Mick Wallace nails the £4.5bn dog,

looking for proper investigation of

Cerberus and other portfolios

1 2 October 2016
T
he current Public Accounts Committee
hearings into the sale of Project Eagle
by NAMA threaten the careers and rep-
utation of its chairman and chief
executive, the finance minister,
Michael Noonan, the Comptroller and Auditor
General and a number of politicians on both
sides of the border. This explains why we are wit-
nessing a war of words across the print and
broadcast media pitting NAMA against its per-
ceived enemies.
Public enemy number one in this conflict is
the Wexford TD, Mick Wallace, no stranger to
controversy but not immune to the hurt that
comes with incessant criticism of his motives,
his methods and the manner in which he tack
-
les head-on the unfairness he perceives in
many aspects of Irish life.
His public clashes with NAMA chairman Frank
Daly and chief executive Brendan McDonagh are
likely to intensify over the coming months of
inquiries, including a promised Commission of
Investigation into Project Eagle and possibly
other aspects of the agency’s disposal of billions
of euro of distressed property assets.
Over recent weeks, Wallace has been accused
of making “unfounded allegations” against the
two senior NAMA executives on more than one
occasion, including at the PAC hearing on Thurs-
day, 29 September, last. McDonagh in particular
has been incensed at what he believes is Wal-
lace’s deliberate misleading of the public with
“incorrect statements” and “false claims”.
During his evidence to the PAC, McDonagh
said that it was “completely untrue” that US
fund, Fortress, had been excluded from making
a bid for the £4.5bn Project Eagle portfolio in
early 2014 and only made the short list after
making an eleventh hour intervention to the
Department of the Taoiseach. The portfolio was
of course sold to US fund, Cerberus, for £1.24bn.
The following day Wallace posted an email
from Michael George, managing director of
Fortress, to Andrew McDowell in Enda Kenny’s
office dated 13 February, 2014.
It read: “We’ve heard that NAMA/Dept of
Finance is running a ‘process’ for the loans to
Northern Irish borrowers. Being from the North
I’ve taken a keen interest in this €4bn portfolio
and would like to throw our hat in the ring. Might
you have any insight as to how we can get
involved?”.
McDowell replied that he had asked Martin
Whelan of NAMA to put George in touch with the
right officials, to which the Fortress managing
director replied:
“Thanks Andrew. FYI I’ve also reached out to
Bren (McDonagh)”.
According to NAMA, it was the direct approach
to McDonagh and not the request to the most
senior official in the Taoiseach’s department that
prompted the late invitation to Fortress to join
the race for Project Eagle. McDonagh said that
he passed the request from George to Lazard’s,
the external advisor on the sale, which contacted
Fortress later on the same day, 13 February.
“NAMA has recently been forced to correct
Deputy Wallace in respect of incorrect state
-
ments he has made in respect of the Fortress bid
and it is regrettable that he is compounding this
situation by making further false claims now”,
NAMA said. The problem for NAMA is that the
complaint about having to contact the Taoise-
ach’s department to get into the process came
from Mike George and he made it to various
people in politics and business, north and south.
The increasing bitterness of the exchanges is
also reflected in the coverage by some news out-
lets which have sided with NAMA in its row with
Wallace. Over recent weeks, The Sunday Times
and the Irish Daily Mail have published lengthy
and detailed criticisms of Wallace comparing him
(“a tax cheat”) unfavourably with McDonagh
(“an honourable public servant”) among other,
less than complimentary, remarks.
It is understood that McDonagh and his media
advisors have spent a considerable amount of
time briefing journalists with their side of the
Project Eagle story. Conversely, the Sunday Inde-
pendent has been running various claims and
revelations by Wallace over recent weeks and
months. This contrasts with coverage in the Irish
Independent which, with the exception of Gerry
Adams, singled out Wallace for its most sus-
tained vilification in advance of the general
election this year. The Irish Times has belatedly
accepted that its coverage of Project Eagle and
related NAMA stories has been too tame and
uncritical in the past and has given an airing to
the Wexford TD.
An apparent desperation in the NAMA media
operation was well illustrated by its attack on
the Comptroller and Auditor General, Seamus
McCarthy, who it claimed was not up to the job
of scrutinising the Project Eagle sale. The media
reported it as a row between two state agencies
rather than what it was; a detailed and critical
report by its auditor of NAMA: an auditor whose
previous ‘value for money’ reports on the agen
-
cy’s work was never subjected to such an attack.
It was only when the CAG said that the Project
Eagle portfolio was sold for some £190m less
than it could have been that it was targeted by
NAMA for attack. In fact, while NAMA’s purchase
NEWS
Cerberus
still biting
Mick Wallace nails the £4.5bn dog,
looking for proper investigation of
Cerberus and other portfolios
by Frank Connolly
The media reported it as
a row between two State
agencies rather than what
it was: a detailed and
critical report by its
auditor, of NAMA
October 2016 1 3
price for the portfolio was £2.2bn, for what was
a par value of £4.5bn, it was eventually sold for
just over £1.3bn, one of NAMA’s biggest losses.
The attack tactic did not go down well with
most members of the PAC, nor with Wallace, who
was present for the full day hearing although he
is not a member of the committee. Neither did
the sometimes unconvincing claims by McDon-
agh about the Project Eagle sale to US fund,
Cerberus. It was Wallace who first disclosed that
£15m in fees were to be paid by Cerberus to US
lawyers, Brown Rudnick and Belfast law firm
Tughans. Wallace also told the Dáil in July 2015
that £7m had been located offshore in an Isle of
Man account in connection with this payment
and that some of it was intended for a politician
or political party in the North. A former member
of NAMA’s Northern Ireland Advisory Committee
(NIAC), Frank Cushnahan has since been secretly
recorded stating that he is due £5m for his work
on the sale.
In an extraordinary moment at the PAC last
week, McDonagh claimed that he did not know
that Brown Rudnick and Tughans were working
for Cerberus until 3 April, 2014, after the Project
Eagle sale was completed.
“It seems extraordinary that NAMA did not
know who the legal advisors to Cerberus were
until after the Project Eagle portfolio was sold”,
Wallace told Village.
“Brown Rudnick and Tughan’s were the advi
-
sors to PIMCO until they pulled out of the deal on
the legal advice of their compliance department
who considered that the agreed fee arrange-
ments were in breach of US law. That was just
weeks before the deal was done with Cerberus.
If the senior executives of NAMA did not know
who the legal advisors to Cerberus were, then
someone should be fired for incompetence at
least.
“It also raises the question as to who was
really running the show. According to both Daly
and McDonagh at the PAC, the data room where
all the detailed information was made available
to bidders was controlled by the head of asset
recovery, Ronnie Hanna”, Wallace said.
Hanna was arrested by members of the
National Crime Agency in Belfast last May along
with Cushnahan and solicitor Ian Coulter, for-
merly of Tughans, as part of the police
investigation into the Project Eagle purchase.
None of the three has been charged and their
bail restrictions were lifted recently.
Wallace continued: “I am not convinced that
the PAC can get to the bottom of this given that
it is restricted to the parameters of the CAG
report. The CAG has done a thorough investiga-
tion but he is limited to an auditing or ‘value for
money’ exercise. His report has highlighted a
number of weaknesses in relation to the process
- the restricted number of tenders, the question
of access to the data room where some clearly
had more than others and the conflict of inter-
ests evident in Cushnahan’s role as NIAC
member. He was acting as a consultant for a
number of NAMA debtors. It is not enough to say
that everything was rosy because he did not
deliver anything for these debtors. The CAG says
there should have been more questions asked
about Cushnahan given the conflicts he had him-
self disclosed to NAMA. And why was he meeting
prospective buyers with Hanna and accountant
David Watters, before the Project Eagle portfolio
"It seems extraordinary that
NAMA did not know who the
legal advisors to Cerberus
were until after the Project
Eagle portfolio was sold.
Someone should be fired
for incompetence",
Wallace told Village
hercules/Wallace grapples Cerberus

Loading

© 2015 Village Magazine

Back to Top