FERGUS FINLAY: Secrecy surrounding NAMA needs to be undone

Government is largely composed of people who opposed the wall of secrecy around NAMA, writes Fergus Finlay.

WHEN something is started in secrecy and operates in secrecy, it runs the risk of scandal. When it is also given immense power, the risk increases. When it has to report to nobody except the minister, it becomes harder and harder to escape the perception of scandal.

Fine Gael knows that. They said it again and again during the debate that led to NAMA. They even opposed its establishment. And one of the key reasons they gave for opposing NAMA was “the growing concerns from creating a secretive, politically directed, state-managed, tax funded work-out process for 1,500 property developers”.

The logic of NAMA was simple. We’d had the disastrous bank guarantee, and our banks were in freefall. That was to continue until we were forced — again in attempted secrecy — to hand over our sovereignty to an equally unaccountable troika.

Richard Bruton, who led for Fine Gael on the issue, forcefully made the point, in the debate on the bill to establish NAMA, that transparency was fundamental. “We want to see the unacceptable recovery system, which is shrouded in secrecy, exposed,” he said, “with full disclosure and the protection of the comptroller and auditor general. He should be in a position to objectively advise the House on how business is being conducted on our behalf. We want to see proper Oireachtas oversight of this extraordinary animal the minister is creating.”

Bruton wasn’t alone. Even the redoubtable Phil Hogan said that “secrecy in the use of taxpayers’ money is at the very heart of NAMA”. He listed a huge range of things that would be kept secret: the names of the developers whose loans would be bought by NAMA with taxpayers’ money, the price paid by the taxpayer, who would benefit from €5bn in new tax-funded loans that NAMA would make available to developers to complete their projects, and so on.

Secrecy surrounding NAMA needs to be undone

Throughout the debate, the issue of secrecy was key. Opposition spokespeople, especially Joan Burton and Richard Bruton, tried, again and again, to get the government to agree to independent oversight. Both had amendments down at every stage of the bill’s passage, and both were rejected, again and again, by the minister for finance, Brian Lenihan.

They were looking for codes of practice, more open reporting systems, the right of the Oireachtas to approve any guarantees issued by the minister, and scrutiny of any directions given to NAMA by him.

All to no avail. NAMA was set up as an all-powerful, highly secretive agency of the State. And now, inevitably, the chickens have come home to roost.

Is there a scandal in NAMA? I don’t know. There is an imminent report from the comptroller and auditor general that appears to be highly critical. The implication in all the pre-reporting suggests that hundreds of millions of profit that could have been made (for the taxpayer) by NAMA have been lost, as a result of poor procedure and practice.

That may not, in itself, amount to a scandal — it may suggest a lack of competence in key areas. But the depth and breadth of other allegations, especially in relation to the sale of NAMA’s assets in Northern Ireland, are staggering.

Operating behind its wall of secrecy, NAMA has consistently denied any wrong-doing, but has failed utterly to provide reassurance. It has put itself in the position where it cannot now, in my view, avoid an independent enquiry into its operations. And the Government has done precisely the same thing.

This is one of the really puzzling bits of this story. The Government is largely composed of people who opposed, tooth and nail, the wall of secrecy built around NAMA. And yet they, and especially the Minister for Finance, Michael Noonan, have adopted a tone of ‘nothing to see here’.

There may not be anything to see. There may not be any connection between the C&AG report and the mounting allegations that need proper answers. But there is an accumulation of suspicion that has to be addressed.

Regardless of the policy mistakes that led to the need for an agency like NAMA, and regardless of the way it was designed, NAMA was set up for a simple purpose. The banks were drowning in bad debt. There was a need to take those debts off the books of the banks, to acquire the assets (land and property) that led to the bad debts, and get back as much as the State could, while, at the same time, enabling the banks to get back on their feet.

Secrecy surrounding NAMA needs to be undone

NAMA was the agency designed to do all that. Essentially, its job is to get back €30bn by selling the assets it acquired after it was set up. By its own account, it has done a great job.

In its most recent annual report, the chairman says they expect to report a several billion surplus by the time they finish their work. The chief executive says that many countries now look to NAMA as an example of international best practice, especially when implementing complex programmes in a “diligent, professional and effective manner”.

But here’s the key thing. NAMA belongs to us. It needs to be accountable to us in exactly the same way as the IDA, or the Road Safety Authority, or the HSE. It might have a difficult and complex brief, and it might speak a language that the likes of me have difficulty following (they seem to have invented new words, like deleveraging, just to confuse us).

But it has to operate, because it’s operating on our behalf, without a hint of suspicion.

According to news headlines, NAMA is going to challenge any investigation. Why? In my experience, every state agency makes mistakes. Many of them lose sight of their fundamental mission, and have to be hauled back. Occasionally, just very occasionally, there have been reasons why trust in one or other of them has been eroded.

But the money involved in NAMA, the billions and billions of it, is greater than at all of the other state agencies put together. If trust in the probity of NAMA is undermined, that would do incredible damage to Ireland. In that sense, it’s more important to establish that NAMA can be fully trusted than it is to find out whether mistakes have led to lower profits.

So, not only must all these allegations be thoroughly, transparently and independently investigated, but NAMA should be pressing for that. They shouldn’t be forced into it; they should be demanding it. We chose to set up NAMA behind a concrete wall of secrecy, despite grave reservations. It’s that secrecy, more than anything else, that has damaged trust. That’s what has to be undone now.

More on this topic

NAMA review finds it has made 'exceptional progress', will manage loan book beyond 2021NAMA review finds it has made 'exceptional progress', will manage loan book beyond 2021

Nama forced into €2m settlement with Revenue, correspondence revealsNama forced into €2m settlement with Revenue, correspondence reveals

'It is very frustrating to see it': Developers buy back Nama loans at discounts'It is very frustrating to see it': Developers buy back Nama loans at discounts

Taxpayers let down over historic assurances about NamaTaxpayers let down over historic assurances about Nama


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