THE DEPARTMENT of Finance refused to pay fees to economist Peter Bacon for his evaluation of an outside proposal to buy unsold houses and apartments to lease them to local authorities, according to official correspondence released to The Irish Times.
Letters sent last June between the then National Treasury Management Agency chief executive Dr Michael Somers and David Doyle, secretary general at the department, reveal a difference of opinion between them over the payment of the fees to Dr Bacon.
The letters were released by the department under the Freedom of Information Act.
On June 3rd, 2009, Dr Somers forwarded to Mr Doyle an invoice from Dr Bacon for “special advisory services” on the evaluation of the so-called Irish Residential Property Trust proposal.
“I presume this payment falls to be made by your department,” said Dr Somers, adding that the NTMA did not have any involvement with Dr Bacon on the matter.
On June 10th, Mr Doyle replied to Dr Somers, saying the department did not enter into a contract for consultancy services from May 1st-20th, 2009, relating to a submission on the proposal.
Mr Doyle claimed Dr Bacon was closely involved in promoting the proposal which he was evaluating. “It would be wholly inappropriate for the State to pay Mr Bacon for evaluating a proposal with which he is closely involved in promoting,” he told Dr Somers.
Mr Doyle suggested that the invoice be returned to Dr Bacon with his letter, “which details why the invoice is not valid and will not be paid by this department”.
Dr Bacon told The Irish Times he had no involvement in promoting the proposal and did not know what Mr Doyle was referring to in his letter. He had been asked by Minister for Finance Brian Lenihan to evaluate the proposal from a third party, who has since died, he said. “They suggested putting together a fund to buy unsold stock of houses and apartments and they were then going to lease those to local authorities.”
Separate to this work, Dr Bacon was hired by the department in February 2009 to devise a plan to remove toxic assets from the banks. He eventually proposed the creation of the National Asset Management Agency (Nama) in a report submitted to Government.
Dr Somers told the Dáil Committee of Public Accounts last May Dr Bacon was paid “a five-figure sum” for this work.
Dr Bacon was recruited as an independent consultant by the NTMA to work on the plan, but he reported directly to the Minister.
The letters between Dr Somers and Mr Doyle came weeks after an appearance before the public accounts committee last May at which Dr Somers was critical of the strain being exerted on the NTMA by the department in being asked to supervise Nama, in addition to its work on the banks.
Asked about the Nama plan, he said he knew “very little, apart from what has appeared in the newspapers”, and that it would be a “very difficult” task.
His comments are understood to have generated considerable tension between the department and the NTMA at that time.
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