This story was first published in the Irish Mail on Sunday on 4/11/11
By: Michael O’Farrell
ONE of the two developers being paid a salary of €200,000 by Nama is not paying tax on that income in Ireland, the Irish Mail on Sunday can reveal.
The astonishing revelation was conceded in a letter to the Dáil’s Public Accounts Committee (PAC) by Nama chief executive Brendan McDonagh this week.
Mr McDonagh also confirmed that Nama has already approved €4.1m per year salaries to 41 debtors, an average of €100,000 each.
And by the end of this year they expect to have approved salaries of between €70,000 and €100,000 for up to 120 developers, who can also take a share of any profits made.
Nama controls all money in and out of their companies, including advancing further operating funds if necessary. The salary is paid out of company accounts with Nama’s permission.
While taxpayers have already rescued their companies from bankruptcy, Nama had insisted until now that both of the highest paid developers on its books were tax resident in Ireland.
‘I understand that they are resident in the State for tax purposes,’ Mr McDonagh told the PAC in October.
But under questioning from Fine Gael TD Eoghan Murphy, Mr McDonagh promised to double check the situation for the committee. And this week the committee received the reply – in fact one of the developers ‘is an Irish citizen, whose principle business interests and assets are in the UK and is not currently tax resident in Ireland’.
Mr Murphy, a government TD, was sharply critical.
‘If that money is actually coming from the Irish State – if that’s the case – they should pay tax on it. We have a right to know these things,Nama is not transparent enough.’ Mr McDonagh also confirmed that the two debtors in question were being paid ‘salaries of €200,000 per annum by their businesses out of their overhead budget with Nama’s approval as of September 30’.
Both developers have always had family homes in Ireland.
ENDS
Here at NewsScoops we are always delighted to see others follow in our footsteps. Here’s how the Irish Times reported on this issue four days after we first broke the story.
Thursday, December 8, 2011
Tax exile gets Nama salary
CARL O’BRIEN
THE NATIONAL Asset Management Agency is paying a €200,000 salary to a property developer who is not tax-resident in Ireland.
Earlier this year Nama confirmed that it was paying a salary of €200,000 to two debtors and was planning to approve salaries of up to €100,000 for about 120 other developers whose loans have been transferred to the agency.
In new correspondence to the Dáil’s Public Accounts Committee, Nama’s chief executive Brendan McDonagh has confirmed that of the two biggest debtors, one is an Irish citizen who is not currently tax resident in Ireland.
The principal business interests and assets of this individual are in the UK, he said. The other major debtor is a resident and tax resident of Ireland.
Overall, Nama paid a total of €4.1 million in salaries to 41 property developers last year. Their combined debt is €18.6 billion.
Nama has previously insisted that while paying these salaries was not a popular move, it will help the agency get the best commercial return for the taxpayer.
The new correspondence also contains details on incentive payments to developers aimed at encouraging them to repay their debts.
It states that if a developer recovers the acquisition price paid by Nama for their loan plus a further 10 per cent, they may retain a portion of the excess to encourage debt repayments.
Nama has signed legally binding agreements with nine debtors under which proposed incentives are in place, linked to these “financial milestones”. It says each of these nine agreements differ, depending on the nature of the debt.
It gives the example of a debtor who secures €570 million for a loan that was acquired by Nama for €560 million. In this case, of the €10 million, some €9 million would go to Nama while €1 million would go to the debtor.
Mr McDonagh, however, says this outcome is unlikely. “Looking at the current economic situation both in Ireland and in other locations were assets are located, unless there is a significant global economic improvement, it is likely that no debtor will achieve the aggregate targets to qualify for an incentivisation arrangement,” he writes.
Nama has acquired close to €2 billion more in loans from the banks in recent times, bringing its portfolio to €74.2 billion, for which it has paid €31.7 billion.
Mr McDonagh said developers are obliged to repay the full €74.2 billion debt to Nama. However property values have fallen by about 60 per cent in Ireland from peak so this would not be possible given the market, he said.
ENDS
