Seán Fleming (Laois, Fianna Fail) | Oireachtas source

We understand, and I think we have dealt with the issue. Part of our coming to the end of the process of these public hearings is perhaps to draw some of those issues together.

I now want to refer to page 111 of the Comptroller and Auditor General's report. I will lay out the scenario as I see it and will ask Mr. McDonagh to convince me otherwise. I have not made up my mind yet, but this jumps out at me. We are dealing with page 111, which contains the NAMA board minutes of 8 January 2014. Towards the end of the third paragraph, they state: "As agreed at [the] 12th December 2013 meeting the Board noted it would not consider the sale of Project Eagle portfolio of loans for a consideration [of] less than STG£1.3 billion." Mr. McDonagh accepts that. Those are the minutes. We will not argue. That is a definite recording.

However, I have to ask myself where this figure of £1.3 billion came from. Mr. McDonagh has said that he has not been able to demonstrate it based on his figures. The only thing that has been demonstrated to me is that PIMCO came to NAMA with a bid of up to £1.3 billion in December or thereabouts. It was towards the end of the year. The only people to put a figure of £1.3 billion on the table were PIMCO. It offered up the £1.3 billion and that became NAMA's price. It is hard to believe there is a coincidence there.

I want to move on to the PIMCO offer. The PIMCO offer had a number of what I would call restrictions. I am pulling them from the notes prepared for the board. The board stipulated that it would be cash only. That is significant. According to page 82 of the report, Lazard also referred to these restrictions when it was making its recommendations to NAMA. At paragraph 4.61 of the report, it is stated that Lazard, in a letter dated 2 April, after the conclusion of the bids, noted that "[t]he process involved a limited number of highly qualified bidders". That is a restriction. There was a limited number of bidders. It went on to note that there was "limited due diligence information". That is a second restriction. There was "a single round of bidding". That was a further restriction. "[T]he requirement for bidders to acquire the portfolio 'entirely [for] cash'" was another significant restriction. There was a tight timeline as well, although it is not mentioned in that particular paragraph. I also think that in one of the recommendations - in the information of the board meeting - NAMA said that there should be restrictions on the number of advisers appointed by the purchaser. That was probably for confidentiality reasons.

When NAMA came to put out its proposal to tender, lo and behold, everything it had laid out - confidentiality, cash upfront, limited due diligence, time restrictions and the price of £1.3 billion - appears to have been mirrored exactly in what went out. I have to say that it looks to me - Mr. McDonagh might convince me otherwise - that NAMA's tender document was, possibly, based on what PIMCO gave it. This whole thing about 10%, 5% and 11.7% is all well and good, but the figure of £1.3 billion came from the PIMCO document. That is the only place I have seen that figure. Will Mr. McDonagh address that point?

My next question leads on and I will deal with all of this particular issue on PIMCO. In respect of the last sentence on page 132 of the report, one has to ask how PIMCO came up with the figure of £1.3 billion. I would be surprised if the board did not ask it when out of the blue it gets an inquiry and an indicative offer from PIMCO and it comes in with the figure of £1.3 billion. It is a mystery. I do not think it is based on NAMA's internal discount rates of 10%. PIMCO has come up with the figure of £1.3 billion, which NAMA ran with from there on in and which was the ultimate final figure. I will require explanation of the last sentence on page 132, because whoever was preparing the information for the board obviously had to understand where PIMCO was coming from. The sentence reads: "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." Therefore, there are two bases by which it came by the figure of £1.3 billion. Is "the publicly available information" newspaper articles about who the big debtors were, etc., or how was that established? If it was publicly available information, did anyone ask at that stage if anyone on the Northern Ireland committee might have been aware and dealing with it and have already declared he or she was working with debtors to help put some of this information together? I would have asked how it, out of the blue, came up with the figure. I am asking Mr. McDonagh to explain it.

I have asked a couple of people how it was able to work out the bid based on reverse engineering NAMA's balance sheet. It is a lovely, beautiful technical term to confuse us all, but I do not think NAMA issued a separate balance sheet for Northern Ireland. The figures that are available or that NAMA normally gives us include Northern Ireland and the UK. I do not know how someone could have used "reverse engineering" of NAMA's balance sheet to work out what was left in NAMA.

I will stop at this point now. I want to take this further. Can Mr. McDonagh understand our concerns as to where the whole bid structure came from? It is very similar to what PIMCO approached NAMA with. Did NAMA not ask how it come up with the figure, which NAMA ultimately went with?