Paul Kehoe (Wexford, Fine Gael) | Oireachtas source

I will briefly set out the background to the motion. As Senators will be aware, NAMA was established as part of the response to the banking crisis that arose in 2008. Its objective was to acquire loans from eligible banks, hold and manage these loans and related collateral and achieve the best financial return for the State by disposing of these assets expeditiously. NAMA acquired the loans for a total of €31.8 billion from the participating banks. NAMA's purchase was funded predominantly through €30.2 billion of Government-guaranteed senior NAMA bonds, which was a large contingent liability for the State. There was no doubt that the repayment of this debt would be extremely challenging and vitally important to improving the creditworthiness of the State. To be successful, NAMA would have to make important and commercially informed decisions at a time of great economic crisis. It is important to note that since 2010, against all expectations, NAMA has redeemed 98% of its senior debt, reducing the State's contingent liability from the original €30.2 billion to just €500 million today. NAMA expects to redeem the remaining €500 million in 2017 and ultimately to deliver a surplus of over €2 billion to the State. The full repayment of NAMA's debt, let alone returning a surplus to the State, was considered unthinkable by most people at NAMA's inception. NAMA's focus over the period from 2018 to 2020 will be on completing its objectives, including the delivery of office space in the Dublin docklands and much-needed housing.

As Senators will know, in 2014, NAMA sold the Project Eagle portfolio to Cerberus, and issues around the sale subsequently became the subject of much media and political debate. In 2016, the Comptroller and Auditor General carried out an investigation into the sale to ascertain if NAMA had obtained the best achievable financial return for the State. In September 2016, the Comptroller and Auditor General published a special report which criticised elements of NAMA's performance. The Comptroller and Auditor General concluded that the decision to sell the loans at a minimum price of £1.3 billion involved a significant probable loss of up to £190 million in net present value terms; restrictions on the sales process, combined with the scope of Lazard's comfort letter, did not provide sufficient assurance that a different marketing strategy for the loans or a different timing of the sale could not have resulted in NAMA achieving a higher price from the sale of the loans; and allegations of the involvement of a member of NAMA's Northern Ireland advisory committee in an arrangement to share fees with law firms connected to the sale warranted more action by NAMA. Following publication of the report, NAMA indicated it fundamentally disagreed with many of the conclusions reached by the Comptroller and Auditor General.

In March 2017, the Committee of Public Accounts published a report on NAMA's sale of Project Eagle which was completed following extensive public meetings at which many key witnesses gave evidence. The committee's report concluded that the Comptroller and Auditor General's report was evidence-based, balanced and reasonable and that the Project Eagle sale was marked by inadequate record-keeping, weaknesses in the management of conflicts of interest, a seriously deficient sales process and, ultimately, an inability by NAMA to demonstrate that it had obtained best value for money for the State. The Committee of Public Accounts also welcomed the proposal to establish a commission of investigation.

There has been extensive consultation with all parties in the Oireachtas since last September about the establishment of this commission of investigation. The Taoiseach met leaders of the Opposition on a number of occasions both before and after the Committee of Public Accounts report was published. At those meetings, all present acknowledged the limitations a commission of investigation will face, including that some of the alleged events took place outside the State, as well as ongoing criminal investigations. The Taoiseach also emphasised that it is unclear how much more information a commission may be able to provide beyond what the Committee of Public Accounts has already achieved. Nonetheless, in view of the consensus among Opposition representatives that a commission of investigation be established, and despite its likely cost, the Government has agreed to establish the commission. I am pleased to confirm that Mr. Justice John Cooke, a former High Court judge, has agreed to chair the commission.

The Taoiseach has also consulted Opposition representatives on the terms of reference of the commission. The commission will, in the first module of its work, investigate NAMA's sale of Project Eagle. As agreed with Opposition representatives, it will be possible to amend the terms of reference, in accordance with the Commissions of Investigation Act, to provide for further modules at a future point. The commission is to investigate, having regard to NAMA's statutory obligations under the NAMA Act 2009 and appropriate commercial practice, the following: if the disposal strategy for its Northern Ireland loan portfolio, including the timing of the disposal and sale as a single portfolio, was appropriate in the circumstances; if the minimum price applied, and how it was derived, regarding its Northern Ireland loan portfolio were appropriate in the circumstances; if the management of the sales process by NAMA, including procedures and controls applied, timeframes, access to potential bidders and record-keeping, was appropriate in the circumstances and demonstrated best corporate governance; if any conflicts of interest arising in respect of members of NAMA's Northern Ireland advisory committee were managed appropriately in the circumstances; when and how NAMA became aware of fees allegedly payable to a former member of the Northern Ireland advisory committee by bidders on Project Eagle and if this issue was managed appropriately by NAMA during the sale of the Northern Ireland loan portfolio; and if decisions and actions of the Minister for Finance and the Department of Finance relating to the disposal of the Northern Ireland portfolio, including communications with members and officials of the Northern Ireland Executive and meetings with potential bidders, were appropriate in the circumstances.

The commission shall avail of appropriate and independent commercial and financial expertise to inform its investigation. The commission will provide an interim report after three months and a final report by the end of June 2018, subject to section 6(6) of the Commissions of Investigation Act 2004.The exact requirements of the commission will become clearer once the commission is established and begins to scope out its work in more detail. Based on an initial assessment and taking account of the cost estimate for the Irish Bank Resolution Corporation, IBRC, commission to investigate one transaction, an approximate cost of €10 million is proposed. This may be an overestimate if the commission does not suffer from the same level of third party costs and other challenges faced by the IBRC commission. It is important to note that this estimate refers to the proposed first module of the commission’s work relating to NAMA’s sale of Project Eagle only.

There is a shared commitment among the Members of this House that the matters giving rise to public concern regarding NAMA are investigated thoroughly and effectively. I commend the motion to the House.