NAMA 2

The following letter has been sent to the Taoiseach.
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Our Ref; EMcG/ Your Ref; 25th August 2009

Taoiseach Brian Cowen TD
Department of the Taoiseach
Government Buildings
Upper Merrion St.
Dublin 2

Re: NAMA

Dear Taoiseach,

I acknowledge receipt of the letter of 20th August 2009, from your Dept. requesting €15.00 from me.

I will send that under separate cover.

However, I protest at the demand; given the documentation I am requesting from you I believe the information in the documentation should have been put into the public domain long ago.

You are reported in the Irish Times as having cited the European Commission, the International Monetary Fund and, possibly, the European Central Bank as having advised the Government (i.e., you) to adopt the NAMA solution to Ireland’s financial woes.

The first intimation of such a claim came from the Department of Finance and referred only to the European Commission.

Those EU “consents” are, ostensibly, in accordance with the “three ts” — “temporary, timely and targeted”, all of which are a requirement of the EU for State Aid to financial institutions currently in trouble. Your NAMA plan is not, I believe, in conformity with those requirements.

The Commission has disclosed elements of its dealings with you (and others) on its website.

1. On 25th February 2009 the Commission issued guidelines to States on handling impaired assets of banks. http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/322&format=HTML&aged=0&language=EN&guiLanguage=en

The guidelines of 25th February 2009 provide for “full transparency and disclosure of impairments, [which] has to be done prior to government intervention”. And again, require “… full ex ante transparency and disclosure of impairments and an upfront assessment of eligible banks”

To date, here in Ireland, this has not happened. Nevertheless the Government’s aid has already commenced. The mere declaration of an intention to grant aid, is aid, and the publication of the National Asset Management Agency Bill is aid par excellence.

The guidelines also confirm that “In general, any transfer of assets covered by a scheme at a valuation in excess of the market price will constitute State aid” [and, is therefore, illegal in principle].

A number of points arise from the foregoing;

1. The Commission does not appear to mandate values based on “real economic value”.

2. Additionally, the Commission emphasizes that “In general, all schemes must ensure that the beneficiary banks bear the losses incurred in the transfer of assets”.

3. The guidelines provide for review by the Commission of asset relief schemes [particularly the “valuation process”].

I need hardly point out to you that these issues are surely relevant to the Lisbon Treaty debate.

I urge you to seek Commission guidance on the Government’s NAMA scheme.

Perhaps you would emphasize to the Commission that;

a) the bad assets of the Irish banks are not “complex”(being, principally, land and buildings);

b) The Irish High Court has established a discount on the value of such assets of 50% (relative to the recent past) in Collins & Anor v Duffy & Anor [2009] IEHC http://www.bailii.org/ie/cases/IEHC/2009/H290.html

Yours Faithfully,

____________________
Edward McGarr
McGarr Solicitors