A LETTER from Fine Gael Senator Eugene Regan to the European Commission seeking clarification of the commission’s decision approving the National Asset Management Agency (Nama) scheme, appeared to have been written at the “instigation” of property developer Paddy McKillen, counsel for the State has told the High Court.
Maurice Collins, for the State, also yesterday rejected arguments that the reply to Mr Regan from a European Commission official indicated the commission’s February 10th approval for the Nama scheme meant only “impaired” loans could be transferred to Nama.
The official’s letter had no legal status, was inadmissible and irrelevant, counsel said. Mr McKillen and his companies had no entitlement to question the unanimous decision of the commission.
Mr McKillen was arguing the letter meant the commission’s approval for the Nama scheme was approval only for the transfer of loans of “impaired” borrowers, counsel said. If Mr McKillen was correct, that meant the commission, when approving the Nama scheme, either fundamentally misunderstood what was being proposed despite having the full draft Nama Bill before it, or had instead, “by a side wind”, imposed a “dramatically different” definition of eligible loans in the scheme, counsel said.
These were both “incredible propositions”; the commission’s decision was clear, it was approving a “macro-approach” by the Government aimed at procuring a “clean break” from risky loans, and could only be understood as approval for the Nama scheme as ratified.
The draft Nama Bill provided Nama could acquire land and development loans, associated loans of a borrower and commercial loans associated with that borrower, and it could not be suggested the breadth of the definition of “eligible bank assets” in the legislation was not understood by the commission.
Even if Nama could only acquire the loans of an “impaired borrower” – and the State insisted that was clearly not the case – Nama could still acquire Mr McKillen’s loans as some of these were impaired, counsel said.
Mr Collins was making submissions in the continuing hearing of the action by Mr McKillen and 15 of his companies to prevent the transfer of their Bank of Ireland loans to Nama.
He claims these loans amount to some €211 million, while Nama claims they total €297 million. The action has implications for the entire €2.1 billion loan portfolio of the applicants with the five participating institutions in Nama.
Mr Collins will conclude his arguments this morning, after which Shane Murphy will reply for Mr McKillen. The three-judge court is expected to reserve judgment when submissions have closed. In other submissions yesterday, Mr Collins rejected arguments on behalf of Mr McKillen that the decision to acquire his loans was null, void and of no legal effect because it was taken on December 11th/14th, 2009, prior to the actual establishment of Nama on December 21st.
Mr Collins said the decision was taken by persons in the National Treasury Management Agency who remain on the Nama board, was also clearly adopted by the board of Nama days later and also notified to the participating institutions in Nama. The Oireachtas’s intention was that Nama should “hit the ground running”.
Counsel argued there was a loans acquisition process and the decision of December 11th/14th was just to set that process in train. There had been no service of a schedule of loans to be acquired and no actual acquisition of loans, and judicial review did not arise as the December 11th/14th decision had no effect in itself, he argued.
In exchanges with counsel, the president of the High Court, Mr Justice Nicholas Kearns, said the applicant’s case was not that Nama was precluded from doing preparatory work, but it had taken off before the “starter pistol” was fired. Mr Justice Peter Kelly said every journey began with a first step and if that was not lawfully valid, nor were the other steps.
