BUSINESS OPINION:Like the Civil Service, asset agency's position is that taxpayer has no right to know anything
THE PUBLICATION last week by Real Estate Opportunities (REO) of its 2009 accounts has exposed one of the fictions surround the modus operandi of the National Asset Management Agency (Nama).
It turns out that it is quite possible for details of a developer’s dealings with Nama to be put into the public domain without the developer disappearing in a puff of smoke.
On the contrary, as of Friday night, REO remains very much in existence despite the taxpayer being told that Nama has bought €997 million of its debts from AIB, Anglo Irish Bank, Bank of Ireland and Irish Nationwide. In addition, the taxpayer has also learnt that Nama has waived a breach of the covenants covering REO’s loans in respect of Battersea Power Station and is also favourably disposed to the notion of the power station being floated off as a separate company.
We also now know that REO has a funding deadline coming up next year and is seeking to restructure its debts. Clearly, Nama has some decisions to make as to whether to support this. On the upside we also know that the assets held by REO which hopefully Nama has security over are about as good as you could get in the Irish commercial property market, namely the Vodafone HQ in Sandyford.
Put all this together and we have a pretty good idea where Nama and the taxpayer stands in regard to REO. No puff of smoke. No spontaneous combustion.
Despite this unexpected breakthrough, we look set to be left in the dark by Nama as to where we stand regarding the other €20 billion or so worth of loans it has bought to date. The agency cites commercial confidentiality as the reason for its secrecy.
It would be wrong to give the impression that REO has somehow got religion and disclosed all this information in the public interest. It made the information public because, unlike Nama’s other “clients” which include REO’s own parent Treasury Holding, it is a quoted company, listed on the stock market.
Fundamentally, because REO has taken other people’s money through a public offering of shares it has an obligation to tell them what it is doing with the money. It has a duty to its shareholders to be transparent, up to a point.
Nama’s other clients have no such obligation as they are private companies. Some have limited liability and must lodge accounts with the Companies’ Office but they are invariably 18 months or more out of date and not very informative. Others have built an unlimited company into their corporate structure to avoid making even these rudimentary disclosures.
As as result, with Nama’s agreement, these developers’ dealings with the taxpayer will take place behind the same veil of secrecy that shielded them from any serious scrutiny as they ran riot in the Irish property market.
It would be a mistake to underestimate the extent to which this “confidentiality” contributed to the madness. One of the more shocking things to emerge from the crisis is that the Irish banks simply did not know their customers. They did not know the true extent of the other borrowings and obligations of the people they were lending to. And moreover they did not dare ask, for fear they would scare off the business.
Nama, for reasons best known to itself, seems to consider it a good thing to perpetuate this lack of transparency. As a result, the taxpayers who are rescuing the likes of REO have less right to information about what is going on than the shareholders whom they are supporting. By the same token, the developers whose bankrupt private companies are now being banked by Nama have more right to information than the people footing the bill.
It just does not wash to say that Nama needs to preserve commercial confidentiality to conduct its business. As REO’s published accounts demonstrate, this argument does not extend to justification for a blanket ban on all information.
There is a lot of very basic information that can be disclosed without crossing the line after which the taxpayers’ right to know what is being done in their name is exceeded by the damage to their own interest by disclosure. It’s the difference between wanting to know what loans Nama has bought and from whom and wanting to know the the minimum price Nama will take for the underlying assets.
The more likely explanation for Nama’s secrecy is that it is an extension of the Civil Service and shares the same obsession with secrecy that runs deep through that system. The default position is that the taxpayer has no right to know anything. The only chink in this wall of official secrecy in recent years was the Freedom of Information Act brought in by the Opposition a decade ago and substantially neutered by the current administration.
Secrecy is in Nama’s DNA because it is a child of our system of government, which puts a very low value on transparency and the external scrutiny it invites.
If we have not learned at this point how that culture is the enemy of good government, then we never will.
