OPINION: Five questions for PAC to ask over €5.7bn Project Eagle sale

The controversy started over disputed legal fees at the Belfast law firm Tughans involving £7m (€9.8m) held in a secret account on the Isle of Man.

That led to allegations that a large slice of the hidden monies was earmarked for local ‘fixers’ and a local Northern Ireland politician for their work on a deal.

That the deal-making involved an auction of €5.7bn of loans held by Nama on behalf of the state — Ireland’s largest sale of distressed boom-time loans — has sparked a furore of intense public interest.

The PSNI last night started a criminal investigation. But for the allegations in the Dáil made last Thursday by TD Mick Wallace, the public would still be in the dark about a huge Nama auction, codenamed Project Eagle.

The auction was only completed last summer, when Nama signed off on the deal that affirmed Cerberus — the giant US fund — as the purchaser of the Project Eagle northern loans. It won the auction paying a heavily discounted price of €1.6bn. In Belfast, the inquiries by the Stormont Finance Committee — which met on Monday and plans swiftly to get down to business next week — is focused on the identities of the intended recipients of the large chunk of the monies held on the Isle of Man.

Stormont wants to talk to Ian Coulter, the former managing partner, of Tughans who the firm reported to the Law Society of Northern Ireland as the sole controller of the Isle of Man account. Among many others, the committee also wants to talk to the former advisers to Nama on its Northern Ireland Advisory Committee.

Q1. But the first question for John McGuinness’s PAC is whether it believes it has sufficient powers to investigate these matters? Does he suspect his committee is being used by the Government to deflect calls for a full inquiry into what a northern politician has described as a “murky scheme”? Before news broke of the PSNI investigation, the Government was relying on PAC and inquiries in a separate jurisdiction to get to the bottom of serious allegations.

It is a racing certainty that Nama board directors won’t attend its hearings when Stormont’s official invitations reach Treasury Buildings in Dublin.

Q2. The second question for PAC is whether it can unveil the role played by US lawyers Brown Rudnick, who signed up Tughans as its local legal representative. At the start of the Nama sale Brown Rudnick was engaged by another rival US bidder, the giant Pimco. That company confirmed this week that it left the field in March 2014 after it revealed to Nama its concerns relating to unnamed third parties.

It appears Nama was shocked to learn that its proposed fee arrangement may have included a former adviser on NIAC. Brown Rudnick — soon after, perhaps only days after Pimco’s exit — was then engaged by Cerberus for its bid. Brown Rudnick this week said after hiring Tughans it agreed “to share with Tughans our fee from Cerberus and this arrangement was disclosed to both Cerberus and Nama.” PAC should question the fee arrangements — proposed or otherwise — that Brown Rudnick struck with Pimco and then Cerberus. Brown Rudnick told the Irish Examiner this week that it was “fully supportive of efforts to clarify the issues.” Meanwhile, Cerberus has said it was “deeply concerned” by the allegations.

Pimco says it voluntarily withdrew from the bidding.

Q3. PAC should ask Nama the identities of the bidders left standing after Pimco left the field in March 2014. Nama has said that Cerberus submitted the highest bid.

The agency stands behind the integrity of the process. How can Nama be sure that Pimco’s exit did bot lessen competition? Should Nama have postponed the sales process, in March 2014, when it learned about the fee arrangements proposed by Pimco?

Cerberus acquired €1.6bn of loans secured on 850 properties, including large swathes of new Lagan-side office blocs in Belfast city centre. Industry sources have told the Irish Examiner that Belfast property values have since soared by 20%.

Q4. PAC could ask Nama why it didn’t secure a deal involving its participation in any potential upside in property prices?

Q5. The Project Eagle sale brings into question the Government’s decision-making that led to it advancing the schedule for Nama to wind down its huge portfolio.

Unfortunately, the Government’s decision has also led it into huge controversy and unanswered questions on the Project Eagle sale.