Nama lost €29m in botched sale of Project Nantes loan portfolio

Agency boss admits being 'flaggergasted' to learn director in sale had been involved with the loans previously
Nama lost €29m in botched sale of Project Nantes loan portfolio

Brendan McDonagh, Nama chief executive. Picture: RollingNews.ie

The head of Nama has said he was “flabbergasted” to discover that a company that bought loans from it at a discount had a director who had been involved with the loans previously in Ireland.

Brendan McDonagh, chief executive of the agency, said he only discovered the fact in 2018 — six years after the loan sale — on the day that former TD Mick Wallace informed the Dáil.

“To say that I was flabbergasted would be an understatement. I was very unhappy,” Mr McDonagh told the Public Accounts Committee. He added that to the best of his knowledge no one within Nama had been privy to that information.

The director in question, Mark Donnelly, had worked for developer Derek Quinlan in Ireland, from whom Nama obtained the loans, before joining Luxembourg company Clairvue.

Clairvue acquired the loans for €26m in 2012 having been offered the sale privately. A 2018 report by the Comptroller and Auditor General (C&AG) suggested that the loans had been worth at least €55m at the time.

C&AG Seamus McCarthy told the committee there was “no basis to believe that Nama achieved the best possible return” for the loan portfolio, known as Project Nantes.

The hearing had been convened to discuss both the agency’s 2019 accounts and the aforementioned C&AG report into Project Nantes. In the end, the latter became the primary focus of the discussion.

Brendan McDonagh denied that Nama had “thrown in the towel” by offering the Nantes loans to Clairvue when that company had been aware there was no other bidder.

“Clairvue still had the same issue as we did — how do you manage those loans if the people behind them were made bankrupt?” he said. He said the Luxembourg company had “more experience of managing complex businesses in multiple jurisdictions”.

He said he accepted the C&AG’s report, but “didn’t agree” with all of it. He admitted the €10m loss made on Project Nantes did not constitute a good return, but insisted that it was unfair to single out that transaction from the eight portfolios which were sold, of which it was just one.

He conceded, under questioning from Sinn Féin’s Matt Carthy who had suggested that Nama had “been played” by Clairvue and should be “angry as hell” about it, that he was “angry and very unhappy that they weren’t upfront with us” in reference to Avestus Capital Partners, who managed the sales.

He said Avestus, though under no legal obligation, had a moral to inform Nama of Mr Donnelly’s presence on the Clairvue board.

It would have been morally better if they had been upfront with us.

"We had never come across a situation like this before," he said.

“We’ll do our best to make sure this doesn’t happen again,” he added.

Nama chair Aidan Williams later asserted that such a private offering of a portfolio sale would not happen today, and that it “hadn’t been taken lightly”.

Mr McDonagh nevertheless denied that “a litany of mistakes” had been made with regards to Nama’s functionality.

“We’re returning €4bn to the taxpayer,” he said. “You don’t do that by making mistake after mistake.”

More in this section

War of Independence Podcast

A special four-part series hosted by Mick Clifford

Available on
www.irishexaminer.com/podcasts

Commemorating 100 years since the War of Independence

Home Delivery
logo-ie

HOME DELIVERY SERVICE

Have the Irish Examiner delivered to your door. No delivery charge. Just pay the cover price.