Oireachtas Joint and Select Committees
Wednesday, 21 May 2025
Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach
Dissolution of National Asset Management Agency: Discussion
2:00 am
Mairéad Farrell (Galway West, Sinn Fein)
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The committee will now consider the dissolution of the National Asset Management Agency, NAMA. To this end, the committee has invited representatives from the National Treasury Management Agency, NTMA, and NAMA. NAMA was established in 2009 as part of the State’s response to the 2008 banking crisis to deal with property-backed loans acquired from Irish financial institutions. At the time, NAMA acquired 11,500 land and development and associated loans from five financial institutions, with more than 800 debtor connections, an acquisition value of €32 billion and a par value of €74 billion. With less than 18 months remaining in the lifetime of NAMA, it is necessary to make suitable arrangements for the management of any residual activity of NAMA after this time. While the Government had planned for a complete dissolution of the entire NAMA infrastructure by the end of 2025, it has become clear that this will not be feasible as some assets may still be on NAMA’s balance sheets and some litigation cases may be outstanding at the end of 2025. To manage these outstanding matters, a resolution unit is to be set up and resourced by the NTMA. The Government has identified two key challenges with the wind-down and its associated timeline, namely, the pace of deleveraging and the timeline for asset disposal and the significant level of work still required to resolve par debt and the exit of the debtor connections.
The committee has invited witnesses from the NTMA and NAMA to discuss the following matters: the special liquidation of the Irish Bank Resolution Corporation, IBRC; the dissolution of NAMA; the retention and-or destruction of data records of the IBRC and NAMA; ongoing and unresolved cases; staffing arrangements following the dissolution of NAMA; current assets under NAMA’s ownership; and an update on NAMA’s commission of investigation report and expected publication. In this context, cuirim fáilte roimh an bhfinné inniu. I welcome to the meeting today the chief executive officer of NAMA, Mr. Brendan McDonagh. I invite him to make his opening statement.
Mr. Brendan McDonagh:
The committee has invited me here to discuss my role with NAMA as it relates to the seven distinct topics mentioned. I will address each of these in turn. The first topic is the special liquidation of IBRC. NAMA has no role in the special liquidation, which means I cannot be of assistance to the committee in that regard. The Minister for Finance, Deputy Donohoe, recently announced that residual IBRC activity will transfer directly to the proposed resolution unit within the NTMA following the enactment of the relevant legislation to facilitate the conclusion of the special liquidation. Following this announcement, NAMA has no role to play in the transfer of IBRC activity to the NTMA resolution unit.
In its invitation, the committee also asked me to discuss the dissolution of NAMA. We have been planning for some time to complete as much of this work as possible by the end of 2025. We remain on track to achieve this on schedule. During 2025, we will finalise the leveraging of our remaining portfolio and ensure that any residual activity to be transferred to the NTMA resolution unit is minimised insofar as possible. We will also conclude the transfer of our lifetime surplus, currently projected to be €5.2 billion, which includes corporation tax payments to the Exchequer. In December 2024, we transferred €400 million, bringing our total cash contribution to the State to €4.69 billion by the end of 2024, including €450 million paid in corporation tax.
A key part of our activity during 2025 to date includes the transfer of national asset residential property services, NARPS, which is our social housing portfolio comprising 1,366 social homes, to the Land Development Agency, LDA. As such, these will remain in State ownership. We also expect to transfer to the LDA two residual development sites, one in Dublin and Kildare, respectively, with capacity for 4,000 new homes.
We are progressing the wind-down of NAMA in parallel with the legislative process, which is being managed by the Department of Finance, to enact the necessary legislation that will give effect to the dissolution at the end of 2025.
The third topic I have been invited to discuss relates to the IBRC's and NAMA’s data and records. I will set out NAMA’s approach to the data and records it controls. I have no information on IBRC’s data and records and cannot be of assistance to the committee in that regard. NAMA has a long-standing records management policy, which has been approved by the NAMA board and informed by legal advice. Under this policy, specific categories of important NAMA records, such as records identified as having historical significance, NAMA board and committee papers and other Government-related records, NAMA policy and procedures and records supporting the integrity of NAMA’s financial information, have been identified to be retained and preserved. NAMA’s record management policy also sets a framework for managing other categories of records in compliance with GDPR and other relevant obligations. We are making detailed plans for how data and records will transfer to the NTMA resolution unit by the end of the year. The resolution unit will have responsibility for managing these records.
The fourth topic in the invitation relates to the ongoing and unresolved legal cases. This is another key work stream for us. We are continuing to manage 16 cases in which NAMA has direct involvement, including ten active litigation cases and six dormant cases that have not progressed in the past 12 months. There are another eight cases in which NAMA does not have a direct involvement. In these cases, the realisation of secured assets is impacted by the ongoing litigation. NAMA’s approach is to manage each case with a view to obtaining the best achievable outcome for the taxpayer. If we can resolve these cases on terms that meet this objective before the wind-down at the end of the year, we will do so.
However, in cases where this cannot be achieved, they will likely go through a court process and responsibility for managing the cases to a conclusion will transfer to the NTMA.
The fifth topic is the staffing arrangements that will follow NAMA’s dissolution. NAMA has no staff and all staff are assigned to it by the NTMA under section 42 of the NAMA Act. While the precise nature of these arrangements is a matter for the NTMA, NAMA will cease to exist as a legal entity when the wind-down is complete, which is expected at the end of this year, and therefore will no longer have staff assigned to it. Any decisions on how the NTMA resolution unit will operate will be a matter for the NTMA and I have no role in that.
The sixth topic you asked me to discuss is the current assets under NAMA’s ownership. We succeeded in implementing our deleveraging programme managing a portfolio of loans from its value at acquisition of €32 billion. Entering 2025, our balance sheet included a loan portfolio with assets valued in the region of €100 million with associated debt of €1.7 billion, mostly made up of low-value exposures. The loans of some 34 debtors currently remain under the active management of NAMA. Most of these debtors are expected to exit NAMA by the end of this year. Any unfinished activity is likely to comprise of compromised assets of less than €10 million in value, associated with unresolved litigation.
Finally, the seventh topic in the invitation was an update on the commission of investigation report into the sale of the Project Eagle Northern Ireland loan portfolio in 2014. The NAMA board welcomed the Government’s publication of the report by the commission in February 2025. The board has always maintained that the best achievable price was secured for this portfolio and that NAMA managed the sales process appropriately. The board has noted that the findings of the commission’s report confirm this.
There is still some complex work to be done by NAMA to deliver additional surplus moneys to the Exchequer. Our focus now is twofold: first, extract as much value as possible from our residual portfolio with a view to maximising the surplus that we ultimately hand over to the Exchequer; and second, progress the orderly resolution and wind-up of the agency as much as possible by the end of 2025.
Mairéad Farrell (Galway West, Sinn Fein)
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Gabhaim buíochas as sin. I now will invite members to discuss. I remind members participating remotely to use the raised-hand feature and to cancel it when they have spoken. I remind our newer members that as we are doing this through a process of indication, they should make sure to indicate clearly to the Chair.
Pearse Doherty (Donegal, Sinn Fein)
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I thank Mr. McDonagh for coming before the committee. I want to state in public session that it is unacceptable for the NTMA not to be here. They are paid and paid well and are servants of the public. The Oireachtas finance committee invited them in. They should be here to answer the questions. Mr. McDonagh is here and we appreciate that.
He has outlined the work that NAMA has to do between now and the end of the year in terms of its wind-up. Is it not the case that there was a chance that Mr. McDonagh was not going to be there to oversee that process? That is my first question. Can he outline to this committee what the process was in the approaches that were made to him to move away from NAMA and into the role of the so-called housing tsar? Did any Minister speak to him in relation to that potential move at any time up until him indicating he was not interested? Did any official or Secretary General approach him? Could he give those details to this committee please?
Mr. Brendan McDonagh:
That is not really relevant in terms of NAMA but I will be open and frank with the Deputy. There was a lot of speculation in newspapers for a number of weeks. Nobody had discussed anything with me. The first time I met the Secretary General of the Department of housing was on 10 April. We had a general discussion. I subsequently got a call inviting me to meet the Minister, Deputy Browne, on 16 April, the Wednesday before Holy Thursday of the Easter weekend. The Minister outlined what he wanted the SHAO to do. I should add that this was not a role I sought or ever canvassed for, I want to be absolutely clear about that. The Minister, Deputy Browne, said my name had been mentioned in many circles as being somebody who might have appropriate skills to help and asked would I be prepared to let him propose my name to the Cabinet sub-committee and the Government. After talking with him, I agreed. That was my only discussion about the role with the Minister, Deputy Browne.
Pearse Doherty (Donegal, Sinn Fein)
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Was there any discussion afterwards with the Taoiseach or anyone else when Mr. McDonagh decided to pull out?
Mr. Brendan McDonagh:
No. I had no contact with any other member of the political system. On 1 May, given that there was a lot of public controversy about me and the role - I am not a political person; I am apolitical - I really felt I did not want be part of that. I am a professional. I believe I am a public servant and I did not want the story to be all about me. On 1 May, I advised the Minister that I really was not interested because to be honest, everybody who knows me knows I am very straightforward, and I had made the decision that really I was not. There was no point -----
Pearse Doherty (Donegal, Sinn Fein)
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On 16 April when Mr. McDonagh met the Minister, Deputy Browne, did they discuss retention of his salary at that stage?
Pearse Doherty (Donegal, Sinn Fein)
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How then was Micheál Martin able to stand up in the Dáil and say - was it ever understood that Mr. McDonagh was retaining his €430,000 salary if he accepted that position?
Mr. Brendan McDonagh:
There was no discussion about it. I am being completely frank. I was told that people would be brought on secondment from their parent bodies and their salaries would be paid by their parent bodies. My parent body is the NTMA. There is lots of speculation about my salary in the newspapers. I can honestly say that there was no discussion about my salary with the Minister, Deputy Browne.
Mairéad Farrell (Galway West, Sinn Fein)
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As this was not included in the invitation so, as long as you are okay to answer the question, you can answer as you wish.
Pearse Doherty (Donegal, Sinn Fein)
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It is relevant to NAMA because he oversees NAMA. NAMA has got more than 1,000 social houses that are to be transferred over, land with capacity for 4,000 houses and tens of million of euro of assets. The head was being poached to another role. That was completely botched. I appreciate Mr. McDonagh's answer. To be clear, at the time he withdrew from this position or indicated he did not want it, two things were happening. It is only fair I put this to him. One is the role of the housing tsar. It was understood that the salary would not be €430,000 but that it would be at a lower rate, and rightly so. The second was there was a media report relating to the Mr. McDonagh renting out his home for €10,000 per week. The idea of that is outrageous during a housing crisis. Can Mr. McDonagh state that neither of those issues was the reason that he withdrew from consideration to be the housing tsar?
Mr. Brendan McDonagh:
I can confirm to the Deputy that neither of those issues had an effect on my decision. I will make it clear. I am quite happy to discuss anything about my role in NAMA. I am not discussing anything about my personal circumstances.
Pearse Doherty (Donegal, Sinn Fein)
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That is fair enough if he does not want to. He might clarify something in terms of a "Yes" or a "No". NAMA is a development of homes, social homes, rental accommodation and so on and it also deals a lot with people who are complying and have to comply with planning permission. Can he confirm with regard to the NTMA code of conduct that he did not have any responsibility to declare as an interest that he was renting out a property of that value? It was in excess of €10,000 per week.
Pearse Doherty (Donegal, Sinn Fein)
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I am not asking about your personal circumstances.
Mairéad Farrell (Galway West, Sinn Fein)
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As I said, you are welcome to comment on the topics included in the invitation.
Pearse Doherty (Donegal, Sinn Fein)
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The question is in relation to the ethics Acts and is in relation to the NTMA code of conduct. When you are an officer who is paid €430,000, there are requirements. There is a requirement here to furnish annual statements of one's own registerable interests. Is, in Mr. McDonagh's view, he satisfied that he has complied with that?
Pearse Doherty (Donegal, Sinn Fein)
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That is fine. I thank Mr. McDonagh.
We were led to believe when we were dealing with the pre-legislative scrutiny of the legislation to wind down NAMA that everybody would go into the resolution unit. It has now emerged that is not the case.
Is that a fact?
Mr. Brendan McDonagh:
I can speak for NAMA and not for the NTMA. How could everybody who was working in NAMA go to the resolution unit? There would be residual activity left in NAMA which would have to be managed by the resolution unit and it is up to the NTMA to staff that unit with people with appropriate skills.
Pearse Doherty (Donegal, Sinn Fein)
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Just to be clear, and I am paraphrasing here, the heads of Bill are quite clear. They state that all employees of NAMA at the point of dissolution will transfer to the resolution unit. That is what the heads of Bill are saying.
Pearse Doherty (Donegal, Sinn Fein)
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Okay, but that is my understanding.
Pearse Doherty (Donegal, Sinn Fein)
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That is what we are trying to tease out. Mr McDonagh will transfer back to the NTMA and not the resolution unit. Is that correct?
Pearse Doherty (Donegal, Sinn Fein)
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I thank Mr. McDonagh for clarifying that. Can he shed any light on the remuneration that would be paid in that position? He is the head of NAMA, he has overseen a large organisation and he has been paid substantially for that. Will he provide any information to the committee on whether he will be taking a salary reduction when he transfers back into the NTMA?
Mr. Brendan McDonagh:
My salary as NAMA CEO has been in public domain since 2010. That is fine because I am an accountable person under the NAMA Act and it is disclosed in accordance with the code of practice for State bodies. Regarding my salary with the NTMA, it is not disclosable because I will not be the accountable person as another person is the chief executive of the NTMA and that person's salary is publicly disclosed in accordance with the code of practice for State bodies. That is as much as I am prepared to say on the subject.
Pearse Doherty (Donegal, Sinn Fein)
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The NTMA, which is not here, told us a bit about the NAMA contracts, some of which come to an end when the work in NAMA finishes. Mr. McDonagh's contract is different. When he moved from the NTMA to NAMA, he went from a salary which, I think, was reported in the media as being around €210,000 to a salary of €430,000. He is going back to a State body. It is the taxpayer who pays him. Is he, as Micheál Martin suggested in the Dáil, going to be paid the €430,000 anyway and that is why the Taoiseach said this would cost the taxpayer any money if Mr. McDonagh took on the housing tsar role because he was getting this money anyway? It is a fair question because the public are asking the questions.
Pearse Doherty (Donegal, Sinn Fein)
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Is Mr. McDonagh aware of the role he will take up in the NTMA at this point?
Pearse Doherty (Donegal, Sinn Fein)
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Regarding the contract Mr. McDonagh has, can we ask about that? He is the accountable person at this point. He is paid by the NTMA, so we are dealing with the contract he has at the minute. Does his contract have a clause in it that allows for a salary reduction?
Pearse Doherty (Donegal, Sinn Fein)
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In his contract, Mr. McDonagh is allowed to take a bonus of up 60% of his wages. Is that correct?
Pearse Doherty (Donegal, Sinn Fein)
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Mr. McDonagh has waived that bonus in the last number of years, I think, if not all of the years.
Pearse Doherty (Donegal, Sinn Fein)
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When he goes back to the NTMA he will not be an accountable person so we will never know what he is getting. Will we ever find out if he is getting the 60% bonus as well?
Pearse Doherty (Donegal, Sinn Fein)
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The NTMA did not turn up to answer these questions.
Mr. Brendan McDonagh:
I am not responsible for the NTMA. If the NTMA is here, it can decide whether it wants to answer that question but as far as I am concerned, I joined the NTMA and signed an employment contract with it which is private and confidential. When I transferred to NAMA I was the accountable person. My salary was going to be disclosed. I had no problem with that. It has been disclosed for the last 15 years. When I go back to the NTMA I am no longer the accountable person and I do not see why I would be singled out to be treated differently from anybody else who is in a senior position in the NTMA.
Pearse Doherty (Donegal, Sinn Fein)
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I understand it is not of Mr. McDonagh's making but the point is that the Taoiseach of this country stood up in the Dáil and said it would not cost the State any more money because the individual who was to be appointed housing tsar, namely, Mr. McDonagh, was going to be on this salary of €430,000 anyway. Then we had the Minister for Finance commenting on Mr. McDonagh's salary and saying his understanding was that Mr. McDonagh would be taking a reduced wage. We are the finance committee, Mr. McDonagh is the person with whom the contract is and we are trying to square the circle. Who is telling the truth here? Is it the Minister for Finance who oversees the NTMA and is saying Mr. McDonagh will be taking a reduced wage or is it the Taoiseach of the country who is saying Mr. McDonagh is on a salary of €430,000 anyway and will be on a salary €430,000?
Pearse Doherty (Donegal, Sinn Fein)
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That is why I am asking and giving Mr. McDonagh the opportunity to correct the record and put his own facts on the table.
Mr. Brendan McDonagh:
I am prepared to put any facts I know in relation to NAMA on the table. Regarding my personal employment contract, that is something at which I draw the line. I do not mean to be disrespectful to the committee or anybody else but I have been in front of many committees, including this one, and I have always been upfront and honest. However, there comes a point where there are matters which are private. I reserve my position on that.
Pearse Doherty (Donegal, Sinn Fein)
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That is fine. I thank Mr. McDonagh for that. The public will look in and say in some cases when they are paying hundreds of thousands of euro for State employees, some of it is not private anymore. We have a job to do there but I understand Mr. McDonagh has come here and answered the question.
I will put a question to Mr. McDonagh regarding NAMA's accounts in 2021. He said that one of these sales was at market value. I want to give Mr. McDonagh the opportunity to explain to the finance committee how he thinks NAMA achieved market value when it sold land and property with an original loan value of €10 million for €265,000 in 2021. There was a 97.5% discount. It sold it to a special purpose vehicle and the brother of the debtor financed the purchase of it. Is it not illegal under the NAMA Act to sell something to a connection of the debtor? They set up an SPV and the brother financed the SPV. That is shoddy. That is seriously questionable. However, going back to the value for money, what did it include? It included land and property comprising 14 occupied residential units, 28 unfinished residential units and seven plots of land totally 20.9 ha and it was sold by NAMA for €265,000. That is the equivalent of somebody trying to stay in your gaff for a couple of months. How is it value for money to sell 14 occupied residential units, 28 unfinished residential units and seven plots of land of over 20 ha for €265,000?
Mr. Brendan McDonagh:
What the committee can know, however, and it is in the public domain, is that in September 2023 I had a three-hour session on this special report by the Comptroller and Auditor General in the Committee of Public Accounts, where all of this was discussed. There is a transcript of it. We got a market valuation for the properties. There were particular issues. It is all discussed in detail. I do not want to start speaking without having read it first. It is there with full disclosure in the report of the C and AG and there was full discussion of it at the PAC on 30 September 2023. If anybody wants to know the facts about that, they were all outed that day at the PAC in 2023.
Pearse Doherty (Donegal, Sinn Fein)
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It was not openly marketed either. Is that correct, from Mr. McDonagh's memory? It was sold privately.
Pearse Doherty (Donegal, Sinn Fein)
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I look forward to reading that.
Mairéad Farrell (Galway West, Sinn Fein)
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Go raibh maith agat, a Theachta. I remind the new members to make sure they indicate so that they are included in the list. I call an Teachta Nash.
Gerald Nash (Louth, Labour)
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Mr. McDonagh is very welcome to the committee. It is appreciated that he is here when others who are responsible and accountable to this committee are not here. It demonstrates his integrity over the years, his commitment to public service and his track record more generally. It will not come as a surprise to Mr. McDonagh that this committee will want to interrogate and ask some questions about the particular role he was associated with in the context of media reports and regular references in the Dáil and elsewhere and his potentially holding a position under the aegis of the Minister for housing and Department of housing.
Mr. McDonagh will accept that we are asking these questions because he is the chief executive of an organisation that is accountable to this committee - the finance committee. He has worked for a number of years for the NTMA, an organisation that is also accountable to this committee. When media speculation around the potential for him to fill a different role outside the ambit of the Department of Finance arose, what did the NTMA say to him about it? When did the NTMA know and how did he broach the matter with Frank O’Connor?
Mr. Brendan McDonagh:
The first person I told was the NAMA chairman. That is who I report to. I do not report to Frank O'Connor. I am assigned to NAMA, so I report to the NAMA chairman. He was the person I spoke to. I spoke to Frank O’Connor, the chief executive of the NTMA, on the Tuesday after the bank holiday Monday when we were both in the office.
Gerald Nash (Louth, Labour)
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What date was that? Mr. McDonagh said he was approached by the Secretary General of the Department of housing on 10 April.
Mr. Brendan McDonagh:
No. There was nothing offered on 10 April. It was on 16 April that the Minister told me he would like to propose my name. He asked if I would agree to that, to which I said “Okay”. I advised my chairman the following morning. The Friday was Good Friday and then there was Easter weekend and bank holiday Monday, so on Tuesday morning, I advised Frank O’Connor.
Gerald Nash (Louth, Labour)
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The NTMA was informed. Of course, the NTMA - and the Taoiseach has put this on the record - would essentially be the parent agency. Mr. McDonagh said that it was his understanding, from speaking to the Secretary General of the Department of Housing or the Minister, Deputy Browne, that, ultimately, those who were going to be part of this operation, this housing advisory body, and would be paid by their parent agency. Mr. McDonagh explained to Frank O’Connor the potential for this offer to be made and that the NTMA would be paying his salary if he were to assume that role. Did Frank O’Connor understand that to be the case?
Gerald Nash (Louth, Labour)
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I am not suggesting that Mr. McDonagh is not.
Mr. Brendan McDonagh:
No, but, again, for the record, I was very clear that what was said to me was that there would be no employees of the SHAO office; they would be people on secondment from various utilities – the ESB, Irish Water or whatever – and I would be just another person on secondment from a parent body. There is nothing in it to hide; that is the information. I am just being completely honest with you here.
Gerald Nash (Louth, Labour)
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I assume Mr. McDonagh always is. I always make that assumption. This is probably the most public information that has been placed on the record of any committee of the Oireachtas with regard to what this organisation is proposed to do and how it will be composed. I thank Mr. McDonagh for that. Clearly, this was a role that he was interested in. Barring the media controversy, the cack-handed way in which the Minister for housing handled this, how it was represented in the media and the disputes that clearly emerged between Fine Gael and Fianna Fáil, would Mr. McDonagh have taken this role? He clearly was interested.
Mr. Brendan McDonagh:
I was interested in the role. I fully accept that I am a well-paid person, but I believe I have demonstrated that I can add value. By the end of the life of NAMA, I will have delivered in excess of €5 billion back to the Exchequer. I led a team that did that. I also have experience of dealing with complex property assets. If you look at the second part of the Dublin docklands, from the convention centre down to the Point Village across from the south docks, you will see it is double its original size. The IFSC - I was involved heavily in that. I was also involved in NAMA’s housing programme, which has contributed over 42,000 units since we started funding it in 2014. I have a lot of knowledge. I am not an engineer, but I have picked up many things. I am a quick learner. I picked up many things over the years regarding things I have known have gone wrong or could potentially go wrong. I know many people who could help. I believed that if I had those skills, I could do something. We are all affected by the housing crisis, and most of us have kids. I genuinely believed I had something to offer. If I knew there was an issue with people not supporting me, I clearly would never have allowed my name to go forward, but I was not aware of that until afterwards.
Gerald Nash (Louth, Labour)
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Does Mr. McDonagh see how this evolved as being a case of somebody not supporting him or does he see it as arising from the fact that there was a dispute within the Government parties? Who said what and when?
Gerald Nash (Louth, Labour)
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The way Mr. McDonagh has presented his response is interesting. It certainly appears that he was interested in what could potentially be a very exciting, interesting role and that could potentially be transformative. One could look at it another way, namely that there is another layer of bureaucracy that the Minister wants to introduce to ensure he is not held accountable for some of the failures we are experiencing in our housing system. However, that is not for Mr. McDonagh or anybody else to say. It seems that Mr. McDonagh would have considered taking this position were it not for the fact that there was media controversy and that a dispute about it had arisen at the highest level of Government. Would he have taken the position? He withdrew quite quickly, clearly as a result of the media controversy surrounding the issue. He has put on the record of the committee the fact that he met the Secretary General on 10 April - that was his first meeting in respect of this issue - and that on 16 April he was asked to meet the Minister, Deputy Browne. He also told the committee that his understanding from the Minister was that – he may wish to clarify this – a name, potentially his name, would go to the Cabinet sub-committee on housing and that this was where the matter would be dealt with. Was Mr. McDonagh surprised to see his name linked with this job in the media before the matter went to the Cabinet sub-committee?
Mr. Brendan McDonagh:
My name was in the media for weeks, and nobody had spoken to me. That really annoyed me. To be honest, I did not know who to ring or who to talk to about it. When people did talk to me, the only person who could make the decision about whether they were going to propose me or not, in my view, was the Minister, Deputy Browne. I met him on the night of 16 April. After a discussion, he asked if I would be prepared to let my name go forward, and I did. I do not believe there was controversy at that stage. I am a GAA man, so you are playing the man rather than the ball. I sort of felt afterwards that I did not want to be the guy who was being played any more, and removed it. I do not mind whether people have different ideas on the role or not, but I genuinely believe there is big difference between the policy and implementation on the ground. Over the years in NAMA, I had to do stuff on the ground. I had to get involved and get my hands dirty. I believed I could have brought a skill set to do that. It was not to be, however. So be it. We move on. That is life.
Gerald Nash (Louth, Labour)
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Has the Minister apologised to Mr. McDonagh for dragging him into this controversy?
Mr. Brendan McDonagh:
It is not fair for me to speak about private conversations other than to say that he said he was sorry I wanted to withdraw and that things had not worked out. I told him "This is more important to me. I hope somebody does this, and I wish them the very best in the role." That is the genuine reflection of my-----
Gerald Nash (Louth, Labour)
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There is an onus and a responsibility on us to discuss NAMA. A huge intervention was made by the Irish State a number of years ago that was controversial at the time. We are all aware of the track record of NAMA and what has happened over the past few years. I wish to ask some questions on the winding down of NAMA. I accept that Mr. McDonagh is not accepting any responsibility for questions necessarily on IBRC and the winding up thereof. I had some concerns about how, for example, ongoing cases with the Ombudsman were going to be handled once IBRC was dissolved, but the position in that regard has been clarified for me in recent times. There are a number of outstanding cases with the FSPO in relation to IBRC issues.
The fourth topic Mr. McDonagh covered - we requested that it be covered - was the legal cases that are outstanding.
Mr. McDonagh said in his opening contribution that there were six dormant cases that had not progressed in the past 12 months. Is he in a position to elaborate on what those cases are, even in general terms? If he is not in a position to identify them individually, that is fine, but typically what do those kinds of cases involve?
Mr. Brendan McDonagh:
It is not unusual that there is litigation with organisations like NAMA that are coming to the end of their lives. People start litigation and do not progress it to the next stage. You would hope it gets to a point where you can engage with them, and they agree to drop the case and both parties walk away. There are six cases that have been dormant for more than 12 months and usually when they are dormant, they do not come back. Sometimes the people in question do not want to spend any money to wind up the case. Maybe there are discussions to be had about whether both parties will bear their own costs. The costs in these cases have usually not been much at this point. People are leaving some of those cases dormant. Maybe they have their own issues with NAMA, or whatever the case may be. They may ask why they would withdraw the case. They know they will never do anything with it but they will leave it there to potentially annoy NAMA. It does not annoy me; it is just part of the job that has to be dealt with. It will be dealt with at some stage but if somebody is taking litigation against you, you can go into court after a number of years to ask the judge for a strike-out. However, our experience has been that judges are sometimes reluctant to do that. They want the other party to engage and say it wants to drop the case. Sometimes people engage and sometimes they do not. I assure the Deputy that the six dormant cases are not something that will ever affect the outcome of NAMA.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank Mr. McDonagh for coming in. I echo the comments made by others that it is disappointing that the NTMA is not here. We are thankful that Mr. McDonagh has come in and we appreciate that.
I turn to some of the answers given on the role of the housing tsar. Mr. McDonagh said that his name was in the media but nobody had contacted him and he was annoyed by that. He said he was interested in the role and had experience and skills relevant to the role that he thought could be useful. He met with the Minister and had a conversation about the role, and then withdrew because someone was not supporting him. When he says someone was not supporting him, who does he mean?
Mr. Brendan McDonagh:
I do not have to tell the Deputy that it was reported in the media that there seemed to be disagreement within the Government about the person rather than the role. I genuinely feel that the role is important. Somebody with the right skill set can go in and add value and start unlocking things, which has to be the objective of us all. It cannot be about nothing happening. Nothing happening is not an option when you have so many people who need housing. I decided I would not be part of this anymore, because when it becomes about the personality rather than the importance of the job, I felt that was not the way to go. Why would I sit in there and just be kicked around like a political football? I am a public servant but I am apolitical. I admire all Members. They put themselves up for election and get elected. They are public representatives. I am not a public representative but I am a public servant. I said I felt the right thing to do was remove myself from the process and let the process move on.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Filling roles in the public service with the right skills, experience and expertise is important, including senior roles. What is Mr. McDonagh's view on how this has been handled, as someone who was a participant in it? There clearly have to be lessons drawn from this.
Mr. Brendan McDonagh:
At the end of the day, I did not seek this role. My name was in the paper for weeks before anybody spoke to me. The way this role was formulated or put together was not of my making. Other people made that decision. When they approached me I thought I could help. I offered myself up. The lesson for me is that sometimes trying to do the right thing does not necessarily always work out, but that is life.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Mr. McDonagh spoke about what he thinks could be achieved in the role. He obviously thought about how it could unblock issues with delivery of housing. Will he elaborate on his thoughts in terms of how the role could work?
Mr. Brendan McDonagh:
The role was all about unblocking land that is zoned but that might not yet have planning. The reason it does not have planning is that there are barriers to getting planning because people will not go in and spend money to get planning applications if there are infrastructure deficits. From my experience, and I did not need anybody else to tell me, the biggest infrastructure deficits out there are that there are sometimes problems with electricity connections and water and sewerage connections. What was envisaged here would be that you would look at the sites across each local authority that were zoned land. By working with the local authority, utilities and the potential landowner, you could identify the infrastructure blockages, work out and cost up the solution, and then make a recommendation. I would not have been making any decisions. I would have been making a recommendation that you can get 200 houses on this site if you fix the infrastructure. They can go in for planning and the site moves on. That is what the role was about. There is no other way to explain it. There are lots of zoned sites across the country, but they will never be built on because there are infrastructure deficits.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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This is relevant to Mr. McDonagh's experience in NAMA. Does he think there is an alternative way of doing that? Why is this not happening at local authority level? In an ideal world we would not need a housing tsar to step in and do things that should be done-----
Mr. Brendan McDonagh:
I know the phrase is "housing tsar." I hate that phrase. There is no such thing as a housing tsar. It is effectively someone who goes in and is able to pull people together and say to the ESB it has to move pylons or whatever or to Irish Water and the local authority that they have to do this or that. It is effectively a co-ordination role to try to pull people together and there would be a budget available to try to make that happen, if it were approved.
Mairéad Farrell (Galway West, Sinn Fein)
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That is outside the remit of the committee in terms of the finance.
Mr. Brendan McDonagh:
Thank you, Chair. All I would say in general terms, as I said earlier, is that there is a big difference between a policy objective and stuff happening on the ground. The Deputy is right to ask why the local authority is not doing it or why Irish Water and the ESB are not doing it. Sometimes they may want to do it, but the fact is that there seems to be a lack of co-ordination. It is a shame that we have land that could potentially be used for housing but that co-ordination is not there. I believe I could have brought that co-ordination skill to try to bring people together. Whether I would have been successful or not is another story, but that is moving on.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I turn to Mr. McDonagh's opening statement and the lifetime surplus from NAMA of €5.2 billion. Does he have a view, from his professional experience of the remit of NAMA over the past 15 years, and now that we are heading into wind-down, of where we are as a country with the housing crisis and issues like affordability? Does he have anything he can draw from those 15 years? If NAMA had been given a different remit or different direction, could we be in a different place with regard to affordability? We have seen, for example, the work that has been done by the Land Development Agency. A lot of people in key roles in the Land Development Agency came from NAMA. Does Mr. McDonagh have a view, from his 15 years’ experience, as to whether we could be somewhere different with regard to housing, affordability and access to it if NAMA had been given a different remit or direction?
Mr. Brendan McDonagh:
I am not allowed to comment on Government policy under the NAMA Act, and I will not do so. NAMA did what it was told to do by the Oireachtas in the legislation. It was always open to the Oireachtas and the Government to change the legislation and do something else with NAMA. Everybody knows that did not happen. The LDA is there now and some of my former colleagues are in the LDA. I hope the agency gets on and is a big success because the country needs it. At this stage of NAMA's life, it is moot because the legislation was promulgated in 2009. The job I had as Accounting Officer was to ensure I stayed operating within the legislation and got the best return I could. People might disagree with NAMA but my job was to do what the Oireachtas passed and I believe I have done it. I have generated a financial return, which was the major objective of the NAMA Act. I fully respect that other people have different views of what NAMA should have done, but I could not have done it because the legislation pointed NAMA in a certain direction. I had to drive the NAMA car, if I can call it that, in that direction.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I appreciate that. There is public commentary, including from a former Government Minister, that people in NAMA were looking for a change in direction towards delivery of more housing and affordability. That is coming from a former Minister. Does Mr. McDonagh have a view on that? I appreciate he was given a role and he performed that role. I appreciate that, but also-----
Mr. Brendan McDonagh:
I am aware that a former Government Minister has written a book and has written certain things. Unfortunately, I am restricted under section 59(2) of the Act, which states I cannot comment on the merits of Government policy or the merits of any policy objective of a Minister or Government. I might have my personal views but, unfortunately, as much as I would like to say it to the Deputy in public, I would be breaching the legislation if I did so and I am very conscious of not doing so.
Mairéad Farrell (Galway West, Sinn Fein)
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That is fair enough.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank Mr. McDonagh.
Edward Timmins (Wicklow, Fine Gael)
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I thank Mr. McDonagh for coming here. His honesty is much appreciated. I had a couple of questions that are specifically NAMA-related, but given Mr. McDonagh's experience and knowledge over the last 15 years, I would like to pick his brain a little bit. Following on from what Deputy O'Callaghan asked, has Mr. McDonagh particular suggestions about how we should do things differently? He cannot comment on Government policy but does he have any thoughts on how things should be done differently? I was a councillor for 20 years and am thinking of stuff like the national planning framework not being rolled out, 0% headroom for the Planning Regulator on zoned land and, as Mr. McDonagh said a few minutes ago, a lot of land being zoned that will never be built on because a lot of landowners are not developers and are never going to acquire that skill set. Apart from what Mr. McDonagh said about lack of infrastructure, there are 20 other reasons land banks that are zoned will not be developed. Headroom should be at least 70%. Does Mr. McDonagh have any thoughts? We are trying to use his vast experience to help in the housing crisis we are experiencing.
Mr. Brendan McDonagh:
I thank the Deputy. I have been thinking a lot about what things could help solve the housing crisis. I have developed this personal acronym, FELIPE. I believe if these issues were resolved, it would go a long way to helping unlock the housing problems of the country. Not all of them are the responsibility of the Government; some are the responsibility of stakeholders. The F stands for development finance, which is crucial. It has to be available for developers to build. E stands for expertise. We need our trades, like carpenters, plumbers and electricians. We do not have enough of them in the country. We are never going to solve the housing crisis when we do not have those skill sets. We all know people who are plumbers and electricians and who, like me, are getting older. There is nobody coming behind them and that is not good. L stands for land, which is needed for housing. I stands for infrastructure, which is crucially important, as the Deputy said. We can have all the land zoned in a country but if there is no infrastructure in place, nothing will happen. P stands for planning and zoning. We had huge delays in the planning system. We have sites in NAMA that have been with An Bord Pleanála for two years and still have not come out the other side. We have the new planning Act which needs to get going and there are huge challenges there. I said at another committee that my experience with developers who are in NAMA is that even if they get planning, there is a high likelihood of it being appealed to An Bord Pleanála or judicially reviewed. It costs a huge amount of money and people go back in again. E stands for engineering, including modern methods of construction. The productivity in the construction sector is one of the lowest across all industries. There are things happening. We funded development of apartments in London which were built with modern methods of construction in 2014. All the sections were built off-site and brought in and assembled very quickly.
Edward Timmins (Wicklow, Fine Gael)
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The other aspect is closer interaction between the local authorities and the Department. I see gaps there. Does Mr. McDonagh have a comment on that?
Mr. Brendan McDonagh:
That is the issue. I am speaking generally about this, but in terms of what I have seen and the developers that NAMA funded over the years, there are huge silos in different locations. There is no consistency even between local authorities. One guy can get planning in this county and the same guy can go and try to get planning in another county for the exact same type of houses and there would be different conditions attached to those than the ones 20 miles away across the border. A co-ordination role is crucially important. Everybody has to pull together on this to try to solve this.
Edward Timmins (Wicklow, Fine Gael)
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That is fine. We are agreed on that. I have two points on NAMA. First, the original NAMA Act gave the agency responsibility for bank loans and the power to be a debt collector. However, the Act also envisaged a wider social responsibility and that is what I want to focus on. NAMA had control of huge swathes of development land all over the country. It had access to money and could develop a lot of this land. In my opinion, NAMA failed in its wider social responsibility. It turned a profit of €5 billion. That was great and well done on that, but part of the Act was a wider social responsibility to build more houses. Does Mr. McDonagh not feel the agency concentrated too much on debt collection and the bottom line and failed in delivering houses? I am not saying it is the full reason we are in the situation we are today, but does he not agree that failure of the social side of the NAMA Act is a factor?
Mr. Brendan McDonagh:
NAMA has done a lot on the social front. We offered over 7,500 units to local authorities and AHBs and only 3,000 were accepted. Add to that the fact that NAMA never actually owned the properties, which were owned by debtors' receivers. Between 2010, when NAMA started, and the end of 2013, when Ireland was still under the troika and in the bailout, NAMA could not have funded new housing development because we were subject to state aid rules. The cost of building a house would not have been recovered in the price it could be sold for. That changed from 2014 onwards and we started funding development of houses.
We have been involved in 42,000 of them since that period. We received a state aid complaint from a number of developers that we were distorting the market. That went on for three years. We were able to demonstrate to the European Commission that we were not involved in any illegal state aid. People forget that as soon as it became possible to fund, people could get more for a house than what it cost to build. We started this in 2014. We go on with it. In 2015, the then Minister for Finance, Michael Noonan, set us a target-----
Edward Timmins (Wicklow, Fine Gael)
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Mr. McDonagh is happy that NAMA delivered on the social housing aspect under the Act and built enough houses.
Mr. Brendan McDonagh:
As I said, we funded houses. Part V housing was part of that. We also offered completed stock that we had when we acquired it. We offered to provide more than 7,500 houses, only 3,000 of which were ultimately accepted for social housing. I can only offer; if people do not take them, that is a different story.
Edward Timmins (Wicklow, Fine Gael)
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That is fine. NAMA took over the loans of five banks, namely Anglo Irish Bank, Irish Life and Permanent, Bank of Ireland, AIB and Irish Nationwide. Can Mr. McDonagh rank the banks in order of returns to the taxpayer? He must have a feel for which of the banks performed best in this regard.
Mr. Brendan McDonagh:
When we acquired the loans, we merged all the loans of the debtor together. We did not associate them with individual banks, we had to group them together. That was part of the accounting reality under the accounting rules. We never went back and traced them because that would have been an almost impossible job. Some people borrowed from the five institutions that came in and others borrowed from three.
Edward Timmins (Wicklow, Fine Gael)
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Did NAMA ever carry out an analysis? Did Mr. McDonagh ever think that a particular bank, for example, Anglo, did better than expected? Surely he had a sense of the different banks. This is out of curiosity-----
Mr. Brendan McDonagh:
Getting a sense of it would be almost impossible. We were using the surpluses from one loan to fund the deficits relating to loans relating to other banks. It is an almost impossible exercise. We thought about doing it and tried to assess if we could do it, but it would be-----
Edward Timmins (Wicklow, Fine Gael)
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It was never done. It was never split out on the basis of the five banks.
Mr. Brendan McDonagh:
No, because merged all the loans of the five institutions together under the each debtor. In the context of how much money we made under each debtor connection, we do not have that information. There are up and downs. Once the loans were transferred from the banks, they were bundled into NAMA.
Edward Timmins (Wicklow, Fine Gael)
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I am surprised that the big-picture statistic was never developed.
Edward Timmins (Wicklow, Fine Gael)
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Not even with a random sample.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Mr. McDonagh is very welcome. I thank him for his time. Our requests related to NAMA, but we can obviously come back to those. When Mr. McDonagh goes back to that organisation he can covey the imperative for NAMA to respect the Oireachtas and the finance committee in particular.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Sorry. What did I say?
Mairéad Farrell (Galway West, Sinn Fein)
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NAMA. I knew the Deputy meant the NTMA. I wanted to make sure the record reflected that.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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This is my first opportunity to question a witness before an Oireachtas committee, and I, perhaps rather naively, stuck to the brief. My questions will be about NAMA.
My first question relates to the 4,000 homes on the Kildare and Dublin sites. What stage are those houses at? They will be handed over to the LDA. How much work did NAMA do to get those sites ready for construction? Are they shovel ready for the LDA or is that likely to involve some work and take time?
Mr. Brendan McDonagh:
Both sites are massive. One is in north Dublin and was designated an LAP under the Fingal county development plan for the period 2023 to 2029. Part of the site will potentially be sanitised for a number of years because of a proposed metro station. Ultimately, it will deliver 3,000 units - potentially more, depending on the densities permitted. We have another site in Kildare that has been zoned and in respect of which there is planning. We submitted the first planning application for 344 units two years ago. That has not come out of An Bord Pleanála yet. It was an SHD application. It is still there and has not come out the other side. We also sold part of that site to the Department of Education, which has started work on building a much-needed school. Those are the sites.
It is likely that 1,100 to 1,200 units will be developed on the Kildare site and at least 3,000 on the site in north Dublin. Depending on Fingal County Council doing its work in respect of an LAP - this has been started but it has to go through the council’s process - the site in north Dublin is potentially two or three years away from work starting on housing. If planning came through for the site in Kildare, the LDA could start building if it wanted on the basis of our planning permission and getting through second- and third-stage planning permission very quickly under the LRD system. If planning came through in Kildare, we could potentially see something happen there in 18 to 24 months.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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How does the transfer of NARPS to the LDA align with the statement in Mr. McDonagh's submission to the effect that his focus is to extract as much value as possible from the residual portfolio?
Mr. Brendan McDonagh:
In 2012, when the country was under control of the troika, there was no capital programme available to the local authorities or the AHBs to buy substantial numbers of social housing units. The policy then was around the leasing model. At the time, I met the then Minister for the environment who asked NAMA to come up with an idea to help. Myself and my colleagues came up with an idea that we would create an SPV and buy the properties from the developers and receivers. Some of these were unfinished housing estates and we put the money in to finish them. They were owned by the NAMA SPV and leased to the AHB or local authority. That is how we got 1,366 units. The value of those units today is in excess of €350 million. That is money the State does not have to find somewhere else. We handed it over to the Minister as part of our surplus. The Minister has directed us to transfer them to the LDA, which will carry on those leases with the AHBs and local authorities involved.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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That €350 million constitutes part of the €5.2 billion lifetime surplus.
Mr. Brendan McDonagh:
Yes. If we were to sell it on the market, there would be €350 million - possibly more. It would be given as cash to the exchequer. Instead of giving it as cash, we are giving it as payment in kind. It had a market value of €356 million at the end of 2024, according to an independent evaluation.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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I understand. To come back to the €5.2 billion; much will be said and written about the success of NAMA when all is done and dusted. How does the €5.2 billion lifetime surplus align with the day-one target projection?
Mr. Brendan McDonagh:
The year 2009 was a different time. People may recall when the Minister for Finance at the time was putting legislation through the Dáil in 2009, people laughed at it. He asked, as part of going to the Oireachtas, for a business plan. We had no details of the assets and things yet but we had to put a business plan together for the Minister based on the limited information we had at the time. We said NAMA would return, I think, about €4.8 billion over its life, so we are in excess of that now. When the NAMA board came in in 2010, it said that it was not its plan and it wanted to put in its own plan. NAMA’s board said that if everything went according to the numerous assumptions - we published the assumptions, and we had more information at that stage on the portfolio that we got from the banks - and said if everything went right, we would probably make about €3.9 billion profit. It turns out we were making well in excess of that. That is how it came about.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Turning to the resolution unit, how long might that last?
Mr. Brendan McDonagh:
In terms of the small number of litigation cases we have managed to get it down to - we are still trying work on settlements in a number of these cases, which hopefully will settle before the end of life of NAMA - it could last about two years. Again, it is not unusual. If we look at the experience of entities in Sweden and Finland, there were probably one or two people still working in them 15 years later because outstanding litigation kept going. It is dependent on the litigation. It does not affect the financial outcome.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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In respect of choosing the staff-----
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Ten are going into the resolution unit.
Mr. Brendan McDonagh:
The NTMA sent a note to the committee saying it will be potentially up to ten staff to manage residual activity of NAMA. That is its decision, not mine. It could be ten or eight – I do not know. It will not know until we get closer to the end of 2025 and we see how much more I and my team have got rid of.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Mr. McDonagh has no say as regards which staff. He does not recommend people to transfer.
Mr. Brendan McDonagh:
No. My understanding is that the NTMA will choose the staff. The roles will probably be advertised internally in NAMA and, if people want, they will be offered to go on a fix-term contract for two more years to the NTMA until that work is done. That is the way I understand it. It will be their decision, not my decision.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Maybe we are in the NTMA space here, but the concern would be a loss of corporate knowledge in a much reduced team if the skills and knowledge of those cases are not there.
Mr. Brendan McDonagh:
Absolutely. It is important to retain the corporate knowledge, particularly around challenged assets, which are associated with litigation. Those are people who will have signed the affidavits, gone into court, been cross-examined and whatever, as the case may be. Obviously, it makes sense for the NTMA to try to retain people who have the appropriate skills to do that. That is the sensible business thing to do.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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Regarding case settlements, is there any risk that to get these settled by the end of 2025, Mr. McDonagh would take haircuts in those settlements?
Mr. Brendan McDonagh:
No. Anybody who knows me knows that I pursue every single penny I can on behalf of the taxpayer. When you settle, it is a cost-benefit analysis, for example, how much longer this litigation keeps going versus the value you can potentially get from a settlement with the other side. I remind my case managers when they are dealing with the counterparties on the other side to say to them that just because NAMA is ending, they should not think they will get a soft deal come October or November 2025. This is going into the resolution unit and, in fact, they might actually end up with a worse deal there. We have knowledge of the cases and things like this, but if new people come in, they might take a different view. However, there are no soft deals.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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My final question is somewhat related to that. Regarding the general assets, I take it there is no risk of a fire sale to meet a prescribed timeline.
Mr. Brendan McDonagh:
No. The whole objective of NAMA is to try to do it in an orderly way. We are not fire sellers of anything. We always hold out for what we think is the best price we can reasonably achieve, taking account of the circumstances.
Shay Brennan (Dublin Rathdown, Fianna Fail)
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I appreciate that. I thank Mr. McDonagh.
Alice-Mary Higgins (Independent)
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I will pick up on a couple points related to time and value for money, and how they intersect. When we examined this issue in the previous finance committee, there was much discussion. One of the key issues was we were waiting for the publication of the report of the commission of investigation. One area that surprised me when Mr. Des Carville was speaking to us was that there seemed to be an emphasis within NAMA on the requirement for expeditiousness. That has been mentioned consistently in respect of many of the sales and many of the decisions in relation to how assets were disposed of and properties that changed hands. There are numerous examples of individual cases where people point to what does not seem to be the greatest value for money. The expeditiousness was mentioned consistently whereas the elements of section 10(1)(c) of the NAMA legislation, which refers to “protecting or otherwise enhancing the value of those assets, in the interests of the State” and achieving the best achievable financial return to the State, were somewhat less emphasised in our previous hearing. As we are coming towards the end of NAMA, does Mr. McDonagh feel there has been the right balance in this expeditiousness, in moving through the set of 12,000 loans and so forth, versus that question of what is actually going to protect and enhance the value of those assets for the State, "in the interests of the State", which is an interesting piece phrase, and in terms of the best achievable financial return? Are there things that should have been done differently, or maybe would have been done, to achieve a better financial return to the State or the best wider value in the interests of the State whereby some of the sales were made early and perhaps without greater return? Where has the balance come between those two imperatives?
Mr. Brendan McDonagh:
I thank the Senator for her question. As chief executive on the board of NAMA, and we have had many different people on the board of NAMA since the start, the board is very conscious of section 10 of the NAMA Act, which is the obligation to get the best achievable financial return. Mr. Carville is a Department of Finance official. In terms of NAMA, we have always tried to get the best achievable financial return. In the first three years of NAMA, between 2010 and 2013, the troika – the IMF, the ECB and the European Commission – was in town and tremendous pressure was applied, particularly by the ECB, on NAMA to sell down assets quickly so we would get rid of NAMA bonds. The NAMA bonds issued to the banks were Government-guaranteed, and this was a huge drag in terms of our going back into the bond markets. Therefore, we agreed, and the board agreed, that we would redeem 25% of the NAMA debt, which was €7.5 billion, by the end of 2013. After some considered and frank discussions with the troika, it accepted that. The reason we would not go any further than that is we did not want to engage in fire sales or selling stuff we believed would have better value by holding on to a bit longer to maximise the return. I recognise what the Senator is saying and there is much commentary on what NAMA should have sold or held on to longer. The reality, however, is that to allow the NTMA to get back into the debt markets to raise debts and take advantage of low interest rates, we needed to extinguish the Government-guaranteed bonds, which we did by 2017, which was three years early.
At all times, the board and I were conscious that we could stand over and defend whatever we sold. In this business, you have to make decisions based on the best information you have at the time. While people can look back five years later and say that this and that should not have been done, we made the right decisions at the time. We took advantage of available buyers to try to sell the assets at the right price, while taking account of the overall wider national interest, which was really important.
Alice-Mary Higgins (Independent)
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Mr. McDonagh mentioned the target was 25% by 2013. Is that correct?
Alice-Mary Higgins (Independent)
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That is relevant in the context of policy decisions from the ECB. We can look to sales in some other areas, such as in Greece and so forth where ports were sold in a way that may be considered ill-advised now. That is relevant when we look to Ukraine, for example, which is getting substantial loans, now that it is not placed into an ill-advised position with regard to the long-term financial security of its people. There is still a question in that regard.
When it comes to areas of learnings, the question of holding a line on what would be sold and when within the large time period up to 2025 is really important. Is Mr. McDonagh confident that all of those data, even those data which relate to that negotiation with the ECB, are still available in order for us to learn from it? I refer to the transfer of files and information because some of those policy decisions and negotiations with external actors are relevant if we find ourselves in a difficult financial position in the future. There are materials relating to commissions of investigations or even future potential tribunals. Will those data and records, including those texture data about where the pressure points where, be available?
Mr. Brendan McDonagh:
All of those records are, I believe, there. An agreement was signed by the Government with the troika. Within that agreement, one of the objectives was for NAMA to redeem 25% of its debt by the end of 2013. Those records are maintained by the Department of Finance. It was the overall co-ordinator of the troika programme. I have been on record here before with the former chairman of NAMA. We were asked whether we were put under pressure to do X, Y and Z. We said we were but that we held the line. We believed that was the right thing to do and that we would not go past that line. We held that line. In fairness, the Minister for Finance, the Department and the Government at the time supported us. It was the right thing to do. It allowed Ireland to re-enter the bond markets at the start of 2014.
Alice-Mary Higgins (Independent)
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I will come back to that. I have a couple more questions and I am conscious of time. My core question does not solely relate to the outcomes that may be on the records, but rather about the materials. What will be transferred and where will those records be stored?
Before Mr. McDonagh replies, I wish to add in another issue which comes back to that question of protecting or enhancing these assets in the interest of the State. It is really surprising, given the housing crisis, that the figures for the delivery of social housing by NAMA have been so low. Mr. McDonagh mentioned that individual offer that was made, which only a certain number took up. Can he indicate why no more than 7,000 properties were offered and why more of those 7,000 were not taken up? This is a key issue in the context of local authorities. When Mr. McDonagh mentioned this, did he mean offers of ownership or leasing were made to local authorities? In respect of leasing, as I understand it, NAMA has a social housing portfolio of 1,366 properties. Those are not social homes directly owned by the State. These are properties being leased as social housing.
Alice-Mary Higgins (Independent)
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I am going to come to develop that point. We know leasing is poor value for money for the State. Given that a key responsibility of NAMA is to work in the interests of the State - not to work solely in the interests of NAMA but rather for those interests of the State - does Mr. McDonagh think it may have been a poor decision to allow a situation in which the State continues to lease properties during a time, as he will be aware, where fiscal rules had been suspended and where there had been no barrier to the State purchasing properties? It would have been better value for the State to have been purchasing and owning properties and allowing local authorities to purchase and own properties. We had this suspension of the fiscal rules for a substantial time. Does the maintenance of leasing relationships not go against the interests of the State?
Mr. Brendan McDonagh:
This seems to be almost like a circular movement of money. The Exchequer is at every juncture, by and large. The local authorities and the approved housing bodies, AHBs, are leasing from NAMA. Sometimes, they are getting subventions from the Department of housing to pay those rents. Those rents are coming into NAMA. If we are making profits, we are giving dividends back to the Exchequer again. The money is never leaving the system. It is all moving around within the system.
Alice-Mary Higgins (Independent)
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The capacity of local authorities is diminished if they are paying for leasing.
Mr. Brendan McDonagh:
I agree. Listen, Senator, these are policy decisions. I am not responsible for Government policy. Anyone can have views about the way things could be done. To me, and for NAMA, it was about keeping the money in the system. If we had sold those properties to a third party and they started leasing them to the AHBs, the money would be leaving the system and going to the people who bought the properties rather than coming back into-----
Alice-Mary Higgins (Independent)
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If they had been sold to the local authorities-----
Mr. Brendan McDonagh:
As I said to one of the Senator’s colleagues, the Government did not have money at that time to give to local authorities for capital programmes to be able to buy the units. This was a way for properties to stay and be used for social housing as part of a leasing programme. That was not my decision. It was a decision of the Government as part of the programme. While I understand where the Senator is coming from, I tried to come up with an innovative way in order that properties could be made available and that, ultimately, the Government could retain the SPV we set up that owns the properties. It means those properties still stay in State ownership but the money involved moves around the system.
While I understand the argument being made with regard to the lease costs, NAMA leases with these AHBs and local authorities generally charge approximately 80% of market rent. They are getting-----
Alice-Mary Higgins (Independent)
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How many of those leases have been renewed in the past five years?
Alice-Mary Higgins (Independent)
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All of these leases are for 20 years. There have been no renewals.
Alice-Mary Higgins (Independent)
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The value will be substantially more than it cost to purchase them, however.
Alice-Mary Higgins (Independent)
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If a local authority purchases now, it gets a 10% discount but it still has paid for 15 years of leasing.
Mr. Brendan McDonagh:
The money is going from NAMA to the LDA. It is another fully owned State body. The money is not leaving the system. You are paying the money out of one hand and taking it back with the other.
Alice-Mary Higgins (Independent)
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It is just that more money is moving around single properties when we want to see all engines and measures.
I am coming to the end of my time. One concern I had when the LDA was being set up was that we were still waiting for commissions of investigations into NAMA. Where will accountability lie with regard to future records when they are transferred? As Mr. McDonagh said, he is hoping employees will be transferred but there are no guarantees. Where does he feel accountability will lie in the future?
In terms of learning from NAMA are there things Mr. McDonagh has learned which he might or would have done differently and that he believes should be taken on board as a lesson for the LDA, specifically in relation to social housing delivery?
Mr. Brendan McDonagh:
In terms of records, all important records will be preserved at NAMA and transferred to the NTMA, so they will be held by the NTMA. I do not think there should be any concern about that. While the Senator is talking about the LDA, from looking from the outside at the LDA, the agency is involved in doing many things. People do not mind if they get a social or affordable house from the LDA because they just want a house.
Building housing or apartments is a very risky exercise for anybody, whether a State or commercial entity. Based on my experience, my advice would be that you have to be up early in the morning and be clued in. In terms of controlling costs, the works programme and who has been appointed as a contractor, you have to make sure you are on top of these and do not have cost overruns. Taking examples of State projects where there have been cost overruns, you really need the right people. My advice would be, in any State project, that you need the right people with the right skill set to make sure a project is delivered to a realistic budget and on time and that you do not get hit with extra costs that you did not anticipate or that could have been avoided. That would be my strong advice.
Alice-Mary Higgins (Independent)
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I suggest it is not solely around individuals but also looking to what the mandates and priorities are within the bodies.
Mr. Brendan McDonagh:
Absolutely. These are policy decisions. If you are talking about the practicalities of how to deliver things, which I have been doing for a long time, you really need to have the right skill set with you. We have had people in NAMA over the years who were quantity surveyors, engineers, project managers, accountants and legal people. You need the right people and they need to all work together to make sure their eye is on the ball the whole time because the potential for things to go wrong and costs to get out of control is huge.
Alice-Mary Higgins (Independent)
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Infrastructure associated with the delivery of housing is an area Mr. McDonagh mentioned in regard to schooling and so forth. It that one-----
Mr. Brendan McDonagh:
There is no point in building an estate if there are not the amenities around it. That is the responsibility of the planning system. When planning is granted the planning system should make sure there is the appropriate infrastructure in the community around it. Is there a site for schools? Are there public parks? Are there play areas? That is particularly important, in my view, in places where apartments are being built. If you are building a house, there might be a bit of a front or back garden where kids can play or whatever the case may be but if apartments are being built, sometimes they are built and there are not sufficient amenities around them, for example, playgrounds and things like that. It is the responsibility of the planning system to make sure that if planning is granted, there are, for apartments in particular, sufficient amenities included as part of the planning conditions.
Erin McGreehan (Louth, Fianna Fail)
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I welcome Mr. McDonagh. A lot of questions have been raised, several of which strayed from the content of the letter of invitation set out at the beginning of the meeting. I do not think that was necessary. As to why Mr. McDonagh was invited to the meeting, Senator Higgins mentioned the institutional knowledge of NAMA and the inside knowledge that is integral to NAMA. Has there been engagement with staff and the unions on the transition and dissolution of NAMA in order to be able to maintain that intellectual property in the public service and in the institutions that will move over to the NTMA?
Mr. Brendan McDonagh:
The NTMA is a business and is there to work on behalf of the State. It recruits professionals - very good colleagues who do their jobs well. The NTMA is very mindful that it will have to get to a point where it decides the roles it needs and how many of them it wants. The NTMA will advertise those roles and it will probably have to happen sooner rather than later. As matters stand today, NAMA has a redundancy programme and people have been accepted onto that programme. If people are to set aside the redundancy programme and go to the NTMA for two more years, the NTMA will have to offer them a contract. I cannot speak for the NTMA but in my view it would be better if it was done sooner rather than later.
I can understand why the NTMA is trying to figure out how much of the portfolio will be left and how much of the litigation will be left. There is no point in saying just for argument's sake that it will need three litigation solicitors when, in fact, if the cases have reduced from ten active litigation cases to five, only two litigation solicitors might be needed. I can understand why the NTMA has not pulled the trigger on that yet. In fairness, I know the agency is working on that and I am very mindful of trying to retain the skill set.
Having said that, a large amount of the working NAMA is doing now is preparing handover material and I am also mindful of the need to hand over the files in a proper way to the NTMA. Whether it is for NAMA people who stay for another year or two or for people who are recruited from elsewhere, the file will be an A to Z of everything that is left and where it sits and nobody can come in and say there is no file here and they do not know what is happening. The board and I are very mindful that we will hand over the files properly to the NTMA by the end of the year and we will always be there to help if the NTMA needs help afterwards. None of us will say we are no longer in NAMA and do not have to answer that question. Those sitting on the board of NAMA or not that kind of people. We will be there to help if the NTMA needs help.
Erin McGreehan (Louth, Fianna Fail)
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Mr. McDonagh mentioned legal cases. Of the 16 legal cases he mentioned, how many involve disputes with developers regarding asset valuations, conflicts of interest or even allegations of mismanagement of NAMA? Is there potential for a summary of each case, even in a redacted form, to ensure for taxpayers and Members of the Oireachtas that the public interest would be protected in those legal cases?
Mr. Brendan McDonagh:
No. Some of the cases are disputes over assets. Two of the ten live litigating cases are in a foreign jurisdiction, which means they are more difficult for us to manage but we are managing them because we are reliant on the courts in that foreign jurisdiction. One of the cases involves a lay litigant. Three further cases relate to one single debtor who is in dispute over receivership and three different cases arise from that. One open case relates to the estate of a former developer where there is some cash left in the estate and NAMA believes, as a secured creditor, that we are entitled to a share of that cash. There are two further cases involving two current NAMA debtors, although the assets have been sold, where NAMA believes the two debtors have assets. We are pursuing those debtors through the courts to get those assets, as we are obliged to do. If NAMA believes somebody has assets and we have done asset searches on them, they should come and offer those assets because the taxpayer bailed them out and they cannot just walk away from their obligations.
Erin McGreehan (Louth, Fianna Fail)
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Is there an option for a redacted summary of cases in order to be able to understand those legal cases, even in an anonymous form?
Erin McGreehan (Louth, Fianna Fail)
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Why did it take until the final year of NAMA to transfer the significant housing assets and developments to the LDA? We have had a significant housing crisis for at least a decade. Why is that the case? Does Mr. McDonagh know how many properties under NAMA control were left vacant or under-utilised during the height of the crisis? Is there potential to publish that data?
Mr. Brendan McDonagh:
There are very few units left in NAMA. There is only one vacant property. It has just gone sale agreed and it has not been vacant for very long. Off the top of my head, it was approximately 70 properties, of which approximately 44 are apartments that require remediation. There is a health and safety issue so you really cannot put people into them. There is an ongoing legal case about that, which is the third-party litigation I referred to in those other cases. We were directed by the Minister for Finance in 2020 to transfer NARPS to the LDA. We have been ready to transfer it since 2020. Legislative changes to the LDA Act had to be put through, which only came through in the Finance Act just before the end of the previous Government. The LDA is doing its due diligence and I expect that to transfer in July. On the two sites that could potentially deliver 4,000 units, we only acquired them late last year because we had to acquire them from the debtors and receivers. We expect they will transfer to the LDA on the direction of the Minister at around same time, in July. The LDA is doing due diligence on that at this stage. They are fields, but it wants to do its due diligence and that is its call. I expect all the assets NAMA has that can go the LDA will go to the LDA.
Erin McGreehan (Louth, Fianna Fail)
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Over the years, has NAMA ever refused offers from AHBs or local authorities due to commercial considerations? I know there are leasing and different agreements. Has it ever refused offers?
Mr. Brendan McDonagh:
No. There has never been a formal offer made to us with regard to acquiring the units. On the NARPS, there are 1,366 units. The AHBs and local authorities have a right to acquire them two thirds of the way through the lease, which is approximately 13.5 years through the 20-year lease. I think the first one of those is coming up later this year. Whether they want to do it or not, they will not be with NAMA at that stage. They will be with the LDA and that is a matter they will have to work out with the LDA if they want to do it.
Erin McGreehan (Louth, Fianna Fail)
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Mr. McDonagh mentioned a surplus of €5.2 billion coming to the State. Given the size of the original State guarantee and NAMA's control over tens of billions in distressed assets, does he think the return was commensurate with the scale of public exposure and the long-term costs to the taxpayer? Does he think more could have been done earlier in NAMA's lifespan to extract value through alternative strategies like renting or long-term land retention rather than rapid deleveraging?
Mr. Brendan McDonagh:
I do not think there was rapid deleveraging. There was a plan to deleverage in a structured way. The Ministers for Finance always made it clear to me and the NAMA chairman when we met them over the years that effectively extinguishing the Government-guaranteed NAMA bonds was important to get done, to help the NTMA raise bonds at good interest rates on the bond markets while interest rates were low. In the scheme of things, our return at the start was projected to be approximately 5% per annum. Our actual return is approximately 12.9% per annum, so we are two and a half times ahead of where everybody expected us to be in 2009.
Pat Casey (Fianna Fail)
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I welcome the few councillors here from Wexford. They are gone now, so I do not have to welcome them. I also welcome Mr. McDonagh. I refer to what Deputy Timmins said earlier. It is refreshing to hear the openness with which Mr. McDonagh has come to this meeting. At times during this debate, I wondered if we lost an opportunity at this point in time, but that boat has sailed. I was listening upstairs before I came down and heard Deputy Timmins address the area of NARPS, which Senator Higgins also mentioned. It is fine to sit here and ask with hindsight if we could have achieved a lot more from NARPS than we did. We equally have to reflect on the time when NAMA was established and the sense around it. The focus on getting a financial return from NAMA as opposed to a common good return was an opportunity lost when we reflect on it. My observation from what I have heard today is that we could have achieved a lot more. I was involved in Wicklow in respect of one development that NAMA offered, but when you looked at the location and the size of the house it was not deemed to be good social housing. There were other factors that played into why properties were not easily transferred to local authorities.
I was equally interested in the word FELIPE that Mr. McDonagh introduced. I will go to the "P" aspect, which is an area I am passionate about. Having served on the housing committee in 2016, I was here for the introduction of the national planning framework, which was put on a statutory footing at the time. While I had no problem with it being put on a statutory footing, it is the implications of that, down the road, which we are now beginning to see. They have been significant. There is a complete lack of flexibility within county development plans to move population growth from where it was designated in the original centres. Deputy Timmins finished the Wicklow County Council development plan two years ago. We allocated 38% of our population growth to areas that did not have the infrastructure to deliver that population growth. We dezoned land in 16 of our 21 towns where we had services on the land, and we could have built houses. I raised this lack of flexibility at the time and have done so over and over. We have seen six planning permissions refused in Wicklow either because we have exceeded our population growth targets, or it is R2 and not R1 land, or both. That is despite the fact that the majority of R1 lands have been built on. At the time we adopted that plan, a number of our towns had already exceeded their 2031 population targets, never mind that the plan was to end in 2028. I hope a lesson has been learned from that process and that now that we have commenced a complete review of all county development plans, we will not apply that strict regime where we cap population growth and allocate population growth where there is no infrastructure while we dezone land where there was infrastructure. I am probably in full agreement with Mr. McDonagh in regard to planning.
I want to spend time on the financing of housing development because I have not fully got my head around it, and why the system in Ireland seems to be completely broken at the moment. I heard one statistic recently about our four pillar banks indicating that 70% of their lending is to developers who are building for approved housing bodies, local authorities, or both, which in theory are backed by the State. However, our pillar banks are sitting with €166 billion that we cannot seem to activate into the market. I had not heard of the Basel ruling until recently and I am trying to get my head around that. What is Mr. McDonagh's opinion on financing?
What do we need to do to get more finance for developers so as to have more development? The Housing Finance Agency’s lending criteria are probably too strict. Maybe it needs to be a little more flexible with some of the developers that might have a slightly chequered history but that have been developing for the past several years.
It is fine getting the capital investment initially but, at the other end, we need to ensure people are able to buy the properties. Do we need to do more in this regard? Financing is critical because, if it is not right, we will not have any developments. The State cannot continue to put up €6 billion every year. We have to get a considerable amount of additional private equity into the system; otherwise, it will not work. Maybe Mr. McDonagh could give us his insight into and experience of financing.
Mr. Brendan McDonagh:
When NAMA was established, a very experienced individual who worked with me in it said to me – I did not come from a property background – that the day you buy is the day you sell. He said that means everything, but you cannot sell anything unless you build it in the first place. I totally agree that we need an effective planning system, a national planning framework, etc., but everybody would agree that, by and large, the targets were set as maximums rather than minimums. We had major population growth between 2016 and the last census. We in NAMA could see it happening and commissioned an independent report on it. It stated the targets were out of date and that something needed to be done about them. The Government recently updated the targets and the local authorities have to consider their development plans again. However, the big issue is that if you want 50,000 units per year, it can be achieved only if the majority of them are apartments, not houses. There is a whole structural change regarding people’s expectations as to what will be built and what people will live in. If the average cost of building an apartment, excluding VAT, is about €500,000, €25 billion is needed to build 50,000 apartments per year. The Senator is right in that if the Government puts in €6 billion per year, another €18 billion or €19 billion needs to come from somewhere to fund the development.
The publicly available figures recently published by AIB and Bank of Ireland as part of their year-end results show they are lending about €600 million or €700 million each in development finance. In an economy the size of the one we have, I find that hard to understand. I realise the banks will say they try to lend but can lend only on a risk-adjusted basis and that the Central Bank is very strict on them and so on.
An issue arises over demand in that if the apartments are going to be built and people cannot afford to buy them, someone else will have to buy them and rent them out. I have to be careful not to stray into policy areas, but we cannot just look at these matters in isolation; rather, we must also consider the issue of rents. When NAMA started operating, there was no capital in it. The banks would not lend anymore to allow people to buy the assets. Capital had to be got from outside – we get criticised for this – to get the property market moving again. The same thing is happening now and we have to be realistic about it. I am aware that many officials went to a big property conference, MIPIM, in the south of France this year to talk to foreign capital investors about opportunities to invest in Ireland. Someone has to ask the question about what is occurring. Foreign investors are not coming here banging the door saying they are going to invest their money.
I predicted in 2020 or 2021, when I was invited to present to the Housing for All investment committee, that interest rates were going to start rising. People told me I was wrong, which is fine as it is their prerogative, but I was proven right in the end. People were investing in property in recent years because interest rates pertaining to the normal sales products – Government bonds or whatever the case may be – were zero or sub-zero. I said that when those interest rates started to rise, people would no longer invest in the private residential sector in Ireland at a rate of 3.75% because, as anybody who knows anything about finance would ask, if an investor can buy an Irish Government bond and get a coupon rate of 3% on it, why would they invest in an Irish private rental sector, PRS, property and get a coupon rate of 3.75% on it? This is because an Irish Government bond is freely tradeable on the market and there are no holding costs or issues such as maintenance costs. I said that as interest rates rose, the PRS capital here would evaporate. It has evaporated because investors have alternative opportunities.
With regard to competition for international capital, nobody has to turn up in or invest in Ireland. Investors have to be attracted here and given an investment opportunity on which they can get a return on their capital. Many people might not like that but I believe in being upfront and honest with people in saying an equilibrium has to be struck. The money has to come from somewhere for people to be able to afford to buy a property. The reality is that if a house or apartment costs €500,000 or €600,000, even though the Central Bank has relaxed the mortgage lending rules, a couple must be earning a combined income of in excess of €100,000 to get a mortgage to buy it. That is a big issue. You cannot just look at one thing in isolation; you need to look at these things in the round and piece them altogether. Planning and infrastructure need to be right and there is a need for realistic population targets for where one can build. It makes no sense to zone land that will not have infrastructure for years. To me, it is absolutely silly – I have to be careful here – to dezone land that has infrastructure.
Finance is needed to build on land, and builders. Builders are finding it very hard to get finance to build houses. The big builders will be fine. The likes of Cairn and Glenveagh will get money from international banks all day every day and it will be down to the cost at which they can borrow, but the small builders are very reliant on the local bank and Home Building Finance Ireland if they are to build. I made a recommendation in 2017 to the then Minister, Eoghan Murphy, and wrote a paper for him on setting up Home Building Finance Ireland because I could see at the time that small builders were having difficulty getting finance from the main banks, which did not want to touch them after the crash. The aim was to provide finance to smaller builders because they are the lifeblood of the country. I come from Kerry, where four or five friends I grew up with are in the building industry. They would buy a site, get planning permission for, say, ten houses, build two, sell them and then use the money to build another two. That is the way they operated but they have not been able to do that for years. We have to be very realistic about what is wrong and needs to be solved. As the Senator said, finance is very important, but there is no point solving the finance issue if all the other steps are not solved beforehand.
Pat Casey (Fianna Fail)
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I have not got my head fully around the finance aspect of the housing market yet but I have a full understanding of planning and the other aspects.
On Mr. McDonagh’s experience of working through sites, we hear in the media a narrative about time-binding both the ESB and Irish Water in their decision-making processes. Is that a valid proposal, in Mr. McDonagh’s opinion? From my understanding, it can take up to a year to get a connection from Irish Water, even though one has gone through the pre-connection process. It is the same with the ESB. Is there logic to what is being said about time-binding the decision-making of these bodies?
Mr. Brendan McDonagh:
There is but they also have to have the finance to be able to do it. I started my career in the ESB. The ESB had stores all around the country which stored all the electricity materials, including wire, power transformers, TRAFOs, and everything one needed. The management thinking at the time was that it was an inefficient use of capital because one might store a TRAFO for two years and there would be no storm, so it would be sitting there unused. Management computerised the whole system and it went to a just-in-time system, where something could be ordered just in time. I left the ESB a long time ago but now one hears that if one is ordering a TRAFO now, it can take two years to get it, when a TRAFO is needed for a site which can deliver 500 houses.
That is not the only issue but someone has to grab this and say that there is no point saying there will be 50,000, 40,000 or 30,000 houses unless there are people who can do their part on the necessary steps along the way. It is important. Sometimes, one has to focus people's minds and say that you want to get to 50,000 units a year and therefore you will have to give the money to Irish Water or the ESB to upgrade the network and have sufficient stock to do it. Otherwise, to be honest, since we are all adults here, people are only fooling themselves if they think it is going to happen without someone calling it out, planning it and saying that failing to prepare means one should prepare to fail. That is the motto I have. One has to put the work in. One cannot just think that somebody else will do it but has to drive it and say that this is what needs to happen. It needs to be done in a co-ordinated way. We have a bit to go.
Pat Casey (Fianna Fail)
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How do we address the affordability issue? Mr. McDonagh said that €500,000 realistically is not affordable. Is it beyond the reach of many people? Will increased supply adjust that or are we at a level now where it will not? Before Mr. McDonagh answers, would he mind sending on the paper he did for the then Minister, Eoghan Murphy, at the time? Would that be acceptable?
Mr. Brendan McDonagh:
I do not know if I still have it. It was 2017 when there was a proposal for the Government to set up an organisation called HBFI. The Minister thought it was a good idea and obviously got approval to do so. I do not know if I still have the paper. If I have it, I will send it to the Senator. If I do not have it, I apologise.
Pat Casey (Fianna Fail)
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That is fine. Will Mr. McDonagh address the €500,000 figure? If that is where we are, we seemingly need additional interventions to allow people to own their own home.
Mr. Brendan McDonagh:
There is no need to reinvent the wheel with many of these things. Many other countries have the same problems with housing. There is state intervention in delivering housing in other countries. I have a friend who lives in Germany. He has been there since we both left college, many more years ago than I care to remember. It was only about two years ago that he finally bought a house in Germany. He was renting for over 30 years. That is what they do in Germany. It was a controlled rent that he could afford. He has two kids. As he went on in his career and his kids grew up, he managed to buy a house. I do not know how much he paid for it and I have not seen the house, but that is just the way it was. He was in a system where there was state intervention and people could not afford to buy a house. As he said to me, for the first 27 years of his working life, he could not afford to buy a house because he did not have enough money but in the last few years he got promotions, things went well and he was able to get the money to buy a house.
There are lessons to be learned from elsewhere. If people cannot afford to buy houses, help is needed. Help is available. The first home scheme is a good idea. It is run by a former colleague of mine from the NTMA, Michael Broderick, who is a good guy. That type of intervention happens. Again, I do not want to get into a policy area but we have to be realistic that if there are logjams, you have to try to figure out solutions. Sometimes the solutions are in other places, other countries and other experiences that you see if you can adapt to use here. I hope that answers the Senator's question.
Pat Casey (Fianna Fail)
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I appreciate Mr. McDonagh's time today. I am fully aware of the first home shared equity scheme and the help to buy scheme and how both of them interact with one another and help people to buy their own properties. I have done a number of public meetings on both of those schemes. I thank the Chair for her leniency with time.
Mairéad Farrell (Galway West, Sinn Fein)
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I am conscious that we are running low on time. I am delighted that Mr. McDonagh was able to join us.
Conor Murphy (Sinn Fein)
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I apologise for missing some of Mr. McDonagh's evidence to the committee. Like Senator Casey, I was trying to follow from upstairs. If some of the questions relating to the housing tsar role were already answered, Mr. McDonagh has my apologies.
Mairéad Farrell (Galway West, Sinn Fein)
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With regard to any questions outside the remit of what was on the invitation, it is Mr. McDonagh's choice whether to answer.
Conor Murphy (Sinn Fein)
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I heard that at the start and appreciate Mr. McDonagh's candour on some of these matters. Is it Mr. McDonagh's contention that he had no discussion about potential salary when he allowed his name to go forward, regardless of where that might salary might end up, and that he did not have any discussion with anyone else inside the political system apart from the Minister for housing? Had he continued to allow his name to go forward, what was the end point for his role in NAMA if he took up that new post?
Mr. Brendan McDonagh:
The only person I spoke with in the political system, who I do not know, is the Minister, Deputy Browne. I met him once at his invitation and had a discussion about salary, as I said earlier. It was always subject to approval. If it came to approval, I had a number of things I needed to do which I made commitments to do with NAMA, and I would not have been available to commence that role until August if it came to pass, but it did not come to pass so it is moot.
Conor Murphy (Sinn Fein)
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There was no discussion and Mr. McDonagh was not aware of what the salary might entail up until that point where he decided not to let his name go forward. When he discussed this with the Minister and allowed his name to go forward at that point, he was not aware of what the salary might entail.
Conor Murphy (Sinn Fein)
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It was a significant leap of faith for Mr. McDonagh to allow his name to go forward, not knowing what the outcome would be. I thank him for his evidence.
Mairéad Farrell (Galway West, Sinn Fein)
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I will come to a few of my questions. I am conscious that we are short on time and I have many questions, so I will not go into them all, for all our sakes. I have three questions which Mr. McDonagh might bring information back to the committee on. I will start with them and if Mr. McDonagh decides he wants to write in to the committee, that is fine. How much corporation tax did the NAMA Group pay in 2021, 2022, 2023 and 2024? How much of a dividend did NAMA pay the State in each of those years? What was NAMA's total level of bad debts written off? If Mr. McDonagh would prefer to come back-----
Mairéad Farrell (Galway West, Sinn Fein)
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I thought that. Sometimes it is easier to just ask those questions in this capacity rather than trying to get the answers in another capacity. We are near the end of NAMA. When it comes to the time to wind up, will Mr. McDonagh commit to this committee to produce the final report we have heard talked about, which allows for input from this committee on information that would be of value for the public?
Mr. Brendan McDonagh:
We have always published information straight after year-end. Obviously NAMA will not be there at the start of next year, but I think the board of NAMA would probably do a press release which would be available publicly anyway.
I am happy to give it to the committee. It would say what is left in NAMA in general and this is what is transferring to the NTMA. That is in the public interest and I do not see a big issue about that.
Mairéad Farrell (Galway West, Sinn Fein)
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Does Mr. McDonagh think it will be more like a statement rather a pure, final debts report?
Mairéad Farrell (Galway West, Sinn Fein)
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Anybody who was on the previous committee with me knows I have a keen interest in section 110 vehicles. It is something we have discussed a good bit in this committee, but it is my understanding NAMA has used multiple section 110 vehicles. What was the motivation for doing that?
Mr. Brendan McDonagh:
If we look at the original state aid approval of NAMA back in March 2010, one of the concerns of the Commission was that NAMA should not distort the market, that we would have no unfair tax advantage and that we would operate on a tax-equivalent basis to any private sector entity. Therefore, when we had the SPVs, we set them up, taking tax advice, using section 110 structures. Obviously, that allowed us to pay smaller taxes up to 2016, the same as anybody else in the market. The tax changes in 2016 meant more taxes were paid and that is how we have ended up paying €450 million in tax to date. It is a zero-sum game because the money we paid in taxes would have been paid over to the Government in the form of dividends if we did not pay the taxes.
Mairéad Farrell (Galway West, Sinn Fein)
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It is just that the use of those vehicles in particular came directly from the-----
Mairéad Farrell (Galway West, Sinn Fein)
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That is fair. It is very interesting that came from the Commission. Did the agency have many dealings with Revenue on that? Were there any dealings with it?
Mr. Brendan McDonagh:
Yes, as a State body we had tax advisers. We told the Revenue what we were doing. We have annual meetings with the Revenue to show we are in compliance. Under the code of practice, State bodies are obliged to be tax compliant, but also we were a big entity so we used to have regular meetings with Revenue staff to tell them what we were doing. We never engaged in any aggressive tax measures or anything like that, which maybe other people did in the market. We were very conscious of making sure that as a State body we were fully tax compliant.
Mairéad Farrell (Galway West, Sinn Fein)
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It is quite interesting to see where that goes. When NAMA is wound down I assume not everybody is planning on going straight into the NTMA. People will perhaps make decisions as to where they want to go.
Mr. Brendan McDonagh:
There are 72 people in NAMA today, all but two of whom have been accepted for VR programmes. Of those 72 people, the NTMA has said - and I believe said this in its submission to the committee yesterday - it thinks it might need up to ten people. It will advertise the roles and people from NAMA may apply. Then the NTMA will decided whether to take them. It will be only for as long a time as the NTMA needs them. If the work gets done in a year the contract finishes in a year and so on. As I said, the tail end of this is litigation and that is the difficulty.
Mairéad Farrell (Galway West, Sinn Fein)
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My question is more about what happens after that and where somebody might want to go after that. I had a Bill before the Dáil previously on TDs and cooling-off periods. The legislation stated there should be a cooling-off period for TDs who are not re-elected or finish up and move on. It would apply to lobbying and so on. Is Mr. McDonagh aware of anything like that, especially cooling-off periods?
Mr. Brendan McDonagh:
It is six months for me and my senior team. For people who are middle management down, it is three months. Effectively we are not allowed work or go into the same line of business. Obviously for the senior people like me, if I want to go into the property industry tomorrow morning, I would have to go talk to SIPO about that because it could be seen as being very close if I was on this side and now I am on that side.
Mairéad Farrell (Galway West, Sinn Fein)
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Yes. It could be said of all our jobs.
Mairéad Farrell (Galway West, Sinn Fein)
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I remember from work in the private sector that with gardening leave people get paid during throughout that period.
Mairéad Farrell (Galway West, Sinn Fein)
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I get that. We have it in the finance sector with people moving from one bank to another, depending on what knowledge they have and that kind of thing. Does Mr. McDonagh think it is a long enough period from an institutional knowledge point of view?
Mairéad Farrell (Galway West, Sinn Fein)
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Of course, and what information they have.
Mr. Brendan McDonagh:
If they were working in the finance function, they have probably never dealt with the assets, so it is less important, but if they are dealing with the assets, that is different. We have to strike a balance. Ultimately, the taxpayer is paying this money. The gardening leave originally came up at the public accounts committee in, I think, 2012 or 2013. The Cathaoirleach's leader Deputy McDonald raised the issue. At that stage the PAC insisted there be gardening leave for people who were leaving NAMA and that is why the clauses were put into people's contracts. It was three months for the lower-grade, or rather the lower-level people, and six months for the more senior people. That was a recommendation from the PAC that the NTMA adopted.
Mairéad Farrell (Galway West, Sinn Fein)
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That is fair, it is just something I am especially interested in in this line of work.
Mr. McDonagh mentioned Project Eagle in his opening statement. As I am chairing, he will have to tell me what he can answer and what he cannot, so he should just be frank. Has NAMA ever conducted its own internal investigation into Project Eagle? Obviously Mr. McDonagh could be limited in what he can say, but does he know how many people were called to take part in the commission of investigation who would not appear?
Mr. Brendan McDonagh:
I think it is in the final report of the commission, which is 500 or 600 pages long. I think there were only two or three witnesses who live in Northern Ireland whom the commission invited and did not appear. The commission said it had no jurisdiction to force them to appear. The majority of the witnesses were based in the Republic and everybody I know who was invited to give evidence to the commission did so and the commission acknowledged that.
Mairéad Farrell (Galway West, Sinn Fein)
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I thank Mr. McDonagh.
Moving to the records, which are something Senator Higgins queried, after NAMA has been wound down, I am unsure how commercial sensitivity issues would apply. Will we get a breakdown by folio number of properties sold per project, or will that not be made available?
Mr. Brendan McDonagh:
It will not because under sections 99 and 202 of the NAMA Act there are confidentiality obligations on the agency. Section 99 is the contractual obligation, which is called banker's confidentiality, which we inherited in taking over the loans from the banks. Section 202 is a lifelong obligation in terms of confidentiality. A lot of the borrowers were individuals and there are GDPR considerations. We have looked at this. That is not going to be in the public domain. All the records associated with the board meetings, minutes, decisions, board papers and things like that will be preserved.
Mairéad Farrell (Galway West, Sinn Fein)
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That is very interesting because commercial sensitivity issues are often raised but it makes sense that other issues can be raised.
Go raibh míle maith agat. I thank Mr. McDonagh for appearing at the committee. Gabhaim buíochas leis na Baill go léir as fanacht go dtí an deireadh agus as a bheith mar chuid den choiste seo. That concludes today's public session. The meeting now stands adjourned until next Wednesday, when the committee will meet in private session at 2.30 p.m.