Nama NI sale probably cost State €220m, says C&AG

Nama 'categorically rejects' key findings as Government backs probe

Opposition to be consulted on Nama NI sale probe. Pic: RollingNews.ie

The Taoiseach is to consult Opposition party leaders tomorrow after the Government decided to back an investigation into Nama's sale of its Northern Ireland property portfolio, known asProject Eagle.

A statement this afternoon said the Cabinet had considered in detaila report by the Comptroller & Auditor General on the sale process, which was published this afternoon.

The report said Nama's decision to sell the NI portfolio in bulk represented a shift in its strategy, and that the decision to sell the loans at a minimum price of £1.3 billion represented a "significant probable loss of value to the State" of up to £190m. The C&AG report, however, said it was drawing no conclusion about the merits of the decision to sell the portfolio.

The C&AG report said two of three bases for valuing the NI loans submitted to the board of Nama underestimated the value of the portfolio, providing no evidence to support the downward adjustment, while the third made no valuation. The Nama board, however, "strongly rejects" the conclusion that its decision involved a significant loss to the State, saying it represented the best achievable commercial outcome.

The report also questioned the restrictions imposed on the sale process by Nama, saying they "reduced both the level of competition and the opportunity for potential bidders to assess the value of the portfolio. They acted as a deterrent for a number of bidders and had the potential to affect the price achievable."

The C&AG report said a member of Nama's NI advisory board, Frank Cushnahan, acted as an advisor to six Nama debtors whose loans represented about half of the Northern Ireland loan book. It sais the Nama board should have formally considered whether Mr Cushnahan’s engagement in discussion of the Project Eagle strategy was consistent with his ongoing involvement as financial advisor to a significant proportion of Nama's Northern Ireland debtor connections.

A Nama statement said it "categorically rejected" the report's key conclusions, saying it overestimated the value of what it called the "poor quality loan portfolio" in Project Eagle. It also claimed that the C&AG estimates were made by in-house staff with no experience of loan sales.

“It is clear to us that, if Nama had retained the Eagle portfolio, there would be no investor interest in buying it today – or in the foreseeable future – at anything close to the £1.322 billion price that was actually achieved," said Nama chairman Frank Daly.

Report raises important issues, says Government

The Government statement said the C&AG’s report raised a number of important issues which will require further investigation, and that its objective was to ensure that all matters of public concern were addressed "in a speedy and effective manner".

It added that it also expected the Public Accounts Committee to convene a public hearing on the report and would offer it any support it needed. This afternoon, the PAC said it would start meetings on the issue on September 29.

"The Government also recognises that it has its own responsibilities to ensure that all matters of public concern with regard to the functions of an important public body such as Nama are fully addressed," it said.

As a result, Enda Kenny is to invite Opposition party leaders to meet him tomorrow in an effort to reach agreement onthe issues to be investigated and the most appropriate terms of reference. The issue is expected to discussed in a Dáil debate early in the new session.

Jack Horgan-Jones chronicles the unfolding of the events leading up to today’s report.

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