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Cerberus still biting

Mick Wallace nails the £4.5bn dog, looking for proper investigation of Cerberus and other portfolios

The current Public Accounts Committee hearings into the sale of Project Eagle by NAMA threaten the careers and reputation 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 witnessing a war of words across the print and broadcast media pitting NAMA against its perceived 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 tackles 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 Thursday, 29 September, last. McDonagh in particular has been incensed at what he believes is Wallace’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 statements 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 Taoiseach’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 outlets 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 Independent 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 sustained 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.

Hercules/Wallace grapples Cerberus
Hercules/Wallace grapples Cerberus

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 agency’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 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 McDonagh 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 advisors to PIMCO until they pulled out of the deal on the legal advice of their compliance department who considered that the agreed fee arrangements 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, formerly 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 investigation 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 interests 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 himself disclosed to NAMA. And why was he meeting prospective buyers with Hanna and accountant David Watters, before the Project Eagle portfolio was put up for sale?”.

Neither is Wallace convinced that the Commission of Investigation will get off the ground any time soon.

“I would not take it for granted that it will be set up anytime soon. I think Fine Gael will brazen it out for as long as they can and Fianna Fáil don’t want an inquiry. Any investigation has to go beyond Project Eagle, which is just one of the many portfolios. The problems with how NAMA has done its business run right through the organisation”, he told Village.

Wallace has learned more about NAMA from anonymous contributions to his new website although he is conscious that every claim and allegation needs to be verified.

“There are people with agendas and grudges out there. But we do not just swallow everything we are told. Everything must be checked. Neither am I being fed a line by one or two disgruntled developers as NAMA has suggested. I’ve been blamed for a lot of things but stupidity is not one of them”, he says.

“Problems relating to NAMA that are gradually coming into the public domain are very worrying. Not just because of the billions of euro that the organisation may have cost the Irish people but because there are issues at play that go to the heart of how we do business in Ireland”.

By Frank Connolly