Nama must be accountable to the taxpayer

Hiding decision-making processes behind the cloak of ‘commercial sensitivity’ is no way to build trust in the asset management agency, writes ELAINE BYRNE in the IRISH TIMES, August 4 2009


BRIAN LENIHAN scares me sometimes. When Áine Lawlor asked him on Morning Ireland last Friday about Nama’s process of valuing toxic assets, he had this to say: “Some of the land is at present not sellable in what is a very illiquid market and some allowance can be made, and it’s a limited allowance, but some allowance can be made for that in determination of what’s a fair price . . . some allowance can be made for longer term economic value.”


His liberal use of “allowance”, which translates as “discretion”, was very disconcerting.


Nama’s breathtaking powers to buy up to €90 billion in property loans will mortgage Ireland’s future for generations. It is entirely irrelevant how limited the scope of the allowance is when €90 billion in taxpayers’ money is involved. So when Lenihan refers to discretion he needs to reassure us that the degree of latitude exercised when determining the writedown or “haircut” on these loans is wholly and utterly transparent.


The public are not enthused with confidence as far as the relationship between Fianna Fáil and property developers is concerned. A perception of improper influence exists in the public mind for good reason.

It is no consolation then that potentially the biggest clients of Nama were also prominent donors to Fianna Fáil.


The Standards in Public Office Commission donations records show that developers Seán Dunne, Ray Grehan, Seán Mulryan, Paddy Kelly, Gerry Gannon, Johnny Ronan, Séamus Ross and many others donated to Fianna Fáil during the property-fuelled boom years when Fianna Fáil was in government.


Indeed, the developer Bernard McNamara stood for Fianna Fáil at the 1981 general election but failed to win a seat for the party in Clare.


So Minister, if you want me to trust the integrity of the decision-making process, I will need something more than 136 pages of proposed legislation which fails to reference transparency or accountability.


The cost of Nama will be borne by the taxpayer and therefore must be accountable to the taxpayer.


Yes, Lenihan will announce what the total loan book is on September 16th next to the Dáil.


Yes, independent valuers, the European Commission and the European Central Bank will exercise oversight to ensure a fair and accurate valuation.


Yes, section 16 of the Nama Bill stipulates: “To avoid doubt, the provisions of the Prevention of Corruption Acts 1889 to 2001 apply to every officer of Nama and the Chief Executive Officer of Nama and other members of the Board.”


These measures are not good enough because of the pretext of commercial sensitivity.


One of the first questions on the “frequently asked questions” page on the Nama website is: “Will there be transparency in relation to loans transferred to Nama?” The answer? “Information regarding its exposures and their size is commercially sensitive so it will not be appropriate to disclose every detail.”


Of course, disclosing the valuation of individual assets is counter-productive and contrary to the public interest. The exchequer is already naked without unnecessarily showing its hand. But what is stopping Lenihan from making this information subject to the Freedom of Information Act, after a specified length of time, when the rationale for such confidentiality is no longer commercially sensitive?


This would go some way in promoting confidence in the integrity of a decision-making process that encompasses the biggest property portfolio in the world, at the courtesy of the Irish taxpayer.


Comprehensive and robust oversight provisions may prevent, God forbid, the tribunals of the future.


Publishing commercially sensitive information after an appropriate period demonstrates a commitment to open government, neutralises perceptions of secret, undue influence and confronts accusations of political favouritism.


The danger right now is that moral questions are regarded as impractical because we are fighting for our economic independence; that the speed with which this war is being fought leaves little time for the luxury of ethical niceties such as responsibility.


The Department of Finance and the National Treasury Management Agency (NTMA) have increasingly reverted to the pretext of commercial sensitivity of late.


Last October, the Department of Finance invoked the clause of commercial sensitivity and did not disclose the terms and conditions of the Government’s guarantee scheme for the six banking institutions.


Following the nationalisation of Anglo Irish Bank last February, Lenihan refused to quantify the extent of the bank’s bad loans for similar reasons. Only extracts of the PricewaterhouseCoopers report were published.


In a letter to The Irish Times in May, NTMA chief executive Michael J Somers was circumspect about this newspaper’s editorial query on the details of bond auctions.


“The detail of the amount of the bonds taken up by each of the primary dealers is confidential because it is commercially sensitive market information,” he said.


Welcome to the world of commercial sensitivity. In this world, the right to know is the privilege of the Department of Finance and not democratic right of the taxpayer.


Lenihan’s media forays have been notably conciliatory in tone since the publication of the Nama draft legislation. He has the opportunity to promote trust within Nama, the NTMA and the wider financial regulatory framework by extending the Ombudsman’s jurisdiction when the Ombudsman (Amendment) Bill comes before the Oireachtas later in the year.

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