will return to the minutes of the October meeting which are crucial and have been discussed in forensic detail. I note, on page 106, that they refer to matters the committee had discussed in respect of Project Eagle. They state: "The discussion included External Member feedback on the proposed approach to support the Board's consideration of the matter at its meeting on 10th October 2013".

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

Nothing was recorded, however, about what had been said.

Mr. Brian Rowntree

I think the key words are "to support ... consideration". It does not state "to support affirmation". The word is "consideration".

Deputy Catherine Connolly

Yes. While the minutes state the discussion was to support the board's consideration, they do not tell us what was said. They tell us lots of other things. The document states the discussion included external member feedback on the proposed approach to support the board's consideration, but it does not tell us what that feedback was.

Mr. Brian Rowntree

I would see consideration as being option appraisal. The two options are to sell or to hold and consideration has to be given to sell as much as it has to hold.

Deputy Catherine Connolly

Thie meeting of 7 October was Mr. Cushnahan's last.

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

He did not appear again after that.

Mr. Brian Rowntree

No.

Deputy Catherine Connolly

As has been pointed out, the next meeting was held in December and the meeting after that was held in April. At that stage, the sale of Project Eagle had been completed.

Mr. Brian Rowntree

Correct.

Deputy Catherine Connolly

I have a number of quick questions. It has been said repeatedly by different witnesses from NAMA - this was touched on by Deputy Bobby Aylward - that the Northern debtors were cranky, that they were not working or playing ball and that the market was extremely bad. I have looked at all of the minutes and the Comptroller and Auditor General included a reference to this. The market and rents were picking up.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

This is noted throughout the minutes. Is that correct?

Mr. Brian Rowntree

Yes. Waiting lists were increasing. Demand was increasing for residential property.

Deputy Catherine Connolly

There was investor interest.

Mr. Brian Rowntree

The requirement for grade A commercial property was on the rise extensively. Also - this was discussed in general at meetings - we had the requirement to look at the regeneration aspects of commercial and industrial property and at how we could look at regenerating areas where we had vacant sites.

Deputy Catherine Connolly

Various briefing documents to the Minister for Finance, Deputy Michael Noonan, confirm that more than two thirds of the debtors were working hand in hand with NAMA. Is that correct?

Mr. Brian Rowntree

We were not aware of the debtor portfolio, nor would we have sought to be aware of it.

Deputy Catherine Connolly

On what Mr. Rowntree has said about not knowing about Project Eagle and so on, how does he reconcile this with NAMA's statement that no confidential information was put before him? He has clearly stated today, in terms of the University of Ulster report, that there was confidential information.

Mr. Brian Rowntree

That is a matter for determination. The committee and others reviewing this matter will look at the definition of "confidential". What I would say is that if one conducts a corporate governance investigation and review of Project Eagle and one looks at the reference material contained within the NAMA Northern Ireland advisory committee, that review will give a clear determination on what was or was not confidential. I may have got it wrong or Mr. Daly may have got it wrong or perhaps we are both right.

Deputy Catherine Connolly

What happened to the University of Ulster report?

Mr. Brian Rowntree

I have no idea.

Deputy Catherine Connolly

It just went off the agenda.

Mr. Brian Rowntree

I think the University of Ulster was working with it, perhaps with other banks which were participating.

Deputy Catherine Connolly

It was obviously no longer relevant in relation to NAMA because the portfolio had been sold.

Mr. Brian Rowntree

Yes, I presume so.

Deputy Catherine Connolly

The portfolio represented 3% of the overall property with which NAMA was dealing.

Mr. Brian Rowntree

Yes.

Deputy Catherine Connolly

I have one or two final questions. When the Minister for Finance was before the committee, I put it to him that he had stated in September 2013 that Project Eagle was the only game in town. He denied making this statement and described it as not accurate. It is, however, included in one of the notes taken after a Northern Ireland meeting. He said it in September 2013. Was Mr. Rowntree aware of this?

Mr. Brian Rowntree

No, I was not aware of it.

Deputy Catherine Connolly

The advisers - Brown Rudnick in London and Tughans - had to sign non-disclosure agreements when they went into the data room. Was Mr. Rowntree aware of this?

Mr. Brian Rowntree

No, we were not aware of any detail of any aspect of Project Eagle's sale.

Deputy Catherine Connolly

They had signed a non-disclosure agreement, which means that they could not disclose any information, yet the same two firms went forward to Cerberus. Can Mr. Rowntree comment on this?

Mr. Brian Rowntree

I am sure they would have separate disclosures for each individual - for each contract. That is all I would presume.

Deputy Catherine Connolly

Mr. Rowntree cannot comment on it.

Mr. Brian Rowntree

I cannot. I cannot even accommodate the question because I do not know.

Deputy Bobby Aylward

I have an observation to make. In hindsight, Mr. Rowntree must be disappointed. Having been a member of an advisory board in Northern Ireland which had been in place for many reasons and having for many years advised on asset control and sales, all of a sudden the committee was dismissed, NAMA took a different route and the committee was forgotten about. That must have been disappointing for Mr. Rowntree who had been advising NAMA and had much goodwill towards the Northern Ireland economy and businesses there. NAMA went for the sale of the loan book instead of an asset driven process. Having listened to Mr. Rowntree's evidence, it seems the Northern Ireland advisory committee was basically dismissed. It talked for a couple of years and then that was it.

Mr. Brian Rowntree

We got our P45s and were told we were no longer required. It is frustrating more than disappointing because there is potential to provide a dividend in society. Perhaps this is outside the terms of the committee, but when I look at the housing issue in Ireland and the housing issue in Northern Ireland, I ask what do we have. Do we have a testament to success or do we have something which was a financial solution that fitted in a moment in time, that is, it fitted an approach from another source? I think there is a balance to be achieved between maximising value and also getting some dividend in society. The two were not as well balanced as they should have been. However, that is said in hindsight and everyone is great in hindsight. I certainly believe the conditions which NAMA created and the opportunity it created were not exploited to the full.

Deputy Bobby Aylward

We did not know much about the University of Ulster report before today. It appears to be significant, yet no one has seen it, other than members of the advisory committee who saw it privately. Should NAMA have looked at it more? I presume considerable finance and research went into the report which was never used. If the committee had access to it, it would have a better insight into the reasons NAMA sold the loan book rather than the assets. I would like to see the report, find out what is in it and compare its contents with what happened later. Mr. Rowntree has seen it. Would it have made a difference if it had been used properly?

Mr. Brian Rowntree

I cannot really say because I was not part of the discussion on the sale of Project Eagle. What I can say is that, as Deputy Catherine Connolly said, there were quite animated discussions in the build-up to the draft report from the University of Ulster. There was a level of intensity around these discussions which were focused on opportunity and strategic visioning, but that was set aside. Someone has an evidence base somewhere, I presume, that says we no long require this and this is the best we can achieve, that is, selling the loan book.

Deputy Bobby Aylward

We do not see that anywhere.

Mr. Brian Rowntree

I do not have that capacity or authority, but I presume the committee has the authority to seek that information.

Deputy Bobby Aylward

May we seek that information?

Chairman

We will raise the matter directly with NAMA. Considerable emphasis has been placed on the University of Ulster report today and we will seek a copy of it. I am conscious that Ulster Bank, Santander Bank and other entities may have contributed to the report and that, therefore, it may not be in NAMA's gift to provide a copy for the committee. However, we can ask for a copy.

On achieving value for money, the NAMA loan book was sold for approximately £1.25 billion, with approximately half of the assets relating to the loan book based in Northern Ireland. This means that approximately €600 million of the sale proceeds were related to assets in Northern Ireland. Is that correct?

Mr. Brian Rowntree

It is hard to apply equally value against asset base because some of the assets in Northern Ireland had a more negative value than a positive value. Some of the assets would have had a more agricultural value than any residential or commercial value.

Chairman

I am not sure where we saw it, but it has been indicated in several reports that 50% of the assets were in Northern Ireland, 38% were in-----

Mr. Brian Rowntree

That might have been asset location as opposed to valuation and-----

Chairman

Perhaps the Comptroller and Auditor General could clarify that.

Mr. Seamus McCarthy

Page 36 of the report, figure 3.1, details collateral by location. The percentage is based on the November 2009 property valuations. The diagram shows that 50% of the assets by location were in Northern Ireland, based on the November 2009-----

Chairman

By value?

Mr. Seamus McCarthy

By location.

Mr. Brian Rowntree

By location, not by value-----

Chairman

Hold on. The collateral-----

Mr. Seamus McCarthy

Some 50% of the value of the portfolio, using the November 2009 property valuations, related to assets that were in Northern Ireland. Then there is the split of the rest of the assets.

Chairman

Is the Comptroller and Auditor General saying that approximately-----

Mr. Seamus McCarthy

Obviously, there are differential impairment rates for different locations.

Chairman

The Comptroller and Auditor General is saying that because the market in Northern Ireland was weaker than in parts of northern England-----

Mr. Seamus McCarthy

It was smaller.

Chairman

-----it would have been less than 50%.

Mr. Seamus McCarthy

Yes.

Chairman

According to the report, somewhere between €400 million or €500 million of NAMA collateral assets were based in Northern Ireland. Does the Comptroller or Auditor General have any idea-----

Mr. Brian Rowntree

It was probably more because the original value of the loans was €4 billion. So, the value against loan book and the present value were quite-----

Chairman

It was massive. It was about 70% impairment-----

Mr. Brian Rowntree

Absolutely right. The exposure in Northern Ireland in terms of deficit was probably greater than in other parts of Ireland.

Chairman

Fine. Like down here, Ulster Bank had a big portfolio of debt, as did Santander and a number of other banks. In terms of the study being carried out by the University of Ulster, how much of that, if it was identifiable, related to NAMA?

Mr. Brian Rowntree

I think somewhere in the region of 20% to 25%.

Chairman

That is interesting. In terms of the report that has been presented here, only 25% related to NAMA's interests in Northern Ireland. The rest related to the other banks.

Mr. Brian Rowntree

Correct but NAMA was potentially one quarter of the overall market in Northern Ireland, which is quite significant in anyone's eyes.

Chairman

Okay. I was worried earlier because I thought this was a NAMA report and that it all related to its assets. We now find that three quarters of that report relates to other entities. It is for Northern Ireland, not just NAMA and that is why the others were involved.

Mr. Brian Rowntree

Yes, but there was a specific exercise done on the NAMA portfolio itself.

Chairman

Was that in the report?

Mr. Brian Rowntree

It is in that report, yes. That report is made up of several component parts. It contains individual reports on each bank's individual land holdings. Those are confidential to each bank. Then there is a consolidation report in which individual portfolios are not identifiable. There is also the NAMA section, which NAMA would have itself.

Chairman

That is exactly the point I was getting to, namely, whether it was possible to identify the various banks in that report. Mr. Rowntree is saying that NAMA had NAMA-specific information.

Mr. Brian Rowntree

Correct.

Chairman

Did the external members to the board have that?

Mr. Brian Rowntree

Yes, we saw that.

Chairman

The members had NAMA-specific information.

Mr. Brian Rowntree

Yes.

Chairman

Was there a value put on that in terms of the €1.3 billion?

Mr. Brian Rowntree

I think there was some attempt by the university to estimate future values.

Chairman

We have not heard anything about the value of the NAMA portfolio. I think that is the first reference we have heard to anything recent.

Mr. Brian Rowntree

No, I think the most significant thing about values is that they depend on whether one lets the land sit or re-profiles the planning and takes a different approach in terms of development potential. The present values are not really where one wants to sit. One wants to focus ones gaze on how to re-profile planning in terms of future value.

Chairman

Mr. Rowntree is saying that there was a chapter specific to NAMA dealing with different methods of valuation, depending on what happened to the land. That is highly commercially-sensitive information.

Mr. Brian Rowntree

I would think so.

Chairman

We did not know there was such a specific report in existence. We really appreciate Mr. Rowntree's help on this. We will have to chase NAMA for part of the information. Was there any information in that NAMA chapter which linked any of their major debtors to the particular lands?

Mr. Brian Rowntree

Absolutely not. This was not a debtor-specific report. This was about the assets and the opportunities deriving from them.

Chairman

Fine, but there was tremendous information about the valuation of the NAMA-controlled lands in this chapter. I know Mr. Rowntree did not and the board never discussed it but if someone had debtor-specific information and had that report, he or she could match the two in the blink of an eye. Does Mr. Rowntree understand-----

Deputy David Cullinane

Can I ask if the Comptroller and Auditor General was aware of the report.

Chairman

I must qualify this by saying that it could only be done if someone breached corporate governance rules. If there was no breach of corporate governance, such a link would not be made. If there was a breach, however, a child of two could put the pieces together.

Deputy Bobby Aylward

Sure, we will never know.

Chairman

We might not. I just want to know if I am following the logic through.

Mr. Brian Rowntree

Absolutely. The report itself was designed and intended to inform an internal discussion. If corporate governance was breached, one would assume that the same discussion that took place internally could take place externally. That would apply to any public body with confidential information.

Chairman

Let us be clear, the approach by Pimco on day one was initiated by two major NAMA debtors. We have all read about that. They went to different people and put a plan together. I read somewhere that the five or six debtor groupings represented 85% of the total loan book at the end of the day. Therefore, it would not take much to link the five or six people to this chapter of the report that was commissioned for NAMA on the valuations of its loans-----

Mr. Brian Rowntree

Well those are questions that I cannot comment on and-----

Chairman

I am not-----

Mr. Brian Rowntree

-----this committee will have to seek the answers to them.

Chairman

Mr. Rowntree cannot answer those questions. I am just thinking out loud as to future questions as a result of Mr. Rowntree's help today.

Deputy David Cullinane

May I ask again if the Comptroller and Auditor General knew of the report?

Chairman

Did the Comptroller and Auditor General get that report?

Mr. Seamus McCarthy

We were aware of the work, the analysis that had been done, from the minutes of the NIAC. We did not examine it. Just to put it in context, there was a revision of the strategy for Northern Ireland assets which was considered by the NIAC in April of 2013 and approved by the board of NAMA in May of 2013. The timing fits. The University of Ulster information was presented, according to the minutes, in February or March of 2013. That would appear to be the basis on which the revision of the strategy for the assets in Northern Ireland was adopted in May 2013.

Chairman

Mr. Rowntree, what revision of strategy happened in terms of the NAMA assets?

Mr. Brian Rowntree

The revision was to work to a work-out solution and to take value out of the assets. Then came the curve ball which was the loan acquisition.

Mr. Seamus McCarthy

Just in respect of NAMA's strategy for the debtors, paragraph 3.5 of the report-----

Chairman

Yes. It reads "updated in May 2013".

Mr. Seamus McCarthy

Just to give a very brief outline, the aim was to protect and enhance the value of the assets.

Chairman

Mr. Rowntree has been most helpful. He has provided some information of which this committee was not fully aware. There is information in the system and we will ask NAMA for a copy of the report. It would have been nice had NAMA told us about it when its representatives were here for several hours recently. We will ask NAMA for that now. If there are no other questions, I propose that we conclude.

I thank Mr. Rowntree sincerely for his time. He has been with us for three hours this afternoon. I hope we were not too severe on him. We appreciate his input. I also thank Mr. McCarthy and his colleagues for attending.

The witnesses withdrew.

The committee adjourned at 5.30 p.m. until 10 a.m on Tuesday, 18 October 2016.