Paul Bradford (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry, and ask him to transmit my views on this matter which deeply concerns me to the Minister for Finance, Deputy Noonan. I raise with the Minister for Finance, the Government and all my political colleagues the need for us, as a body politic, to react quickly and firmly to the suggestion that somehow we will go back on the word we gave the Irish taxpayer at the time of the creation of the National Asset Management Agency that private arrangements would not be entered into where NAMA developers would be entitled to purchase back their loans at a discount. I would like to quote the final sentence of George Orwell's book, Animal Farm, because it is very pertinent to this debate. It reads: "The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which." I say to the Minister of State and the Cathaoirleach, on behalf of the Irish taxpayer, that if we, politically, decide to go back on the commitment we gave to the Irish taxpayer and re-enter into some cosy deal with NAMA developers, then the whole concept of political commitments and political promises will be totally irrelevant. The last general election and the change of Government will not have been worthwhile. That is at the very core of this debate.

The suggestion is now being made, whether on behalf of Government sources or developers, that we will rewrite history in regard to NAMA and give a new set of discounted deals to NAMA developers. The taxpayers, the very same people who footed the original bill, will foot the bill. I want a very firm and very quick commitment from the Government that no such plan is receiving serious consideration.

At the time of the creation of NAMA, which most of us supported as being the least worst option, and at its core were economics, politicise and ethics. There was an economic requirement for it. From a political perspective, it was seen as perhaps the Government and the political establishment taking a hands-on approach to the devastated construction industry. From the perspective of ethics, it was presented as an arrangement which would be transparent and fair.

Questions are being asked about NAMA in this House and the Dáil, but the workings of NAMA and its transparency is a debate for another day. However, section 172 of the legislation absolutely prohibits the prospect of NAMA entering into what I would call discounted deals with the NAMA developers. That position must be maintained. The Irish taxpayer and not some far away entity has already paid €30 billion for the loans and the discount on those loans of €40 billion was taxpayer-funded. The Irish taxpayer, therefore, has a huge interest in how NAMA operates and in ensuring it operates well.

We often hear about a functioning property market and somehow the story is spun that to have a functioning property market again, we must facilitate, in some special way, those who were in charge of what they previously deemed to have been a functioning property market. It was not, of course, a functioning property market but an entirely dysfunctional one based on grossly inflated values and grossly inflated egos. The last thing we want as a society, as a people and as an economy is to go back to those days. The people who speak about a functioning property market must recognise it will be a new place and will not be a return to what existed in the so-called Celtic tiger years.

We must ensure the commitment at the core of NAMA, which the taxpayer who was burdened with such debt was given, that there would be no discounted deals for developers is maintained. I look forward to the broader debate on NAMA, to the concept of it coming under the freedom of information legislation and to the very serious questions which have been raised in this House and elsewhere over the past number of months being articulated and answered. I also look forward with hope to a sense of decency and ethics remaining in this House, in this Government and in politics. I hope the commitment that we would not allow developers discounted deals is fully and strongly maintained.

If there is a further write-down for developers, what will be the arrangement for householders and the tens of thousands of people throughout the country with mortgage debt, credit card debt or with small business debt? How many people who have had difficulty with their financial affairs have been in receipt of salaries of up to €200,000 per annum to look after or get out of their debts? According to media reports, some NAMA developers have been in receipt of those sorts of salaries. If the payment of those sorts of salaries helps, in some way, to get some of the projects up and running, the proper management of mismanaged projects and a return to the taxpayer, fair enough but where is the salary for the man or woman who is trying to live on weekly budget and to pay a mortgage which might be out of control? Where is the salary for the small business person struggling against the odds? We need openness and transparency but, above all, we need fairness.

This country was brought to its knees by greed and by people who felt they lived outside the normal rules. The Government, to its credit, is trying to return this country to solvency and, hopefully, in years to come, to prosperity but we must learn from past mistakes and recognise that one does not build an economy on a so-called property boom. The purpose of development, of housing estates and of a property market should be to provide homes for families and not to turn millionaires into billionaires. Will the Minister of State give a firm commitment that this Government will maintain the line, which its component parties certainly took during the initial debate on the NAMA legislation, that there will be no special arrangements for certain people and that section 172 will remain firmly part of the NAMA guidelines?

John Perry (Sligo-North Leitrim, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I convey the regrets of the Minister for Finance, Deputy Noonan. He is on Government business but would be here otherwise.

As the Senator may be aware, section 172 of the NAMA Act precludes NAMA from selling loans or property to a defaulting debtor or to parties connected to a defaulting debtor. The Minister has no plans to amend this section at present. NAMA requires that the sale of all loans and of all properties and other assets securing these loans is conducted on a competitive, fully open market basis by suitably qualified sales agents. In all events, NAMA insists on independent valuations of all assets. NAMA also requires sales agents to prepare a final report and recommendation.

Included in these reports is a summary of the marketing campaign undertaken, a list of all parties who expressed interest in the loan or 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, confirmation that the agent has reviewed the 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.

This process ensures all interested parties are given equal opportunity to bid for and purchase loans or properties sold by NAMA or by NAMA debtors and receivers. NAMA has adopted a very thorough approach in line with international best practice for the sale of loans, central to which is the open marketing of the loans to ensure competitiveness and transparency. For this purpose, panels of loan sale advisers have been selected through a public procurement process for each of the US and Europe. Where there are indications that a potential loan sale could be a feasible commercial option for NAMA relative to alternative options, an adviser from the relevant panel is selected by mini-tender to conduct the loan sale process, which includes the public marketing of the loans.

The adviser's role includes the preparation of a data room and the circulation of outline information to potential qualifying interested parties to generate as much competition as possible. The adviser assembles all relevant data relating to the loans, which are made available at the appropriate stage to credible potential purchasers who complete the necessary confidentiality agreements. The sale process is conducted on the basis of all parties having equal access to the necessary information at the same time to make fully informed bids, and NAMA will only approve a sale where it is satisfied the price obtainable represents the best possible return for taxpayers.

As part of the formal sales process, potential purchasers are required to provide an undertaking that they will not engage with the debtor or other obligors at any stage during the sales process without NAMA's pre-approval. Both debtors and potential purchasers are aware that the infringement of agreed protocols or undertakings may have an impact on NAMA's decisions as to whether, and to whom, it sells a particular portfolio. Where NAMA approves the sale of any loan or approves the sale of any secured property by a debtor, it requires a confirmation that the purchaser is not connected to the debtor or other obligors.

NAMA also requires sales agents to prepare a final report and recommendation. Included in these reports is a summary of the marketing campaign undertaken, a list of all parties who expressed interest in the loan or 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, confirmation that the agent has reviewed the 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.

Since inception, NAMA has overseen the sale of €10.6 billion worth of loans, property and other assets held as security. To year end 2013, NAMA has completed loan sales, across the entire portfolio, with a par debt value of in excess of €4 billion. In this period NAMA has also sold more than 10,000 individual properties, mainly across Ireland and the UK. As the Minister has stated, NAMA will be reviewed this year and this issue may be considered within this review. However, the Government does not see the requirement for such a change to the legislation at this time.