Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Question 4: To ask the Minister for Finance his views on whether all properties being sold by agents on behalf of the National Assets Management Agency or on behalf of receivers appointed by NAMA should be advertised on the open market in order that all potential interested parties have the opportunity to make an offer for the property. [25881/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

Under the NAMA Act 2009, the sale of private property by the National Asset Management Agency is a matter for the board of NAMA. I have no function on such matters. I am advised by NAMA that the NAMA board issued policy guidelines in mid-2011, which set out that, in the absence of very exceptional circumstances, the sale of all property assets undertaken by debtors or receivers shall be by the appointment of suitably qualified agents and that all such sales must be appropriately marketed. The marketing strategy for all asset disposal is determined by a range of factors, including the asset class, size, value and location. In all events, NAMA insists on independent valuations of all assets.

A key principle of the guidelines is that the conduct of disposals should be on a competitive basis and in accordance with prevailing market norms for the asset class and jurisdiction, having regard to NAMA's objectives set out in section 10 of the Act. NAMA advises the principal methods of sale are private treaty, sale negotiated directly with a purchaser, sale by public auction, sale by public tender, sale by sealed bids, and other disposal mechanisms tailored to the specific characteristics of the underlying real estate or a combination of the above. Sale instruction and contracts with agents and brokers require prior approval by NAMA or the participating institutions.

The guidelines also require that sales agents are expected to prepare a final report and recommendation addressed to the debtor and copied to NAMA. Included in these reports should be a summary of the marketing campaign which, generally, should not be less than one month; a list of all parties who expressed interest in the real estate or were contacted during the marketing campaign; a recommendation to accept the terms of the purchaser's offer as the best price reasonably obtainable for the asset at the date of the recommendation; confirmation that the agent has reviewed purchaser's confirmation relating to connected party sales; and a statement disclosing any commercial relationship between the agent, debtor, purchaser or purchaser's ultimate beneficial owners in the past five years and how any actual or perceived conflict of interest was managed during the sales process.

Additional information not given on the floor of the House.

In certain limited circumstances, NAMA and the participating institutions may agree an alternative form of disposal with the debtor or insolvency office holder with, for example, more limited marketing or reporting requirements. However, decisions on alternative forms of disposal are subject to review by the board of NAMA.

The Deputy recently raised concerns in relation to the sale of land controlled by NAMA debtors in Cork.

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

This issue goes to the heart of the need for transparency in the operation of NAMA. This came to my attention because of the sale of a 450 acre land bank outside Cork city. It was sold by agents appointed by a NAMA debtor and the sale was completed without the property being put on the open market. On further investigation, it appears this is not an unusual occurrence. NAMA is hiding behind a facade, appearing not to be the seller even though it is pulling all the strings. NAMA appoints receivers, who appoint selling agents or, in some cases, NAMA debtors directly appoint selling agents at the behest of NAMA. In effect, the assets are being sold on behalf of the taxpayer and the proceeds will be used to redeem debt owed to NAMA. There is something very wrong when NAMA cannot tell us how many of the 663 sales it has completed have been put on the open market. Will the Minister insist that in all cases where assets are being sold by NAMA or on behalf of NAMA and where the taxpayer has a direct beneficial interest, the properties are put up for sale on the open market so all interested parties can submit bids and be considered on a fair basis?

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I will clarify the matter according to what NAMA told me about the sale in Cork. In that instance, NAMA advised me the sales agent was acting on behalf of the debtor and that a competitive sales process was undertaken. The debtor was not in liquidation. I understand from NAMA that the sale was managed and implemented on behalf of the debtor by a firm of professional sales agents. Following wide engagement with viable interested parties, a special purchaser emerged in respect of the entire holding of 450 acres at a price considerably in excess of that guided by the retained professionals. It was the considered advice of the sales agent that the offer from this purchaser would be accepted. I understand that NAMA, on receipt of this information, commissioned a second independent report by another professional firm, which agreed with the original guide price. On the basis of the independent valuation advice, which established the price offered was 40% in excess of the two independent valuations and taking account of the fact that the offer was for the entire holding rather than for individual land plots within it, NAMA granted its approval to the debtor to proceed with the sale on the advised terms on the basis that this maximised the recovery for the taxpayer.

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context

With the greatest of respect to selling agents, they cannot know what property is worth until it is put up for sale on the open market. In this case, it concerns a land bank of 450 acres of prime agricultural land with some potential for future development. Many people would have been interested in the land bank or parcels of it. The broad principle concerns more than just this case. Where NAMA is selling assets through debtors or receivers, the assets should be put up for sale on the open market. We should insist upon the principle and the Minister should exercise political judgment on the issue and not allow NAMA to enter into private deals. Even if the deal achieves the best price, we cannot be certain. The only way to ensure we get the best price is to put land on the open market. As legislators, we should insist that is done in every case.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

NAMA is an independent organisation established under law by this House and the Seanad. It is a criminal offence for anyone, including the Minister for Finance, to try to steer or influence a commercial decision being made by NAMA. NAMA is accountable and, for example, it must produce quarterly reports. The report on the last quarter of 2011 will be published tomorrow. NAMA is also amenable to scrutiny by the Committee of Public Accounts. The chairman and the chief executive of NAMA can be called before the Committee of Public Accounts in the normal way.

The Comptroller and Auditor General, under law, has a special auditing relationship with NAMA and he and his team can go into NAMA and examine every piece of paper in there to see if everything was done properly and appropriately. NAMA is also amenable to other committees of the House and an annual report is published. There is accountability and Deputies should exercise it. Furthermore, if there is concern about a specific aspect of NAMA's work, it is within the power of the Comptroller and Auditor General to scrutinise any aspect of it. He is not obliged to wait for the production of the annual report from his office but rather the Comptroller and Auditor General can undertake an examination of any aspect of NAMA's work.