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Allegations about NAMA in North begin to focus attention on disposal patterns in South

By Frank Connolly

Is it possible that the row that has engulfed the National Assets Management Agency (NAMA), a leading solicitors firm and senior politicians in the North over the disposal of its Project Eagle portfolio of distressed loans could spill over to its controversial operations south of the border?
The involvement of the US Department of Justice (DOJ) in the on-going investigations into the 2014 sale of the 850-property portfolio to New York based investment firm, Cerberus, has also cast a long shadow over the intensive discussions to save the devolved administration in Belfast.
The Financial Times reported on 7th September that the DOJ has served a subpoena for information on Cerberus over allegations that improper payments were made, or intended to be made, in connection with its successful acquisition of the Project Eagle assets for £1.3bn (€1.6bn) last year. The assets of commercial and residential properties had an estimated value of £4bn when they were taken over by NAMA.
These allegations were first aired in the Dáil in July when Mick Wallace TD disclosed that an audit of Tughans solicitors had revealed that a payment of £7m was “earmarked for a Northern Ireland politician”. Belfast-based Tughans was engaged by US legal firm Brown Rudnick which in turn was working for Cerberus on the purchase.
When Wallace broke the story, Brown Rudnick confirmed it had “agreed to share with Tughans our fee from Cerberus and this arrangement was disclosed to both Cerberus and Nama”. Cerberus has said that it has not been accused of any wrongdoing in the matter and welcomes the inquiries. It said that “these matters are related to the alleged conduct of third parties and not to Cerberus or any of its affiliates”.
The New York firm is chaired by former US vice-president, Dan Quayle, and details of his private meetings in 2013 and 2014 with then-first minister Peter Robinson and his party colleague the DUP finance minister, Simon Hamilton, over the deal have generated angry exchanges with deputy first minister, Martin McGuinness. The Sinn Féin leader in the North claims to have been unaware of the discussions and of a memo of understanding sent by Robinson to NAMA that helped to seal the loan-book sale.
Central to the deal which is now under scrutiny in three jurisdictions is the former Tughans’ partner, Ian Coulter, whose sudden departure from the firm early this year sparked correspondence to the Northern Ireland Law Society from the firm.
Coulter diverted the £7m fees due to Tughans to an offshore account which, Wallace said, was to be used for the benefit of a politician or a political party.
It later emerged that Belfast businessman, Frank Cushnahan, a former member of NAMA’s Northern Ireland Advisory Committee (NIAC), was to receive £5m for his role in brokering a sale of the assets to another US vulture fund, Pimco. Cushnahan was recommended for the position with NAMA by former DUP finance minister, Sammy Wilson.
Minutes of phone calls revealed by NAMA to the Stormont committee investigating the controversy show that Hamilton informed the agency in December 2013 that both Robinson and McGuinness had been updated on confidential briefings about the sale of the portfolio and in particular the bid by Pimco. McGuinness has rejected the claim that he was kept informed of the tender and sale process.
The Pimco bid collapsed after the suggested £5m payment to Cushnahan was disclosed to the Agency by the US firm in March 2014, just five months after he left his position with the NIAC. Pimco then withdrew from the process. Its rival Cerberus was awarded the tender.
Further complicating the inquiries is a claim by Belfast developer, Gareth Graham whose family owns Sean P Graham bookmakers that “inappropriate political relationships and potentially unlawful banking relationships” are at the heart of the disposal of lucrative assets in the North, including his own distressed loans.
At a dramatic hearing in early September Graham told the Stormont finance and personnel committee of Cushnahan’s “malevolent influence” over his company since he was taken on as an adviser in 2005 and more particularly since he was appointed to the NIAC in 2010.
He also claimed that Cerberus have adopted a “ruthless, unjust and unreasonable” approach towards his company since it acquired Project Eagle last year.
It has been suggested that Graham has been targeted for unfair treatment in comparison with the manner in which better connected developers and distressed property owners in the North have been treated.
It is this type of controversy which could foster fresh allegations of improper behaviour by some of the large number of asset managers, or vulture funds, that are buying up substantial loan portfolios from NAMA in Dublin and other centres across the country in some cases with developers whose hubris created the crisis in the first place.
Cerberus has bought up some €20bn in distressed assets in Ireland and across Europe over the past two years.
Another complication for NAMA is the revelation that Cushnahan shared a directorship with agency chairman, Frank Daly, on an obscure though well-funded and Dublin-based Catholic charity called Ciorani, for some years. Daly has said that his involvement in the charity is a private matter. •