Seán Fleming (Laois, Fianna Fail)
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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. To date, we have met the Comptroller and Auditor General on his report, representatives of NAMA, the Minister for Finance, Deputy Michael Noonan, and his officials, Mr. Brian Rowntree, a former member of NAMA's Northern Ireland advisory committee, or NIAC as it is known, and the deputy First Minister of Northern Ireland, Mr. Martin McGuinness. We have also met three members of the current board.

I welcome three former members of the board of the National Asset Management Agency and thank them for making themselves available to the committee. We are joined byMs Éilish Finan, Mr. John Mulcahy and Mr. John Corrigan. Ms Finan was on the board until December 2013, Mr. Mulcahy was on the board until January 2014 and I understand Mr. Corrigan resigned on 4 January 2015 when he retired as chief executive of the National Treasury Management Agency. The witnesses cannot answer questions relating to matters after those dates, for example, when the Project Eagle sale went through and when PIMCO withdrew.

I remind members, witnesses and those in the Visitors Gallery to switch off all mobile telephones. I advise witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses 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 and 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 asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against a person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the provisions in 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. 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.

We do not have any opening statement today. We will go directly to questions from members of the committee. The first speaker today is Deputy Catherine Murphy.

Catherine Murphy (Kildare North, Social Democrats)
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The witnesses are very welcome. I will start with Mr. Corrigan. He was in a unique position in that he was a member of the board of NAMA but he was also in the National Treasury Management Agency, NTMA. The year 2013 was important in that IBRC was liquidated and instead of a €3 billion payment annually, or a little more in some cases, it was elongated. In terms of the European Central Bank, ECB, and the pressure that we have heard others talk about, was there additional pressure in 2013 to accelerate the process? Was the ECB putting on more pressure than it had been? Was that changing dynamic a factor and did it have any bearing on the way the sale of Project Eagle occurred?

Mr. John Corrigan:

That is a very good question from Deputy Murphy. I will talk about my own position in that I straddled the two organisations. I was chief executive of the NTMA and I was ex officiothen on the board of NAMA. I would have characterised myself as a non-executive on the board of NAMA. In my head I was acutely aware of the pressure that was on to make progress with liquidating, so to speak, NAMA’s balance sheet. There was pressure from the ECB. It was general pressure really. I attended a lot of meetings with the troika. On the Irish side, the Secretary General of the Department of Finance and the Governor of the Central Bank would also have attended.

From my point of view, and also from Ireland’s point of view, 2013 was a year where we were poised to come out of the IMF-EU programme. The question which was being discussed at the time was whether we would come out of the programme or if we would have to go into a second programme. Those were real issues that were being discussed at the time. From the point of view of the particular brief of the NTMA there was also the question, which was very relevant, of whether we could come out of the programme under our own steam, so to speak. There was also the question of the rating agencies, which had downgraded Ireland through the period we were in the programme. In fact one of them, Moody's, I think it was, had us in sub-investment grade status. The rating agencies in general adopted a very strange approach towards NAMA. While technically the NAMA bonds were off the State’s balance sheet, because they were only guaranteed by the Government, they were real liabilities. From a statistical point of view they were not on the State’s balance sheet, but when the ratings agencies looked at them, they actually put them on the balance sheet. A number of them, in particular I think it was Standard & Poor’s, gave no credit then on the asset side for the value of the NAMA assets, so a very aggressive approach was being taken by the ratings agencies. There was general pressure on but in my experience at the NAMA board meetings, NAMA looked at its sales programmes, its sales process and its strategy purely in the context of the NAMA Act and the question of-----

Catherine Murphy (Kildare North, Social Democrats)
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Was there nothing specific to Project Eagle?

Mr. John Corrigan:

No. The mood music was there in the background that we had to get on with this but there was no specific pressure on NAMA and certainly we looked at things in the context of section 10 and section 2 of the Act.

Catherine Murphy (Kildare North, Social Democrats)
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In regard to when the sales process ceased to be confidential, when the information ended up in The Irish Times, did Mr. Corrigan consider a review of the strategy to sell? Was that considered at all? Can Mr. Corrigan recall that?

Mr. John Corrigan:

The question of pressing ahead with the sale or not pressing ahead with the sale was discussed at the board meeting when the matter came into the public domain but it was decided to press ahead with it. I would have totally supported that decision. The board believed it was a good idea.

Catherine Murphy (Kildare North, Social Democrats)
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Was there any debate about getting better outcomes by approaching it in a different way?

Mr. John Corrigan:

No, we believed this was the best outcome, that the bulk sale, so to speak, of the portfolio was the best outcome. It was unfortunate but it was probably going to happen in any event. One cannot keep everything confidential. It is very difficult, but we decided to press ahead. The main thing was to ensure that there was a competitive tension in the process, which is a term of art that has been bandied about. We were advised over the course of what happened subsequently by Lazard's that there was sufficient competitive tension in the process, so it was a decision made by the board. There was no outside pressure or at least I was not conscious of outside pressure.

Catherine Murphy (Kildare North, Social Democrats)
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Mr. Mulcahy came from real estate property background. Were the assets transferred to NAMA in advance of his arrival in NAMA. I wish to get a context.

Mr. John Mulcahy:

No, I was involved in the transfer.

Catherine Murphy (Kildare North, Social Democrats)
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Obviously when the assets were transferred to NAMA there were significant haircuts before they arrived.

Mr. John Mulcahy:

And after they arrived. Deputy Murphy must understand that when we were transferring the assets what we were actually trying to do was to recapitalise the banks. I know it is being characterised that NAMA was trying to buy the assets cheap, but any reading of the situation will see that it was absolutely far from the truth. In fact, we introduced this concept of long-term economic value to try to give more money for the assets so when they came into NAMA the market continued to slide and we had to take impairments as the Comptroller and Auditor General will tell the committee.

Catherine Murphy (Kildare North, Social Democrats)
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As I have limited time I wish to focus on particular questions.

Mr. John Mulcahy:

Deputy Murphy asked for the context.

Catherine Murphy (Kildare North, Social Democrats)
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The very fact that the assets in regard to Project Eagle were a loss over and above the amount that was paid for them by NAMA, if we could use that terminology, that would have been unusual in that most would have achieved the amount that they were transferred for or more. Does Mr. Mulcahy believe errors were made in their valuation at that stage or did they lose value?

Mr. John Mulcahy:

I think there are a few things in there. One is no matter what price they were transferred at in 2009 and 2010 almost all markets slid further, so one will see that in the years after NAMA transferred the assets we continued to take impairments - in other words, they were worth less a year later almost in all markets, possibly bar the US, which was the first to recover. That is not unusual. My perspective, coming from an investment background as I do, is that I am seldom interested in what one paid for something - I know other people are and I know it is to do with human psychology - but I am only interested in what it is worth now and what is it likely to be worth in a year’s time.

The fact that one might take less or more than one paid for it really does not matter to me. The decision is made at the time of looking at the asset, today.

Catherine Murphy (Kildare North, Social Democrats)
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If Mr. Mulcahy had been on the other side of the process whereby one bidder got access well in advance of others would he see that as an advantage?

Mr. John Mulcahy:

My own experience is that the advantage is completely overblown. A bidder can only be told the same piece of information, whether it is worth more to know it for a month or a week seems to be overblown. Those who do not get the information first always say they would have been in a better position if they had got it earlier but I do not believe that to be material.

Catherine Murphy (Kildare North, Social Democrats)
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It was a very sizeable portfolio. Teams had to be put together to look at the information when they were given access to the data room. Was the three weeks that others were given not a very short period when the process accelerated in 2014?

Mr. John Mulcahy:

The people who buy these things have a lot of resources. There were 900 properties. Taking the 70:30 rule the number of properties that matter would be quite small. Two or three teams of five or six people would deal with it in a matter of days. I do not buy this idea that people need enormous amounts of time. The kinds of purchaser who do this can do it in jig time.

Catherine Murphy (Kildare North, Social Democrats)
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Mr. Rowntree was very surprised at the change in tack from the sale of assets to the bundling and sale of the loans. He said he would never bid blind and PIMCO appeared in the first instance to have indicated an amount almost blind. It reverse-engineered. It looked at what was publicly available. Would Mr. Mulcahy have taken that approach? Would he have bid blind to purchase something or would he want to have the maximum information for the greatest length of time? I would have thought a fair process would have afforded that.

Mr. John Mulcahy:

In all areas of life people always want more information. Given an option of bid or not, I would always bid. Bidders can always cover their position by saying “subject to due diligence”. If somebody tells me the rental income is £100 million and will be £85 million next year, there are 900 assets, 55 borrowers and asks me to indicate where my interest might be I would be happy to go with that.

Catherine Murphy (Kildare North, Social Democrats)
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Why was there such a rush when it became public? There was an opportunity then to maybe break up the portfolio. It was not all located in Northern Ireland, some assets were more valuable than others and I understand that it needs to be mixed. Why the rush? Why not go back to the drawing board? Why was there such a rush to sell this portfolio at that point?

Mr. John Mulcahy:

I am not sure I would characterise it as a rush. First of all, speaking personally, I thought it was a superb deal from NAMA’s perspective. To shift the whole Northern Ireland portfolio in one go, for £1.3 billion, was an inspired transaction. My fear was that something would go wrong and that possibility would go away and we would revert to dealing with the portfolio piecemeal. That would have been very slow. I never liked the Northern Ireland property market. My belief was that it would perform badly. I thought we would be better holding assets elsewhere. I would characterise the debtors I dealt with in Northern Ireland as unusually difficult. It would have taken a lot of resources. We had a discrete geographical area. There were a lot of shopping centres, which I believed would be an Achilles’ heel and indeed the Deputy has probably seen the close-down of retail in the UK. That is one of the things I was worried about. I did not need to see a whole lot of cashflows to know that £1.3 billion, based on an income roll of £100 million going to £85 million was an extremely good transaction. My worry was that PIMCO, which had put the ball in play, might go away and we would have to revert to dealing with the thing on a granular basis which would have been very slow, tortuous and most unlikely to yield the same result.

Catherine Murphy (Kildare North, Social Democrats)
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Mr. Mulcahy describes it as a superb deal. If that was the benchmark for all NAMA’s deals, the so-called profit - I say so-called because when one looks at the par value, it is not a profit - and if it had been applied to other deals, the profit that NAMA talked about making would have been a substantial loss. The 55 top loans were valued some time earlier. Would that not have indicated to NAMA that it needed to value all the loans individually so that it could measure them to know what their potential would be if they were bundled or sold in smaller bundles to maybe attract a wider group of people to purchase them?

Mr. John Mulcahy:

It might be instructive to look down the other end of the telescope. We had one £1.3 billion on the table. If we had said "no" to that the chances are that it would be worth 20% less with the currency difference. Second, the Northern Ireland property market has performed badly. Taking it against assets down here if we had put the £1.3 billion into Republic of Ireland assets, as they are called, we would be up 60%, in Northern Ireland the asset values have hardly moved at all. Looking at the result of taking the £1.3 billion, as opposed to not taking it, the answer is clear. That is why it was a superb transaction.

Catherine Murphy (Kildare North, Social Democrats)
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Mr. Mulcahy is talking about Northern Ireland assets but 50% of those assets were not located in Northern Ireland.

Mr. John Mulcahy:

Geographically.

Catherine Murphy (Kildare North, Social Democrats)
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Yes, exactly.

Mr. John Mulcahy:

I am just giving the Deputy a measure. The ones that were not in Northern Ireland were largely shopping centres in the UK and I suspect they would probably have suffered a similar fate.

Catherine Murphy (Kildare North, Social Democrats)
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Ms Finan is in the unique position of having two dimensions to her role in that she was on the Northern Ireland board and the board of NAMA. Ms Finan seems to recall that the discussion of the PIMCO bid and the Project Eagle portfolio occurred in the latter part of 2013 but according to the minutes she appears to have been at the meetings. That seems to conflict with the recollections of others at the meetings in Northern Ireland where it was discussed, not in detail. She would have known the discussions that took place in NAMA as well. I am sure that piqued her interest. At what point in 2013 does she recall the discussion about PIMCO and the Project Eagle portfolio?

Ms Éilish Finan:

The Northern Ireland advisory committee was a committee of recommendation to board. It was not a board and therefore did not have decision-making capacity. My recollection, and it is a recollection, is that the first time this was discussed formally at board was September, I think 12 September. The Northern Ireland advisory committee tended to meet four or five times, and as it materialised approximately five times, each year. That was first discussed in October 2013 in the Northern Ireland advisory committee.

Catherine Murphy (Kildare North, Social Democrats)
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Can Ms Finan recall the nature of the discussion?

Ms Éilish Finan:

The nature was in line with the terms of reference of the Northern Ireland advisory committee, which was a collaborative strategically and macro focused forum. Effectively, from a Northern Ireland stakeholder standpoint, the concept of selling the entire bundled portfolio would have been deemed strategic and macro and, therefore, it was within the terms of reference and correct that it should be discussed in the Northern Ireland advisory committee. It was very much strategic in its focus on the concept of the impact that it might have, first, on the stakeholder being the southern Irish taxpayers and the ability for NAMA to maximise its return and, second, the impact that it might have from a Northern Ireland stakeholder standpoint. It was within that concept that the discussion was held.

Catherine Murphy (Kildare North, Social Democrats)
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When Mr. Rowntree appeared before the committee he talked about the work that was done in the University of Ulster, particularly on the residential side. There was an expectation that the Northern Ireland portfolio would be worked through and it was a big surprise when there was a change in approach. That appears to have been known by Mr. Rowntree, or it appears to have been discussed, which tends to move it away from the strategic discussion to a more practical one. Would Ms Finan recognise that?

Ms Éilish Finan:

I would not say there is any difference between what I remember it to have been and what Mr. Rowntree has said. In fact, the sale of an entire Northern Ireland portfolio is undoubtedly a macro, strategic issue for both NAMA and the Northern Ireland committee and it was appropriate that it would be discussed at the Northern Ireland committee. It would not have been appropriate had it been at a borrower-specific level discussion, and it never was.

Catherine Murphy (Kildare North, Social Democrats)
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Obviously the discussion at the NAMA board would have happened much earlier than that.

Ms Éilish Finan:

No, not much earlier. My recollection is that it was first tabled for discussion at the NAMA board in September 2012. I am speaking from retrospective memory, but that is my recollection.

Catherine Murphy (Kildare North, Social Democrats)
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Would the witness have been aware that a bid was being made by PIMCO and that these loans were being bundled into Project Eagle in advance of the board meeting?

Ms Éilish Finan:

Papers would have been issued in advance so I would have been aware, but not very far in advance. In fact, my recollection is that the board did not meet in August 2013. My recollection is that the first time we formally tabled and discussed it, and it was a minor discussion, was September 2013.

Catherine Murphy (Kildare North, Social Democrats)
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This was a change in approach. NAMA had deviated from the approach it has taken up to then. Would this not have jumped out at the witness?

Ms Éilish Finan:

Absolutely, it would have been a strategic material issue. It was an opportunistic lens. If there had been a potential bid earlier in the NAMA life for a London book of assets or a particular geographical sector or a particular group of borrowers, that would have been an opportunistic strategy and we absolutely would have looked at it. What happened in September 2013 was that a potential opportunity presented itself.

Catherine Murphy (Kildare North, Social Democrats)
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Were any contrarian views expressed at the board as to whether this was a good idea and whether it would maximise the return?

Seán Fleming (Laois, Fianna Fail)
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Deputy, your time has concluded.

Ms Éilish Finan:

Contrarian views and challenges were always a matter of discussion at the NAMA board. It was a very active and engaged forum and every issue that came to the board for decision would have been discussed and challenged so, absolutely, there was a discussion.

Catherine Murphy (Kildare North, Social Democrats)
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What does the witness remember about this one?

Ms Éilish Finan:

There was a discussion about the pros and cons. During my tenure the board decided it was potentially opportunistic and potentially an easier, quicker gain. We would always have been mindful of our requirement to sell the assets expeditiously for the benefit of the Irish taxpayer. There was a challenge and a contrarian view, but the collaboration, discussion and ultimately the decision was that we would explore the opportunity.

Seán Fleming (Laois, Fianna Fail)
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You might not have all of your notes before you, so I will clarify the dates of the meeting. At the main board meeting on 12 September 2013 the chairman advised that he had received the letter about the interest of PIMCO. The meeting of the Northern Ireland committee was on 7 October. There is a full page in the minutes of that meeting about the chairman outlining the issues and wishing to hear the views of the committee. Finally, he brought it to the full NAMA board meeting on 10 October.

Ms Éilish Finan:

Yes, that is the chronological order.

Seán Fleming (Laois, Fianna Fail)
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I wanted to get the chronology right in case people are confused.

Ms Éilish Finan:

That is the chronology.

Seán Fleming (Laois, Fianna Fail)
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In September the board in Dublin heard about it, on 7 October the Northern Ireland committee was apprised of it and on 10 October it was discussed in more detail at the main board meeting in Dublin.

Ms Éilish Finan:

Yes, that is correct.

Alan Kelly (Tipperary, Labour)
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I welcome the witnesses. I have a question for Ms Finan. In her dual role as a member of the advisory committee, could she outline how declarations of interest were handled, because we have been given other evidence on this?

Ms Éilish Finan:

The declaration of interest for a State board is predominantly defined by the ethics in public office-----

Alan Kelly (Tipperary, Labour)
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We have that information. The issue is how they were handled at the meetings.

Ms Éilish Finan:

They were handled under the two formats, the standards in public office and the ethics in public office. They were also handled under section 30 of the NAMA Act. There were three defining formats.

Alan Kelly (Tipperary, Labour)
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Were all declarations given to the meeting or to the chair?

Ms Éilish Finan:

At the commencement of every meeting the declarations were given during the first four or five minutes.

Alan Kelly (Tipperary, Labour)
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Was this at the Northern Ireland advisory committee?

Ms Éilish Finan:

Yes. Should there be a need for individuals to declare something personally that they deemed was conflicted, the requirement was that they would declare it if it was of material interest to the items on the agenda for that meeting. That happened. There was also an annual requirement for every NAMA director and officer, which included the Northern Ireland board members and external members, to make a declaration to the head of the NTMA compliance which also was shared-----

Alan Kelly (Tipperary, Labour)
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Is the witness satisfied that the declarations of interest at the meetings were handled appropriately?

Ms Éilish Finan:

They were handled as they would have been at any sub-committee meeting.

Alan Kelly (Tipperary, Labour)
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The witness is happy that everything was handled appropriately.

Ms Éilish Finan:

I am absolutely certain that everything was handled appropriately and transparently.

Alan Kelly (Tipperary, Labour)
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I will move on. The NAMA paper to the board relating to the proposal for the block sale recommended a minimum price of €1.3 billion for the sale, but it did not say that this was would achieve the best available or achievable return. Did that not concern the witnesses?

Mr. John Mulcahy:

I believe the wording was "not less than" $1.3 billion and subsequently referred to a minimum of €1.3 billion.

Alan Kelly (Tipperary, Labour)
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I would have thought it was the best achievable return.

Mr. John Mulcahy:

The Deputy has to understand that the wording of the NAMA Act refers to the best achievable financial return, having first been prefaced by referring to dealing with the assets expeditiously. That is why we introduced the competitive tension part. Frankly, I was surprised that we had €1.3 billion on the table. I would have thought a smaller figure might have come forward. Then the decision was not to take the €1.3 billion but to subject it to a process involving Lazard and create some competitive tension to see if there was anything better available. That is the way I would have seen that covered.

Alan Kelly (Tipperary, Labour)
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The minutes of the board meeting on 12 September state, "The Board agreed that the paper and analysis presented therein presented a compelling commercial case to sell the portfolio, and that in addition such a portfolio sale would release NAMA from what had been a disproportionate burden of effort in light of the relative size of the portfolio".

That is an interesting statement. What does "disproportionate burden of effort" mean? Mr. Mulcahy called it an inspired transaction that would require a great deal of resources and told us that his greatest concern was that PIMCO would go away. Was it a case of getting it done as quickly as possible?

Mr. John Mulcahy:

The Deputy is mixing up two issues, the first of which is the comment in the board minutes. The Northern Ireland portfolio and the Northern Ireland borrowers were a challenging group.

Alan Kelly (Tipperary, Labour)
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I agree.

Mr. John Mulcahy:

Judging by the other evidence given to this committee that I have read, most people would recognise that. I had moved from being a board member to an executive. We were seen with some hostility in the North and the borrowers were not repentant borrowers. Rather, they felt their troubles had been caused by a failure of the banking system in the South and through no fault of their own. They were most unlikely to be co-operative. What reception we would get working the assets out asset by asset in the courts of Northern Ireland was a concern. That phrase is an attempt to capture all of that and more.

Alan Kelly (Tipperary, Labour)
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To be fair, and as I have said at this committee previously-----

Mr. John Mulcahy:

Plus, it was a small market.

Alan Kelly (Tipperary, Labour)
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Yes.

Mr. John Mulcahy:

That meant we had to have a specialist team that understood Northern Ireland.

Alan Kelly (Tipperary, Labour)
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Does Mr. Mulcahy agree that the reference to a "disproportionate burden of effort" is really a reference to the fact that NAMA had on it four pressures? First, there was political pressure on the Northern side. There could have been none from the Southern side because that would not have been allowed. Second, there were diplomatic issues. Third, a lack of debtor engagement became an issue. Fourth, and for want of a better phrase, there was significant business risk. Does Mr. Mulcahy agree that what he just referenced and the four pressures correlate with the term "disproportionate burden of effort"?

Mr. John Mulcahy:

And probably more. Those four-----

Alan Kelly (Tipperary, Labour)
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What are the others?

Mr. John Mulcahy:

People sit on a board. Has the Deputy ever sat on a board?

Alan Kelly (Tipperary, Labour)
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Yes.

Mr. John Mulcahy:

The members of any board or committee, such as this one, will arrive at an agreed decision, but not all for the same reasons. My view as to what I saw as being the problems in Northern Ireland may not be the same as the view of other board members. I would certainly have regard to all of the pressures the Deputy mentioned, but I was also concerned about, for example, the fact that we had a large proportion of Northern Ireland. I also regarded Northern Ireland as having all sorts of other risks. Something could go wrong on the security front and Northern Ireland could become an unattractive place. It is not on anyone's radar for investment in the property world. Global investors do not seem to think about Northern Ireland as a-----

Alan Kelly (Tipperary, Labour)
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Obviously, members bring their own expertise to the board, which I respect, and they are doing that to serve, etc. What I am getting at is whether, for all of the reasons that Mr. Mulcahy and I have outlined - we could dial them up or down - as well as others, the reference in the minutes was to the effect that the best option was to make a clean break and get out after the £1.3 billion offer was brought to the board.

Mr. John Mulcahy:

I am sorry, but the Deputy has disconnected two issues.

Alan Kelly (Tipperary, Labour)
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I have not.

Mr. John Mulcahy:

The Deputy has in my view, and he asked me the question. First, I considered a superb offer on the table of £1.3 billion from an undoubted counterparty, PIMCO, that had the cash. It was attractive. Second, I considered what we were selling and believed it was a wonderful opportunity to shift a large portfolio about which I had many worries. Third, it would generate large amounts of cash for NAMA. Taking the three together, it was the perfect opportunity. The only thing that we then had to cover was the introduction of competitive tension so as to ensure that there was not another big beast out there that was prepared to pay more. I did not believe there was.

Alan Kelly (Tipperary, Labour)
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Competitive tension that lasted a short time, I might add. We are here to assess the facts. We cannot unscrew the witnesses' heads and look inside to see what they were thinking at the time. We are here to get their evidence. The minutes are the only link that I can see to what we have been discussing. The other factors outside of-----

Mr. John Mulcahy:

A board has minutes because one does not want all of-----

Alan Kelly (Tipperary, Labour)
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Does Mr. Mulcahy-----

Mr. John Mulcahy:

The committee has just heard my view on why I would have voted for proceeding. That is not necessarily the view of all of the other board members. A board has minutes to record the decision.

Alan Kelly (Tipperary, Labour)
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Ms Finan stated that there were contrarian views. Unfortunately, we cannot see them. Are the minutes accurate and do they reflect the totality of the decisions, including their lead-up?

Mr. John Mulcahy:

They accurately represent the decision. One could not have minutes that represented everyone's point of view.

Alan Kelly (Tipperary, Labour)
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I am not saying that.

Mr. John Mulcahy:

One would never get them agreed.

Alan Kelly (Tipperary, Labour)
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Does Mr. Mulcahy believe they accurately reflect-----

Mr. John Mulcahy:

Yes, I do.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

-----not just the decision, but the process by which it was made?

Mr. John Mulcahy:

No. They represent the decision.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Does Mr. Mulcahy have any issue with the minutes?

Mr. John Mulcahy:

No.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

In hindsight, could they have been better?

Mr. John Mulcahy:

There is never a piece of information about which, when one looks back on it, one does not think that. I have given evidence in court cases and, when I looked back on it, thought that it would have been wonderful to have made more notes. However, the board minutes are a perfect recollection of what was agreed.

Alan Kelly (Tipperary, Labour)
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"Perfect" differs from the view of NAMA's chairman, who believes that, if he would change anything, it would be how points were documented in the board's minutes. Does Mr. Mulcahy not agree?

Mr. John Mulcahy:

I did not hear what he said.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

He said it in front of this committee.

Mr. John Mulcahy:

But I did not hear it.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I am not asking whether Mr. Mulcahy heard it. I am asking whether he agrees with it.

Mr. John Mulcahy:

No. The board minutes are fine as far as I am concerned.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy disagrees with the chairman.

Mr. John Mulcahy:

No, I do not. I did not hear what he said. I did not hear the context of it. Deputy Kelly just asked me a question.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Exactly. I will put the same question to the other two witnesses.

Ms Éilish Finan:

My view is-----

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I only have a short time. Could Ms Finan answer, please?

Ms Éilish Finan:

-----that this is somewhat interesting. I did not review those minutes because I had left by that time.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I know, but Ms Finan was there for the first meeting.

Ms Éilish Finan:

Yes, but what I am going to say will be generically relevant to how all minutes were handled in NAMA. This is important. Minutes were issued in draft form to every board member and to committee member, were they minutes of a committee. There was ample time for every board member to red line and suggest edits to the minutes. The minutes were never approved by the board without previous sight and ample time to be reviewed.

Alan Kelly (Tipperary, Labour)
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Fine.

Ms Éilish Finan:

Although I was not present for the meeting in question, I never felt that I did not have an opportunity to track, red line and edit.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I am sorry, but we are caught for time. The Chairman will crack the whip soon. Will Ms Finan answer my question?

Ms Éilish Finan:

That was the answer to the question.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

No. I asked whether Ms Finan agreed or disagreed with the view of NAMA's chairman that how points were documented and reflected in the minutes could have been done better.

Ms Éilish Finan:

I am not going to discuss that minute specifically because I was not a party to the-----

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

For the time that Ms Finan was present.

Ms Éilish Finan:

I totally believe that there was ample opportunity. That opportunity was taken and-----

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

It is "Yes" or-----

Ms Éilish Finan:

-----members edited draft minutes to reach a set of minutes on which all members of the board collaboratively agreed that they were a good record of the board meeting.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

It is a "Yes" or "No" answer.

Ms Éilish Finan:

I am saying "Yes".

Mr. John Corrigan:

It was agreed at the outset of NAMA that the minutes would record the decisions taken. I am happy that the minutes felicitously recorded the decisions that were taken. With the benefit of hindsight, maybe there could have been a bit more colour around the challenge, but hindsight is a wonderful thing. I have read the minutes of this committee's deliberations. Clearly, if there had been colour, some issues could have been dealt with by the committee much sooner.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

That is a fair answer. I have some more brief questions, but the witnesses will be glad to know that I am moving on from that topic.

In October 2013, NAMA authorised PIMCO to be given access to the data room. Did that happen for any other loan sale? Did that early access give PIMCO an advantage?

Mr. John Mulcahy:

I have already answered that question. I do not believe so.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Did it happen with any other loans?

Mr. John Mulcahy:

I do not know. I have not researched that.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy has not researched it. From his time in NAMA, did this ever happen before? That is all I am asking.

Mr. John Mulcahy:

This will sound evasive, although it is not meant to be, but I was not actually involved in the loan sale side of the business.

Alan Kelly (Tipperary, Labour)
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That is actually an answer, to be fair to Mr. Mulcahy. Usually for a loan sale, NAMA loan sale advisers provide advice on sales strategy, market conditions, estimated values of portfolio, etc. None of this happened with Project Eagle, yet it was the first large multi-debtor sale. Why was this advice not sought?

Mr. John Mulcahy:

The Deputy must remember that I left in January. However, I think he is referring to an earlier point where the board - I think it was the Chairman - said that, for Project Eagle, there was a bespoke process initiated simply to cover off the PIMCO proposal, which was on the table, to get the competitive tension. I think it was probably the first big loan sale that we did.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Mr. Corrigan might be in a better position to answer the question.

Mr. John Corrigan:

My apologies, Deputy, but what was the question again?

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

NAMA's loan sale advisers provide advice on loan sale strategies, market conditions and estimated values of the portfolio. None of this occurred in respect of Project Eagle. Given that it was NAMA's first large multi-debtor sale, why was this the case? Why was the advice not sought?

Mr. John Corrigan:

I suppose it reflects the fact that initially this was a reverse inquiry. As regards the valuations, as a non-executive, I would not have been intimately involved in the transaction but my understanding is that it was only from late 2014 onwards, when the nature of the market changed, that advisers were asked to give valuations as part of their briefs. The role of advisers would have evolved over time. That would be part of the reason. Second, it would reflect the reverse nature of the inquiry, which prompted the decision by the NAMA board to examine this transaction.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Deputy Kelly might finish now.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I will conclude-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
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On a point of information, perhaps the Deputy might give way in order that I can get clarification from the Comptroller and Attorney General. On advisers, their role and how it changed, Mr. Corrigan seems to have asserted that there was one approach at the time of Project Eagle and that it evolved into something more sophisticated.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What I will say -----

Mary Lou McDonald (Dublin Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I want to check if that is factually correct.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will wait until Deputy Kelly finishes his questioning, which will be in a moment. The reason is that until now I have avoided a forward-and-back form of questioning when the Comptroller and Attorney General is present. I want to-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is a point of clarification.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

In fairness to Deputy McDonald, it is a good question, because there does seem to be a change. Let us find out the facts.

Mr. Seamus McCarthy:

My understanding is that Project Tower would have been contemporaneous-----

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

That was my next question.

Mr. Seamus McCarthy:

-----that it was run around the same time and that, in compliance with NAMA's own loan sale and assets disposal policy, there was loan sale adviser valuation of the portfolio.

Alan Kelly (Tipperary, Labour)
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My final question is specifically addressed to Mr. Corrigan. In or around February 2014, it became widely known that the loans were on the market. Therefore, the process of a confidential loan sale was out of the window. It was over, it was gone. The committee is struggling with an issue. At this point, given that the confidential nature of it was over and everything was out in the open, why was the whole sale strategy not reviewed? Why was there such a rush?

Mr. John Corrigan:

I do not believe there was a rush.

Alan Kelly (Tipperary, Labour)
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It was all concluded pretty quickly.

Mr. John Corrigan:

That does not mean there was a rush. The committee has already heard from my former colleague that these transactions can be completed in a relatively short period. Strategically, we decided to go ahead with the sale. It was a good idea to go ahead with it. I still believe it was a good idea to go ahead with it. When it broke into the public domain, as I mentioned in reply to Deputy Catherine Murphy, there was discussion at board level on whether we would press ahead with it. We decided to press ahead because it represented a good transaction in terms of NAMA's objectives.

Alan Kelly (Tipperary, Labour)
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Did the board think it appropriate to reassess it at any time during the process?

Mr. John Corrigan:

We would have discussed whether we would abandon the process but we decided to press ahead with it. If we consider it as a bulk sale, all of the players that we believed were relevant had, on Lazard's advice, been invited into the competition. As discussed earlier, the alternative was to go back and examine the portfolio and to sell it on a piecemeal basis. However, we did not believe that would have been a good decision. To go back to my earlier point, perhaps the minutes should have reflected that in terms of the colour I spoke about but I certainly know that it was discussed, that we said that the bulk sale was a superior strategy for all of the reasons Mr. Mulcahy mentioned earlier and that we would press ahead with it.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I call Deputy David Cullinane.

David Cullinane (Waterford, Sinn Fein)
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I welcome the witnesses and thank them for attending. I want to check a number of facts in terms who was on the board at what time so that I am clear when putting my questions. Were all three witnesses on the board at the time of the board meeting in October 2013, at which a portfolio sale was initially considered?

Ms Éilish Finan:

Yes.

David Cullinane (Waterford, Sinn Fein)
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A paper, to which I also wish to refer, was submitted to the board on 12 December 2013. Were all the witnesses on the board then?

Mr. John Mulcahy:

It is all set out on page 103 of the Comptroller and Auditor General's report.

Ms Éilish Finan:

To directly answer the question-----

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am asking the question-----

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

For the record.

Ms Éilish Finan:

For the record of the committee, all three of us were on the board in September. I did not attend that meeting.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am not asking that. I am just asking if Ms Finan was a member of the board.

Ms Éilish Finan:

Absolutely.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

On 8 January 2014, Ms Finan was not a member of the board but the other two witnesses were. Is that correct?

Ms Éilish Finan:

Yes, that is correct.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I wanted to clarify that matter. Mr. Corrigan stated earlier that he believed the Project Eagle deal was a good idea and a good deal and that it represented the best outcome. However, it is also the subject of two criminal investigations. More importantly for this committee, it was the basis for a report from the Comptroller and Auditor General, which is very critical of the process. It is, therefore, contested that this was the best outcome. Does Mr. Corrigan accept that to be the case, for starters?

Mr. John Corrigan:

Absolutely, otherwise we would not be here.

David Cullinane (Waterford, Sinn Fein)
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Yes; and it is contested. Mr. Corrigan and the board view this as having been the best outcome but there is an alternative view. That view, shaped by the Comptroller and Auditor General, was based on two years of work and a great deal of investigation into documentation, information, etc., given to the board. That is the basis for his report. I wanted for that to be clarified. I will get to his criticisms and talk through some of those in a few moments.

Mr. Mulcahy spoke about this as being an inspired deal. Those were his words. As it was he who used the word "inspired", I will ask him this question: in his view, what was the genesis of the Project Eagle deal? How was it conceived?

Mr. John Mulcahy:

I do not understand the question.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is a very simple one. It emerged-----

Mr. John Mulcahy:

It was conceived in that we got a reverse inquiry from PIMCO. Is that what the Deputy means?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Sorry?

Mr. John Mulcahy:

It was conceived because PIMCO suggested it would make an offer to NAMA to buy the Northern Ireland portfolio.

David Cullinane (Waterford, Sinn Fein)
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So PIMCO saw an opportunity, approached NAMA and said it wanted a short and exclusive sales process. Is that Mr. Mulcahy's understanding of how it was conceived?

Mr. John Mulcahy:

I do not know if they referred to a short, exclusive sales process at the time but the genesis was that a buyer appeared - which, frankly, I did not think existed - for the whole Northern Ireland portfolio at a figure-----

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This being PIMCO?

Mr. John Mulcahy:

Yes.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That is clear.

Mr. John Mulcahy:

So that is the genesis of it.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Exactly; I thank Mr. Mulcahy for that. Did Mr. Mulcahy read the PIMCO letter that was read into the record of the committee last week?

Mr. John Mulcahy:

No.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay. I will read a passage from it that might be of interest to Mr. Mulcahy because I think it sheds some light on why and how the deal was conceived. It stated:

In April 2013, PIMCO was approached by Mr. Tuvi Keinan, a partner at the law firm Brown Rudnick who then introduced PIMCO to Mr. Ian Coulter of Tughans and Mr. Frank Cushnahan, with whom Brown Rudnick appeared to be working to identify potential purchasers for the NAMA Northern Irish loan portfolio (which later became known as Project Eagle). As we understood it, PIMCO was one of three firms who were approached at the time by these three parties.

This was in April 2013. The first discussions Mr. Mulcahy would have had as a board member was when PIMCO approached the NAMA board. Brown Rudnick, Ian Coulter of Tughans and Mr. Frank Cushnahan were approached by PIMCO well before PIMCO made any approach to NAMA. The parties "appeared to be working to identify potential purchasers for the NAMA Northern Irish loan portfolio (which later became known as Project Eagle)". The genesis of it was that the parties who made up that trio saw an opportunity and approached PIMCO. It was not PIMCO that saw the opportunity. Would Mr. Mulcahy agree?

Mr. John Mulcahy:

I have no knowledge of the events about which the Deputy speaks.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy has knowledge now.

Mr. John Mulcahy:

No, I have not. I have a letter. The Deputy is telling me this, but I do not know this from my own information.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That is not the point-----

Mr. John Mulcahy:

I do not see the relevance of asking me this.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It is very relevant, given that Mr. Cushnahan was a member of the NIAC in April 2013. He was working with Mr. Coulter and Brown Rudnick. PIMCO did not approach them; they approached PIMCO. After that, PIMCO approached NAMA and said it wanted a short and exclusive sales process. PIMCO went on to say the three parties then requested £15 million for the information they brought to PIMCO. It is very relevant. Mr. Mulcahy's view before he came into this room was that PIMCO had approached NAMA. In fact, it goes back earlier. The clock started ticking in April when these individuals approached PIMCO.

Mr. John Mulcahy:

The Deputy is telling me events happened of which I have no knowledge, and that they were a precursor to PIMCO's approaching NAMA. All I know is that PIMCO approached NAMA.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy cannot be expected to comment on something about which he knows nothing.

Mr. John Mulcahy:

Absolutely. I have been trying to make this point.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When did Mr. Mulcahy first become aware of the PIMCO bid?

Mr. John Mulcahy:

September 2013.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I cannot ask you to speculate on who did what on issues about which you do not know anything.

Mr. John Mulcahy:

Thank you, Chairman.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We are here to deal with facts. Witnesses cannot be asked to speculate. If Mr. Mulcahy says he knew nothing, that is his answer.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

With the greatest respect to the Chairman, I am not asking witnesses to comment on what they knew then. I am asking them whether they were aware of the PIMCO letter in which PIMCO said it was approached by these individuals in April. I accept that, at the time, based on the information he had, Mr. Mulcahy may have had a view that he had received an approach from PIMCO. He did not know that, a few months previously, Brown Rudnick, Tughans and Mr. Cushnahan had approached PIMCO. Is it a surprise to Mr. Mulcahy that this is how it transpired?

Mr. John Mulcahy:

Yes, of course.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Is that a worry for Mr. Mulcahy, as a board member?

Mr. John Mulcahy:

Of course, because Mr. Cushnahan was in the middle of it at that time.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This is my point. Given the information we now have, the genesis goes back further. It is not that Mr. Mulcahy knew at the time. We know it now.

Mr. John Mulcahy:

I did not know it at the time or even up to the time when I left the NAMA board. All my decisions were made without that information.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy also said the lack of information is overstated. However, PIMCO was prepared to pay these three partners £15 million for the information. We also know from Cerberus that it was also prepared to pay two of those parties £16 million for the information. Clearly, there was a price and a premium on information, given that they were prepared to pay that kind of money. It was not overstated. It was obviously very valuable information if they were prepared to pay a price for it.

Mr. John Mulcahy:

I am not sure what they were paying for. Is the Deputy asking me to comment on what they were paying for?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This is one of the issues touched on in the report of the Comptroller and Auditor General. Mr. Mulcahy, as a board member, was made aware that there was a conflict of interest and that there were success fees with both Cerberus-----

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Who was made aware of a conflict of interest and when?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The board was made aware of a conflict of interest by-----

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

When?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

They were made aware when PIMCO approached NAMA and said there was a difficulty. We also have the conference calls.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy was not a board member at this stage.

Mr. John Mulcahy:

No.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am not having questions put to a witness about what the NAMA board decided when the witness was not on the board. Mr. Mulcahy can answer only up to the date of his resignation from the board.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I asked whether board members were-----

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy, do not try to answer for the board after you left. Deal with it up to the date on which you left.

Mr. John Mulcahy:

I have been trying to tell the Deputy that I was not aware of the matters which he has spent the past five minutes talking about, either when I was a board member or up to the time I left.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

This is a bit frustrating for me. At the very beginning I asked who was on the board and when. If people were not on the board when decisions were made, that is fine. There are people here who were, and they can answer those questions. I asked at the beginning of the meeting.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In my opening statement, I gave the dates on which people resigned from the board. It is in the report of the Comptroller and Auditor General, appendix B, which states, "Eilish Finan completed her term of appointment on 21 December 2013; John Mulcahy resigned from NAMA and the board with effect from 17 January 2014". Witnesses cannot answer anything in connection with NAMA after the dates on which they left the board. Our committee has no authority regarding their involvement in NAMA. I have restated the dates in case people have forgotten them.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I will put the question in a different way. We know NAMA was made aware of conflicts of interest and a success fee between PIMCO and Brown Rudnick, Tughans and Mr. Cushnahan. It was relayed to the board because we had plenty of discussions with other board members and NAMA around conference call minutes and so on, which is in appendix C of the report. The board was made aware that there was a success fee with Cerberus, Brown Rudnick and Tughans. Is there anybody here who was on the board at the time?

Mr. John Corrigan:

I was on the board at the time.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I will put the questions to Mr. Corrigan. The questions to Mr. Mulcahy were on information, and he said he did not know what information they were providing. Cerberus said the information it provided was "material containing information and research relating to the portfolio's borrowers, guarantees and assets and potential business plans".

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What is the Deputy quoting from?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am quoting from Cerberus's opening statement.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

This is the second time today. Out of courtesy to the Cerberus delegates, who have to come before us this afternoon and read their opening statement, I am not having anyone gazump their opening statement before they make it here at 2 p.m. There will be no question on or reference to Cerberus's opening statement until they make it. We must be fair to the people. They cannot possibly have seen the statement. It is not in the public arena. It has not been made. After they have made their opening statement, if the Deputy has questions for the witnesses, we will contact them. You get the point.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

No, it is a bit unfair.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am making a ruling, whether you like it or not. There will be no discussion on the Cerberus opening statement until the Cerberus delegates make it here this afternoon. I will rule you out of order and move on if you want to talk about the Cerberus opening statement.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The Chairman has made his ruling, so I will ask Mr. Corrigan a question. When the board, of which he was a member, was made aware of the arrangement between Cerberus, Tughans and Brown Rudnick, did anybody on the board ask what information they were providing to Cerberus? Did they ask what the arrangement or the purpose of the success fee and the relationship was?

Mr. John Corrigan:

No, it was a matter between Cerberus and the two parties the Deputy mentioned. To return to the PIMCO transaction, the board's difficulty was with Mr. Cushnahan's involvement in it, and it was on foot of his involvement that the thing could not be proceeded with. If PIMCO had been dealing with just the other two parties and paying a success fee, it would have been entirely a matter for PIMCO and would not have caused the difficulties which Mr. Cushnahan's involvement threw up.

David Cullinane (Waterford, Sinn Fein)
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I will read from the report of the Comptroller and Auditor General's report. With respect to the Chair, these are issues he raised. Conclusion No. 55 reads, "Given the joint agreement between the parties to the success fee arrangement with PIMCO, all of the payment – not just the payment to Mr Cushnahan – should have raised concerns for NAMA."

The same applies in relation to Cerberus. Mr. Cushnahan had a relationship with Brown Rudnick and Tughans and the Comptroller and Auditor General said that his departure did not mean it was the end of the problem. The board should have interrogated it more.

Mr. John Corrigan:

That is the view of the Comptroller and Auditor General and one the board clearly did not share. Success fees are not unusual; they are a matter between the purchaser and the person they are paid to. I am not a party to what the fee was paid for. The report of the Comptroller and Auditor General quotes the letter of assurance NAMA got from Cerberus which clearly indicates that no NAMA-----

David Cullinane (Waterford, Sinn Fein)
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The Comptroller and Auditor General goes on to state, in finding No. 56, that the understanding that Brown Rudnick and Tughans had allegedly been in an arrangement with a member of the NIAC at any stage of the process should have raised concerns for NAMA over the potential impacts of such arrangements on the sales process. The following finding is that the board did not appear to have asked Cerberus when it engaged Brown Rudnick, or what the precise nature was of the service Brown Rudnick and Tughans were providing for Cerberus, notwithstanding any opening statements that may or may not have been made to the effect that information was not sought. They were clearly providing a service but the board never asked what that service was. The board knew they were working with, or had an association with, a NAMA board member and the question of a conflict of interest was clearly discussed because other board members have said they were horrified to find this.

Mr. John Corrigan:

Mr. Cushnahan was not a board member of NAMA but was a member of the Northern Ireland advisory committee and our information was that no price-sensitive information was discussed at that committee. The discussions around Mr. Cushnahan and the termination of the PIMCO discussions were largely around the board's concerns over the reputational risk involved.

David Cullinane (Waterford, Sinn Fein)
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I am trying to understand where the board was at that time. I fully understand that the board did not have all the information which we have today. We are getting information all the time and have received some from PIMCO, Fortress and Cerberus, giving us facts the board did not have and I do not expect the board to operate on the basis of hindsight. However, I ask the board to give us a view as to why they made decisions at the time, and there is some criticism from the Comptroller and Auditor General in that regard. We know that Mr. Corrigan was made aware of the fact that there was a success fee arrangement involving Frank Cushnahan, Tughans and Brown Rudnick in regard to PIMCO. It was extraordinary that Brown Rudnick and Tughans approached Cerberus and offered their services. The Comptroller and Auditor General is asking why the board never asked what these services were. It made no connection with the fact that they had an association with a member of the NIAC and that, potentially, the process had become contaminated. The report of the Comptroller and Auditor General states that appropriate action was not taken.

Mr. John Corrigan:

The PIMCO sale did not proceed because the board was concerned over the reputation risk around Mr. Cushnahan's involvement. We were assured, and had no reason not to believe, that the Northern Ireland advisory committee had no access to any debtor information. It was a question of perception and the reputational risk.

The Comptroller and Auditor General may have his own opinion on Cerberus-----

David Cullinane (Waterford, Sinn Fein)
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I need to clarify one point. Mr. Corrigan is factually wrong because finding No. 54 states that during NIAC meetings and annual statements of interest, one external NIAC member, Mr. Frank Cushnahan, declared his involvement as an advisor to six NAMA debtors. It goes on to state that the NAMA board should have formally considered whether Mr. Cushnahan's engagement in discussions of the strategy, including the approach of Brown Rudnick and PIMCO, was consistent with his ongoing involvement as a financial adviser to a significant proportion of NAMA's Northern Ireland debtor connections. He did have an association with debtors and declared this to NAMA. NAMA was aware of it but did not see it as an issue. Given that this made up 50% of the loan portfolio, clearly it was an issue.

Mr. John Corrigan:

That was a matter for the chairman of the Northern Ireland advisory committee to decide.

David Cullinane (Waterford, Sinn Fein)
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Was it not an issue for Mr. Corrigan, as a board member?

Mr. John Corrigan:

I was not at the Northern Ireland advisory committee. No debtor information was promulgated by NAMA at the Northern Ireland advisory committee.

David Cullinane (Waterford, Sinn Fein)
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Is Mr. Corrigan telling us that the NAMA board was never made aware of this conflict of interest and that it was never brought to the attention of the full board?

Mr. John Corrigan:

The minutes of the Northern Ireland advisory committee were circulated to the NAMA board and we were made aware of this.

David Cullinane (Waterford, Sinn Fein)
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The board was aware of his association with debtors.

Mr. John Corrigan:

We would have been made aware through the Northern Ireland advisory committee of his association with debtors. However, no debtor-specific information was circulated, discussed or made available to the Northern Ireland advisory committee members.

David Cullinane (Waterford, Sinn Fein)
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He had the information directly from the debtors. He was working with the debtors, was a member of the NIAC board and ended up working with Brown Rudnick and Tughans. They were touting for business and were approaching three potential bidders. According to PIMCO it was approached by these parties.

Mr. John Corrigan:

No information was discussed at the Northern Ireland advisory committee which could have been of benefit to the debtors.

David Cullinane (Waterford, Sinn Fein)
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Mr. Rowntree says something different. He said he would be smiling-----

Mr. John Corrigan:

I was not at those meetings.

David Cullinane (Waterford, Sinn Fein)
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Mr. Rowntree was at those meetings and he said he would be smiling if he was a potential bidder with access to the information he had.

Mr. John Corrigan:

I was not at those meetings.

Seán Fleming (Laois, Fianna Fail)
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Mr. Corrigan was not at those meetings.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Ms Finan was on that committee. Can she comment on it?

Ms Éilish Finan:

I attended approximately five meetings every year of my four years' tenure at the Northern Ireland advisory committee. The terms of reference of that committee were devised by the NAMA board, approved by the NAMA board in 2010 and marginally revised in, I think, 2011. At no point was there ever a discussion at the Northern Ireland advisory committee on any specific borrower or any specific property. That is a really important point to put on the record. It was always a strategic discussion with the paramount focus being on the expeditious requirement of NAMA to sell the assets in the interest of the Irish taxpayers, with a stakeholder focus which was the Northern Ireland cohort within the country of Ireland. It was a collaborative, strategic committee. That was its purpose and that was how it carried out its duties. We, and all members including the external members, were fully aware of its terms of reference and complied with the restrictions, which required confidentiality at the borrower level. During my term of office, which coincided with the term of office of Mr. Cushnahan prior to his resignation, there were four disclosures at the committee. They were not disclosed in the minute details but my recollection is that they referenced two or three borrowers. At no point was there a disclosure about PIMCO. It is really important to understand that up until the end of December 2013, the involvement of PIMCO or any other Northern Ireland party was not disclosed at the committee and therefore the board would not have had knowledge of it.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The Chairman might bear in mind that I lent some of my time to finish off a question for Deputy Cullinane. During Ms Finan's time at the Northern Ireland advisory committee, did she ever get a sense from the Northern Ireland representatives, such as Mr. Cushnahan, that its strategic focus was to extract the Northern Ireland interest from the NAMA portfolio?

Ms Éilish Finan:

No, I did not, but I had an absolute sense that its primary focus would be Northern Ireland, and this was its right, while the board's primary focus was the taxpayer.

There was tension between the Southern Ireland taxpayers' awareness and our responsibility as a board versus the Northern Ireland cohort, but that is life.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Did the tension manifest itself through a suggestion that the throwing of all the developers in the South under a bus would destroy the economy in the North?

Ms Éilish Finan:

No, not directly. In fact, there was an ongoing fear that NAMA might have a piecemeal, bit by bit fire sale of the assets. That is the term that was used and I think it has been used during the course of this committee's discussion. That was an absolute concern of the Northern Ireland external members of what was effectively-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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They wanted to avoid it.

Ms Éilish Finan:

Yes. We absolutely would not have wanted a fire sale. The board and, therefore, the board members within the Northern Ireland committee would have been fully aware and cognisant of its requirement as a governing body to do the best for the Irish taxpayer. That was our focus.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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No, I understand that. As time is limited, I have to rush at times when I get what I need and apologise if it comes across as rude.

Was there a sense that the Northern Ireland representatives were reporting to the First Minister, the Executive or anybody else?

Ms Éilish Finan:

The two external members were nominated by the Northern Ireland-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Of course. We know that they were.

Ms Éilish Finan:

Yes.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Was it assumed that they were reporting to them, or that there was a reporting structure?

Ms Éilish Finan:

We assumed, by virtue of their requirement to be confidential within the four walls of the committee, that their confidentiality could be taken on trust. On the question of whether we were aware that there was a risk, in any forum one is aware that there could be a risk.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Of course.

Ms Éilish Finan:

They had a requirement to maintain their confidentiality.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I know of their legal obligations; I just wanted to know whether there was a sense that-----

Ms Éilish Finan:

There was an awareness that there might be a risk.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I am conscious that Ms Finan left in December. Was it ever suggested during a discussion that a memorandum of understanding that could be included in any sale negotiations by NAMA might be drawn up to cater for the worries of the Northern Ireland side, or those of the Southern side in the light of NAMA's responsibilities to the taxpayer?

Ms Éilish Finan:

Between which parties would such a memorandum of understanding have applied?

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I presume it would have applied between the Northern Ireland Government and the third party which might be the ultimate buyer of-----

Ms Éilish Finan:

No, that was never discussed and it never arose as a concept.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I would like to put a question to Mr. Corrigan. We heard evidence yesterday from the deputy First Minister in Northern Ireland, Mr. Martin McGuinness, on the specific question of a memorandum of understanding that had emerged. It was prepared by at least one half of the Executive in Northern Ireland. To the best of Mr. McGuinness's recollection - he said he thought he was correct, but he might stand corrected - this memorandum of understanding had been provided for NAMA within three days of a conference call that had taken place between Mr. McGuinness, the Minister for Finance here and the then First Minister, Mr. Peter Robinson, in the North. That was in February 2014, which was obviously before any sale was concluded. Is Mr. Corrigan in a position to confirm or deny that the memorandum of understanding was provided for NAMA?

Mr. John Corrigan:

No. I read a report to that effect in a newspaper ahead of Mr. McGuinness giving evidence. I do not recall anything about a memorandum of understanding. I think I read about it in a newspaper on Tuesday.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Let us leave the context aside for one moment. To Mr. Corrigan's recollection or knowledge, as a board member all through this period, the existence or otherwise of a memorandum of understanding was not party to the sale negotiations, as far as the board had been informed. Would it be fair to say this?

Mr. John Corrigan:

I have no recall of a memorandum of understanding.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Is it simply that Mr. Corrigan has no recall, or can he confidently say-----

Mr. John Corrigan:

I am 99.99% confident. I can say with confidence that I was not aware of a memorandum of understanding.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Is it the case that Mr. Corrigan could stand corrected or that he was not so aware?

Mr. John Corrigan:

One could always stand corrected. I am giving-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Suffice it to say Mr. Corrigan is sure.

Mr. John Corrigan:

I am making this statement in good faith. I have no recall and do not believe-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Mr. Corrigan does not believe the board was informed of any memorandum of understanding or its contents, or of anything else around the sale.

Mr. John Corrigan:

No.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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If there was such a memorandum of understanding and it advocated the release of guarantees, would Mr. Corrigan have a view on it?

Mr. John Corrigan:

I would, but we are entering the realm of speculation. It would have affected the value of the loans and would have-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It would.

Mr. John Corrigan:

It is certainly something that, if it had surfaced-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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No.

Mr. John Corrigan:

I am speculating.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The reason I asked the question was to get into the exact question on which Mr. Corrigan had touched. The release of guarantees in a loan sale would have been a factor. Mr. Corrigan has rightly said "it would have affected the value..."

Mr. John Corrigan:

Yes.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Will he confirm whether his assumption in making that statement is that it would have affected the value downwards or upwards?

Mr. John Corrigan:

Negatively, obviously.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I thank Mr. Corrigan. Has Mr. Mulcahy who has considerable experience as head of the asset management agency and previously in Jones Lang LaSalle ever come across the release of guarantees in any sale by NAMA south of the Border?

Mr. John Mulcahy:

As I think I said earlier, I was not involved in loan sales.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I know that Mr. Mulcahy was not, but he has considerable experience in the industry. He was there in the building-----

Mr. John Mulcahy:

Not in loan sales.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I will ask Mr. Mulcahy about property sales in one second, but for now I would like to ask him whether he would have been aware, even though he was not directly involved in loan sales, of any release of guarantees taking place in any loan or property disposal south of the Border.

Mr. John Mulcahy:

Is the Deputy asking about it happening before they were sold?

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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No, I am asking about the release of guarantees taking place as a condition of sale. I will give an example. To Mr. Mulcahy's knowledge, notwithstanding the fact that he was not directly or specifically involved in loan sales, would a memorandum of understanding of this kind ever have been a precondition of the sale of a loan by NAMA to an investment company? Would NAMA have stated, "We are selling you X for Y, but you have to release everybody out the gap from their corporate or personal guarantees"?

Mr. John Mulcahy:

I do not know of how much use what I have to say in response to that question might be. As I was not involved in loan sales, my experience is very limited. However, I will answer the question the Deputy has asked by saying I would be surprised if guarantees were released before a loan was sold, but I do not know if that is helpful.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I have a more specific question. If Mr. Mulcahy was buying a loan book from me, would he ever imagine it being a condition of sale that, as soon as he bought it, he release everybody from their corporate or personal guarantees?

Mr. John Mulcahy:

I would be surprised.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Would he be surprised, or does he think he never heard of that before?

Mr. John Mulcahy:

I do not want to repeat myself. As I was not involved in loan sales, it really would not be of much help to the committee for me to say I have never heard of it before.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I appreciate that. Equally, Mr. Mulcahy will appreciate-----

Mr. John Mulcahy:

If I had a loan belonging to the Deputy - God forbid - with a personal guarantee and I was going to sell it, I would consider it unusual to include a letter stating the buyer would have to release the guarantee before taking ownership of the loan.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Would it be unusual or unheard of?

Mr. John Mulcahy:

Come on; I have told the Deputy that I am not involved-----

Seán Fleming (Laois, Fianna Fail)
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Is Deputy Marc MacSharry talking about the guarantee being released by the purchaser or the seller?

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The purchaser.

Seán Fleming (Laois, Fianna Fail)
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The Deputy phrased the question in such a way that it was NAMA that was going to release the guarantee.

Mr. John Mulcahy:

I think what he-----

Seán Fleming (Laois, Fianna Fail)
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He is actually talking about the purchaser of-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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With respect, Chairman, yesterday we heard evidence of a memorandum of understanding-----

Seán Fleming (Laois, Fianna Fail)
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From whom?

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It emanated from the Northern Ireland authorities. Yesterday a witness told us that it had ended up with NAMA within three days of a three-way conversation that had included the Minister down here. I am trying to establish whether the people in NAMA knew about it at the time. They have said they did not. I want to take advantage of the fact that we have certain expertise before us and want to know whether that kind of thing is the norm. We have established from Mr. Corrigan that if there was a memorandum of understanding at play, it would have served to reduce the value. Mr. McGuinness said yesterday that, to the best of his knowledge, this had been the case and that NAMA had been informed of it. A NAMA board member has said it would bring down the value. That is why we are all here. We want to know whether there was a loss of money to the taxpayer. Therefore, it is perfectly relevant.

Seán Fleming (Laois, Fianna Fail)
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For the Deputy's information, the chairman of NAMA addressed this question previously. He said the memorandum had no legal standing and no basis-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I understand that.

Seán Fleming (Laois, Fianna Fail)
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He said the document had no legal standing or basis and was not worth the paper on which it was written.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I know, but we are not talking to him today.

Seán Fleming (Laois, Fianna Fail)
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I just want Mr. Mulcahy to be aware of this because he would not have read all the transcripts. He gave no standing.

Mr. Seamus McCarthy:

I am sorry to intervene but just as a matter of record, I would ask everyone to turn to 108 of the report which contains an extract from the signed minutes of the board's meeting on 12 December 2013. The second paragraph concludes with the following:

The board also noted the sensitive matter of PGs [personal guarantees] and the risk to wider NAMA debtor management should Pimco release debtors from PGs [personal guarantees] - notwithstanding this could occur following any completed loan sale.

Seán Fleming (Laois, Fianna Fail)
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The release of debtors by PIMCO, not by NAMA?

Mr. Seamus McCarthy:

Yes, by PIMCO.

Seán Fleming (Laois, Fianna Fail)
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Thanks.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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All I am trying to find out is whether a memorandum of understanding existed, as far as NAMA is concerned. Mr. Frank Daly has given his view on it but frankly, I do not know. I want to get to the bottom of it. If there was such a memorandum, it would have brought down the value and that is a concern. Mr. McGuinness said that the document went to NAMA but I do not know if that is true. Anecdotal evidence suggests that guarantees were released and all 56 connections were out the gap. I have a concern, which I why I am asking these questions.

I will now move on to the valuation issue. In terms of valuations, Mr. Mulcahy would have been responsible for property disposals and that kind of thing. Is that correct?

Mr. John Mulcahy:

Yes.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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If NAMA had stock or file valuations for assets in 2009 which it was disposing of in 2013 or 2014, would it have been prudent, in terms of best practice, to update those valuations?

Mr. John Mulcahy:

Again, if the Deputy reads the Comptroller and Auditor General's report he will see that the valuations were updated. What we did not do was a complete revaluation of the entire portfolio at a particular point in time.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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What is the difference?

Mr. John Mulcahy:

First of all, the loans tend to be valued on a cash flow basis, not on the basis of the underlying asset. I notice that members of this committee often interchange the word "asset", meaning two different things. In some senses, the Comptroller and Auditor General did the same thing. There are two meanings. The assets that NAMA had were the loans to the debtors. I do not want to be patronising here but this is important. The loans to the debtors are one asset. The underlying security, the real estate, is a separate asset. NAMA did not have access to the underlying real estate. It may inform the value of the loan. In fact, it informs a fairly big backbone of the value of the loan but to dive into the value of the underlying real estate is not as pertinent as looking at the value of the loans.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Okay. So just-----

Mr. John Mulcahy:

When they value the loans-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I thank Mr. Mulcahy for the explanation of the definition of assets. I will ask the question again. Does Mr. Mulcahy think it would have been prudent to update a 2009 valuation for a 2013 disposal, regardless of whether it was bricks and mortar or a loan?

Mr. John Mulcahy:

No, not if one has a market process.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Let us say I went-----

Mr. John Mulcahy:

It is always better to have the maximum amount of information but one must balance that-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Would Mr. Mulcahy think it prudent to have up to date valuations?

Mr. John Mulcahy:

It is not imprudent not to have them.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is not imprudent? That means prudent, then, does it not?

Mr. John Mulcahy:

No, because the Deputy cannot ask me to say, if we had up to date valuations, would it not be better than if we did not have up to date valuations. Clearly, it would be better but is it necessary in the overall commercial balance of the thing? No.

Seán Fleming (Laois, Fianna Fail)
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The Deputy must conclude.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I gave a lot of time for clarification so I ask the Chairman to bear with me. I just want to stick to the point on valuations for a second. When NAMA was selling assets, for example, houses or pubs, is it not true to say that it got three valuations under Mr. Mulcahy's watch?

Mr. John Mulcahy:

No, not necessarily.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Is it not the case that when NAMA was selling assets - bricks and mortar or the underlying assets - it would ask for three valuations?

Mr. John Mulcahy:

It depends on the context, frankly.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Let us say a house in Kiltyclogher is being sold for €50,000. Was it the practice that NAMA, before selling that, would seek three valuations?

Mr. John Mulcahy:

I cannot recall but one would be enough for me.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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One would be enough for Mr. Mulcahy. Let us say there is just one valuation. My experience is different and that seemed to be confirmed by Mr. Brendan McDonagh when he appeared before this committee and said that I was aware of the process, and indeed I am.

Let us just take it that one valuation was enough for Mr. Mulcahy. As a board member, albeit not on the loan sales side of the business, would it not be a major surprise to Mr. Mulcahy that the biggest transaction in the history of the State, not least in the history of NAMA, would require no update of valuations, not even one update, which Mr. Mulcahy says would have been enough for him?

Mr. John Mulcahy:

At the risk of repeating myself, the Deputy has gone again from looking at the value of the loans, which were valued by the NAMA team-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In 2009. Is that not correct?

Mr. John Mulcahy:

-----as loans. The Deputy has dived away from the value of the loans into the value of the underlying assets-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No, I have not.

Mr. John Mulcahy:

-----the security. He is trying to make one look like the other when that is not the case.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

No, I am not doing that.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Are we talking about the loan sale or the sale of the property?

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We know exactly what we are talking about. If Mr. Mulcahy ever wants to have a career on this side of the room he probably has every chance of securing one, in terms of the diplomatic nature of his answers. What I am saying is-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Only in Fianna Fáil, though.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What I am is that the facts show, from the evidence we have heard so far, that this loan book was sold on the basis of 2009 valuations.

Mr. John Mulcahy:

Wrong.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

We know that.

Mr. John Mulcahy:

No, that is wrong.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Wrong?

Mr. John Mulcahy:

The board paper values the loan based on the cash flows. The Comptroller and Auditor General's argument with NAMA is all about cash flows and discount rates-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will just rephrase what I said-----

Mr. John Mulcahy:

That is how the loans were valued.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will just rephrase what I said. In the data room-----

Mr. John Mulcahy:

There was no argument about the value of the underlying security that I could see.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In the data room that was provided to potential purchasers, or certainly to one of them, the parties were shown valuations of the underlying assets from 2009. We have already established that Lazard was not valuing the loans on this occasion - I do not know why it was paid all of the money it received - even though it did so for Tower, as the Comptroller and Auditor General has pointed out. Why would NAMA not have obtained updated valuations for the biggest property related transaction in the history of the State?

Mr. John Mulcahy:

I do not want to irritate the Deputy by giving him the same answer that I gave a moment ago, which was that we were selling the loans. The loans were valued and those valuations were updated. The Deputy is talking about the value of the underlying security and whether it would have served a useful purpose to-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I promise to conclude now. Why would the 2009 valuation of the underlying assets on the one hand and of the loan book on the other not have been updated in the context of the biggest transaction in the history of the State?

Mr. John Mulcahy:

First, I have just said that the loans were valued. They were valued in the papers presented by the group within NAMA and presented to the board. They were updated. Based on that, the board decided that there was a compelling commercial case-----

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There was an internal valuation.

Mr. John Mulcahy:

They were the best people in the business to------

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Then why did the same internal valuers not deal with the Tower case, for example? Why did NAMA need to pay Lazard millions-----

Mr. John Mulcahy:

I was not involved in the Tower case.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am asking Mr. Mulcahy, as a board member, why NAMA would apply one set of criteria, albeit bespoke and recklessly so, to this portfolio and not get external valuers? Why did it take the view that it was only Northern Ireland and that the internal guys would do a good job on that? Why would NAMA bother wasting money getting Lazard or others in for Tower but would not do that-----

Mr. John Mulcahy:

I do not know the answer to that question truthfully, but I would be happy to rely on NAMA's internal people and then go into a market process, which is what we did.

Marc MacSharry (Sligo-Leitrim, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

On the same question, what is Mr. Corrigan's view?

Mr. John Corrigan:

NAMA had recruited people who were experts in the business. We assembled a very good team and I was happy to rely on their valuation of the loans. There seems to be an idea that NAMA should have sought external advice on every issue but we had assembled a very good team of people who were experts in this area. They were not gifted amateurs. They were professionals.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Deputy Connolly is next.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Thank you very much. I welcome the witnesses. I have adopted the same approach to all witnesses, so I will begin by asking if they have read the report of the Comptroller and Auditor General.

Ms Éilish Finan:

Yes.

Mr. John Corrigan:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy?

Mr. John Mulcahy:

I was nearly going to ask if the Deputy has read it. Yes, I have read it.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I have read it. In fact, I have lost track of the number of times I have read it. Has Mr. Mulcahy read it completely?

Mr. John Mulcahy:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Then he will know that it is not just about the percentage. There are lots of issues raised in the report. Is that not correct?

That is a "Yes" or "No" answer please. There are a lot of concerns raised in this report in relation to conflict of interest, inadequacy of records, failure to look at alternatives, failure to follow-up on conflicts of interest. That is what the report is about. Do all three of the former board members present accept that? They all have read it. Does Mr. Mulcahy?

Mr. John Mulcahy:

That there are issues raised, of course. Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

On those issues that I am raising, as set out in this report-----

Mr. John Mulcahy:

They were not of concern to me.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I beg Mr. Mulcahy's pardon.

Mr. John Mulcahy:

They were not of direct concern to me.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

They are of direct concern to this committee-----

Mr. John Mulcahy:

Of course.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

-----and to the taxpayer and to the people who are listening to us. It is of direct concern to trust and confidence in the system. I leave aside the probable loss. What is being brought into question here is the process of the sale, the concerns over a conflict of interest and how that should have been followed-up on, the inadequacy of records, etc. That is what I am concentrating on here.

My first question is, have Ms Finan and Mr. Mulcahy, both of whom have gone on to other jobs, met NAMA to discuss an approach to this committee? Has there been a meeting between them?

Mr. John Corrigan:

Yes. I met to seek clarification on a number of facts. Certainly, it was not to discuss how I would approach the committee. I am quite independent in the delivery of my evidence here today, but certainly there were a number of factual questions which I had and they were answered. They were also kind enough to send me printed transcripts of the evidence given here. That was a facility that NAMA made available to me. My home printer probably would have blown up if I myself had tried to print it off.

Catherine Connolly (Galway West, Independent)
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Absolutely. I welcome Mr. Corrigan to the club. Did Mr. Corrigan get all the transcripts?

Mr. John Corrigan:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Did Mr. Corrigan have a meeting with NAMA?

Mr. John Corrigan:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Corrigan is still on the board of NAMA.

Mr. John Corrigan:

No. I am retired, happily, two years now.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am sorry, I beg Mr. Corrigan's pardon. Did Mr. Corrigan go back and meet NAMA?

Mr. John Corrigan:

I had one meeting with NAMA. The three of us had a factual session with NAMA.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What were the facts that came out of that?

Mr. John Corrigan:

There were a number of factual questions around-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What were they? What was Mr. Corrigan trying to clarify? It would be of help to us as well.

Ms Éilish Finan:

Perhaps I can just assist here. There is a ruling made by the board of NAMA, which, I think, is a wise ruling, that the retention of papers is not material that can be held by a board member subsequent to his or her tenure. Subsequent to each of our departures any board paper or any relevant NAMA paper was returned. I am out of the board three years, as is Mr. Mulcahy, and Mr. Corrigan is out approximately two years. In fairness, there was material that we would have liked to have reread. We attended a meeting and they kindly sent, as Mr. Corrigan said, some additional transcripts, which was more about this committee. Minutes of certain meetings relevant to the point of the PAC for main points of discussion were made available to us to allow us reflect and recall the context, and that was it.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Was it one meeting with all three of the witnesses?

Ms Éilish Finan:

One meeting with-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

With whom in NAMA?

Ms Éilish Finan:

-----Mr. Brendan McDonagh, Mr. Frank Daly and-----

Mr. John Corrigan:

Mr. John Collison.

Ms Éilish Finan:

-----Mr. John Collison.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

In regard to the evidence here today, did they agree what should be said?

Ms Éilish Finan:

No.

Mr. John Corrigan:

Absolutely not.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is okay. I have to ask the question. They did not.

Ms Éilish Finan:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Did they go through this report then and look at conflict of interest and the sale process and records?

Ms Éilish Finan:

We did not do a turn-paper of that report at the meeting. Did we go through it individually? I can say I absolutely went through the report, but not at the meeting.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Ms Finan went in 2013 and prior to that, Mr. Cushnahan had retired in November 2013.

Ms Éilish Finan:

Yes. His-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is okay.

Ms Éilish Finan:

The last meeting was October 2013.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am telling Ms Finan he retired in November. It is from what I know but nothing hangs on that, other than what was brought to Ms Finan's attention. Ms Finan was on both the board and the committee. What was brought to Ms Finan's attention in terms of his reasons for resigning?

Ms Éilish Finan:

His reasons were not verbalised directly from him to the committee members, as far as we were led to believe.

Catherine Connolly (Galway West, Independent)
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What was brought to Ms Finan's attention as his reason for resigning?

Ms Éilish Finan:

The answer to the question was: his reasons, which were brought to the attention directly of the chairman and from the chairman to the committee members, were personal and that was as much as he disclosed.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Did Ms Finan discuss anything else about it? Was a conflict of interest brought to Ms Finan's attention at that point?

Ms Éilish Finan:

To repeat some of what I personally said here earlier, they were four disclosures during his term.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Would Ms Finan listen to me? After he retired and resigned, did Ms Finan discuss conflict of interest with him?

Ms Éilish Finan:

Okay, I am answering Deputy Connolly's question directly. There were four disclosures during his term of office as a member of the Northern Ireland Advisory Committee. None of them were material interests discussed during the course of any of the Northern Ireland meetings and, therefore, it was not apparent to the members of the Northern Ireland committee at the point of his resignation and, therefore, not apparent to the board members that there was any glaring conflict.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Ms Finan, I am sorry, I have only a certain amount of time. Please let me ask the question and I would like a straight answer. I am very factual.

Ms Éilish Finan:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

When he resigned, did Ms Finan then have a discussion at the committee or the board level about the reasons for his resignation?

Ms Éilish Finan:

We discussed the reasons as presented to the chairman and they were personal. There was no commercial other reason presented to us.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What personal reason? Sorry now. Obviously, the chairman said personal reasons. There would be discussion then, would there?

Ms Éilish Finan:

There was a discussion as to the context in the statement of resignation, which was personal. There was no reason to believe at that point that there was - other than the disclosures, the four that I already referred to - any risk from a conflict standpoint bearing in mind that the Northern Ireland committee never discussed at borrower level.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am sorry I do not understand Ms Finan's reply. The reason given was personal reasons.

Ms Éilish Finan:

That is correct.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

If I resigned from this committee for personal reasons, there would be no discussion. Personal reasons might include a medical matter.

Ms Éilish Finan:

That is correct.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Okay. In regard to Mr. Cushnahan, was there a discussion about a conflict of interest after he resigned?

Ms Éilish Finan:

There was a discussion as to the scope of his resignation which - he made a statement - was for personal reasons. Was there any other knowledge discussed or were we made aware of any other possibility? No, we were not aware of any other conflict that existed at that time. I am answering Deputy Connolly very directly. There was no further discussion, no further knowledge, no further awareness, other than the four disclosures made during his term of office.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

In his private role, is it not correct he represented six or seven debtors in Northern Ireland, 50% of whom constituted the Project Eagle portfolio?

Ms Éilish Finan:

That appears in hindsight to be correct, yes. I was aware of the four disclosures but not necessarily of the 50% ratio which has since been reported.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Will Ms Finan stay with me on that now? How would a member of the NAMA board and of the Northern Ireland Advisory Committee not know that?

Ms Éilish Finan:

At the Northern Ireland Advisory Committee, we never discussed borrowers - size or name.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

His declarations of interest would have been clear, would they not?

Ms Éilish Finan:

They would have been clear, as the Deputy probably has seen from the minutes. What was never discussed was a borrower, by name or by size.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Was Ms Finan aware that Mr. Cushnahan represented six or seven debtors whose debt amounted to 50% of the Project Eagle debt?

Ms Éilish Finan:

I am aware of the four disclosures that were made.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I ask Ms Finan to listen to my question, please. Was she aware that it represented 50% of the Project Eagle debt?

Ms Éilish Finan:

I was not aware of anything other than that which was disclosed during four disclosures where there was no quantum discussed, either as a composite or individually.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Corrigan was on the NAMA board after the other two witnesses left the committee, right into 2014. Is that correct?

Mr. John Corrigan:

Yes, through to 4 January 2015.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Corrigan will have read the Comptroller and Auditor General's report.

Mr. John Corrigan:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The Comptroller and Auditor General made the point that there should have been further follow-up on the conflict of interest issue that arose. Is Mr. Corrigan aware of that?

Mr. John Corrigan:

Yes. I read that in the report.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Does Mr. Corrigan agree with the Comptroller and Auditor General on that?

Mr. John Corrigan:

Knowing what I know now, yes. At the time of the conversations with PIMCO, I think, in February-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It was March 2014.

Mr. John Corrigan:

March, sorry. At that time, Mr. Cushnahan had gone off the Northern Ireland committee and the PIMCO deal had not proceeded. As far as we were concerned, that was the end of it.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is what all of the NAMA-----

Mr. John Corrigan:

That is the truth.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I am only trying to elicit------

Mr. John Corrigan:

It is up to the committee to decide whether that was ill judged or whatever------

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Absolutely.

Mr. John Corrigan:

-----but I am answering the question directly.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I appreciate that and I am not attacking Mr. Corrigan in any way. However, NAMA did not pursue it at the time. The Comptroller and Auditor General's report is saying it should have been done and it should have been followed up at that point. Mr. Corrigan does not think so.

Mr. John Corrigan:

We had no reason to follow it up.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Okay.

Mr. John Corrigan:

As I said, Mr. Cushnahan was gone off the Northern Ireland committee-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is okay. I hear what Mr. Corrigan is-----

Mr. John Corrigan:

-----and the PIMCO transaction did not proceed. Certainly, I had no knowledge of the extent of Mr. Cushnahan's involvement with Northern Ireland debtors as represented by Deputy Connolly.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Not represented by me; the Comptroller.

Mr. John Corrigan:

Well, as represented by the Deputy but as is now known. I did not know about that.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

So, there is divergence between Mr. Corrigan and the Comptroller and Auditor General in relation to the necessity to follow up. Let us move forward then to when Cerberus took over. When did NAMA become aware that the same legal advisers had moved on to Cerberus from PIMCO?

Mr. John Corrigan:

I cannot remember. I read the evidence and whatever the executive said in relation to its discovery I presume I would have been made aware of. I have no distinct recall.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It is important and I am not trying to catch Mr. Corrigan again. If he does not know, that is fine and I will move on. However, it is key. It is one of the keys because the NAMA CEO and chairman have been here and, subject to correction and checking the thing, they said they only became aware of the legal advisers at a certain date. Mr. Corrigan cannot add or take from that.

Mr. John Corrigan:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

He does not know.

Mr. John Corrigan:

No. I-----

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I ask Mr. Corrigan to let me put a question to him now. They were the same legal advisors. They had advised PIMCO. PIMCO withdrew on 12 November. Within a matter of, let us not exaggerate, two weeks they were now advising Cerberus. Would that raise concerns on a NAMA board? Should it have?

Mr. John Corrigan:

The advisors to Cerberus were Linklaters and A&L Goodbody. I was not aware of the involvement of the firms the Deputy has mentioned.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Brown too.

Mr. John Corrigan:

Yes. Their involvement in the PIMCO transaction was not a particular source of concern. It was Mr. Cushnahan's involvement and the reputational risk that represented.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I understand that. I have moved onto Cerberus now and within ten or 12 days, the same legal advisers had moved on to a new company which won and bought. Mr. Corrigan cannot add to that.

Mr. John Corrigan:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

He does not know. In relation to his superb offer and wonderful opportunity, Mr. Mulcahy was surprised someone came forward with the offer they did. Is that correct?

Mr. John Mulcahy:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

He would have sold for a lesser sum. Is that correct, given everything he has outlined and the worries?

Mr. John Mulcahy:

Well, I would have been interested at a lesser sum, yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

That is very honest and straight. He was not involved in the sale process whatsoever.

Mr. John Mulcahy:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

When he read the Comptroller and Auditor General's report and looked at the various elements in the sales process, was it something that would have given him cause for concern when he was there at the time?

Mr. John Mulcahy:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It would not. As such, Mr. Mulcahy disagrees with the Comptroller and Auditor General on the concerns raised regarding the limited time and information.

Mr. John Mulcahy:

I do.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

On all of those issues.

Mr. John Mulcahy:

I think he got that module wrong. A lot of the other stuff he raises is valid enough.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What is valid in relation to what he raised?

Mr. John Mulcahy:

The usual stuff about having better documentation and more reporting lines he could trace and so on. One would always take those as criticisms. I just speak for myself but the essential point that I disagree with is where he makes a commercial judgment in the middle having said that he was not, by the way.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Where does he make the commercial judgment?

Mr. John Mulcahy:

If one boils it down and reads all of the transcript, what he basically says is that instead of selling for €1.3 billion, there was another option of working out the portfolio and achieving a better result. That is the €190 million.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Mr. Mulcahy is totally wrong and I suggest he goes back and rereads it. He has made no commercial decision. He has made no judgment.

Mr. John Mulcahy:

No, the Deputy should go back and read it. That is why I said it. What he actually says is-----

Catherine Connolly (Galway West, Independent)
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He makes no comment on the decisions by NAMA to sell. He makes no comment on its commercial judgment. He looks at the records and raises issues. What he says is that he is not reassured in relation to the 10% the witnesses say NAMA used. He is not reassured by NAMA's explanations. Sorry now, but throwing up of hands is not helpful because this is the report we are dealing with. We are not dealing with allegations. We are dealing with a report that raises serious concerns. Mr. Mulcahy is coming in here and telling us it was superb, wonderful and he would have sold for less actually. I asked him at the beginning if he had read it. If he goes back and reads it, he will see that he makes no decisions, but rather raises concerns repeatedly and draws conclusions from the records or the absence of records, in particular that there was no outlining of an alternative strategy, no grounding for a change of strategy in mid-term and many other reasons. That is why I asked if Mr. Mulcahy had met NAMA in the beginning and if he had come up. He said he did not. That is what I would like from witnesses here; to go through this and say "We agree" or "We disagree" on each one. I thank Mr. Mulcahy.

Mr. John Mulcahy:

Can I answer that because I think Deputy Connolly has misrepresented what I have said?

Catherine Connolly (Galway West, Independent)
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I apologise and I will give Mr. Mulcahy a chance.

Mr. John Mulcahy:

Yes, because the Comptroller actually says he makes no strategic or commercial comment but he makes an economic judgment. I fail to see what the difference is. I think that what the Comptroller and Auditor General has actually said is that he is making a commercial judgment but is just saying he is not. That is what I disagree with. If he had not used the words "a probable loss", I would have no problem with his report; if he had said "a possible loss" for instance.

Catherine Connolly (Galway West, Independent)
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I do not accept that at all.

Mr. John Mulcahy:

That is fine.

Catherine Connolly (Galway West, Independent)
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I am not here to take sides. I am here to listen to witnesses and Mr. Mulcahy is coming back and saying something that is not true from what I can see. When I say "not true", I refer to his interpretation of the report. I am sure the Comptroller and Auditor General will come back in as he has done before.

Seán Fleming (Laois, Fianna Fail)
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I am moving on now to Deputy Mary Lou McDonald. I want to make it clear that at the board meeting of 3 April when the Cerberus business was discussed, Mr. Corrigan was noted as absent. Regarding asking Mr. Corrigan about the discussion, when the Brown Rudnick matter came to light and the issues that emerged about that time, he was marked absent from the board meeting that, in essence, approved the Cerberus offer. He was not party to that discussion on that particular day. The value of today's meeting is to get different perspectives. It would be terrible if everyone was singing from the same hymn sheet. It might make it more difficult, but that is our job. Before calling Deputy McDonald, I note genuinely that there is a vote in the Dáil and we are finished this session.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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In that spirit, let us motor on. I have a series of questions here.

Seán Fleming (Laois, Fianna Fail)
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I am reluctant to go straight through from 9 a.m. to 12.45 p.m. I am not going through a three and a half to three and three quarter hour session without a ten-minute break. It is unfair to witnesses and members. I will not go beyond that. I suggest we take a ten-minute break now and then let Deputy McDonald straight back in, or we can take her slot now and then take a break.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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That is at the discretion of the witnesses. I am happy enough.

Seán Fleming (Laois, Fianna Fail)
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We are taking a ten-minute break because it would be unfair to go from 9 a.m. to 12.45 p.m. without any break. Keep it to ten minutes. Do not wander off out of the building. We will be back in ten minutes.

Seán Fleming (Laois, Fianna Fail)
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As we are back in public session, the next speaker is Deputy McDonald.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I welcome our witnesses. I apologise in advance if I splutter as I have a dose of illness. I have a number of questions and I will start with Mr. Mulcahy. His role was head of asset management. Will he explain briefly the relationship he had with NAMA debtors in the carrying out of his function?

Mr. John Mulcahy:

I was not dealing with the loan aspect of the portfolio but probably with disposal of properties and, more particularly at the time to which the Deputy refers, with the development of properties, mainly in the UK.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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What kind of working relationship did Mr. Mulcahy have with Mr. Ronnie Hanna, the head of asset-----

Seán Fleming (Laois, Fianna Fail)
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The Deputy stated that Mr. Mulcahy was head of asset management. Will he explain that as he was invited here as a board member?

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes, sorry.

Seán Fleming (Laois, Fianna Fail)
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The public will not-----

Mr. John Mulcahy:

I was invited here as a board director.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes.

Mr. John Mulcahy:

My executive function was head of asset management.