A flaw in the law prohibiting the resale of properties by NAMA to the developers that originally controlled them has been exposed at the Public Accounts Committee.
Described as "deeply frustrating" by Social Democrats TD Catherine Murphy, the anomaly in the NAMA Act has led to claims by some PAC members that some developers are back in control of their assets after securing them at large discounts.
The legislation underpinning NAMA contains a provision, titled Section 172, to assure taxpayers that developers could not buy back their properties.
Comptroller and Auditor General Seamus McCarthy outlined that Section 172 is a legal prohibition on NAMA, which prevents the agency from selling an asset back to an owner or someone with an interest in that asset.
He said: "It is a very restricted piece of legislation that only applies to a sale by NAMA, not by a borrower or by a receiver. It only applies to the sale of a property and not to the sale of a loan.
"Because NAMA sells loans rather than selling property, what they have tried to do themselves and they are to be commended for it, is they have tried to extend the principle of that to loan sales.
"So while there is a legal structure and a potential that if NAMA were selling property, that there would be some infringement or a criminal offence. It is not in the same league when they have looked for the same declarations in relation to the sale of a loan.
"It is very complicated ... Any infringement or irregularity that was made in relation to the sale of a loan would not strictly be an offence under Section 172."
The Committee Chair Sean Fleming said 95% of NAMA's work is completed and the agency is expecting to have a surplus at the end of their operations in the order of €4bn.
He expressed his frustration that the flaw in the legislation is only emerging now, close to the end of the agency's lifespan.
Mrs Murphy said: "I think the public expectation was that somebody would not be able to buy back a loan for less than the face value of the loan before the discount. That was an assurance and an important assurance that was given."
She said she was aware of allegations of people being back in control of an asset that was substantially discounted.
The Kildare North TD said: "I have no doubt in my mind that there are people back in control of their assets. It may well be that the loan was sold. Then there was a second transaction ... It is a flaw in the legislation. It's very frustrating to see it."
She said that it was not the way the public expected the legislation to work in practice.
In a report published by the PAC in March, the committee recommended that "NAMA's lack of systematic and routine verifications of Section 172 declarations was unacceptable. We recommended that NAMA put in place a system to verify these recommendations for the remainder of its operations".
However, the PAC received a letter from Robert Watt, the Secretary General of the Department of Public Expenditure and Reform, enclosing a minute from Minister for Finance Paschal Donohoe.
Mr Donohoe has rejected PAC's recommendation that NAMA seek further verification on Section 172 declarations.
Mr Fleming explained the reason for the minister rejecting the recommendation was "providing purchaser compliance with the Section 172 agreement, would necessitate a comprehensive asset search of every purchaser of NAMA secured assets. It would be time consuming".
The minister's correspondence said "the delay could jeopardise any sales and the process would involve a comprehensive process of purchaser verifications and would appear to imply that NAMA does not regard purchasers' written confirmations as having much standing. Instead, it operates a presumption that many purchases of NAMA secured assets are willfully breaking the law, in respect of this issue".
Mr Fleming said: "The PAC never suggested that NAMA by asking for verifications was suggesting that NAMA secured clients were willfully breaking the law. That is attributing an assumption to us that we never made."