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December - January 2017 1 3
A
S PUBLIC hearings at the Public
Accounts Committee into the contro-
versial sale of the Project Eagle
portfolio of distressed assets in
Northern Ireland and Britain come to
a close, its members are facing some difficult
choices with potentially serious political
implications.
However, the absence of key individuals who
have declined invitations to give evidence,
including of former Northern Ireland first minis-
ter, Peter Robinson, his former finance minister
Sammy Wilson, Ian Coulter of Tughans Solicitors
in Belfast, as well as of some unsuccessful bid-
ders for the €4.5bn property portfolio (sold for
€1.6bn to Cerberus) will make it extremely prob-
lematic to make definitive conclusions on a
number of matters.
Even more complicating is the absence from
hearings of the former member of the Northern
Ireland Advisory Committee of NAMA (NIAC),
Frank Cushnahan, and of the agency’s former
head of asset recovery, Ronnie Hanna, both of
whom have cited the ongoing criminal investiga-
tions in the UK by the National Crime Agency as
reasons for their absence as witnesses.
Without this pair, it is arguable that the final
PACing up
Public Accounts Committee needs to
answer serious questions in the absence
of key witnesses in Project Eagle
investigation
by Frank Connolly
NAMA executives could
not explain how Frank
Cushnahan sought
purchasers for Project Eagle
in November 2012 without
any senior executive of the
agency knowing
Frank Cushnahan
Peter Robinson
1 4 December - January 2017
NEWS
report and conclusions can only rely on a great
level of speculation as to the real motivation
behind the decision by the eventual successful
bidders, Cerberus, in paying a £15m success fee
to be divided between US law firm Brown Rud
-
nick, Tughans and Cushnahan which of course is
the most dramatic and questionable aspect of
the entire Project Eagle saga.
The PAC inquiry is based on the finding of a
report from the Comptroller and Auditor General
(CAG), Seamus McCarthy that NAMA could have
secured some €220m more from the sale of the
mainly NI-based assets, that it applied a greater
than expected discount to the buyer and that it
failed properly to investigate a series of appar
-
ent conflicts of interest involving key figures in
the transaction. The committee is restricted to
the parameters of the comprehensive and
detailed CAG report and to the broad question of
whether NAMA delivered the Irish people ‘value
for money’ from the purchase.
But what has emerged from the public hear
-
ings goes much further than this and opens up
a truly appalling vista if it emerges in time, fol
-
lowing the various investigations in the UK and
the US, and by the Bureau of Fraud Investigation
in the Republic, that the executives and board of
NAMA failed to uncover an attempt by a small
number of key insiders, in business and politics,
in the North to enrich themselves at the expense
of the state agency.
This was the thrust of the sensational claims
by Mick Wallace TD when he revealed the £15m
success-fee arrangement, in the Dáil in July 2015
and in much of the subsequent debate in the
House and at the Committee hearings into the
controversy while it is also central to the demand
by the opposition parties, including a somewhat
reluctant Fianna Fáil, for a full-scale Commission
of Investigation into the Project Eagle purchase
and sale.
When and what NAMA knew about the details
of this success fee were at the heart of the most
recent hearings of the PAC when further ques-
tions were put to its chairman Frank Daly and
chief executive Brendan McDonagh about this
crucial issue that goes to the heart of how the
property management agency dealing with bil-
lions in distressed assets across Ireland, the UK,
the EU and US has dealt with its awesome
responsibilities.
Under robust questioning by several commit
-
tee members including Josepha Madigan of Fine
Gael, Mary Lou McDonald and David Cullinane
of Sinn Féin and independent, Catherine Con-
nolly on 24 November, the NAMA executives
were put to the pin of their starched collars to
explain how Frank Cushnahan could have been
seeking purchasers for the Project Eagle assets
as far back as November 2012 without any senior
executive of the agency knowing about his
activities.
Cushnahan met Brown Rudnick along with Ian
Coulter to discuss the idea of finding a buyer for
the entire NI property portfolio in late 2012.
Cushnahan represented six debtors, mainly in
Belfast, who made up more than 50% of the
entire bundle of distressed commercial property
and residential assets and had declared some of
these interests under NAMA compliance
requirements.
It has emerged in recent correspondence from
PIMCO, the US fund which was forced to with-
draw from the sales process in March 2014 after
it revealed to NAMA that Cushnahan was to
share in the three way £15m success fee. Pimco
has also claimed that it was approached by
Brown Rudnick and introduced to Cushnahan in
April 2013.
PIMCO also asserts that Cushnahan set up a
meeting for PIMCO with the NI first minister Peter
Robinson and finance minister Sammy Wilson a
few weeks later, in May 2013. PIMCO also con
-
firmed in a letter in early November last to the
PAC that it was approached by Brown Rudnick in
June 2013 about a success fee, one third of which
was to go to Cushnahan. PIMCO went on to claim
that it sought assurances from Brown Rudnick,
whose then partner Tuvi Keinan was leading its
effort to secure the Project Eagle portfolio, as to
whether NAMA had been informed of, and
approved, the involvement of Cushnahan in the
planned deal.
During all of this time, and until 7 November
2013, Cushnahan was a member of the NIAC
which was chaired by Frank Daly and which
sometimes held its meetings in the offices of
Tughans solicitors in Belfast, where Cushnahan
occupied an office.
The NAMA executives claim that none of these
meetings or requests were raised by PIMCO as
it entered into discussions to purchase Project
Eagle between September and December 2013.
The discussions followed a request by Wilson in
a letter to his Dublin counterpart Michael Noonan
to consider PIMCO’s request to buy the entire NI
portfolio of NAMA in an exclusive deal that
would not involve the normal open tendering
process.
The board of NAMA did not agree to this exclu-
sivity requirement but allowed PIMCO to access
the virtual data room which provided details of
valuations, debts, borrowings and other essen
-
tial information on the properties included in the
Project Eagle portfolio. Daly told the PAC hear-
ings that it was not until March 2014, when the
sale was about to close, that PIMCO legal per-
sonnel advised NAMA executives, including the
key negotiator for the agency, Ronnie Hanna, of
the promised fee to Cushnahan.
Hanna, an executive of Ulster Bank in Belfast
before he joined NAMA, was familiar to Cushna
-
han and indeed to the other major players named
in various parliamentary hearings north and
south in connection with the deal. Cushnahan
was a close advisor to Robinson in the office of
first minister for several years. The refusal of
Hanna and Cushnahan to give evidence is thus
a fundamental flaw in the efforts by the PAC and
others to track the complete process of meet-
ings, discussions, email and telephone
communications that surround the Project Eagle
debacle.
When Hanna learned of the fee arrangement
he informed PIMCO that it would cause a prob
-
lem for NAMA and asked whether there was any
way around the problem that would allow the
sales process to continue. PIMCO, on advice
from its US based compliance officers, said that
it could not continue as it could breach US cor
-
ruption laws.
In his evidence to the hearings in November,
Daly contested much of what PIMCO asserted in
its recent correspondence to the PAC and
insisted that the first he and the NAMA board
knew of Cushnahan’s role over the previous two
years of discussions with different parties in
relation to the sale was during those phone con-
versations between 10 and 12 March 2014, after
which PIMCO withdrew from the sale.
Brown Rudnick then approached Cerberus to
pick up the pieces and the US fund came on
board to meet the reserve price set by NAMA of
almost £1.3bn having confirmed that no former
or current employee of the agency was involved
in their bid. It subsequently confirmed that it
paid an acquisition fee of £15m to Brown Rudnick
in order to ensure that it had sole access to con-
fidential data in relation to the portfolio. The sale
was completed in April 2014. Asked by Deputy
Cullinane about the circumstances leading to the
PIMCO withdrawal and the late entry of Cerberus
to the competition, Daly told the PAC:
“What was our focus at that time in March
2014? We were in the final stages of the
Nama’s Daly insisted that
NAMA was never informed
of Cushnahan’s significant
role in pushing the sale of
the NI portfolio after late
2012 and denied PIMCO’s
claim that it provided
the agency with details
of meetings it held with
Cushnahan and Coulter
starting in April 2013
December - January 2017 1 5
competition for Project Eagle. The main point
was that PIMCO were gone or exiting at that
stage. The main point was that we were making
sure Cushnahan did not get any money. The main
point was that in respect of Cerberus we were
ensuring, by means of a declaration, that Cer-
berus was not paying any fee to anyone
connected with NAMA”.
At the heart of the exchanges was the insist
-
ence by Daly that NAMA was never informed by
PIMCO, or anyone else, of Cushnahan’s signifi
-
cant role in pushing the sale of the NI portfolio
after late 2012 and of his refusal to accept a claim
by PIMCO that it provided the agency with details
of meetings it held with Cushnahan, Coulter and
others starting in April 2013. Attempts by NAMA
since April 2014 to find out from Cushnahan the
extent of any conflict of interest arising from the
deal or the fee arrangement, have met with
silence, Daly said.
Daly and McDonagh have disputed the CAG
suggestion that it could have obtained €220m
more from the sale, and claim that there was suf
-
ficient competitive tension in the bidding even
after the withdrawal of PIMCO, in March 2014, to
justify pushing ahead. They also insist that the
particular conditions in Northern Ireland, and
the reluctance of debtors to engage, made it
more realistic to have a quicker than normal sale
of the entire bundle of assets at a discount rather
than a piecemeal disposal over a number of
years.
Although it is not allowed to delve into a range
of other matters outside the parameters of the
CAG report, the members of the PAC would need
to be living on another planet if they are not
aware of hugely damaging allegations, including
taped interviews, which suggest that Cushnahan
was taking money from debtors in Northern Ire-
land while a member of the NIAC, and apparently
making promises of a light touch from NAMA in
return.
On one secret tape made by developer, John
Miskelly, Cushnahan is apparently heard naming
Ronnie Hanna as a key individual in NAMA who
was helping to ensure that debtors in the North
were not wiped out in the carnage that followed
the arrival of vulture funds into the Irish property
market.
Mick Wallace has recently revealed how a
businessman in the far east, Barry Lloyd, claims
he was approached by Cushnahan about the
property portfolio as far back as 2010.
The refusal of key politicians in Northern Ire
-
land to attend the PAC hearings is telling in itself.
Meanwhile in the South finance minister,
Michael Noonan, failed to intervene after he was
informed of the extraordinary withdrawal of
PIMCO in March 2014 and failed to make any
effort to stop or delay the process until the
potentially sordid details of the finder’s fee
arrangements were fully investigated.
Mick Wallace has
recently revealed details of
a businessman in the far
east who was approached
by Cushnahan about the
Project Eagle portfolio
Hercules/Wallace grapples Cerberus
