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economics and finance |
Tuesday June 23, 2015 23:17 by postman
Mick Wallace Dail Diary for 18th June
The drip feed of questionable deals carried out by NAMA is well under way. Regularly now, we see information reaching the public domain whereby NAMA have sold stressed assets at less than their real value and the purchasers are turning them over within 2 years, at profit ranging from 30% to 40%/ The purchasers are mostly foreign investment funds – ‘vulture funds ‘ – who have picked on the carcass of the stressed Irish property market. Many of them have retained the assets, and become serious players in the residential rental market in Ireland, especially Dublin, and have developed a controlling influence, managing to drive up rents astronomically in our capital city. This all doesn’t make them evil people – they just do what they do, it’s called unfettered Capitalism - our problem as Irish citizens is that our Government have allowed a situation to develop whereby the vulture funds win and the Irish tax payer loses. And our present Neo Liberal Government think that this is all fine. I believe otherwise. Here’s my Leader’s Questions with Taoiseach Enda Kenny this week, who knows that all is not well. -
"Last week we discussed the terms of reference for an inquiry into the State’s alleged preferential treatment of private sector investors in general and our good friend Mr. Denis O’Brien, in particular.
That someone as rich and powerful as Denis O'Brien, who has unfettered control of much of the mainstream media, might get preferential treatment is not much of a shock to many. I do not think he is the only powerful individual or consortium who may have got favourable treatment from State-owned institutions. When NAMA was set up, the plan was that it would not flood the market with stressed assets. This was a special purpose vehicle that would await some form of recovery before maximising the assets in the interests of the taxpayer. That is not what has happened. For some strange reason, NAMA has been in a hurry to fire sale assets for less than their real value despite the fact it is a rising market. We see many of these assets being sold on at massive profits. I named a few of them in here last week. It is frightening how quickly these vulture funds have turned them over and the extent of the profits involved. This means that foreign vulture funds have won and the Irish people are losing out.
Something is the matter with how NAMA has operated. Before the Taoiseach was elected to office, he said that NAMA was a secret society that needed an injection of competence, openness and transparency. He was dead right but everything stayed the same. It did not change. Sadly, the drip-feed of questionable deals has begun. If the Taoiseach does not address this now, it may come back to haunt him in years to come because I believe serious issues are at stake. Will the Taoiseach wait for this to reach a crescendo before he acts or is he prepared to commission an independent inquiry into how NAMA has worked and check whether the people got the maximum return in respect of how the assets were sold by this organisation?
The Taoiseach: The Deputy is well aware that NAMA operates under a very specific remit. It was dealing with the largest property portfolio in the western hemisphere. The Deputy made certain comments here. I point out to him that NAMA also operates under the aegis of the Office of the Comptroller and Auditor General, some of whose personnel serve on the board of NAMA. NAMA appears regularly before the Committee of Public Accounts and the Oireachtas Committee on Finance, Public Expenditure and Reform. If the Deputy has particular cases in mind concerning any deals done or decisions made by NAMA in respect of the disposal of property, he should remember that NAMA's remit is to maximise value and the return for the taxpayer and that personnel from the Office of the Comptroller and Auditor General serve on the board of NAMA and are quite entitled to appear before the independent watchdog in the Oireachtas, namely, the Committee of Public Accounts, as well as the Oireachtas Committee on Finance, Public Expenditure and Reform. If the Deputy has particular cases in mind, he can refer them to the Chairman of the Committee of Public Accounts, Deputy McGuinness. NAMA appears regularly before the Committee of Public Accounts to deal with issues or decisions made by the board about property where its remit is to maximise the return for the taxpayer.
Mick Wallace: It is interesting that the Taoiseach puts the onus back on me. I will give two examples. An office block on Mount Street was sold off market in 2012 by NAMA to US fund Northwood for €27 million. In 2014, Northwood sold it for €42 million. Most of the money was financed by NAMA in the first place. This is in a country where small and medium-sized businesses cannot get a cent out of financial institutions. NAMA sold the Forum building in the IFSC in 2012 to US private equity firm Atlas Capital for €28 million. Less than two years later, it was sold for €37.8 million, a 35% profit. If the Taoiseach thinks this is good business, I think otherwise. They are just two of the smaller examples. The Taoiseach does not need me to give him details. Many of the details are out there and there is a lot of stuff that is not out there because, as the Taoiseach put it four years ago, NAMA is a secret organisation. Despite the fact that it was brought under freedom of information in April, people are finding it incredibly difficult to get any information out of it.
The sale of large blocks of apartments for less than it cost to build them is one of the reasons the private sector has not resumed building. There will be no serious increase in housing in this country until you build it yourselves. This is directly linked to the housing crisis and deserves investigation. The taxpayer has lost out badly and we are talking about billions. The Taoiseach did not set up NAMA but he can address the problem before it comes back to haunt him in the next term."