NAMA and Irish Bank Resolution Corporation Transparency Bill 2011: Second Stage

Senator Mark Daly

I move: "That the Bill be now read a Second Time."

I welcome the Minister, Deputy Michael Noonan, to the House. This is important legislation and I ask the Minister to consider it thoroughly. The people of Ireland must have confidence in institutions of the State.

On 20 February 2012, the Financial Times described NAMA as one of the largest property companies in the world. On 26 January 2011, I raised this matter first in this House with the then Minister for Finance, Deputy Brian Lenihan, when I described situations where property developers were purchasing back land on which they had previously taken out loans for well under the current market value, and these properties were not being put on the open market. There is a growing concern throughout the country about the way NAMA and the IBRC are selling assets and loans. I was joined on 14 June in raising concerns in regard to developers buying back property from NAMA and from NAMA-controlled banks by the Taoiseach when he said: “I have had some indications of attempts to acquire property that was taken from... developers through a variety of methods.” That featured in the Irish Examiner when the Taoiseach was attending the British-Irish Interparliamentary Body meeting. The following day, the Taoiseach had to climb back from what he had said and he then said he had been reassured by NAMA this was not happening.

I can confirm it is happening. Ms Emily O'Reilly, the Ombudsman, is so concerned that on 10 March she again reiterated she would like to see NAMA brought under freedom of information legislation so all information in regard to property transactions with NAMA would be open and transparent. The difficulty and the consequence of freedom of information is that it is applicable only after the event. What we would then have is a post mortem examination of sales when what we should be looking for is transparency at every step of the process.

The NAMA Act set out clearly what should happen. Section 35 of the NAMA Act stated that a code of practice should be set up by NAMA on how it would dispose of assets. This code of practice was adopted three months later, when it said all credit facilities or securities on credit facilities would be sold in accordance with the code of practice for the governance of State bodies. What the guidelines outlined was as follows: "The disposal of assets of State bodies or the granting of access to properties should be by auction or competitive tendering process . . . The method used should be both transparent and likely to achieve a fair and market-related price." That is simply not happening.

NAMA and I have been in constant contact and communication. It disputes whether the properties it has control of through banks come under this Act. We must ask ourselves, and any judge would ask himself or herself, what was the intention of this House when it passed the NAMA Act. The intention of this House was that all properties would be sold in an open and transparent manner.

I have a legal opinion from barrister Mr. Donal O'Laoire, which I can provide to the Minister, that all assets, whether they be properties or loans which NAMA has control of, should be sold under the code of conduct for the sale of State assets. Whether they are controlled by Bank of Ireland or AIB, ultimately, NAMA has given Irish taxpayers' money to those institutions in order to keep those institutions afloat. What we have is a situation where, as we all know, NAMA is simply not following the laws set out by this House. That is why we are introducing the Bill, namely, to make clear that it should sell all properties and assets it has control of under the code of conduct — when I say assets, I mean loans as well as properties. To facilitate this, it should list them on a website.

I am not alone in this. I proposed this in January last year and, six months later, NAMA decided it would have a website and it would show properties it had control of only. After all the money it has given out, it only takes control of roughly 5% of the properties itself whereas it never takes control of 95%. What we are now looking at is examples which are coming to the fore. My colleague, Senator Paul Coghlan, and I have previously discussed a situation in Cork where land that was sold for €10 million was recently sold for €7 million to the person who had originally put together the entire deal, yet nobody in Cork, including the adjoining landowners and farmers, were aware this property was for sale. Irony of ironies, NAMA justified this by saying it had got a higher price than the valuation, which basically means the valuer got it wrong on the first day. It lauded the valuer and claimed it had got more money, when, in fact, if it had sold for less, what would it have done? Very little.

We included the former Anglo Irish Bank in this legislation arising from a situation where in regard to the Four Seasons Hotel, which had borrowed €50 million from Anglo Irish Bank, a director of that bank had co-ordinated the purchase of that hotel from NAMA, and, again, nobody knew this property was for sale. How is it possible that this is in the best interests of the taxpayer? Does this sound like insider trading? How could the Irish people have confidence in an institution that sells property back to directors of Anglo Irish Bank when Anglo Irish Bank had originally given out a loan on that property?

With regard to the reason behind this, a more disturbing case, the details of which I will give to the Minister, is the situation of Nos. 2 to 14 Baker Street, which is an extraordinary loss to the taxpayer. I see my colleague, Senator Paul Coghlan, shaking his head when he has not even heard the evidence, which I think means his mind is closed on this issue. For his benefit, let me outline what happened. In September 2005, Nos. 2 to 14 Baker Street was purchased from British Land for €47.5 million. When the bust came, they sold it after receiving planning for 50% more square footage on the site in 2009.

On 16 April they sold it back to British Land for €29 million, representing a loss of €28.2 million to the Irish taxpayer. This property was——

Senator Paul Coghlan

That was dealt with by Bank of Ireland before NAMA was involved and the Senator knows it——

Senator Mark Daly

This property was not placed on the open market. How was that in the best interests of the Irish taxpayer? Could my colleague, Senator Coghlan, outline how on 16 April, a trust was set up in Jersey? A legal agreement signed in Westminster City Council shows that McAleer and Rushe had a beneficial interest in this trust. Was this to deceive the Irish taxpayer? On 21 September 2011, in a report and a press release to the market, British Land said:

We repurchased approximately 50% of the value it previously sold for in 2004. We structured a three-way deal to purchase the site from McAleer and Rushe, Bank of Ireland, with the consent of NAMA", [ I ask Senator Coghlan to note]. This acquisition has already performed very well. Since purchased the valuers have increased the site value by 52%.

This is in one year. Does this tell us it was undersold? Does this tell us that the market value was achieved? It most certainly tells us that. I could get no answer from either Bank of Ireland or NAMA as to why McAleer and Rushe when they went into that agreement with the consent of Bank of Ireland and with the consent of NAMA, were profit sharing, which means that the money achieved first day was not the entire market value. Was Bank of Ireland aware of this profit-sharing agreement? Was NAMA aware? I do not know the answer.

Senator Paul Coghlan

The Senator received a letter.

Senator Mark Daly

For the information of Senator Paul Coghlan, I received a letter which told me they could tell me nothing. If a situation like Baker Street arose in the future, this Bill would ensure that everybody would know the property was for sale, that anyone could bid for it and there would be confidence in NAMA and the IBRC as a result. At present there are back room deals going on which have nothing to do with the Department of Finance. I have confidence in the people in NAMA but the way this is being structured at the moment, they are not selling it in accordance with the rules laid down by this House and by the laws passed in this House. There needs to be a website where everyone can see what is for sale otherwise the Irish taxpayer is continuing to lose money on a daily basis and not millions or tens of millions but hundreds of millions of euro.

I ask the Minister to consider doing what we have requested in this very straightforward Bill, to have a website showing every property for sale on behalf of NAMA or under its control and that such property would be on the website for four weeks before being sold.

Senator Thomas Byrne

I second the motion. I thank my colleague, Senator Daly, for doggedly pursuing this issue which is of great concern to him. I remind the Minister and his officials that the last time Senator Daly used parliamentary privilege — which I presume he is using in some of his statements — it was a very effective use of Seanad privilege and has resulted in a Garda investigation of child sexual abuse in the Munster region. Therefore, when Senator Daly uses privilege he is to be listened to and what he says must be taken very seriously. I do not think he uses it just for the fun of it.

He raised a very serious issue of considerable public concern. I am aware of a situation and I am happy to provide the details to the Minister after this debate as I am not prepared to put those details on the record of the House. An auctioneer was called by a legal adviser in IBRC and asked if it would be appropriate for a person whose property had been repossessed to bid at an auction. The auctioneer was absolutely shocked that a solicitor would ask such a question and he replied it would be completely inappropriate. In fact, the same auctioneer announced at the auction that this person or his representatives were prohibited from bidding on the property. When I brought this case to the attention of Senator Daly, he amended the Bill to include IBRC because the same principles apply to both NAMA and the IBRC.

My party was criticised when the NAMA scheme was first introduced with accusations that we were trying to do some deal. Deputy Bruton at the time accused us of looking after developers in a secret deal to benefit our friends. The Labour Party made great fun of the notion of properties abroad being subject to NAMA but thank God for them because they are the only properties bringing in any money. The arguments against the establishment of NAMA were quite simplistic in many ways. I do not mean to say NAMA was the perfect solution but the arguments against it were very simplistic. NAMA is working, although it is not working that well. The public need to have confidence in NAMA because of the size of the problem and the size of the black hole which the two entities which comprise IBRC have presented. The Irish public are entitled to the information which Senator Daly proposes in section 3 of the Bill. NAMA's action on the properties under its control is nowhere near enough and this is an important point because banks are selling properties. Apartments in my area are going at a very cheap price and they are all being sold privately. I do not see any advertisements for their sale. Apartments taking in rents of up to €10,000 a year are being sold at about €85,000 to €90,000 in private sales by banks. This results in a significant return to investors who are able to find out which properties are for sale. A local auctioneer or a willing seller will be looking for substantially more than what the banks are willing to take for the properties. These properties are being sold by the banks with a return of 12.5% to 13% but many people do not know about this and this information must be made available to all. Such information would provide the confidence that everything is above board. As Senator Daly said, such information gives people the opportunity to take advantage of such sales and it would also result in higher prices and better returns for the taxpayer.

NAMA will forever be branded as a Fianna Fáil proposal and it is very important that those of us in the Fianna Fáil Party keep an eye on the organisation to ensure it is working in the best interests of the taxpayer which in my view it intends to do. Senator Daly has shown there is a dire need for this legislation as proposed by him. We are not alleging any fraudulent activity by NAMA nor any wrongdoing but we maintain there is not sufficient transparency and the public have a right to know what is happening. If that process is brought to its logical conclusion, which would be to support this Bill, the public could benefit because properties would be sold at higher prices and more people would bid on them.

I reiterate that when Senator Daly reveals facts in this House he should be listened to very closely.

Acting Chairman (Senator Pat O’Neill)

I wish to welcome the Minister for Finance to the House and I am very pleased he is in attendance. I will call on the Minister after Senator Paul Coghlan who has ten minutes speaking time.

Senator Paul Coghlan

I warmly welcome the Minister to the House. This Bill is fatally flawed, both legislatively and commercially. I am glad the Minister is here to add his authoritative voice on the subject.

The Bill proposes the contravening of the legislation which established NAMA and which governs how it conducts its business. It envisages the public revelation of commercially sensitive information and the placing of NAMA at a significant competitive disadvantage in the market place. It does so under the pretext of protecting the interests of Irish taxpayers when in practice the opposite would be the effect of this proposed legislation's enactment——

Senator Mark Daly

Will the Senator please explain how the Bill——

Acting Chairman (Senator Pat O’Neill)

Senator Paul Coghlan, without interruption.

Senator Paul Coghlan

Sections 3 and 4 of the Bill propose the publication of debtor-specific information, including details of debtor properties. This is expressly prohibited under the legislation which established NAMA and which was introduced by Senator Daly's party. It was expressly prohibited for reasons I will raise presently. Information about debtors is also protected against disclosure by the Data Protection Act and the normal rules of banking confidentiality. This Bill would, in the face of these protections, expose the State to constitutional challenge by a NAMA debtor. From a commercial perspective the Bill is extremely poor. Its implementation would have the effect of placing NAMA in a straitjacket in the conduct of its business on behalf of Irish taxpayers and would actively discourage potential purchase interest in NAMA-controlled properties. Sections 3(f) and 4 would require that all offers and successful bids be published.

If the Senator does not like it, he had better stand back because he will hear more.

Senator Mark Daly

The case in Cork shows exactly the opposite.

Senator Paul Coghlan

The Senator would need to read the minutes of the last PAC meeting.

Senator Paul Coghlan

The NAMA Act makes the agency accountable in a number of ways. Its annual report and financial statements are laid before the Houses of the Oireachtas. I am advised by NAMA that its annual report and financial statements will be published within the next two months and will be a full and detailed account of its 2011 operations and results. The chairman and chief executive are also accountable to the Committee of Public Accounts, PAC, and other Oireachtas committees and give evidence to those committees whenever required to do so.

Furthermore, there have been numerous parliamentary questions addressed to the Minister on NAMA and the associated replies are on the Oireachtas record. In addition to its annual accounts, however, NAMA is also required to submit to the Minister for Finance an annual statement by 30 September each year setting out its proposed objectives for the following financial year, the scope of activities to be undertaken, its strategies and policies and its proposed use of resources.

NAMA is also required to report to the Minister on a quarterly basis, giving detailed information about its loans, its financing arrangements and its income and expenditure. These reports, which also include other information specified under section 55 of the NAMA Act, track progress on a quarterly basis. NAMA's accounts are comprehensively audited by the Comptroller and Auditor General, who has a permanent team of officers based in the agency with unrestricted access to all its records and files. If there is concern about a specific aspect of NAMA's work, it is within the power of the Comptroller and Auditor General to scrutinise any aspect of it. The Comptroller and Auditor General has already produced two special reports on NAMA's activities and they have been broadly positive in their assessment of how NAMA is managing its complex business. The process of loan valuation and acquisition is also audited by the European Commission.

I am very supportive of NAMA's efforts and I think it has at all times acted in the public interest and within the law. The Government will not impose restrictions on NAMA that would place it at a competitive disadvantage in the market place by preventing it from acting, in every instance, in the most commercial manner and hindering its ability to get every last cent back for the taxpayer.

As I have said to Senator Daly on several times, he would neither put up nor shut up.

Senator Mark Daly

With all due respect to my colleague, his Taoiseach and Leader has questioned me on that. Senator Coghlan has not——

Acting Chairman (Senator Pat O’Neill)

Will Senator Daly please resume his seat?

Senator Paul Coghlan

No, Senator Daly has not.

Senator Mark Daly

On Wednesday, 15 June last year, he questioned NAMA's activities. I have outlined in this House, if the Senator was listening, that NAMA has sold property in Baker Street and in Cork, of which Senator Coghlan is aware, and that it gave them away.

Acting Chairman (Senator Pat O’Neill)

Senator Daly, respect the Chair. Before I call the Minister, I remind all Senators that they have six minutes after the Minister.

Minister for Finance (Deputy Michael Noonan)

I thank Senator Daly for introducing this Bill. It gives Seanad Éireann an opportunity to debate the issues and it gives the public another insight into the workings of NAMA. The proposals in this Bill have been considered and it has been concluded that the Bill as initiated would place these bodies at a competitive disadvantage to other institutions disposing of assets. Were these proposals to be implemented they would undermine the commercial mandate of NAMA and IBRC. Implementation of the policies in this Bill would also be likely to leave these bodies open to constitutional and other legal challenges.

The two substantive provisions in this Private Members' Bill would require NAMA and the IBRC to display various details relating to their assets on proprietary websites. The level of detail seems to be primarily intended to generate awareness of assets that are to be sold and reveal the likely sales prices for those assets.

The Bill also proposes that NAMA and the IBRC would publish the achieved sales prices for all relevant disposals on those same websites.

The obligations proposed in the Bill would lead to negative financial impacts for the taxpayer. It would reduce the expediency of asset disposal and the value that could be realised, and obstruct the efforts of the institutions to secure the optimum return for the taxpayer. The Bill would most likely give an advantage to property market funds and developers at the expense of the taxpayer. Clearly this would not be desirable. The Bill is clearly at variance with the NAMA and IBRC legislation which established the entities and which governs the conduct of their respective businesses.

Sections 3 and 4 of the Bill specifically propose the publication of debtor-specific information, including details of debtor properties. This would work contrary to the intent of the NAMA Act 2009, which provides for NAMA to make a return for the taxpayer on the loans it has purchased, and is also contrary the normal rules of banking confidentiality which apply to NAMA's debtors and continue to apply to IBRC customers. In relation to the work of both the IBRC and NAMA, the Government's primary concern is ensuring a commercial return for the taxpayer. While the need for transparency is recognised, there is a commensurate need to ensure that these bodies can operate in a commercial manner. It is, therefore, in the public interest to ensure that neither NAMA's nor IBRC's commercial mandate is undermined.

The proposed Bill also has the potential to reduce the number of bidders for property and could be particularly damaging in the cases of sale of larger assets where bidders could be relatively few and therefore more easily identified. I am particularly concerned about the latter aspect and the risk that publication of the price achieved on a property would give rise to collusive behaviour on the part of purchasers of similar assets. As a direct result, the Bill would likely have the consequence of leading to gains for international property funds at the expense of the taxpayer.

There is a contractual duty on both IBRC and on NAMA to respect the right to confidentiality which debtors of financial institutions enjoy. Such contractual obligations also apply to NAMA by virtue of the contractual arrangements entered into by participating institutions with their customers and which remain in force by virtue of section 99 of the NAMA Act as it provides that, on acquisition of a loan, NAMA takes over the obligations of the participating institution under the loan. Furthermore, in the case of property under the control of NAMA's debtors, the agency is precluded, under section 202 of the NAMA Act 2009, from disclosing confidential information, which is specifically defined to include information relating to debtors. Information about individual debtors or guarantors is also protected against disclosure by the Data Protection Acts which apply to both NAMA and to IBRC.

In drafting the NAMA legislation, it was decided that safeguards protecting the existing contractual arrangements would be required in the NAMA legislation. The general position taken was that the debtors' rights and obligations would not be changed and that NAMA would assume the position of the participating institution, thus ensuring that the rights and obligations of debtors remain unchanged by the NAMA legislation.

Given the wide array of legislative and case law protection currently available to debtors of both NAMA and IBRC, I consider that there would be a substantial risk of constitutional challenge by any enactment which requires the disclosure of a debtor's identity——

Senator Thomas Byrne

On a point of order, every time a Fianna Fáil Private Members' Bill is put before this House, the Constitution is invoked against it. It is an abuse of the Constitution. Every time we write a Bill and get senior counsel to advise us on it, it is a disgrace and a shame to come up with constitutional reasons against it.

Acting Chairman (Senator Pat O’Neill)

I call on the Minister to continue.

Deputy Michael Noonan

——particularly in circumstances where there were no similar disclosure requirements in relation to debtors of all other financial institutions.

I would like to remind the Senator who intervened, that the last two Private Members' motions — one of which was a Bill introduced in the Dáil by his colleague, Deputy Michael McGrath — were accepted by me.

Senator Thomas Byrne

Not in here.

Deputy Michael Noonan

We are not opposing them. This is the exception because it is invalid and I cannot accept it on legal grounds.

Senator Thomas Byrne

This is a different Bill.

Deputy Michael Noonan

The relationship framework between the IBRC and the Government ensures that the bank remains a separate economic unit with independent powers of decision and that its board and management retain responsibility and authority for determining the bank's strategy and commercial policies and for conducting its day-to-day operations. This relationship framework was put in place as a condition of the Government's programme of assistance. The proposal would be contrary to the bank's obligation to its clients and contrary to the IBRC's ability to operate commercially and in the public interest.

The existing commercial rules, which apply to both NAMA and IBRC provide for considerable transparency, consistent with bank confidentiality and maximising the commercial return from the assets. The Government is not opposed to maximising transparency where this is consistent with the commercial mandates of these bodies. In the case of NAMA, the existing legislation provides for extensive public reporting on its activities and for review of these reports by an Oireachtas committee. NAMA is already subject to a high level of public accountability compared to other commercial semi-State bodies, reflecting the fact that it is managing a significant financial exposure on behalf of the Irish taxpayer. I met with the NAMA board very soon after taking office and explained that I expected the agency to comply with the high standards of transparency provided for in the NAMA Act to the maximum extent possible. The board of the agency and I liaise closely on this issue.

The NAMA Act 2009 makes the agency accountable in a number of ways, including laying its annual report and audited financial statements before the Houses of the Oireachtas. The agency is also required to report to me on a quarterly basis and those reports are, in accordance with the Act, also laid before the Houses of the Oireachtas. The chairman and chief executive are also accountable to the Committee of Public Accounts and other Oireachtas committees. They give evidence to committees whenever required to do so. NAMA's accounts are comprehensively audited by the Comptroller and Auditor General, and it is also open to the Comptroller and Auditor General to conduct other ad hoc examinations.

Under the Anglo Irish Corporation Act 2009, a relationship framework agreement was specified by the Minister in relation to the bank and this agreement defines my relationship with the bank. The agreement, approved by our external partners, assigns responsibility and authority for all operations and business of the bank in accordance with the board's legal and fiduciary duties. The board also has responsibility and authority for ensuring compliance with the regulatory and legal obligations of the bank. The shareholding management unit in my Department oversees the operation of the agreement. Furthermore, as a licensed credit institution, the bank is regulated by the Central Bank of Ireland and also produces and publishes detailed audited accounts on an annual basis. Interim accounts are also published six months into the bank's financial year. In addition to that, the bank operates in accordance with the terms of a restructuring plan approved by the European Commission. The Commission has appointed a monitoring trustee to oversee the bank's compliance with the terms of the restructuring plan, which reports to the Commission on the bank's compliance on a regular basis. The level of oversight and published information is extensive, appropriate and in keeping with the commercial mandate of the bank. This is wholly consistent with other regulated financial institutions and the commercial and contractual sensitivity associated with the business of the bank. Nonetheless, the matter of transparency is kept under constant review.

Since 2011, NAMA has included on its website a database of properties which are under the control of receivers appointed to enforce against its debtors. This provides a single source of information on NAMA assets which are for sale and is updated on a very regular basis. In each instance, information to facilitate potential purchasers, such as contact details for the seller, is provided. The NAMA board issued policy guidelines in mid-2011 which require that all sales must be appropriately marketed and that an independent valuation of all assets is carried out.

The Government made a commitment in the programme for Government to improve the quality of information available on the Irish housing market by requiring that the selling price of all dwellings be recorded in a publicly available national housing price database, including prices achieved in sales by both IBRC and NAMA debtors and receivers. The register will comprise a database searchable by a number of criteria, including address or value of property by county, city or town. The information, which will be contained in the database, will be the full address of the property, its sale price and date of sale. The register will cover all sales from 1 January 2010. While September 2012 is the outer limit for publication of the register, it is intended to bring it on stream at the earliest possible date. A similar initiative is being undertaken with respect to commercial letting agreements and rent reviews. Commercial property is, more often than not, arranged by lease and therefore emphasis has been placed on leases rather than sales in those cases.

I would like to remind Senators of the potential positive contribution that NAMA can make to the recovery of our economy. The Government has been working with NAMA on plans for getting people back to work. This has recently culminated in NAMA's plan to invest at least €2 billion in Ireland over the coming four years. This investment by NAMA will be an important contribution to the Government's plans for getting people back to work. Some €2 billion of investment will generate up to 25,000 direct and indirect construction jobs and up to 10,000 additional jobs in the wider economy. NAMA has advised that this investment will include the completion of properties and, importantly, it will allow the development of land in anticipation of future supply shortages. Already, there have been discussions between NAMA and IDA Ireland about the development of additional office space to facilitate future foreign direct investment decisions as based on the number of announcements there is a likelihood of shortages emerging in the medium term.

I reiterate my point that the proposals in this Private Members' Bill have the potential to undermine the commercial mandate of NAMA and IBRC and place these institutions at a competitive disadvantage, thus allowing other banks and companies who are the direct competitors of NAMA and IBRC to make higher returns than is currently possible, at the expense of the Irish taxpayer. Clearly, this would not be a desirable outcome. The proposals also leave both NAMA and IBRC open to potential constitutional and other legal challenges. The existing transparency regimes at these institutions provide as much transparency as is consistent with bank confidentiality and ensuring a commercial return from their assets. The Government is committed to maximum transparency and accountability of these bodies.

Given all the above, I feel the operations of NAMA and IBRC are currently sufficiently transparent and this Private Members' Bill is opposed.

Senator Sean D. Barrett

I welcome the Minister to the House. None of us wants to be here for this debate. This is a situation we inherited and it has been a disaster for the Irish economy. The conduct of bankers and their friends in the property business has brought this country to its knees, destroyed its international credit and raised unemployment from 4.5% to 14.5%. I am sure the Minister would much prefer to be presenting his plans for the development of the economy rather than having to tidy up the mess that was left as a result of the conduct of the banks and the property sector. I believe he will have the support of the House for all his efforts to do that. It is part of the difficulties we have had over the weekend in trying to persuade the Germans to take an attitude that some of the bank debt should be their responsibility. Having seen what has gone on, they would not touch it with the proverbial barge pole.

The population of the country is furious that the people who did this to the country are still walking around. The number of special needs assistants, the carer's allowance and so on have been cut and it will be four years in September since the rescue of these people and nothing has happened to them. It is a fault of the entire system of governance, perhaps including the Houses of Parliament, that these are still immune from the consequences of the damage they did to this country. There is huge anger among the people about that. I imagine that a sizeable proportion of 40% who voted against the treaty in the referendum last Thursday were annoyed that we have not yet called these institutions, banks and builders to account for what they did.

The Minister mentioned the Comptroller and Auditor General's report and I note a reference on page 11 which links in with Senator Daly's proposal. The report states:

In practice, NAMA has not, to date, disposed of property directly. Property has been disposed of, has been sold either by debtors or by insolvency practitioners. This means that most disposals are not governed by the NAMA Code of Practice for the disposal of bank assets or the Code of Practice for the Governance of State Bodies, both of which require competitive processes when disposals above a certain value are being made.

He said that this embodies commercial confidentiality and so on but commercial confidentiality went out the window with those banks. In saying they are regulated by the Central Bank, for those crucial years, the Central Bank did not regulate the people concerned.

There is a good deal to be said in terms of the McCarthy report on the disposal of State assets in that we conduct these without beauty contests. Going through NAMA is a kind of a beauty context. Colm McCarthy did not quite say, in his inimitable way, that they should be put on them eBay, but the disposal of all the State assets should be as open and as transparent as possible. I would add that we should do this as quickly as possible. The long-term economic value argument in this respect is largely bogus. Some people hope that property prices will pick up while others do not. When one goes to the auction, the two balance each other out and that is the price, as it were. In terms of hoping that things will turn out better and that NAMA will become a development agency, I do not see that happening. We should do this now and get on with the development of this country.

Interestingly, the Comptroller and Auditor General found that we had lost another €5 billion. We acquired assets that had a €74 billion face value, we paid €32 billion for them, which represents a loss in their value of 57% and they have now lost another fifth of their value. The €63 billion bank bailout in the period reviewed by the Comptroller and Auditor General has now become a €68 billion bank bailout for 776 people, 800 borrowers, 12,000 loans and 35,000 properties. Those 776 people have done an enormous amount of damage to this country and they should not be protected in any way. The sooner we dispose of these properties, realise the assets and get on with developing the country, the better, and their disposal should be transparent.

If we sell the ghost estates now, local authorities, sports clubs and people who intend to do good things can buy them. It is an asset to this country to allow property prices to fall. It is only at the behest of the banks that we assumed it was a goal to try to keep property prices up. The sooner they fall, the better and that will precipitate the revival of the Irish economy.

I favour Senator Daly's proposal and the Minister also spoke in favour of transparency. Commercial confidentiality in respect of bankrupt organisations does not seem to me to be a high value we should espouse. We should take these assets away from the people who made such disastrous investment decisions and passed the bill on to the taxpayer and sell them on to somebody else who can help us to develop this country.

Senator John Gilroy

It has been pointed out that NAMA's accounts are opaque and distorted by accounting adjustments which make them very difficult to interpret. It also makes reading them very ponderous. It is very difficult to ascertain whether the price obtained by NAMA is accurate due to the low level of similar sales which may act as comparators. This is a fair point. However, in London, where comparators do exist, there are indications the prices obtained by NAMA might well be at the low end of the expected price index. This is a fact.

Senator Mark Daly

I have the evidence.

Senator John Gilroy

It is very frustrating to be constantly interrupted when trying to make a point.

Acting Chairman (Senator Pat O’Neill)

I will give the Senator 20 seconds more.

Senator John Gilroy

It has been suggested that one way to amend NAMA legislation, which Senator Daly's Bill has not considered and which removes the possibility of placing NAMA at a commercial disadvantage, would be a requirement for NAMA to publish details after a fixed time, perhaps 12 or 18 months following the completion of a disposal. Perhaps the strengthening of the oversight role of the Office of the Comptroller and Auditor General with an increase in specialised support staff could go some way towards removing any residual doubt that remains in certain quarters about the transparency and accountability of NAMA's activities.

Senator Daly's Bill is welcome in so far as it has facilitated this debate on NAMA. It might do no harm if we could devote further time to a comprehensive debate on NAMA in its entirety.

Senator Averil Power

I welcome the Minister to the House. I join my colleagues in highlighting the need for greater transparency in the way NAMA does its work. It is a crucial factor in having public confidence in the institution. Other issues also need to be prioritised to ensure people and the taxpayer have confidence in the institution and feel it will deliver value for money and its social objectives, as NAMA was also supposed to deliver social dividends in the housing sector during its term of office.

Several months ago I raised the issue of the extent to which NAMA is proactive in chasing developers filing bankruptcy proceedings outside the State with the Minister of State, Deputy Brian Hayes, who gave me a general reply but not much more. The Minister is very aware of the situation in Priory Hall and the despicable conditions in which residents found themselves when they were left living in a death trap and had to be evacuated from their homes overnight. To add insult to the injury of this trauma and despite bankruptcy proceedings having been lodged here, they had to watch the developer concerned, Thomas McFeely, go to London to avail of bankruptcy tourism, which will ultimately mean he will be free to go about his personal and professional business sooner than if he had taken the appropriate course through the Irish courts. The fact that NAMA has not pursued him has caused incredible anger among residents. A private individual, a lady who was a victim of one of his other developments, is taking a case. My colleague, Senator Darragh O'Brien, wrote to the Minister to highlight the issue. While I appreciate the Minister cannot respond to me on an individual development on the floor of the House I impress on him the need to raise the general issue with NAMA.

To have confidence in the institution people need to feel that NAMA is taking the same steps as a private institution would and precedent was set by the Sean Quinn case. He was declared bankrupt in Belfast but this was challenged by the IBRC which was successful in proving his centre of interest was in the Republic and had the decision overturned. NAMA should take the same steps and pursue people with exactly the same vigour on behalf of the taxpayer as any other institution would.

Many unfinished estates throughout the country are related to NAMA loans. People live in developments which are building sites, including in the north fringe in my area. People were promised a particular lifestyle and community facilities in these developments but instead they live in filthy dusty building sites without any of the promised community facilities. Some developments still have hoardings up stating they will open in 2006 or 2007. This is a very serious issue as people live in the most dreadful and unacceptable conditions. They bought at the height of the boom and paid a huge amount of money for their apartments and houses and now live in dreadful conditions. Is it the agency's intention to facilitate a process by which all of the affected estates would be brought up to a suitable standard as soon as possible? There is a social imperative for families living in these states to ensure they are provided with pleasant and safe places to live. The Minister is aware of the child who drowned in a development in Galway in February. This child had wandered out and across from his house to a pool of water in an unfinished development building site and was found dead. This is the harsh reality of what it is like and parents are concerned because they live across the road from building sites. There is also an economic imperative from the point of view of NAMA delivering value for money on the loans over time with regard to future site value of undeveloped land and empty units. To realise the best possible economic value, it would be worth considerably more if the development were finished properly. I appreciate they will not be finished to the full scale of what was initially promised, but new realistic plans should be drawn up for each. In the current context it might not cost that much and might help to stimulate economic activity while ensuring that families have somewhere decent to live.

Transparency is a big issue as mentioned by my colleagues. However, the unfinished estates are important. NAMA needs to be rigorous in chasing developers and being seen to do so in order that people do not take advantage of the easier bankruptcy situation across the Border or across the water in Britain. I urge the Minister to address those issues which are important for public confidence.

Senator Michael D’Arcy

At the outset I take the opportunity to withdraw some of my perhaps excessively harsh criticism of Senator Marie-Louise O'Donnell on the last occasion we had a debate. I was disappointed with her contribution and considered it to be all style over substance. I was harsh because I consider Senator O'Donnell to be somebody of substance.

I reviewed the speech I gave in the other Chamber during the debate on the National Asset Management Agency Bill. All of the issues raised then are on the record. I had a real concern about the price for property on the basis of the sharp practice that took place in the development, auctioneering and construction sectors. This should not be dealt with through a Bill of this type for just one or two institutions. It is crucial that the property services regulatory authority is established as quickly as possible so that we have no more sharp practice. The method by which sharp practice is concluded is that every price on every sale goes up within a period of time as the Minister mentioned in his speech. Those prices will be going up, backdated to 1 January 2010. That will be of real benefit to every future purchaser of a property from now on.

I welcome the €2 billion that NAMA will invest in the construction sector. Effectively it is an injection of cash following its sale of property abroad. I am not sure if that will be replaced by other funds. On a number of occasions I have said in this House that the 100,000 construction workers who are unemployed need to be given an opportunity to get back into work. I am not talking about building unsustainable developments, but building residential units, sustainable energy infrastructure or other crucial structures. I welcome that wholeheartedly.

I have a real concern about the NAMA scheme with the effective 20% underwriting of a property that may fall further in value. The best method of regulating the market is by the market itself. If NAMA put enough of the appropriate properties on the market, starting off effectively in Dublin city centre, there would be a wave effect from there throughout the country. It will take some time for that wave to travel throughout the State but it will happen in time. In the past two months property prices in Dublin city have not only stabilised, but have increased. While we do not yet know if this is a trend, we will find out in the coming months.

Based on my experience on the Committee of Public Accounts, I do not believe there is any Government organisation as professional, capable and authoritative in the job it does than the Office of the Comptroller and Auditor General. Anybody who has had any dealing with those in that office will agree that they are the best at what they do. The Comptroller and Auditor General has a full-time team in NAMA scrutinising everything that is being done. I would welcome an expansion of its role, with greater interaction between the Comptroller and Auditor General and us, perhaps through the committees or perhaps via information flow from the Minister.

The point about commercially sensitive information cannot be ignored. We cannot have two institutions, one a major property company and the other a bank, having that information in public and none of their competitors making that information public. That simply would not work because in time it would cost the taxpayers' money. Nobody in this Chamber or the other one wants to see this costing the taxpayers more than it should. We are all satisfied that it is costing more than enough.

The anger and downright fury is because citizens do not believe the people who caused the crash have been held to account yet. I am hopeful that the various agencies, the DPP, the Garda and the Office of Corporate Enforcement will do their jobs well. Nobody should influence any potential case. Nobody wants a repeat of what happened when Ms Mary Harney spoke about the former Taoiseach, the late Charles Haughey. The New York Times once asked, “Can one bank bring down a nation?” While we do not know the answer to that question yet, we know it went damn close to it. It is crucial that the bankers and developers who caused the crash along with those in the Government and the State agencies who did not do their job well enough should be called to account.

Senator Trevor Ó Clochartaigh

Cuirim fáilte roimh an Aire Stáit. Ba mhaith liom fáilte a chur roimh an mBille seo thar ceann Sinn Féin. Cuirfidh muid fáilte roimh rud ar bith a chinnteoidh go bhfuil an eagraíocht ar a dtugtar NAMA níos oscailte agus níos trédhearcaí. Tacaím le cuid mhaith den mhéid a dúirt an Seanadóir Michael D'Arcy maidir leis an imní atá ar dhaoine os rud é nach bhfuil an dream atá ciontach as an titim thubaisteach a tharla i margadh tithíochta na tíre agus, dá bhrí sin, i gcóras baincéireachta na tíre tagtha os comhair na cúirte, nach bhfuil siad á bhfeiceáil ar aghaidh na ngiúistís agus nach bhfuil ceart agus cóir agus cothrom na féinne á fháil.

I support the Bill because anything that can make NAMA more open and transparent in its dealings is welcome. Deputy Pearse Doherty introduced legislation in the Dáil to provide that the Freedom of Information Act should be brought to bear on NAMA. We need to be able to see what is going on in the organisation. Every day NAMA is dealing in billions of euro of taxpayers' money and is essentially the largest holder of State assets. It disposes of millions of euro worth of assets on average every month and yet there is very little public knowledge of its activities. NAMA costs the State more than €500,000 per day in running costs. On its payroll it has developers earning more than €200,000 and it is mired in potential conflicts of interest. NAMA does not want a spotlight shone on its activities. It is currently fighting a case against the Information Commissioner because it does not want to provide information under environmental legislation sought by an Internet blogger. This case by one arm of the State against another will cost the taxpayer hundreds of thousands of euro.

We have a number of other reasons for calling for more openness and transparency around NAMA. Many more applications were made under the previous freedom of information legislation, but with the change in the rules, that has reduced dramatically. Many people would like to find out more about what is going on. NAMA will cost the State €531,000 in operating costs every day of 2012. Since its establishment, NAMA has spent €27.5 million on legal fees and €2.5 million on audit fees.

NAMA is disposing of an average of €500 million worth of assets per month by reference to the original values of the loans, roughly €200 million by reference to what NAMA paid, and will do so at least until the end of 2013. Up to December 2011, NAMA had been disposing of assets on average worth €750 million per month, at original value, or €15.8 billion worth of loans.

NAMA has advanced millions to developers to finish projects, with €568.2 million being forwarded to developers outside the island of Ireland. Over two-thirds of NAMA properties are on the island of Ireland, yet only 41% of its cash advances are spent here. NAMA is funding development projects in Britain and Europe while Ireland is dotted with ghost estates and empty hotels. Under the original NAMA Act, the body can borrow up to €5 billion in total to loan to developers to finish projects. NAMA is paying more than 100 developers' salaries, with some earning as much as €200,000 a year. NAMA has considered the introduction of a developer incentive scheme which would allow a developer to keep a portion of an asset sale if the sale met and exceeded NAMA targets. This kind of incentivising is not in the original legislation.

A total of 16 firms have been identified by NAMA to advise it on loan sales in Europe and the US. These firms have been put onto Europe and US "panels". NAMA has admitted that several existing NAMA employees have close links with these firms and were formerly employed by them. The newly appointed head of asset management in NAMA is a former chairman and managing director of Jones Lang LaSalle, JLLS. JLLS is on both advisory panels. Other firms listed on the panels include Ernst & Young, Goldman Sachs, KPMG and UBS.

NAMA is using an "effective interest rate" methodology to calculate interest payments in its quarterly accounts. This method assumes interest repayments rather than allowing for actual interest repayments and can overstate profits, delivering a misleading picture to the general public about NAMA operations; for example, in its third quarter reporting in 2011, NAMA reported €255 million in interest payments, whereas only €175 million was received. Given the continued decline in property prices and worsening economic conditions, there is no way of knowing how loans will continue to perform, so estimating interest that may come in is hardly advisable.

The Minister has appointed an additional advisory group to advise him on the future strategic direction of NAMA. It is unclear whether this group will just act as a conduit to the Minister on the strategic direction of NAMA or actively direct NAMA on strategy. NAMA is not effectively managing conflicts of interest. It appointed PricewaterhouseCoopers, PWC, to advise it on bad loans. PWC was then appointed as a receiver to Treasury Holdings against which NAMA is currently fighting a court case. PWC is a tenant of a Treasury Holdings building which is listed as security for loans held by NAMA. NAMA claims it has protected against conflict of interest by appointing Ernst & Young as a receiver to the Treasury Holdings building in which PWC is resident.

Ernst & Young were auditors to Anglo Irish Bank. During their role as auditors they failed to detect and report massive loans to directors as well as the massive window dressing arrangement of €8.2 billion with Irish Permanent TSB which was used to improve Anglo Irish Bank's balance sheet at year end. They also stood over accounts that showed a profit for the bank. Consequently, Ernst & Young are being investigated for their role in the Anglo Irish Bank debacle. As a result of their involvement in Anglo Irish Bank, the Chartered Accountants Regulatory Board, CARB, commenced an investigation into Ernst & Young in 2009. The investigation was led by the former Comptroller and Auditor General, John Purcell. Ernst & Young attempted to block this investigation through the courts but were unsuccessful. In September 2011, the CARB investigation concluded that Ernst & Young do, on the face of it, have a case to answer in respect of their involvement in the Anglo Irish Bank debacle. However, criminal investigations into Anglo Irish Bank have meant that the Director of Public Prosecutions has asked that the investigations be held off until his work is complete.

In a separate matter, NAMA has appointed a senior legal figure to fight a case against the State's Information Commissioner, on the basis of an Internet blogger seeking information from NAMA under environmental legislation. The senior legal figure is currently representing Treasury Holdings against NAMA. NAMA is actively fighting another arm of the State, with taxpayers' money being spent on both sides, to stop information about it being available under freedom of information legislation.

Cuireann Sinn Féin fáilte roimh rud ar bith a thacaíonn le trédhearcacht NAMA. Fáiltímid roimh an mBille atá curtha ar aghaidh ag an Seanadóir Daly agus beimid ag tacú leis. Tá súil agam go dtiocfaidh sé chun cinn chomh tapaidh agus is féidir.

Senator Jimmy Harte

I welcome Senator Daly's Bill because it gives us an idea of how people are thinking about NAMA. It is very confusing for many members of the public, including myself, to grasp how NAMA operates and how we ended up in this position. It was the result of the previous administration. I am not referring to the political Administration but to the developer-led economy in this country. If one studies what happened with the Irish Glass Bottle plant site in Ringsend, it is an example how the entire system ran into itself eventually. It ended up with one State body buying the property from another State body for approximately €412 million. It is worth approximately €40 million now. AIB is owed approximately €300 million and Anglo Irish Bank is also owed money but the bottom line is that the taxpayer will pay for it.

The usual suspects were involved with that site purchase and no consideration was given to the end game. The game in Ireland at that time was that one bought a site, got planning permission changed for it and sold it off to somebody else. The pyramid scheme kept growing until eventually the taxpayer ended up footing the bill. Many developers were genuine property developers who got caught in the flow. Other developers were laundering money, using development for criminal purposes. Those guys are in the same boat as the rest, but we are paying off their debts as well. These people, and we all know who they are, were using it as a money laundering procedure because they could hide under the cloak of a developer. We also know people who became developers. One day they were sitting drinking in a pub and the next day they were driving a mercedes. Many people who have worked in this country for 40 years are lucky to buy a new car. These people are now back on the street, doing what they used to do before that. Other guys who are still driving the mercedes also caused the problem.

Ultimately, we must consider what is in this for the ordinary person on the street. I believe that in ten or 20 years NAMA will be a textbook example in schools and universities of how things went wrong and how we tried to solve them. I met a young couple yesterday who are anxious to change their house. They have had a mortgage for 16 years — I know them longer than that — and they owe perhaps €3,000 on that. They wish to move to another cottage up the road that they like. The wife is working full time and the husband is working part time but because he is working part time they have been told there is no way they will get a mortgage. They are only seeking €70,000, never missed a mortgage payment in 16 years and they have substantial savings of €10,000. They told me the bank told them that unless the husband is working full time for at least a year, it will not even consider them.

As the young gentleman said, they want to buy the cottage and will spend their own money doing it up. When somebody else bought their property, they had to install a new kitchen. However, the entire system has ground to a halt. That is the practical impact of the situation caused by the multimillionaires in this country. Many of them are still millionaires. Until that young couple, and other couples like them, can move to the property they desire, the property market will not move. We have been reading reports recently that property prices are actually too low at present. That is basically because people cannot borrow money.

In Donegal and probably in other parts of the country, houses that are worth €80,000 or €90,000 can be bought €60,000 or €70,000, but people cannot buy them. They are interested in buying the properties but they cannot access the credit which they could have accessed ten years ago. These people are good clients. They are rearing families and maintaining properties, but they do not wish to rent houses all their lives. They want to be in a position to buy the property. They are capable of paying the money back and their track record proves that, but these are the people who are being victimised. It is not the Derek Quinlans, Bernard McNamaras and the like, who were buying property from each other and bumping up the prices. They did not care about the end game.

NAMA has an important role but, for me, it is still a little confusing to assess where it will end up. However, I agree with the Minister that if information is commercially sensitive, we should not give it away. The sooner NAMA can shut its doors, say it has done its job and helped in some small way to bring the country and the property market back to normality, the better. There is a glut of people who wish to buy property but who cannot afford to so do, not through their own fault but through the fault of others.

Finally, I agree with Senator Power's point regarding unfinished estates. Much of the €2 billion that the National Asset Management Agency wishes to spend should be spent on flattening down and cleaning up some estates. While much work is involved in cleaning up an estate, it helps many families who live in areas in which six or eight properties are run-down or in which the block work was left half-complete. Consideration should be given to using the money to finish estates, to clean and flatten down estates and to grow lawns on which kids can play, rather than having parents concerned about torn-down fences and holes full of water. I ask the Minister to use his good offices to push that agenda as well, in respect of how the aforementioned €2 billion will be spent.

Senator Darragh O’Brien

I welcome the Minister to the House and it is good to see him here today. Most Members across both sides of the House are in agreement that there is work to be done on how NAMA goes about its business. As Vice Chairman of the Committee of Public Accounts in the previous Dáil, I have some experience in this regard and many Members are correct on how NAMA reports and is answerable to the Office of the Comptroller and Auditor General and to the Committee of Public Accounts. However, the proposals in this Bill get down to detail and I commend my colleague, Senator Daly, on introducing it. He has been highly consistent on this issue over——

Senator John Gilroy

Consistently wrong.

Senator Darragh O’Brien

That is the Senator's view but——

Senator Mark Daly

I note the Taoiseach is with me on this one.

An Leas-Chathaoirleach

Senator Darragh O'Brien, without interruption.

Senator Darragh O’Brien

Senator Daly has been consistent on this issue and this goes back to the previous Government. Were I obliged to vote again on the creation of NAMA as I did back in 2009, I would and the same vote would apply as when I was a Member of the other House. NAMA is extremely important to the future prosperity of this State. It was an important part of the attempt to cleanse the balance sheets of our banks to allow them to do what they are not doing at present, that is, to lend into the real economy.

I have a couple of questions to which the Minister might respond now or later. In his opening statement, the Minister mentioned the Government's primary concern is ensuring a commercial return for the taxpayer. While I fully agree with him, I consider NAMA's disposal of properties in the context of an average discount, or haircut as it was called back then, on loans taken over to NAMA of approximately 50%. Moreover, the taxpayer ponied up 100% if one includes the cost of the recapitalisation of the banks in addition to NAMA's purchase of the loans at a discounted price. I have an issue with how NAMA now tends to track what are its so-called profits on the basis of what it has made above and beyond the price for which it purchased the loan. However, the taxpayer is on the hook for a lot more than the aforementioned average 50% discount. While colleagues today have mentioned that NAMA has not engaged in a fire sale, I believe it has moved too quickly in selling European and British property in particular for which there have been good rent rolls and good tenants. Vultures from across the world have been looking at prime property, particularly in London, where there have been such cases, and NAMA has sold such properties on the cheap. I refer to the basis of the agency's staff performance guides by which its staff will receive bonuses for hitting certain targets. Is it true the targets they are hitting in this regard are above and beyond the price for which NAMA actually purchased the loans? In other words, in the case of a loan with the average discount of 50%, were NAMA to sell it for 50% plus 1%, this 1% would be deemed by the agency to be a profit. However, that is not a profit to the taxpayer and is not, in the Minister's own words, a commercial return for the taxpayer. This is not what it said on the tin two or three years ago and this is an issue to which all Members must give genuine consideration.

In addition, I fully agree with Senator Michael D'Arcy in that I have a concern regarding the NAMA scheme for guaranteeing properties against future falls in market value. Moreover, I am concerned about some properties NAMA has put forward as part of its pilot scheme. In particular, in respect of one development in north Dublin listed on the NAMA website, I ask the Department of Finance to ascertain whether it can confirm the estate in question has pyrite. I believe it does and while I do not wish to put this on the record of the House, I will give details to the Minister's officials after this debate has concluded. Issues have arisen in this regard in which the Minister is involved and on today's Order of Business, I asked when the pyrite report will be issued. This issue also is tied in to NAMA because unfortunately, many of those who live in unfinished estates, particularly on the east coast but throughout Ireland, have been hit with a double whammy of having pyrite issues within their unfinished estate. I greatly hope the €2 billion announced by NAMA first and foremost will be directed towards making them safe. I acknowledge the former Minister of State, Deputy Penrose, did some good work at the outset to ensure estates were, at the very least, safe.

However, to revert to the Bill itself, I do not agree with the premise that this information is commercially sensitive. Incidentally, I am glad the Government included in its programme for Government a national property database, which I had sought during the lifetime of the previous Government. My colleague, Senator Daly, has given a few examples demonstrating how an issue certainly exists with regard to how some commercial properties are being purchased and sold. I do not suggest all of them but there is an issue in respect of some of them. The Bill itself sets out clearly how this can be done, which would mean bringing in commercial property to this register if, at the very least, NAMA has an interest. As my colleague has stated, NAMA does not control the properties for most of the loans it has and in more than 90% of cases, it has control of the loans themselves. Consequently, it is possible to suggest that as the agency does not hold the property, it cannot release that information. However, the bottom line is that for people to have greater confidence in NAMA, one must realise when the current system is not working as it should. I might add I have confidence in those who work in the agency, which has some excellent people who are doing a tough job. This Bill offers a way to ensure people know how and when decisions are made regarding the selling of properties or loans or properties involving loans held by NAMA and to ensure they go through a proper public process. In the instances mentioned by Senator Daly in the Chamber today, it is clear no such proper auction or sale on those properties took place.

I will conclude by noting the National Asset Management Agency Act 2009 is clear on what the agency should be doing. Given his opening comments, I do not expect the Minister to accept this Bill. However, should this Bill fail to proceed beyond this Stage after a division, the Fianna Fáil grouping will continue to put forward suggestions as to how it believes it can make NAMA work better. In this context, I ask the Minister to indicate what, in NAMA's view and his own view, constitutes a commercial return for the taxpayer. Is it 50% plus 1% or is it 100% plus 1%, because I believe the taxpayer is being sold short in many instances?

Senator Deirdre Clune

The recently-published report of the Comptroller and Auditor General is timely and makes for some stark reading. It gives a summary of NAMA, which has been in operation for more than two years, during which time it has acquired loans from the five financial institutions at a face value of €74 billion for approximately €32 billion. As Senator Darragh O'Brien has just noted, it is immediately evident how the taxpayer is paying on both fronts. I was also interested to read that completed properties account for 71% of its portfolio, properties in the course of development make up 9% and the remaining 20% consists of land. I had thought the percentage of properties in the course of development would have been higher but that element constitutes just 9% of the loans or the properties that are in contention or discussion with NAMA. In common with other Members, I have served on the Committee of Public Accounts and the Comptroller and Auditor General's report is beyond reproach. The reports produced by the former Comptroller and Auditor General, Mr. John Buckley, always have been above reproach, as they have been thorough and have been carried out with expertise. Mr. Buckley, like all Comptrollers and Auditors General, always has been straight and has been willing to say it as it is. It is an important report and I note more such reports will be produced to facilitate tracking of what NAMA is doing and its present position for these Houses and the taxpayer. There is also the summary of properties in receivership on the NAMA website, which is very useful. I scanned it today and do so on a regular basis to see the extent of properties listed. One can looks through one's own area or another one knows and see each property. That is a very important step from which we can all benefit, in terms of properties in receivership and those ones on which receivers are working.

In respect of the Bill before the House, NAMA was set up with the primary function of maximising a return for the taxpayers. It is very important to keep that basic function to the forefront all the time, in that maximising value and any possible return from these properties for the taxpayer must be borne in mind. As the Minister and others have noted, we must respect commercial sensitivities. We all live in the real world and we understand that if properties or loans of properties are for sale there is information available and if one wishes to maximise the return one will not show one's hand. I completely understand the desire to have as much transparency as possible and that all possible information be available but nonetheless, in order to protect the taxpayer's interest, there are certain issues concerning which it would be counterproductive to provide sensitive information. I can see Senator Daly's position with regard to the Bill but at the same time, if an action blows a deal for the taxpayer we should not go down that route.

As he stated in his speech, it is important to note — and welcome — that the Minister has regular meetings with the board of NAMA. On coming into Government, he stressed to that organisation the importance of ensuring there is transparency and that it be increased and maximised wherever possible. The database is part of that process and so are the regular meetings the Ministers has with NAMA in order to ensure that whatever information can be provided is provided.

The recent announcement of the €2 billion investment over the coming four years is very welcome. We have heard a great deal in recent years, particularly from IDA Ireland in regard to would-be investors in this country, about the need to have third-generation office space, particularly in the Dublin region. I am sure that much of this €2 billion will go towards refurbishing such office space, which is needed if we are to sell this country abroad. We need to able to say this is the building, it is there for the investor who wants to come and set up whatever operation we are trying to attract. That type of office space is very important. A shortage of it has been identified and this is expected to continue. That €2 billion is a very welcome development in addition to the funding of €600 million that already came about for developing facilities to a point where they are marketable.

I refer to the original figure of €5 billion from NAMA. We questioned the organisation on this when Mr. Daly attended Oireachtas committees during the past 12 months. He always stated NAMA believed there was never a need to go to that €5 billion. Is the €2 billion, recently announced, part of that package?

We are in a difficult situation. There is a lot of anger from people who borrowed excessively. Money was made available to them but they seem to be writing down their loans in many cases in negotiation with NAMA. We do not know the details of everything but we hear anecdotally there are people in this situation and it is adding to the public anger.

An Leas-Chathaoirleach

I am sorry if I forced the Senator to finish abruptly. I call Senator Wilson.

I thank all my colleagues for their input and the Minister for his reply. I am not happy that the Government has come up with a number of reasons that, in themselves, are at variance with some of the facts. As I and colleagues have outlined, NAMA proposed a website six months after I proposed it but it is limiting its one only to properties of which it has taken title control. That represents a very small fraction of all the loans it has given out. My proposal is that NAMA would put all properties it is allowing to be sold onto the website.

What we must understand here is that section 35 of the NAMA Act asked the organisation to set up a system whereby all its assets would be sold, whether they were property or loans. That was the legislation; it was our intent. Within that, NAMA had to come up with its process within three months. That process is the same as that for selling a State asset, which must be done by tender or public auction. The reason I asked the Attorney General to come to the House is that I cannot understand why NAMA is not selling the property and the loans under its control as laid down by the NAMA Act and as signed off by the Minister, Deputy Noonan's colleague. Why is NAMA not doing that? We have legal opinion on both my side and NAMA.s side. It claims it does not have to do this while my legal opinion states it should do so but is simply not doing so.

The result is a lack of transparency. I do not accept the point about commercial sensitivity. Senator Clune would be aware of this from her own constituency. How is it in the best interest of the taxpayer that 450 acres of land in Cork was sold without anybody knowing about it? How is that in the interests of anybody? It is only in the interest of the people who bought it quietly from the bank, with the agreement of NAMA. Colleagues have pointed out that I have not produced the evidence. I have produced evidence, namely, the property on Baker Street. The company which bought it said that in one year the value had gone up 54% from 2010 to 2011. That can only suggest that it was undersold in the first place. Commercial property in Baker Street, London, did not increase by 54% in one calendar year. What also happened was that the people who had taken out a loan of €49 million were part of the profit share on the sale. It is stated by British Land which is now in control of that property that NAMA and Bank of Ireland agreed to all this. The Irish taxpayer has suffered a loss of €28.2 million on one sale.

I am talking about simple transparency. Like Senator Coghlan, I am an auctioneer. If every property for sale by banks which had been given a loan by NAMA was put on a website there could be no doubt. Would the taxpayer lose if there was a website? The taxpayer is losing already to the tune of €28 million on one sale. I will give the evidence to anyone. Let no one come into the House and say "Mark Daly did not produce evidence". I am presenting the evidence. Senator Coghlan is welcome to talk to the individual or to anyone. When I asked about this at Bank of Ireland it referred to commercial sensitivity. However, the NAMA Act says that every property——

Senator Paul Coghlan

Has the Senator his own correspondence with NAMA about this property?

Senator Mark Daly

I not only have correspondence, I have had meetings with it. It said it had nothing to do with it. British Land states that NAMA had given agreement for the sale to go ahead. McAleer and Rushe which owes the Irish taxpayer money will make a profit from this land even though it still owes us €28 million. I ask Senator Coghlan to outline how that is in the best interests of taxpayers. This was not done in an open and transparent manner. If it had been we would have go the upside. When Senator Coghlan reads this and he gives me a comprehensive reply I will write an apology. However, my apology will not be coming his way.

Question put.

The Seanad divided: Tá, 17; Níl, 24.

Tá

Barrett, Sean D.
Byrne, Thomas.
Crown, John.
Cullinane, David.
Daly, Mark.
Leyden, Terry.
MacSharry, Marc.
Mooney, Paschal.
Mullen, Rónán.
Ó Clochartaigh, Trevor.
Ó Domhnaill, Brian.
Ó Murchú, Labhrás.
O’Brien, Darragh.
O’Sullivan, Ned.
Power, Averil.
Walsh, Jim.
Wilson, Diarmuid.

Níl

Bacik, Ivana.
Bradford, Paul.
Brennan, Terry.
Clune, Deirdre.
Coghlan, Paul.
Comiskey, Michael.
Conway, Martin.
Cummins, Maurice.
D’Arcy, Jim.
D’Arcy, Michael.
Gilroy, John.
Harte, Jimmy.
Heffernan, James.
Higgins, Lorraine.
Keane, Cáit.
Kelly, John.
Landy, Denis.
Moloney, Marie.
Mulcahy, Tony.
Mullins, Michael.
Noone, Catherine.
O’Neill, Pat.
Sheahan, Tom.
Whelan, John.

Tellers: Tá, Senators Mark Daly and Diarmuid Wilson; Níl, Senators Ivana Bacik and Paul Coghlan.

Question declared lost.

An Leas-Chathaoirleach

When is it proposed to sit again?

Senator Maurice Cummins

At 10.30 a.m. tomorrow.

Seanad Éireann debate - Wednesday, 6 Jun 2012

NAMA and Irish Bank Resolution Corporation Transparency Bill 2011: Second Stage

Tá

Níl

Seanad Éireann debate -
Wednesday, 6 Jun 2012