MINISTER FOR Finance Brian Lenihan has insisted the creation of a new special entity to supervise the National Asset Management Agency was necessary to ensure that the €54 billion in loans being taken over by the agency would not be added to the national debt.
During Dáil exchanges on the committee stage of the Nama Bill yesterday, Labour Party finance spokeswoman Joan Burton maintained that the design of the Bill had been “flipped” so that Nama would be controlled by private interests.
Mr Lenihan said last night that some people wanted “to misrepresent everything to create the maximum public confusion”; he said the procedure being followed would be of great benefit to the country.
“The objective here is to get Nama off the national accounts of Ireland. Under the guidance of Eurostat we have come up with this vehicle so that the €54 billion in bonds being issued to cover the Nama loans will be off balance sheet for the national accounts,” he said.
The Minister said that removing the Nama bonds from the national balance sheet was a very positive step for the country and would keep the cost of borrowing as low as possible. Details had been published last week only when final approval had been given by the EU agency Eurostat.
The procedure involves the establishment of a special purpose vehicle (SPV) with a capital of €100 million which will be responsible for the purchase, management and disposal of loan assets identified and valued by Nama. The SPV will be a separate legal entity jointly owned by private investors, who will own 51 per cent of the equity, and by Nama, which will hold the remaining 49 per cent.
Mr Lenihan said that because of the large amounts of debt being guaranteed, Nama would maintain a veto on all decisions of the SPV and its subsidiaries that could affect the interests of Nama or of the Government.
Ms Burton last night repeated her concerns. “It is quite simply extraordinary that the original Nama Bill could have been published in July, and have reached committee stage . . . without this SPV architecture being set out in detail by the Minister. The Dáil was not told of this scheme, even though CSO officials were seeking an opinion from Eurostat on it as long ago as July.”
She said there were a number of questions for Mr Lenihan, such as who would subscribe the private equity for the SPV and who would be appointed to the board.
She also queried the provision for a final payout to private-sector investors of a share in the profits on the dissolution of the SPV and said it seemed to contradict the Bill.
“Quite frankly, it is extraordinary that issues like this, which are fundamental to the day-to-day running of a €54 billion operation, could be introduced at such a late stage,” she said.