The arrest of two men in connection with the criminal investigation into the sale of Project Eagle, the single largest disposal of Irish state assets, has discharged a seismic shock through the establishment, north and south. So shocking indeed that the government and large sections of the media have been caught napping, unable to explain the real context of the unfolding controversy that threatens the credibility of the National Assets Management Agency (NAMA) and a number of senior politicians, unable to see that the story threatens to enmire NAMA in Dublin and its defenders at the top of the Fine Gael party.
Ronnie Hanna, a former head of asset management at NAMA in Dublin and Frank Cushnahan, a former member of the agency’s Northern Ireland Advisory Committee were arrested by police who also seized documents and computers during raids on a number of properties in Belfast.
Village has learned that the arrests came just days before the BBC ‘Spotlight’ programme was due to reveal fresh information concerning the role of both men in the Project Eagle saga. The arrests of the two men by the NCA forced the cancellation of the programme, for legal reasons.
On Thursday, 2nd June, the Irish News reported that Hanna and Cushnahan had been arrested two days earlier by the National Crime Agency (NCA) and were being released on bail “pending further enquiries”.
It was the only news organisation to identify those arrested although, in its report, the Irish Times mentioned the pair as having been previously named in the Dáil by Mick Wallace in connection with the Project Eagle controversy.
In June last year, Wallace sensationally alleged that a sum of £7m “reportedly earmarked for a politician” had been moved to an Isle of Man bank account during NAMA’s sale of its £1.24bn (€1.6bn) Northern Ireland property portfolio to US firm, Cerberus, in 2014.
Under Dáil privilege, he later named Cushnahan and Hanna as having had discussions with bidders for the Project Eagle portfolio in advance of the sale.
Hanna left NAMA in late 2014, six months after the controversial disposal, but his role in the sale of the massive portfolio of distressed property assets continues to haunt him and his former colleagues in the agency. The transaction has also been the subject of investigation by the Securities and Exchange Commission of the US Department of Justice, the Stormont finance committee and the Law Society in Belfast.
In February, the Spotlight programme broadcast secretly filmed footage of Cushnahan claiming that he was to be the beneficiary of monies held offshore in connection with the deal and poured lavish praise on Hanna for the support he gave to distressed property owners in the North. It now appears that further information about his and Hanna’s role has emerged through the BBC investigation led by journalist, Mandy McAuley.
The Project Eagle affair has already damaged the reputation of a number of senior business and political figures in the North and contributed to the unexpected resignation of Peter Robinson as First Minister and leader of the DUP in late 2015.
This followed a barely disguised warning from the Sinn Féin leader, Gerry Adams, to Robinson that if he did not get the suspended political institutions up and running at Stormont he would find himself embroiled in the ongoing international investigations into the disposal of Project Eagle to Cerberus. Adams notably travelled to meet the New York State Comptroller to brief him on the controversial deal. Cerberus executives were then invited to a meeting to face a series of embarrassing questions from the Comptroller about the claims that massive fees had been paid to third parties in relation to the huge property acquisition.
The reverberations from the controversial deal were not as loudly felt in Dublin where the Taoiseach, Enda Kenny, finance minister, Michael Noonan and NAMA chairman, Frank Daly, have continued to insist that there is nothing to see here and that the agency, or its officials, were not involved in any inappropriate behaviour in respect of Project Eagle.
In May, NAMA threatened to sue TV3 over comments it hotly disputes, made during the Vincent Browne ‘Tonight’ programme which suggested that Cushnahan and Hanna were present at a meeting with Cerberus executives just before the agency set a reserve price of £1.24bn for the portfolio. Cerberus purchased it for £1.241bn. According to Mick Wallace, no other bidder enjoyed such access to NAMA and the main underbidder, the US fund Fortress, has complained about the manner in which the sales process was completed.
Following the latest arrests, NAMA and the government have come under renewed pressure to reveal any further information about potential conflicts of interest arising from the transaction. The heat is also coming on Kenny and Noonan for their role in the affair and, in particular, the decision of the finance minister to allow NAMA to proceed with the disposal in early 2014, despite being informed of massive fee payments being sought by individuals involved in the transaction.
On Tuesday 31st May, after news of the arrests emerged, Kenny refused a call by Gerry Adams for the establishment of a Commission of Inquiry into the sale and purchase of Project Eagle.
Kenny said: “The Minister has made a full statement already and there has been quite a deal of discussion at the various Oireachtas committees on the question on NAMA. NAMA personnel at the highest level have responded and given much time on different occasions to discuss these matters.
If two people have been arrested, they have been arrested on suspicion of particular charges and I expect that the court system in the jurisdiction in which they were arrested will follow through on arresting them in the first instance. Obviously, it is not for me to comment on the court system of a different jurisdiction. If they have been arrested, I assume that it is for good reason in respect of activities that would be outside the law. I trust that this will see itself through that process and be judged before the courts”.
In a later exchange (included at length on page 12) the Taoiseach added that from the perspective of NAMA:
“There is no allegation of wrongdoing against NAMA. NAMA has done nothing wrong. It has been completely in compliance with the law and the conditions it was set up under. Coming in and asking for another commission of investigation about this is not the way forward. There is no allegation of wrongdoing against NAMA…”.
The statement did not address the serious issues outlined by Adams, Wallace and others in the Dáil over the past year or more since the sale of Project Eagle to Cerberus in the Spring of 2014. It is utterly wrong to say there is no allegation of wrongdoing against NAMA, when a central figure to its Dublin operation has been arrested, in the North. The figleaf the Taoiseach and Michael Noonan sought, that there was no taint on the southern operation, has now been blown out of the water.
Just weeks before the sale was completed in early 2014, NAMA was informed by another interested bidder, US firm Pimco, that it had been asked for a £15m success fee to be divided between US law firm Brown Rudnick, Belfast solicitors Tughans and Cushnahan, in connection with its tender for Project Eagle.
NAMA informed Noonan of this massive sidepayment request but instead of halting the process immediately, the finance minister insisted that the largest sale of property assets in the history of the state should proceed. Pimco withdrew from the process on the instructions of its compliance officers in the US. The law firms moved on to work with Cerberus on the deal.
Cerberus purchased the portfolio. It then emerged that over £7m had been lodged by lawyers acting for the US firm in the Isle of Man account. The money was lodged by then Tughans partner, Ian Coulter, and according to Wallace in June 2015 was intended for Cushahan and other Belfast professionals as well as a leading politician or party. In the secret BBC recording broadcast in February, Cushnahan claims that he and Coulter put the Cerberus deal together but his role was kept secret from NAMA.
It has since emerged that Cushnahan and Hanna had dealings with Mike George, a senior executive of Fortress, the underbidder as far back as December 2012.
In the coming days and weeks we can expect to see more pressure piled on the government on this issue. An attempt may be made by Sinn Féin, smaller parties and independents including Wallace and Clare Daly to muster support for a motion calling for a Commission of Inquiry.
Given its unspoken agreement with the government, Fianna Fáil may not want to add to Kenny’s discomfort over Project Eagle but to refuse would be in contradiction to its own, similar and unsuccessful motion, which was voted down by the previous administration. In recent days, Micheál Martin has repeated a call for a commission of inquiry into the deal.
In the North, meanwhile, the new Sinn Féin finance minister, Mairtin O Muilleoir, unlike his DUP predecessor can be expected to assist the various inquiries underway into the sale and purchase of Project Eagle. NAMA has confirmed that it took a hit of €280m on the sale.
Dáil Transcript Tuesday 31st May 2016
I understand the British National Crime Agency has arrested two people today as part of its investigation into NAMA’s Northern loan book, known as Project Eagle. For years now Sinn Féin and others have raised concerns about the sale of NAMA’s loan books, including the sale and purchase process for its Northern loan book. The Taoiseach and the former Tánaiste, Deputy Joan Burton, have accused the Opposition of conflating the matter. Deputy Joan Burton described it as just a “Northern tale”. I put it to the Taoiseach that it is actually a national scandal and a disgrace. The sale and purchase process for NAMA’s Northern loan book has been the subject of serious allegations. It has been alleged that, as part of a cosy cartel that was in operation, insider trading took place, that payments were made to a golden circle and that illegal fixer fees were paid. This was brought to the attention of NAMA by a potential US bidder, Pimco. NAMA previously claimed that its Northern advisory committee was not privy to confidential information on the sale, but it has since been disclosed that the committee discussed potential purchasers on at least two occasions before the loan book was sold at a huge loss to Irish taxpayers.
There are investigations in the North by the National Crime Agency, NCA, the law society and revenue. There was an Assembly inquiry which found the Government’s approach very unhelpful. There are also investigations in the USA by the Securities and Exchange Commission, the FBI and other authorities. However, there is no investigation here. In this State, the Minister for Finance, the Government and NAMA have closed ranks. The chairman of NAMA, Mr. Frank Daly, said he briefed the Minister in full, including on the scandal of a fixer fee of £15m sterling, which is totally irregular and illegal. Despite this, the Minister failed to suspend the Project Eagle sale process or to inform the office of the First Minister or Deputy First Minister. The Assembly inquiry noted this failure with regret. This is a public interest matter, which must be fully investigated.
…I have seen this happen to the Taoiseach in that every so often an issue comes up but for all of his cleverness and skills as a politician, he is like a rabbit caught in headlights. This is a huge issue. There needs to be transparency, confidence and accountability. Why not depoliticise it? Why not simply open it up to those of us in the Oireachtas? The people have suffered grievously because of the kinds of activities involved in selling off what were the people’s assets. Given the mounting public concern across the island, will the Taoiseach now commit to establishing a commission of investigation into the sale of Project Eagle?
No, I will not. There has not been any allegation of wrongdoing against NAMA.
…The Deputy informs me that two people have been arrested. I assume they have been arrested for good reason. Representatives of NAMA have appeared before the Committee of Public Accounts and have given very lengthy statements. They have been crystal clear and that from their perspective, there is no allegation of wrongdoing against NAMA. NAMA has done nothing wrong. It has been completely in compliance with the law and the conditions it was set up under. Coming in and asking for another commission of investigation about this is not the way forward. There is no allegation of wrongdoing against NAMA and at the highest level…
Representatives of NAMA have appeared before the Committee of Public Accounts and have given their statements and answered questions at length on all of these issues, and more than once.