Mr. Brendan McDonagh:

With regard to the valuation process, as I outlined in my statement, the first people who did the property valuations, which were a key input into the loan valuations, were the financial institutions. They got their own valuers to value each of the properties. They submitted these to NAMA and NAMA sent the valuations to a property firm on our panel. That property firm, which was obviously different from the bank's firm, looked at the valuation and had to form an opinion on whether it agreed with the valuation and give the basis for the opinion, in accordance with the Red Book, which is the standards of the Royal Institution of Chartered Surveyors. If the firm agreed with it, as happened in 88% of cases, we accepted it. If the firm disagreed with it, the next key step was taken. We set up a process, which we agreed up-front with the European Commission, whereby if there was a dispute between a bank and NAMA where one valuation firm said 100, for example, and another valuation firm said 80, we would refer it to a third valuation firm to make a final determination. Therefore, the bank's original valuation and our valuer's opinion were sent to the third valuation firm. The third valuation firm had all the facts from both sides and it either agreed with the bank or with our original assessing valuation firm and gave its own opinion on what it thought the value of the property should be. That was submitted to NAMA and accepted. That fed into the loan valuation process and it was audited all along the stages.

The reality is that this particular individual did a huge job under a great deal of pressure. I must acknowledge that he worked very hard. However, he was a recipient of the property valuations from the banks and he referred them to our valuation firms to review the valuations. If there was a dispute, he referred it to the third independent valuation firm. He was a key man in the processing of the information but neither he nor anybody else was involved in the valuation process.

He reported to the then head of portfolio management, Mr. John Mulcahy, who is now the head of asset management. Mr. Mulcahy has more than 40 years’ experience in the property valuation industry. He oversaw Mr. Farrell. Mr. Mulcahy had to sign off on the valuation going out to the loan valuation firm. When signing his name to anything, if he did not agree with it, he would have asked the valuation firm to take account of these particular facts. Again, the valuation firm would have either accepted it or not accepted it. The final valuation in the loan valuation process always came from an independent reviewer or a third-party valuation firm. We had no input into determining the final valuation.