NAMA, THE LAST STRAW IN GREEN POLITICS

Part of the professional work I undertake in due diligence, at the Lisbon convention there was an economic workshop that Minister Eamon Ryan chaired where I raised the subject of due diligence or lack of, undertaken by financial institutions on development and business loans that will now form a large part of the NAMA or SPV assets.

Financial controllers and business executives undertook ENRON economics in submitting business plans and financial auditing reports to support the widely unrealistic and bloated long term economic value of property. These assumptions were supported by auditing, risk assessment, financial accountancy and private equity advisory firms. In many respects the very same consultancies that are now still employed by the Government in drafting the NAMA legislation.

As with the fable of “the King has no Clothes” when reality finally hit home ENRON was exposed for what it was, it revealed that the business plan was sustained by institutionalized, systematic, and creatively planned accounting fraud, known as the "Enron scandal". That scandal caused the dissolution of the Arthur Andersen accounting firm, yet in Ireland nobody has been held accountable.

In the USA within months senior executives of corporations, financial and auditing companies were in jail, in Ireland it’s a get out of jail pass, golden handshakes, fat pensions and compensation by the taxpayer for deceit, dishonesty and professional incompetence.

More recently the collapse of Bear Stearns in Wall Street, a bank like Anglo Irish that existed for private wealth creation, occurred once again because their internal risk management systems failed.

All these institutions including Anglo Irish, NIB, AIB, BOI employed auditors, risk managers, insurance advisors, asset management professionals and legal advisors to protect their investments. What we have since witnessed is that the entire financial system was based on falsification and deceit, excessive risk taking and shocking standards of risk management.

During the boom years of the Celtic Tiger we witnessed what could be called criminal behavior by evaluators, bankers, land surveyors, financial advisors, risk assessors, all addicted to institutionalized greed. Nobody has been held accountable for the failure of the financial regulator, the central bank or the Government to control our economy. Yet with NAMA one thing is certain the taxpayer is now accountable.

The unsustainable business model of the ‘Celtic Tiger’ and total lack of supervision by the financial sector created the conditions for the catastrophic collapse of the economy we now see. We have learnt in the meantime how the banks were interconnected, did business, and still do, with the same advisory firms, we know they were sustained with plastid Government support attempting to store up confidence in the banking sector and Government Policy. Anyone who spoke out about financial mismanagement was labeled a loony and encouraged even by our last Taoiseach to commit suicide.

The consequence of this mismanagement we are now lead to believe is that the banks have become to big to fail. Why this was allowed to occur is unclear. After all, both the financial regulator and the Central Bank had or should have had ample information on the stability of the banks as well as the legal ability and obligation to prevent destabilising banking.

In the financial crisis we face, the strength of a bank’s balance sheet is of little consequence. What matters is the explicit or implicit guarantee provided by the state to the banks to back up their assets and provide liquidity. Therefore, the size of the state relative to the size of the banks becomes a crucial factor.

Can the state now afford to save all the banking institutions, today Bank of Ireland posted a pre-tax loss of €979 million for the six months to September 30 compared with profit of 647 million euros during the equivalent period in 2008.

Bank of Ireland said loan impairment charges in the six months were 1.8 billion euros, up from 267 million euros a year ago. The bank has forecast loan impairments of 6.9 billion euros in the three years to March 2011.

Least we forget just last February Bank of Ireland’s estimates for loan impairment charges were calculated at €3.8 billion to circa €4.5 billion for the same period up to March 2011. In the six months since loan impairment has increased by an astonishing €3billion. In the same period both Bank of Ireland and Allied Irish Bank received €7 billion in state aid from the Irish taxpayer.

What we are seeing is the taxpayer through the state investing money in a financial black hole, a black hole that Anglo Irish Bank’s transfer of €28 billion in loans to NAMA will suck us all in.

It is clear that the state is not in any position to attempt to save Anglo Irish Bank. Still the Government pursues this agenda. They have not addressed the failure of the banking system and are gambling for a resurrection on the backs of a NAMA business plan that would not pass the most basic risk management test. A business plan, that must be pointed out is based on continued economic growth over the next ten years.

What is most shocking of all about this is the acceptance and willingness of the Green Party to go along with this fiasco. A fitting satire to peak everything and runaway credit.

What bothers me even more is that the Green Party credits itself as the most transparent and democratic political party in the state. Yet just days after the NAMA convention the Government releases the now discredited NAMA business plan, which would have been in existence well before the convention, followed a week later with revisions to the NAMA legislation with the inclusion of a SPV that will be controlled by private interests but paid for by public monies, which also must surely have been discussed at cabinet by the government.

I find it unbelievable that the Green Party Ministers were not aware of either nor that they wouldn’t have discussed them at Cabinet table with their colleagues. After all isn’t this what collective cabinet responsibility is all about! A bit like how the green parliamentary party is supposed to work as well. If they were not informed or consulted this surely must be the last straw for the current Government.

Of course none of this would have happened if the last Government had acted prudently in the first place, the economy regardless of the global financial crisis would be in a much better shape.

Looking back I cannot escape the feeling that the board and directors of the Central Bank and the financial regulator, along with senior officials there knew what was happening. Similarly, all government ministers, along with senior bureaucrats in the ministries of finance, revenue commissioners and office of the Taoiseach had to have known.

The future of Green Politics is dead and buried under a monument to failure called NAMA

After a weekend of reflection with a large group of my friends I am left in no doubt that the consequence of the Green Party supporting the NAMA legislation has resulted in the party destroying any opportunity for not just the current generation to embrace green politics but it will prevent the next generation from being given an opportunity to join what I had hoped until recently was a Party of the future in this country.

I joined the Green Party as an environmental scientist who believed in what the party stood for back in 2007. I actively encouraged friends and colleagues to think differently about the Green Party and made some serious inroads into bringing about behavioural change within the community I live to support green politics. I was asked to stand in the local elections and did so in west cork, standing up for the Green Party when many others were not willing to engage with the public. This cost be significantly in time and personal finances.

I can categorically say right now I now do not have one personal friend or acquaintance who believes that the Green Party are making the right decision in government in regard to NAMA.

The universal belief of people I meet is that they will NEVER vote green again, even regardless of their friendship to me or their support for me in the past in my career or in my public endeavours.

Without fail they are of the opinion that whatever principals or integrity the party had amount to nothing in the debacle we now find ourselves in with NAMA.

As a committed environmentalist this has shaken my own belief in the party, I find that the willingness of the party to support the NAMA legislation is a step too far and I fear that I may have no choice but to resign from the party.

As a environmental scientist if I wish to continue to build support in the community for sustainable development and green ideologies I find all of my work in attempting to build a low carbon future is now in jeopardy as a consequence of my association with the Green Party.

A party that has lost the support not just of a large percentage of its own members but of the public at large.

I am even more enraged and saddened at this because this should be at a time when Green politics should be on the rise with the threat of climate change and sustainability, instead the parties continued support for NAMA is extinguishing and possibility of the party offering a realistic alternative to the public in the difficult years ahead.

I fear the Green Party will be remembered for NAMA; for not being willing to take the principled stand, but for supporting a vehicle that goes against the very core of green philosophy or matters of sustainability, legislation that supports greed, unsustainable development and the concept of profit from a failed financial system that has bankrupt the state.

Right now it brings to mind Jim Morrison of the Doors with the words,

“This is the end
My only friend, the end
Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the end
I'll never look into your eyes...again..”

As someone who has always felt that I have an ability to feel the pulse of the people and have many times rode ahead of the posse in current or political opinions I believe that NAMA will be the tombstone of green politics in Ireland for a generation.

What a sorry waste,
What a terrible tragedy.

The Politics of History rather than the Politics of the Future.

When does an economist becomes and environmentalist. For anyone who watched David McWilliams programme Peak Everything this week, you might find this article by John Gibbons on McWilliams becoming a devoted ecologist in the Irish Times an interesting read. David used a lot of information that i have been presenting on climate change and sustainability over the past 18 months to organizations and communities. Information and ideas that i also spoke about with people when i decided to run in the local election earlier this year. This was why I ran, to try and get this message out to as many people as possible which i did by circulating information to 14,000 households. Thats why even thought i didnt get elected i was happy that over 3500 people gave me a 1-5 preference vote. People are beginning to listen. I was delighted with the programme, i can no longer be regarded as a radical when someone such a D. McWilliams starts quoting the same information and references as I do. When it comes to NAMA and the financial crises we aint seen nothing yet. My concern with NAMA is however that we are investing in a the failed and unsustainable system rather than using this money to invest in our communities, an alternative future, a new beginning. That's what it's all about ? the politics of history rather than the politics of the future.

NAMA a failed business plan to protect private equity

NAMA is a colossal misdirection and waste of public resources, a financial ballot of institutions that have corrupted our democracy and damaged our society condemning hundreds of thousands to negative equity, bankruptcy and un-employment.

The root cause of this is greed and selfishness and a tangled skein of institutions grown up to express and protect them. NAMA represents not only a failure of truth and justice but illustrates how politics, the economy, society, you and every taxpayer is now subject to the control of financial markets and institutions.

It is exceedingly difficult for the public to understand how Irish Banks as independent financial institutions who made billions in profit for private shareholders in the past few years, now seek a colossal financial ballot from the taxpayer. These very institutions exposed themselves and their shareholders to financial risks totaling, well over 90 billion a figure so vast in the context of Irish history that one searches in vain for any relevant historical parallel.

In 2005 Anglo Irish Bank reported a profit of 685million euros and over 1billion profit in 2007. This profit was shared out amongst its main shareholders including Sean Quinn a 15% shareholder of the bank, Invesco 5% shareholder, Swiss Bank 6% shareholder, Dresdner 7% shareholder and Janus Capitol a 5.5% shareholder.

These shareholders accepted the business plan of the board of directors of the bank that providing over 67billion in loans in 2007 largely for property developments and purchase of development lands in Ireland and abroad that were widely overvalued and should have been regarded as high risk investments. Yet it is now the Irish taxpayer who is being told that we have no choice but to recapitalize such risky credit institutions.

The NAMA legislation is being introduced to protect credit institutions that are of systemic important to the economy of the state. We the public need to demand of our Minister for finance who has ultimate responsibility for selecting which credit institutions are protected by NAMA to explain to the members of the Oireachtas and the public why it is that Anglo Irish Bank, an insolvent institution, is of systematic important to the Irish economy.

Is NAMA protecting its shareholders and business partners who took a risk on equities and investments that have failed? NAMA is now calling on the taxpayer to provide a multibillion bailout to a failed economic system at a time of soaring job losses and widespread economic turmoil. By injecting almost 30 billion euro in Anglo Irish Bank to overpay for assets that are now significantly devalued is a crime. A failed bank and a failed financial system is being sold to us to ensure the survival of a few greedy individuals on the backs of the sacrifices of the many.

How we deal with this current crisis will provide a clear indication of how as a society we may face the real challenges of the 21st century, climate change, food and energy security, over consumption, the challenge of diminishing resources and increasing population. Based on the current situation right now the future doesn’t look to bright.

Crunch Time for Politics

Let me start by saying that I’ve written this as a member of the Green Party who objected to the NAMA legislation. At the recent Green Party conference, I was one of a few speakers to offer contributions on both the NAMA legislation and the revised programme for government.

I wish to outline to your readers my personal views on both these important issues so that you may understand that not all within the Green Party accept that the Programme For Government (PFG) or the NAMA legislation represent the best outcome for the taxpayer in these difficult times.

First, let me begin with why the convention was called. The Green Party constitution allows for a special convention when at least five electoral groups submit a request to the National Executive Committee (NEC) on this occasion,  to decide the position of the party to the proposed NAMA legislation.

Media commentators and opposition political parties have made negative comments about the relative small number of Green Party members deciding government policy. I would be of the opinion that it highly desirable in a democracy that members of political parties can call a special convention to review how a political party is performing in government (or opposition), allowing members an open and frank opportunity to express their views and concerns regarding the performance of their elected politicians.

The weakness lies in the fact that no other political party allows for such openness and access to ministers and politicians and for this reason I would praise the Green Party for its willingness to engage with its members especially in such tumultuous times.

I took the convention very seriously, devoting many hours prior to the convention in attempting to understand the significance of the NAMA proposal and alternatives, while seeking council from professionals in the financial sector, businesses and members of the public on whether it was indeed in the best interest of our nation for this legislation to be introduced in its current format. I was not alone in this endeavor as many Green Party members did likewise.

As a political party, it has devoted more time than any other party and perhaps than all other parties combined, to debating the NAMA legislation. The Green Party have facilitated three party seminars and a party convention devoted entirely to NAMA. Many hundreds of members from across Ireland have attended these events at their own time and personal cost. It has been debated at branch meetings, at local and national level. Therefore it would seem that NAMA has been debated more within the  Green Party membership than any other party in the state. So I would say to detractors that while we may be a minority party, its members clearly take their responsibilities very seriously.

Notwithstanding the above I was disappointed with the Convention for many reasons. The convention was called primarily to debate the NAMA legislation and unfortunately the PFG re-negotiations overshadowed the occasion dealing a serious blow on the day to any attempt to properly debate the NAMA legislation.

I have presented my views on this to the Green Party and they are available for anyone to read openly on my blog website: www.westcorkgreens.blogspot.com

In summary, I stated that I found the manner in which the convention was organised to be worthy of political manipulation.

Despite the clear unease within the Green Party to supporting the NAMA legislation, there was no possibility that the motion to reject NAMA could be won given the procedures and events of the day.

I spoke against the NAMA legislation. I also clearly outlined why I believed the PFG was too aspirational whilst neither being radical enough nor clearly providing transparency on how or when it was going to delivery on many of the 200 items presented in the document. I voted reluctantly for the PFG and only as I noted on the day because I believe that the Green Party ministers are seriously attempting to change how our institutions govern this state from the houses of the Oireachtas to local Government. I voted for the PFG because I believe the Green Party can still make a difference in politics. You can only do this in Government.

In the debate on NAMA, I outlined why I could not morally or ethically accept the legislation in its current format. I stated that the safeguards for the taxpayer were not concrete enough and that if NAMA was the only possibility for safeguarding the taxpayer that it had to be changed.  I debated that neither Anglo Irish nor N.I.B. could be regarded as of systemic importance to the Irish state and that both institutions should be liquidated when the current bank guarantee ceases. I suggested that the bank guarantee should be extended when the current guarantee expires to all other banks so that we may attempt to save what we can and use public monies elsewhere where they are urgently needed. A considerable number of likeminded people voted the same as myself, against the NAMA legislation despite the Party’s insistence that it would result in dissolving the Government.

It is not to late for further significant changes to be made to the NAMA legislation. Let us hope that the multifaceted group of experts, people including teachers, farmers, solicitors, social workers, fish exporters, insurance brokers, economists, plant hire businessmen, auctioneers, accountants, publicans, general practitioners, funeral directors and those of no other occupation or professional skill, that make up the elected deputies and Dåil Eireann have the ability to attempt the salvation of our financial system. For many NAMA represents the level of control that the financial sector have not only over our economy but also our political system. Its not unrealistic to suggest that NAMA represents crunch time for politics in Ireland.

Declan Waugh

The Art of Political Manipulation

I came to the Green Party convention on the 10th October 2009 with an open mind, not being a member of either of the five Green Party constituency groups that called for the convention to debate and vote on the National Asset Management Agency Bill 2009.

I took the responsibility very seriously, devoting many hours prior to the convention to attempting to understand the significance of the NAMA proposal and seeking council from businesses and members of the public on whether it was indeed in the best interest of our Nation for this legislation to be introduced in its current format. I believed that my democratic vote could make a difference and was honoured to be given an opportunity to vote on this matter of national importance.

However, as someone who has observed politics for many years, I found the manner in which the convention was organised to be worthy of Machiavelli, the master of political manipulation.

Firstly, the members were presented with a debate on the Programme for Government (PFG) rather than the NAMA legislation.

Secondly, insufficient time was given for members to review the PFG document prior to debate. Procedures for the day stated that it was to be circulated to members at 10am rather than after noon, which was the case.  The logisitical difficulties here are understandable in the circumstances, however, these could have been overcome by holding the debate on NAMA first.

Thirdly, the NAMA proposal was not allowed to be debated as part of the Programme for Government.

Fourthly, the debate on the NAMA proposal commenced after voting had ceased on the PFG. Yet, the opening argument by the party was that by not supporting this legislation the government would fall; making a mockery of the first vote to support the Programme for Government.

Fifthly, voting on the Programme for Government closed before the debate was finished while allowing members to vote on the NAMA motion before the debate had even commenced was reprehensible.

Sixthly, the procedures allowed for up to 30 speakers to debate the Programme for Government, while less than 10 speakers had the opportunity to debate the NAMA proposal, which let us not forget was the very reason for the convention in the first place.

Seventhly, the National Executive Committee (NEC) did not allow the original or any alternative motion that would have allowed the party to reject or seek changes to the NAMA proposal while remaining in Government.

Despite the clear unease within the Green Party to supporting this legislation by following such procedures, the NEC and Party headquarters ensured that there was no possibility that the motion to reject NAMA could be won.

For the convention to be transparent, clearly the order of the day’s business should have been to discuss the most significant motion first, that being the NAMA proposal, especially given that the convention was called for to debate and vote on the proposed NAMA legislation by Green Party constituency groups. Notwithstanding this, one could argue that implementing the NAMA legislation is the most significant political decision in the Programme for Government and perhaps the most important Statute Bill ever written in the history of our nation.

While I accept the democratic will of the party members, I believe that the convention represented political manipulation of the highest order, was deeply flawed in its procedures and may as a consequence destroy the Green Party for decades to come.

As a result of the aforementioned, the Green Party now have the distinction over any other political party that it’s not just its parliamentarians that voted for NAMA but its ordinary members.

If the Government get it wrong, especially when they do not have the support of the people to make such an important decision, the Government and the Green Party in particular will forever be associated with NAMA; this may well prove to be the tipping point, not climate change, for green politics in Ireland this century.