Peter Burke (Longford-Westmeath, Fine Gael) | Oireachtas source

As mentioned previously - it is on the record - I concur with most of the report by the Committee of Public Accounts into Project Eagle after sitting through countless days of evidence. Any State body needs to be able to demonstrate fully that it got value for money for the State and, unfortunately, due to inadequate record keeping, which has been accepted by NAMA, the Committee of Public Accounts had a limitation of scope in assessing this. Decisions were recorded but discussions were not. In a State agency where sensitive loan sales take place, discussions must also be recorded. I think this was a fundamental weakness of NAMA. It is my view that discussions should centre around NAMA because this is the subject of the report and an investigation surrounds this.

One of my biggest concerns about the sale of Project Eagle was that there was no evidence that a detailed risk assessment for a 10% discount rate for Project Eagle was discussed by the board of NAMA. When we assess the board minutes, only two risk assessment rates were used - 5.5% and 2.5%. I believe this is a fundamental weakness. My second concern relates to how NAMA dealt with conflicts of interest and the necessary safeguards to protect the agency from this. NAMA needed more robust procedures. Its process was clearly lacking in this regard.

However, I would also point out that there are a number of areas we must acknowledge. The Comptroller and Auditor General is very clear in that he is not making a commercial evaluation of this transaction. Page 48 of the report provides a reconciliation of NAMA and Comptroller and Auditor valuations to calculate the £189 million difference. Both values have an inherent weakness in terms of the evidence to test both the £39 million assumption of all cash falling due at year end - a course that, in theory, some property transactions follow as opposed to an even break of cash flow - and the £69 million of additional impairment. The £800 million recorded loss on the transaction is a book loss. It is recorded in the NAMA accounts. However, £570 million had already been written off between 2010 and 2013. Essentially, the loss on disposal was £230 million. We must be very clear that if that sale had been aborted and not followed through, the international accounting standard that is relevant to loan sales would require the loan book to be further impaired. That is very clear based on anyone's interpretation of the standard. Many do not want to acknowledge this but in respect of valuations, that is the correct procedure. The key issue in the investigation by the Committee of Public Accounts is that it assessed how exposed the State was on this occasion. That is very hard to assess. The Committee of Public Accounts is pretty clear on that in the report together with the Comptroller and Auditor General.

Many people have spoken about the performance of NAMA. NAMA acquired 15,000 loans with an original par value of €74.4 billion. The value on acquisition of these loans was €31.8 billion, which is essentially a crystallisation of 57%. However, while the par value is mentioned in the report, it is unfair to blame NAMA for the par value of pre-crash property prices. The Comptroller and Auditor General has commissioned section 226 tri-annual reports into NAMA. They showed no issues regarding other loan sales. NAMA is due to return a €2.3 billion surplus on its acquisition cost and we have to acknowledge this.

Obviously, there was no pressure on NAMA to sell Project Eagle. Anyone who suggests this lacks a basic understanding of NAMA. What is clear is that there was pressure on NAMA to dispose of its loan book. Ireland was unable to borrow on the open market. NAMA bonds of €31.8 billion were guaranteed by the State. We needed to break away from ECB emergency liquidity. We must not forget the environment in which NAMA operated. In 2011, expenditure in the country was running 50% ahead of income. Nobody now wants to acknowledge this.

2013

If NAMA delayed in reducing the debt, ratings agencies would ensure that the State would not be able to make investment grade and we would continue to depend on ECB-IMF liquidity.



(Interruptions).

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