C&AG report: Noonan and Kenny catch a break as publication timing could have been much worse

There will be some fallout but the publication of the C&AG’s report into Nama’s disposal of assets in Northern Ireland could have come at a much worse time for the Finance Minster — two years ago he would have been finished, writes Michael Clifford

MICHAEL NOONAN can comfort himself with the truism that timing is everything. The publication of the Comptroller and Auditor General’s report into Nama’s disposal of assets in Northern Ireland could have come at a much worse time for the finance minister.

The report claims that hundreds of millions were effectively lost by Nama through “shortcomings” and “irregularities”. The Nama chiefs dispute this contention. It’s highly unusual for a state body to dispute the findings of an office that acts as the government’s spending watchdog.

What the C&AG has unveiled is that proper care was not taken in maximising the return for the citizens on assets that were written down to ensure that banks stayed open for business. The cost for the write-downs went into the mix of various debts which have been paid for by citizens through tax rises, and particularly the stripping out of services where most needed.

That is the reality of Nama’s business. As such, it is charged with a huge responsibility to get as much of our money back as possible, particularly to alleviate the suffering of the most vulnerable who have been affected by cuts.

Frank Daly, chairman National Asset Management Agency, at a housing and homeless committee meeting at Leinster House on Kildare Street, Dublin. Picture: Gareth Chaney Collins

The C&AG suggests that Nama has fallen short of that goal.

“The decision to see the loans at a minimum price of £1.3 billion involved a significant probably loss of value to the state of up to £190m in NPV (net present value) terms,” the report states.

This money, and more besides, could have made a difference to the state’s coffers and by extension services.

What is really at issue is why the best prices were not achieved.

One line of inquiry is whether Nama was put under pressure to get rid of the property portfolios quicker than originally envisaged.

The purpose of such pressure would have been to gain political kudos for the government for getting the whole damn thing done and dusted, and winding Nama down so that it might disappear into history along with all the other bad stuff from the last eight years.

Using state resources — or money foregone by the state — for political gain is a staple of the political system in this country.

Such a scenario would certainly explain a series of fire sales in which stuff appears to have been sold off cheaper than might otherwise have been the case.

One way or the other, there was certainly a rush to sell off the assets in Northern Ireland.

This was evidenced by the process in which a sale was quickly agreed with one major vulture fund, Pimlico, in 2014, to buy the 800-plus properties in one bundle. That process was about to through when the fund reported to Nama that something fishy was going on.

This is believed to have been a reference to an alleged £15 million pay-off for various parties. What has been established is that £7 million was shovelled into an Isle of Man account.

Finance Minister Michael Noonan: Is lucky that the Nama sale report wasn’t published two years ago, when small issues were blown out of the proportion. Picture: Paul Faith/AFP/Getty Images

In any event, Nama called a halt to the deal. What was alarming is that it then proceeded with a different purchaser, Cerebrus, which retained a number of the original middlemen from the previous deal.

Why the rush? Why, once something fishy was detected, wasn’t the whole thing called off?

Instead, the sale went through for €1.6 billion, and who knows how good a deal that was for the fund swooping in to pick at the carcass of the Celtic Tiger.

If that wasn’t bad enough, it emerged last year that Cerebrus paid just €10,000 in tax in this jurisdiction in the two years when it was buying and leasing property all over the shop.

Then, last week the BBC Spotlight programme which appeared to show Nama adviser Frank Cushnahan getting forty grand in a bag for this troubles from a developer.

So we have a scenario where vulture funds get a cracking deal on the citizens’ property, a few middlemen allegedly get their palms greased, and the new owner contributes next to nothing to the State in tax.

Timing is everything. If the pieces of this jigsaw were assembled two years ago, Noonan would have been in serious political trouble. He would have portrayed as a man asleep at the wheel while some fiddled and a vulture fund burned a hole in the pocket of the citizens.

Two years ago a relatively small issue like water charges was blown up out of all proportions, creating a febrile atmosphere, and queering the political pitch. Much of that was about timing.

Can you imagine if this stuff had tumbled out back then? Noonan probably would have been toast and his party would have taken a major hit. As it is today, there will be some controversy, which will ultimately be parked in the overcrowded sidelines where inquiries go to sleep.

Noonan is shuffling towards the door, followed closely by Enda Kenny stoking up his newly found mojo.

Lucky boys in terms of timing.