The State’s auditor, which said last week Nama lost out on €220 million when selling its Northern Ireland assets, has claimed the bad bank was never designed to make a profit.

This is made in documents released to The Irish Times under the Freedom of Information Act, in which the C&AG defended its role as Nama’s sole auditor, against concerns among other State bodies that this may no longer be possible under new laws.

Department of Jobs, Enterprise and Innovation officials wrote to the Office of the C&AG in May about issues surrounding the auditing body's oversight of Nama under EU audit reform laws being transposed in June.

The department found, on examining how the Companies Act 2014 interacts with the new EU directive, that the C&AG can only audit not-for-profit entities.

However, a C&AG official responded: “Nama and its subsidiaries were not established for commercial purpose, ie to return a gain on an investment by the State.

“The purposes are set out clearly in the 2009 Act and are part of the measures by the State to deal with the banking crisis.”

At a meeting on July 5th, Department of Finance and Department of Jobs, Enterprise and Innovation officials argued Nama was set up to make a profit. C&AG representatives disagreed.

Responding to a request for comment, Andy Harkness, director of audit at the Office of the C&AG, said while "the purpose of Nama per se is not to make a profit, although a profit may arise, but to help resolve the banking crisis".

Legal advice

The C&AG’s legal advice is that EU law on what is a “non-profit making” entity is unclear and unsettled, he said, adding that it is currently weighing advice from counsel. At stake is whether Nama has to have a second set of auditors, he said.

Nama has raised its profit forecast repeatedly in recent years and is currently targeting a €2.3 billion lifetime surplus.

Meanwhile, Nama is disputing the C&AG's calculations in finding last week the bad bank's 2014 sale of its Northern Ireland loans to private equity firm Cerberus involved a loss of value of up to €220 million for the State.