The National Asset Management Agency (Nama) is resisting calls from the Oireachtas Public Accounts Committee (PAC) to verify that debtors in default are not involved in the illegal purchase of assets of the so-called bad bank.
Nama has told the Minister for Finance and Public Expenditure and Reform Paschal Donohoe that meeting this recommendation, contained in a PAC report in March, "would give rise to a series of practical difficulties which could have an adverse commercial impact on its sales activities". This is according to a response sent by the Minister's officials to PAC last week, which has been seen by The Irish Times.
Section 172 (3) of the Nama Act 2009 prohibits the agency from selling loans or property to a defaulting borrower, or connected parties.
Nama’s policy is to obtain written confirmation from purchaser of Nama-secured assets that they are not breaching this clause in the Act. However, the PAC report from March said the agency’s “lack of systematic and routine verifications of section 172 declarations was unacceptable”.
Alleged breach
It emerged in February – in a response from Mr Donohoe to a parliamentary question from Catherine Murphy TD – that the Garda Síochána was investigating an alleged breach of the rule, while Nama had looked into a separate suspected contravention of the law but concluded that the transaction was above board.
The Nama response to the PAC recommendation is that it would necessitate a comprehensive asset search for every purchaser of a Nama-secured asset that would be “an expensive and time-consuming process with a requirement to retain external service providers, potentially in multiple jurisdictions”.
Any delays caused by this process could result in a proposed buyer renegotiating a sale price or a deal falling through, Nama has also argued, according to the Minister’s response to PAC.
“A process which would involve a comprehensive verification of purchaser confirmations would appear to imply that Nama does not regard the purchasers’ written confirmation as having much standing and that, instead, it operates on the presumption that many purchasers of Nama-secured assets are wilfully breaking the law,” it said. “Nama considers that these considerations could seriously impede its ability to achieve the best possible financial return for the State.”
However, Nama has prosed additional measures, such as seeking confirmation that the purchaser of an assets is the same party that concludes a sale contract. If different, each party will have to provide written confirmation that section 173 (3) of the Nama Act 2009 is being adhered to.
Ultimate owners
In addition, new EU regulations coming into force in the Republic in November will make it easier to identify the ultimate owners of Irish companies, including those that have bought Nama-secured assets, it said.
Separately, the Minister’s response to the PAC report said that Revenue has accepted a recommendation from the committee that the threshold for inclusion in the tax authority’s division monitoring high-wealth individuals (HWI) be lowered from €50 million of net assets to €20 million.
The move brings an additional 475 cases into the division, effectively doubling its scope.
