Sinn Féin TD and finance spokesperson Pearse Doherty TD, has introduced legislation in the Dáil to bring NAMA under the Freedom of Information Act.
Deputy Doherty’s Bill will also remove the application fees for FoI requests, returning the fees structure to the original 1997 Act system. The Sinn Fein TD also published today 12 reasons why the party believes the multi-billion euro NAMA should be brought under FoI.
Doherty said the fact the taxpayer was shelling out half a million euro to run NAMA every day; that the agency continues to make losses while paying developers in excess of €200,000 per annum and legal fees in the millions; in addition to the fact that the agency seemed to be full of potential conflicts of interest meant that the lid of secrecy had to be lifted from NAMA and the public made aware of what is going on.
Deputy Doherty said about the bill:
“Firstly it adds NAMA to the first schedule of the FoI Act. There are currently 600 bodies under the act, but there are notable exceptions – NAMA, NTMA, the Gardaí and the Central Bank. For the purposes of our bill we are concentrating on NAMA.
“I am publishing a list today of 12 reasons why I believe NAMA should be contained under the FoI schedule. NAMA is dealing in billions every day of taxpayers’ money and is essentially the largest holder of state assets. It disposes of millions of euros worth of assets on average every month and yet there is very little public knowledge of its activities. NAMA costs the state over half a million euro per day in running costs; it has developers earning over €200,000 on its payroll; and it is mired in potential conflicts of interest. NAMA does not want a spotlight shone on its activities. It is currently fighting a case against the Information Commissioner because it does not want to provide information under environmental legislation sought by an internet blogger. The cost for this case by one arm of the state against the other will cost the taxpayer hundreds of thousands.
“The other part of our Bill returns the Fee structure to the original 1997 structure (which was amended in 2003). This would remove the application fees. We believe the introduction of application fees acted as a deterrent to submission of requests. This is borne out by the figures. In 2003, the last year before the fees came into full effect, 7,216 non-personal requests were made (personal requests incur no fee). In 2004, after the fees were introduced, 3,191 non-personal requests were made. At a time when the public would be best served by Freedom of Information, the process is not as accessible as it should be. The breakdown of department requests shows this. In 2002 the Department of the Environment had 368 requests. In 2011 it received 100. The Department of Enterprise received 205 requests in 2002, and 70 in 2011. The Department of Health requests dropped from 997 in 2002 to 150 in 2011. Sinn Fein believes the application fees have made people disinclined to access FoI and the removal of them would send a positive message that the state is open to full disclosure.
“The Bill I am publishing today is a small step in that direction. I do not see the FoI Act as perfect – my party would like to see the state move towards a position of ‘open-data’ where all state information was made public, where acceptable, without having to be requested. In the current climate, the public have a right to know how their institutions are operating, particularly ones that are incurring a massive cost on them personally and on their society.
“Given that members of the government parties have expressed a desire to see NAMA under the FoI Act, I am putting it to them now to support this Bill through the house.” ENDS
Twelve reasons why NAMA needs to be under FoI
1) NAMA will cost this state half a million euro (€531,000) in operating costs every single day of 2012
2) Since its foundation NAMA has spent €27.5 million on legal fees and €2.5 million on audit fees.
3) NAMA is disposing of an average of €500m worth of assets per month (by reference to the original values of the loans, roughly €200m by reference to what NAMA paid) and will do so at least until the end of 2013. Up to December 2011 NAMA had been disposing of assets on average worth €750m per month (at original value), or €15.8 billion worth of loans.
4) NAMA has advanced €980 million to developers to finish projects, with €568.2 million being forwarded to developers outside the island of Ireland. Over two-thirds of NAMA properties are on the island of Ireland, yet only 41% of its cash advances are spent here. NAMA is funding development projects in Britain and Europe while Ireland is dotted with ghost estates and empty hotels. Under the original NAMA Act, the body can borrow up to €5 billion in total to loan to developers to finish projects.
5) NAMA is paying more than 100 developers’ salaries, with some earning as much as €200,000 a year.
6) NAMA has considered the introduction of a developer incentive scheme which would allow a developer to keep a portion of an asset sale if the sale met and exceeded NAMA targets. This kind of incentivising is not in the original legislation.
7) Sixteen firms have been identified by NAMA to advise them on loan sales in Europe and the US. These firms have been put onto Europe and US ‘panels’. NAMA has admitted that several existing NAMA employees have close links with these firms and were formerly employed by them. The newly appointed Head of Asset Management in NAMA is a former Chairman and Managing Director of Jones Lang La Salle. JLLS are on both advisory panels. Other firms listed on the panels include Ernst & Young, Goldman Sachs, KPMG and UBS.
8) NAMA is using an ‘effective interest rate’ methodology to calculate interest payments in its quarterly accounts. This method assumes interest repayments, rather than allowing for actual interest repayments and can overstate profits delivering a misleading picture to the general public about NAMA operations. For example, in its third quarter reporting in 2011, NAMA reported €255 million in interest payments, whereas only €175 million was received. Given the continued decline in property prices and worsening economic conditions, there is no way of knowing how loans will continue to perform, so estimating interest that may come in is hardly advisable.
9) The Minister has appointed an additional advisory group to advise him on the future strategic direction of NAMA – it is unclear whether this group will just act as a conduit to the Minister on the strategic direction of NAMA, or actively direct NAMA on strategy.
10) NAMA is not effectively managing conflicts of Interest. NAMA appointed Pricewaterhouse Coopers (PWC) to advise them on bad loans. PWC was then appointed as a receiver to Treasury Holdings against which NAMA is currently fighting a court case. PWC is a tenant of a Treasury Holding building which is listed as security for loans held by NAMA. NAMA claims it has protected against conflict of interest by appointing Ernst & Young (E&Y) as a receiver to the Treasury Building that PWC is resident in. Ernst & Young were auditors to Anglo Irish Bank. During their role as auditors they failed to detect and report massive loans to directors as well as the massive window dressing arrangement of €8.2 billion with Irish Permanent TSB which was used to improve Anglo’s Balance Sheet at year end. They also stood over accounts that showed a profit for the bank. Consequently E&Y are being investigated for their role in the Anglo debacle. As a result of their involvement in Anglo the CARB (Chartered Accountants Regulatory Board) commenced an Investigation into E&Y in 2009. The Investigation was led by the former Comptroller and Auditor General, John Purcell. E&Y attempted to block this investigation through the courts but were unsuccessful. In September 2011 the CARB Investigation concluded that E&Y do, on the face of it, have a case to answer in respect of their involvement in the Anglo debacle. However criminal investigations into Anglo has meant that the DPP has asked that the investigations be held off until his work is complete.
11) In a separate matter, NAMA has appointed a senior legal figure to fight a case against the state’s information commissioner, on the basis of an internet blogger seeking information from NAMA under environmental legislation. The senior legal figure is currently representing Treasury Holdings against NAMA. NAMA is actively fighting another arm of the state, with taxpayers’ money being spent on both sides, to stop information about it being available under FoI.
12) Of NAMA’s loan book in September 2011, 2,872 loans are performing, but 8,911 loans are non-performing. In addition, NAMA made a loss of €1.1 billion in 2010 (and there are estimates that it has made a further loss in 2011).