Pearse Doherty (Donegal South West, Sinn Fein)
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5. To ask the Minister for Finance his views on whether there is an appropriate period of time allocated for notice of leave and cooling-off periods for senior staff in the National Asset Management Agency in view of the new approach of accelerated disposals. [28492/14]

Pearse Doherty (Donegal South West, Sinn Fein)
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For some time now, and the past couple of months in particular, high profile members of NAMA staff and executives have been leaving their positions in NAMA to take up occupations in the private sector. While that in itself is not a key issue, what is at issue is that because some of those staff have taken up employment in companies that are involved in property development there could be a conflict in terms of the information and knowledge they take with them from NAMA. Is there a need for more appropriate terms of notice of leave, cooling-off periods and conditions in contracts not only for new employees but existing employees of NAMA, in light, in particular, of the decision of Mr. John Mulcahy, an executive of NAMA, to depart for IPUT and to advise Mr. Denis O'Brien in regard to his property portfolio?

Michael Noonan (Limerick City, Fine Gael)
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In early 2013, the NTMA chief executive committed to a review of NTMA policy in respect of notice periods and post-termination restrictions on employment. Accordingly, the law firm Matheson was engaged by the NTMA to: advise on market norms in the private sector in terms of notice periods and post-termination restrictions; assess the adequacy of the protections in the current NTMA employment contracts-codes of conduct where employees leave the NTMA to join a commercial entity in the private sector that might gain an unfair advantage by employing them; and recommend changes that could be made in this area by the NTMA.

This review applied across all the NTMA's business areas, including NAMA. All NAMA staff are employees of the NTMA and under section 42 of the National Asset Management Agency Act 2009 the NTMA assigns staff to NAMA. Other than a small number of staff reassigned from other functions within the NTMA, NAMA staff are employed on the basis of specified purpose contracts and their employment is for as long as NAMA requires their particular skills.

Matheson's principal recommendations include longer notice periods - three to six months - to be introduced for middle and senior NTMA management employees; garden leave provisions to be included in all NTMA employment contracts; post-termination of employment restrictions, including cooling-off periods and non-solicitation of employees, to be considered on a case-by-case basis in respect of senior NTMA management employees in particular. However, Matheson stressed that the imposition of such restrictions would need to be balanced against the NTMA's need to recruit good candidates for whom such restrictions may act as a significant disincentive to taking up employment with the NTMA. Furthermore, to maximise the prospects of enforceability, Matheson advised that any such restrictions would need to be drafted as narrowly as possible.

Additional Information not given on the floor of the House

It was proposed by Matheson that any required changes resulting from these recommendations would be introduced for new NTMA employees and existing NTMA employees on promotion. The NTMA has accepted the Matheson proposals and is implementing them on this basis.

With regard to staff assigned to NAMA, it should be noted that the three month notice period and garden leave provision were already in operation since the first persons were assigned at the start of 2010.  A provision prohibiting certain activities in an employee's subsequent employment for a defined period of time has also been introduced on a case-by-case basis for new employees, in cases where employees have moved from fixed to specified purpose contracts, and on promotion.

The Deputy will also be aware that there are extensive safeguards in place to protect the confidentiality of information held by NTMA employees, including those assigned to NAMA.  Employees assigned to NAMA by the NTMA, as is the case with all other NTMA staff, are subject to section 14 of the National Treasury Management Agency Act 1990, which prohibits an employee from disclosing any information obtained while carrying out their duties as employees of the NTMA. Employees assigned to NAMA are also subject to a prohibition on release of confidential data under sections 99 and 202 of the NAMA Act 2009.  NTMA employees, including those assigned to NAMA, are subject to the Official Secrets Act.  Contravention of these prohibitions is a criminal offence.  These protections do not cease at the point of resignation but rather apply indefinitely and extend to former employees. 

In the context of the above, I am fully satisfied that there is an appropriate period of time allotted for notice of leave for senior staff in NAMA having regard to the importance of NAMA being able to attract and retain appropriately qualified and skilled employees from the private sector to enable it do its work on behalf of Irish taxpayers.  Mobility with the private sector is a critical component of the wider NTMA model and we have to accept that if it is to be successful mobility is a two-way street.

Pearse Doherty (Donegal South West, Sinn Fein)
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I thank the Minister his response, which is the same as that given by him in the House on 4 March in response to another parliamentary question. My question is whether, in light of the asset disposal within NAMA and the decision of one of its executives to take up a position in the private sector, there are adequate cooling-off periods in place. I am well aware of what Matheson's advised and the additional protections in place in terms of NAMA and the NTMA since publication of the Matheson report. I discussed these issues with the Minister prior to the commissioning of that report, which I welcomed.

I believe there is a flaw or a weakness in this area. The weakness is that this only applies to new contracts and to people who have been promoted within the agency. For example, these rules did not apply to the executive in question, on whom I am not casting any aspersions, who has left NAMA and taken up employment in INPUT, which is a private sector company dealing in property. Many others also do not come under those rules. Should consideration be given to these rules being applied even on a voluntary basis to people already in binding contracts or is there something else that needs to be done to ensure staff are not poached by the private sector as NAMA begins to wind down?

Michael Noonan (Limerick City, Fine Gael)
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There is an issue here. It is an issue in general terms of a level of principle, which is an issue of concern although I have no practical example of where that concern was manifested by a person doing anything untoward. It is also true, as the Deputy remarked, that contracts are not retrospectively applied, unless by agreement. A person's contract of employment is just that and the rules cannot be changed by an employer half way through that person's period of employment. There is an issue, although so far there is no situation to which one can point in terms of difficulties having arisen. Obviously, we would wish to forestall any difficulties arising. I will discuss the issue again with the Chairman of NAMA. As I understand it, the Deputy is more concerned about NAMA than the NTMA because of the NAMA property transactions.

Pearse Doherty (Donegal South West, Sinn Fein)
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Yes.

Michael Noonan (Limerick City, Fine Gael)
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Perhaps the issue could be raised with NAMA when it next appears before the finance committee. A great deal of progress has been made on finding a solution but I would welcome further discussion on the issue.

Pearse Doherty (Donegal South West, Sinn Fein)
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I believe there is need for further discussion on this issue. My real concern is that because NAMA has already disposed of many of its assets and will, in my view, wind up before its anticipated timeframe - whether that should happen is a different debate - the private sector is at this point in time poaching our best NAMA staff. Staff currently employed by NAMA who will perhaps be out of a job in a year or two will want to consider offers coming their way. The problem is that the cooling off periods are not adequate. This has been recognised already in terms of the stricter conditions that now apply to new employees and staff promoted within NAMA, including prohibition of certain activities of an employee's subsequent employment. If that had applied to other employees then view the executive who recently left NAMA would not have been in a position to take up his current position, in respect of which there appears to be a conflict. I am not suggesting he will do anything, because he is still bound by secrecy and cannot use the information he has, but there is a huge concern that we have allowed that system to develop. I am not sure what can be done but something has to be done. NAMA needs to not only break even but to make a profit because the haircut it took was then forced on the Irish people in terms of recapitalisation of the banks.

While I will raise the matter with NAMA when it next appears before the Committee of Public Accounts or the finance committee, I would encourage the Minister's officials to look into whether anything can be done in this regard in respect of current employees, even on a voluntary basis.

Michael Noonan (Limerick City, Fine Gael)
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We will revisit the issue. We know from practice elsewhere that there are not unlimited options. One proposal is to provide that a person cannot do anything for six or 12 months. However, the person is then entitled to full salary for that period. All of this is covered under the gardening leave provision. Another proposal is that in respect of companies whose end is foreseeable, such as NAMA, a golden handcuff arrangement be put in place. This means an incentive to remain with the company would be built into the person's remuneration and if he or she remains beyond a certain point he or she receives an additional bonus. I am not too sure if public opinion on the markets would wear that kind of an arrangement. It is possible to put things in place. I do not wish there to be hue and cry about individuals' terms of employment and remuneration. We are trying to do the best for the organisation and the best for the country and I do not want to be ambushed on this. However, I am open to discussion on it.