Brian Lenihan: rejects criticism of Nama costs breakdown

Dublin law firm Arthur Cox, which last week won a lucrative contract to advise Nama on the legal aspects of its work, has already been paid in excess of €3.8m by the government for advice on reforming the banks, figures obtained by the Sunday Tribune show.

The law firm, one of the top five in the country, can expect to make large fees from the Nama contract which in­volves the transfer of €90bn of loans from at least four covered institutions into a new agency.

According to recent parliamentary replies, Arthur Cox has been paid €1.62m for advice on the government guarantee scheme agreed in September. It also advised on the recapitalisation scheme that followed in its wake.

Figures supplied to the Sunday Tribune show that the department recently made another payment to the law firm worth €2.25m, bringing total payments to date to €3.87m. As the Nama contract is so complex, it is likely the law firm will hugely exceed this total by the time the government ends its relationship with the firm.

Last week neither the department nor Nama could not say for how long the Nama advice is likely to be needed.

Another firm with a key input into the government's attempts to tackle the banking crisis is US investment bank Merrill Lynch. It is retained by the National Treasury Management Agency (NTMA) to provide "general, strategic and specific technical advice on the Irish banking sector".

The company was first retained in the final week of September 2008 and the contract is due to expire at the end of June 2009. The firm was chosen after several alternative firms said existing relationships meant they were conflicted.

According to a recent parliamentary reply asking about Merrill Lynch, the company benefits from a flat fee.

"The fees paid to the company are a flat retainer fee of €2m with an overall limit of €6m on any transactions undertaken. These fees do not include VAT and expenses. The NTMA has advised me that the specific arrangements set out in the company's contract and the amount of remuneration currently outstanding are confidential contractual matters,'' finance minister Brian Lenihan told the Dáil recently.

The minister has rejected opposition criticism of the costs involved in hiring advisers. Lenihan has said fees and costs should be weighed against the "serious situation being dealt with".