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

I am pleased the Minister for Finance is present to discuss this issue. On 2 August last, the National Asset Management Agency, NAMA, was advised by a journalist from The Sunday Times that a senior executive in the agency, Mr. Enda Farrell, purchased a five bedroom house in Dublin last December from the agency's portfolio in a private deal without the property being put up for sale on the open market. NAMA's response was to appoint its internal auditor, Deloitte, to carry out a review of the transaction. The newspaper ran the story on Sunday, 5 August.

On the question of the property transaction, Deloitte subsequently found that the National Asset Management Agency approved the transaction without apparently realising that the purchaser was one of its employees. The agency stated the failure of Mr. Farrell to disclose the transaction was a breach of its internal procedures. Incredibly, it appears there is no explicit rule in place to prevent NAMA employees from entering into private deals to purchase agency properties. This position needs to change.

This story should have set alarm bells ringing in the National Asset Management Agency and Department. The response from NAMA, in appointing its internal auditor to carry out an investigation, was entirely inadequate. However, the story gets much worse. During the course of the review carried out by Deloitte, evidence was found that pointed to the removal by Mr. Farrell of confidential commercial information from the National Asset Management Agency. High Court proceedings were initiated by the agency in this regard and lawyers for NAMA told the High Court that the information had been taken in a premeditated way over a number of months. This raises a number of serious questions about the internal control and governance arrangements in the agency. How is it possible that information of such a commercially sensitive nature and pertaining to more than 11,000 loans, with a nominal value of approximately €74 billion and underpinned by approximately 16,000 properties, could be compromised in this manner? The very essence of the work of NAMA was potentially compromised by the breach of confidentiality surrounding this information.

It is my understanding that the information technology controls in the National Asset Management Agency prohibit the sending of e-mails to personal accounts, for instance, Hotmail, Gmail and Yahoo accounts. However, as the recipient e-mail address in this case was a professional services firm with which NAMA engages in some work, the e-mail left the agency and was received. Recently and belatedly, NAMA referred the matter to the Garda Síochána. On 5 August, the day this story broke, I immediately called for the matter to be referred to the Garda as it was always one for Garda investigation. Offences under the National Asset Management Agency Act are criminal offences. It was never adequate for NAMA to carry out an internal inquiry into the private sale of one of its properties to an employee without the property being placed for sale on the open market. In the course of the investigation into this matter it subsequently emerged that highly valuable commercial information had been potentially compromised. This issue is of extreme importance and goes to the heart of the role of the National Asset Management Agency. Members of the Oireachtas and citizens have placed their faith in the agency fulfilling its role. NAMA is among the largest - if it is not the largest - property portfolio owners in the world. It is entirely unacceptable to have information of this nature potentially compromised in this manner.

If, as the lawyers for the National Asset Management Agency have stated, this was done in a premeditated fashion over a number of months, it calls into question the governance and control arrangements in the agency. It is well past time the Minister appointed an independent person to find out exactly what took place in this case and carry out a root and branch review of the governance arrangements and control procedures that apply in the agency.

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

I fully support the swift and decisive actions of the National Asset Management Agency, NAMA, in dealing with this allegation as there should be no question but that NAMA employees are working in the best interest of the taxpayer. NAMA became aware of the particular transaction involved on 2 August 2012. On 3 August 2012, NAMA instructed its internal auditors, Deloitte, to carry out a comprehensive investigation into the transaction. The Deloitte review established the sale of the property was transacted at market value as the sale price was in accordance with an independent valuation at the time of the transaction.

NAMA requires its entire staff to complete a disclosure under section 42 of the National Asset Management Agency Act 2009 outlining all assets, liabilities and interests which they hold. Each employee is also required to inform the agency’s chief executive officer of any changes to his or her disclosure. He or she must also immediately inform the chief executive officer of any matter that could raise a question about his or her suitability to act as an officer of NAMA or that could result in an actual or potential conflict of interest with respect to his or her duties or obligations as an officer of NAMA.

However, the investigation found that the former employee did not disclose this transaction to NAMA at any time either prior to or following the transaction. During the course of the Deloitte investigation, NAMA also became aware that confidential data may have been taken without authorisation from NAMA by the former employee.

I wish to inform the House that a thorough investigation has now been completed. I am advised that the unauthorised disclosure was notified to An Garda Síochána and the Data Protection Commissioner on 12 September 2012 and that NAMA has provided, and will continue to provide, all information required by the Garda as part of this investigation.

I am also advised that NAMA has instituted legal proceedings against the former employee and his spouse seeking a number of reliefs including an injunction to prevent them from using, disclosing and/or dealing with confidential information. NAMA is also seeking several court orders, including an order directing the former employee and his spouse to provide a full account on affidavit in respect of all confidential information that either of them has removed from NAMA. This is to include the identity of all persons who have had access to the information or who have been made aware of its existence and/or contents and the identity of all persons to whom the information has been supplied.

These proceedings are within the jurisdiction of the courts and I am, therefore, not in a position to discuss them further. NAMA's swiftly instigated investigation demonstrates how seriously it viewed the allegations raised in early August regarding the purchase of a NAMA property by a former employee as well as the level of adherence to statutory and other disclosure requirements by the former employee.

I am also advised that NAMA already employs a wide range of measures to prevent unauthorised disclosure of confidential data. These include practical measures such as the deployment of e-mail monitoring technology to prevent e-mail attachments from being forwarded to personal and non-corporate e-mail accounts. IT controls also ensure that data cannot be saved from the National Treasury Management Agency, NTMA, network on to external storage devices such as USB keys, CDs, etc.

NAMA employees are bound by several statutory obligations in respect of the confidentiality of information to which they have access by virtue of their employment. These include obligations imposed under section 14(1) of the National Treasury Management Agency Act 1990 and under section 202 of the National Asset Management Agency Act 2009. NAMA staff are also subject to the provisions of the Official Secrets Act 1963. Contravention of these statutory obligations constitutes criminal offences and, under section 7 of the National Asset Management Agency Act, a person who commits such offences may be liable to a substantial fine, a term of imprisonment or both.

It is unfortunate that in spite of these wide-ranging controls and obligations, NAMA has suffered a breach of trust. I take comfort in the fact that as part of its review of Deloitte's findings, the board of NAMA will assess whether there are any changes required to NAMA's current data control and compliance procedures.

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

I thank the Minister for his response. However, I disagree with him that NAMA made a swift and decisive response once the information was brought to its attention. The Minister stated the contravention of provisions of the National Asset Management Agency Act are criminal offences. NAMA is not a competent authority for investigating possible criminal offences. This matter should be referred immediately to An Garda Síochána as soon as it was brought to the agency’s attention. That is what I called for on 5 August. NAMA delayed by appointing Deloitte to do an internal review. Subsequently, only when further evidence emerged was the matter referred to An Garda Síochána.

The practice of NAMA engaging in the private sale of assets under its portfolio without putting those properties up for sale in the open market stinks. It needs to come to an end. Will the Minister make that one practical change immediately? As the Minister knows, the gentleman in question, Mr. Farrell, on leaving NAMA went to work for Forum Partners, a property management company, as its Ireland representative. I am making no allegation as to how information may or may not have been used. However, the potential was certainly there for commercial information of an invaluable value to be used for commercial advantage for one or more parties.

What we need to get to the bottom of now is where all of this information ended up. This is information concerning over 11,000 loans with a book value of over €70 billion and 16,000 properties. Where is that information today? In whose hands did it end up? Since the information was leaked from the agency, is there any evidence of transactions from which persons could have commercially benefited? These questions need to be answered quickly. The Minister should carry out an independent review of what happened in this case, as well as into the wider control procedures and governance arrangements at NAMA. There was a catastrophic failure of procedures in this case. It could yet have potentially negative consequences for the agency and taxpayers. We need to get to the bottom of it and ensure nothing like this happens again.

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

When the Garda is investigating a matter and when it is clear it may become sub judice, everyone should be careful with the allegations they make. The Deputy has made several statements that are not correct. First, NAMA did not delay when this matter was brought to its attention. It first heard of this particular house purchase on 2 August. On 3 August, the day after, it got its internal auditors to carry out a comprehensive investigation of the transaction.

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

That is not good enough. That was a matter for the Garda.

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

No, it concerned the sale of a house. I have described what disclosures have to be made.

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

There was the use of internal information.

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

No, the Deputy should not interrupt me and allow me to put the facts on the record. He has made allegations which are not correct.

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

I did not.

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

The more serious matter was discovered in the course of the Deloitte evaluation of what happened. It was then the transmission of data was discovered which was subsequently referred to the Garda Síochána. On 3 August, NAMA had no idea there was another potential offence involving the transmission of confidential data. There was no delay in dealing with the matter subsequently when that matter came to light. The agency acted expeditiously and in accordance with the powers under the Act. We will see whether there was damage in the revelations or not because the investigations are proceeding. As soon as the facts are established, I will inform the House of what has come to light on a suitable occasion.