Now that the long-awaited Commission of Investigation into the sale of Project Eagle has been conceded it remains to be seen which players will actually be on the pitch when the inquiry is finally convened. As predicted by Village several months ago, there was no chance that Enda Kenny or Michael Noonan would still be in power by the time any inquiry into the controversial deal came around. Indeed it might be considered a success on their part that the decision to hold an inquiry was delayed until they had a foot out the door of government.
The flip-flopping by Fianna Fáil on the issue also contributed to the government’s foot-dragging and it was only the resounding criticism of NAMA’s handling of the €1.24bn sale of its Northern Ireland loan portfolio by the Committee of Public Accounts (PAC) that made a judicial inquiry inevitable.
Former High Court judge, John Cooke, will have his hands full when it comes to ensuring that the investigation does not run well past its current deadline of late 2018 to deliver its report given the number of modules that have been demanded by various parties and independents who contributed to recent Dáil debates on the subject. While the Fine Gael members are determined to restrict the inquiry to the Project Eagle disposal by NAMA to Cerberus, which the Comptroller and Auditor General (C&AG) criticised for leaving the public purse short some €220m, opposition parties including Sinn Féin and independen
ts, most notably Mick Wallace, want a much more wide-ranging investigation.
The PAC, which spent weeks last year interrogating the C&AG’s ‘value for money’ analysis, had much narrower terms of reference than those now demanded given the extent of the revelations that have emerged in the North about some of those who were seeking to make huge sums of money from the Project Eagle sale. A number of BBC Spotlight programmes, in particular, shone a light on the activities of Frank Cushnahan, the former member of the Northern Ireland Advisory Committee (NIAC) of NAMA, who was recorded accepting bundles of cash totalling €40,000 in car park of a Belfast hospital in 2012 from developer, John Miskelly, one of the agency’s debtors to whom he was offering consultancy advice.
Cushnahan was recorded telling Miskelly during a secretly taped meeting, how he was “thick as thieves” with Ronnie Hanna, the then Head of Asset Recovery at NAMA, whom, he said, was doing his best to help developers in the North salvage their distressed loans. Among a range of other matters, these tapes were outside the remit of the CAG and the PAC but their contents will surely be examined by the Commission when it finally convenes.
However, as Wallace has argued during the first debate on the terms of reference last month, there are also the matter of leaks of allegedly confidential information from NAMA, the conflicts of interest involving not just Cushnahan but former employees at the agency and the sale of other large bundles of public assets to global funds which have come under question.
The latest of these to come to light is the sale of Project Shift, a portfolio containing loans associated with supermarkets in Germany which was disposed of to Cerberus by NAMA as part of the larger Project Eagle loan book in 2014. Wallace alleged last month that Cerberus was involved in discussions to purchase Project Shift for £76m before the entire Northern Ireland loan book was put up for sale and that it knew the price which NAMA was seeking for it. When it was later included in the Project Eagle portfolio sale, it had a competitive advantage over the underbidder, Fortress, as it could factor in the German retail assets in its tender.
The Wexford TD also claimed that another former NIAC member, Brian Rowntree, had confirmed that the advisory committee had not discussed the sale of Project Shift:
“Fortress was bidding on Project Eagle without the knowledge that a minimum of €76 m would be taken off the price of the portfolio. Is this not a form of insider trading? Cerberus had non-public knowledge that the price for Project Eagle would be lower”, Wallace told the Dáil in late May.
“Fortress did not have this knowledge. Why did NAMA not write to all bidders who signed non-disclosure agreements at the start of Project Eagle and inform them that a debtor was sale agreed for €76m and that it may be removed from the price? I have written to the Committee of Public Accounts today to ask them to examine all aspects of Project Shift”.
NAMA confirmed that Cerberus had agreed with the agency to convert Project Shift into a loan sale after it selected the US fund in April 2014 as its preferred bidder for Project Eagle.
The Commission of Investigation will also be hampered, as was the PAC, by the difficulty in getting key figures to co-operate with its inquiry or to appear at public session as Cushnahan, Hanna, Belfast solicitor, Ian Coulter and others have previously cited the fact that they are prevented from public comment about their role in the Project Eagle purchase due to the ongoing criminal investigation by the National Crime Agency in the North. Other investigations by the FBI and the Securities and Exchange Commission (SEC) of the Department of Justice in the US will, no doubt, be a reason for other potential witnesses from that side of the Atlantic declining to give evidence to the commission.
On 1 June NAMA chairman, Frank Daly, told RTÉ that the agency was ready to provide any information required by the Commission but insisted that it would not be changing its criticism of both the C&AG and PAC findings. Accusing the C&AG of failing to have the required financial expertise to examine the Project Eagle sale, Daly rejected its finding that NAMA lost €220m on the deal. He also denied that it had ignored evident conflicts of interest involving Frank Cushnahan, who had declared as far back as 2012 that he was advising six debtors who made up more than 50% of NAMA’s entire Northern Ireland loan book.
Daly also countered those who were critical of the agency for selling off assets too quickly and in excessively large bundles, to vulture funds. He said that without adopting that strategy the agency would not be in its current position where only €500m of senior debt remained from the original €32bn it paid for loans transferred from the main Irish banks in 2009 and 2010.
Asked whether more than €18bn more could have been obtained from the massive sale of Irish property assets, as suggested by property developer, David Daly, if it had been done more slowly, the NAMA chairman said that its strategy was the correct one when it came to bringing down the country’s debt mountain. He said that he had rejected the approach of developers who offered to repay their debts over a five or ten year period based on their own business plans.
“You don’t repay it by sitting on your hands and doing nothing and trusting that those who got us into this mess would get us out of it”, Daly told RTÉ’s Sean O’Rourke.
He also rejected a claim by house-builder David Daly that NAMA had contributed to the housing emergency by calling in performing as well as bad loans from developers which effectively closed down his business as well as that of many others.
Frank Daly also said that NAMA would return a surplus of €3bn when it closed its doors in 2020 although he accepted that it would be difficult to offload the remaining €4 bn in distressed loans still on the books of the agency.
It is now almost two years since Wallace told the Dáil of the £7m placed in an Isle of Man account for the benefit of a small circle of business people and politicians in the North in connection with the Project Eagle sale. The delay in establishing a Commission of Investigation into Project Eagle because of the procrastination of the Government and Michael Noonan, in particular, will ensure that NAMA will be well on the road to dissolution by the time its findings are published.
It also emerged in early June that the agency had chosen Mazars to audit its books and confirmed that the C&AG would no longer act as its only auditors. It justified this on the grounds that the State’s accountant can only audit ‘not-for-profit entities’. The C&AG has not accepted this explanation arguing that it was never intended for NAMA to make a profit.
By Frank Connolly