2-14 Baker Street – in London which was subject to a loan from Bank of Ireland

Timeline: 2-14 Baker Street

Offices Analyst Event Sept 2011 Nigel_Webb_transcript



Seanad Debate on NAMA Transparency Bill on 6 June 2012

Senator Mark Daly:     I move: “That the Bill be now read a Second Time.”
I welcome the Minister, Deputy Michael Noonan, to the House. This is important legislation and I ask the Minister to consider it thoroughly. The people of Ireland must have confidence in institutions of the State.
On 20 February 2012, the Financial Times described NAMA as one of the largest property companies in the world. On 26 January 2011, I raised this matter first in this House with the then Minister for Finance, Deputy Brian Lenihan, when I described situations where property developers were purchasing back land on which they had previously taken out loans for well under the current market value, and these properties were not being put on the open market. There is a growing concern throughout the country about the way NAMA and the IBRC are selling assets and loans. I was joined on 14 June in raising concerns in regard to developers buying back property from NAMA and from NAMA-controlled banks by the Taoiseach when he said: “I have had some indications of attempts to acquire property that was taken from… developers through a variety of methods.” That featured in the Irish Examiner when the Taoiseach was attending the British-Irish Interparliamentary Body meeting. The following day, the Taoiseach had to climb back from what he had said and he then said he had been reassured by NAMA this was not happening.
I can confirm it is happening. Ms Emily O’Reilly, the Ombudsman, is so concerned that on 10 March she again reiterated she would like to see NAMA brought under freedom of information legislation so all information in regard to property transactions with NAMA would be open and transparent. The difficulty and the consequence of freedom of information is that it is applicable only after the event. What we would then have is a post mortem examination of sales when what we should be looking for is transparency at every step of the process.
The NAMA Act set out clearly what should happen. Section 35 of the NAMA Act stated that a code of practice should be set up by NAMA on how it would dispose of assets. This code of practice was adopted three months later, when it said all credit facilities or securities on credit facilities would be sold in accordance with the code of practice for the governance of State bodies. What the guidelines outlined was as follows: “The disposal of assets of State bodies or the granting of access to properties should be by auction or competitive tendering process . . . The method used should be both transparent and likely to achieve a fair and market-related price.” That is simply not happening.
NAMA and I have been in constant contact and communication. It disputes whether the properties it has control of through banks come under this Act. We must ask ourselves, and any judge would ask himself or herself, what was the intention of this House when it passed the NAMA Act. The intention of this House was that all properties would be sold in an open and transparent manner.
I have a legal opinion from barrister Mr. Donal O’Laoire, which I can provide to the Minister, that all assets, whether they be properties or loans which NAMA has control of, should be sold under the code of conduct for the sale of State assets. Whether they are controlled by Bank of Ireland or AIB, ultimately, NAMA has given Irish taxpayers’ money to those institutions in order to keep those institutions afloat. What we have is a situation where, as we all know, NAMA is simply not following the laws set out by this House. That is why we are introducing the Bill, namely, to make clear that it should sell all properties and assets it has control of under the code of conduct — when I say assets, I mean loans as well as properties. To facilitate this, it should list them on a website.

I am not alone in this. I proposed this in January last year and, six months later, NAMA decided it would have a website and it would show properties it had control of only. After all the money it has given out, it only takes control of roughly 5% of the properties itself whereas it never takes control of 95%. What we are now looking at is examples which are coming to the fore. My colleague, Senator Paul Coghlan, and I have previously discussed a situation in Cork where land that was sold for €10 million was recently sold for €7 million to the person who had originally put together the entire deal, yet nobody in Cork, including the adjoining landowners and farmers, were aware this property was for sale. Irony of ironies, NAMA justified this by saying it had got a higher price than the valuation, which basically means the valuer got it wrong on the first day. It lauded the valuer and claimed it had got more money, when, in fact, if it had sold for less, what would it have done? Very little.
We included the former Anglo Irish Bank in this legislation arising from a situation where in regard to the Four Seasons Hotel, which had borrowed €50 million from Anglo Irish Bank, a director of that bank had co-ordinated the purchase of that hotel from NAMA, and, again, nobody knew this property was for sale. How is it possible that this is in the best interests of the taxpayer? Does this sound like insider trading? How could the Irish people have confidence in an institution that sells property back to directors of Anglo Irish Bank when Anglo Irish Bank had originally given out a loan on that property?
With regard to the reason behind this, a more disturbing case, the details of which I will give to the Minister, is the situation of Nos. 2 to 14 Baker Street, which is an extraordinary loss to the taxpayer. I see my colleague, Senator Paul Coghlan, shaking his head when he has not even heard the evidence, which I think means his mind is closed on this issue. For his benefit, let me outline what happened. In September 2005, Nos. 2 to 14 Baker Street was purchased from British Land for €47.5 million. When the bust came, they sold it after receiving planning for 50% more square footage on the site in 2009.
On 16 April they sold it back to British Land for €29 million, representing a loss of €28.2 million to the Irish taxpayer. This property was——
Senator Paul Coghlan:     That was dealt with by Bank of Ireland before NAMA was involved and the Senator knows it——
Senator Mark Daly:     This property was not placed on the open market. How was that in the best interests of the Irish taxpayer? Could my colleague, Senator Coghlan, outline how on 16 April, a trust was set up in Jersey? A legal agreement signed in Westminster City Council shows that McAleer and Rushe had a beneficial interest in this trust. Was this to deceive the Irish taxpayer? On 21 September 2011, in a report and a press release to the market, British Land said:
We repurchased approximately 50% of the value it previously sold for in 2004. We structured a three-way deal to purchase the site from McAleer and Rushe, Bank of Ireland, with the consent of NAMA”, [ I ask Senator Coghlan to note]. This acquisition has already performed very well. Since purchased the valuers have increased the site value by 52%.
This is in one year. Does this tell us it was undersold? Does this tell us that the market value was achieved? It most certainly tells us that. I could get no answer from either Bank of Ireland or NAMA as to why McAleer and Rushe when they went into that agreement with the consent of Bank of Ireland and with the consent of NAMA, were profit sharing, which means that the money achieved first day was not the entire market value. Was Bank of Ireland aware of this profit-sharing agreement? Was NAMA aware? I do not know the answer.
Senator Paul Coghlan:     The Senator received a letter.
Senator Mark Daly:     For the information of Senator Paul Coghlan, I received a letter which told me they could tell me nothing. If a situation like Baker Street arose in the future, this Bill would ensure that everybody would know the property was for sale, that anyone could bid for it and there would be confidence in NAMA and the IBRC as a result. At present there are back room deals going on which have nothing to do with the Department of Finance. I have confidence in the people in NAMA but the way this is being structured at the moment, they are not selling it in accordance with the rules laid down by this House and by the laws passed in this House. There needs to be a website where everyone can see what is for sale otherwise the Irish taxpayer is continuing to lose money on a daily basis and not millions or tens of millions but hundreds of millions of euro.
I ask the Minister to consider doing what we have requested in this very straightforward Bill, to have a website showing every property for sale on behalf of NAMA or under its control and that such property would be on the website for four weeks before being sold.


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Filed under NAMA and Irish Bank Resolution Corporation Transparency Bill 2011

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