Taxpayer faces €7m bill over loans action

TAXPAYERS have been left with a €7 million legal bill after NAMA confirmed that it no longer wishes to acquire loans relating to Northern developer, Paddy McKillen worth almost €1.5 billion.

Lawyers for Mr McKillen said the developer received a letter from NAMA yesterday that effectively stated that NAMA had abandoned plans to acquire his loan portfolio.

It follows Mr McKillen’s successful Supreme Court challenge against NAMA’s attempts to acquire some €200m of his loans with Bank of Ireland in a ruling that represented an embarrassing setback for the agency.

The Supreme Court yesterday awarded Mr McKillen his legal costs in the case — a ruling which means that taxpayers will have to pick up a legal bill estimated at up to €7m.

The court ruled earlier this year that the decision to acquire the developer’s loans had been taken before NAMA had been officially established and that Mr McKillen should have been given the opportunity to argue his case before the decision was made.

It also criticised NAMA’s “furtive” approach to dealings with the Belfast-born businessman, whose investments include some of London’s most upmarket hotels including Claridges and The Berkeley.

NAMA had claimed that Mr McKillen’s loans, which were valued at €2.1bn last year, posed a systemic risk to the financial stability of the state.

A spokesperson for NAMA said its board had decided not to acquire the McKillen loans on the basis of the current rather than historical composition of the loan portfolio.

NAMA insisted that the composition of the loans under consideration had changed substantially.

In a statement, Mr McKillen said he was delighted with NAMA’s decision.

He repeated that he had always insisted his investments were in prime commercial property and high-end retail shopping centres, which were not the type of risky loans envisaged to be acquired by NAMA.