Belfast Telegraph

Chairman's replies to corruption allegations

By Shane Phelan

Nama chairman Frank Daly took issue with allegations made in the Dail last week by Independent TD Mick Wallace about the Project Eagle deal.

In the course of yesterday's meeting with the Public Accounts Committee, he went through the allegations and offered answers to questions posed by Mr Wallace.

Mr Wallace's allegation: Cerberus or some fixers went to major Northern Ireland debtors prior to the sale of the portfolio and offered to sell them back their loans for 50 pence in the pound. Having bought the loans from Nama for 27 pence in the pound, Cerberus was able to sell the loans at twice what they paid.

Mr Daly's response: This is a serious misrepresentation of the facts. It is disingenuous to suggest that the whole portfolio could have been sold for 50% of value. Some loans were worth 50 pence in the pound, and some were worth less - perhaps 5p in the pound.

Mr Wallace's question: Why did Nama not negotiate with debtors to secure 50% of the loans' par value as allegedly achieved by Cerberus?

Mr Daly's response: The Nama Act prohibits the agency from selling back assets to debtors who defaulted on their loans.

Mr Wallace's allegation: The price paid by Cerberus was 27% of par value, leaving taxpayers to cover the shortfall.

Mr Daly's response: Mr Wallace's implication is that, if Nama were to retain this portfolio for long enough, it would eventually recover par value. This is a totally unrealistic view of what is achievable.

Mr Wallace's allegation: £45m has been paid by developers in fixers' fees.

Mr Daly's response: It is difficult to comment as details were not provided as to what the fees represent. However, it is normal practice for debtors to pay fees to new lenders when refinancing or buying back their loans. I understand that these fees, commonly referred to as arrangements fees, are typically charged at about 1% of buyout value and this is normal banking practice. Even if 1% fees were paid on the whole portfolio, the total fee payment would amount to £13m, not the £45m claimed. I can state categorically that these supposed fixers' fees do not in any way relate to Nama.

Belfast Telegraph

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