Madam, – The special purpose vehicle (SPV) is the latest worrying development in the whole sorry saga that is Nama. Who would have thought that a sovereign democratic Government – allegedly with the blessing of Eurostat – would resort to such unorthodox accounting practices? Similar practices are at best frowned upon, at worst, illegal, in the corporate world. They played a pivotal role in the multi-billion dollar collapse of corporations such as Enron and Worldcom – officers of which were subsequently prosecuted in the criminal courts.
The Government should reflect very seriously upon the possible consequences of going down the SPV road: 1. The enormous risks to our national reputation of being seen to employ off-balance-sheet accounting mechanisms – which markets and commentators generally interpret as attempts, by organisations, to misrepresent the true situation vis-a-vis income and assets. 2. The risks and complexities with regard to corporate governance and control of day-to-day decision-making and operations. 3. The clear risks of conflict- of-interest. What if either of banking or property developer interests, or associated parties, were to gain direct or indirect influence over the ownership and operation of the SPV? 4. The risks of unintended consequences – given that the SPV breaks new ground and opens a legal minefield in respect of company law.
Against all of which, the benefits are highly unpredictable and may never in fact be realised – because one way or another Ireland Inc will still own the Nama debt and international investors, unless asleep-at-the-wheel, will risk assess Ireland accordingly.
Please let’s row back on this one, before we make a bad situation worse. – Yours, etc,