Nama Scandal: Agency boss ‘failed to protect public interest’
National Asset Management Agency chairman Frank Daly faced criticism from Public Accounts Committee (PAC) members yesterday as it heard explosive revelations about the sale of a huge property portfolio in the North.
Some £5m was to be paid to a former Nama adviser by a US equity fund if it won the bidding war for the loan book, members were told.
Frank Cushnahan was named by US bidder Pimco over a three-way split of a total £15m pot for getting the deal — called Project Eagle — over the line last year.
The others in line for payment were Brown Rudnick, the US law firm acting for the investors, and Tughans, the North’s third largest commercial law firm.
Nama disclosed the startling payoff to PAC as it probed allegations that £7m linked to the deal and “earmarked for a politician or political party” turned up in an Isle of Man bank account. The latter claim had been made by Independent TD Mick Wallace in the Dáil last week.
Nama said Pimco — one of nine global funds asked to show an interest in the 850-property loan package — told it about the “success fee” plan in March 2014, during the final days of bidding for Project Eagle.
Nama chairman Frank Daly said: “There was £15m and we understood there was £5m each.”
Under questioning from visibly astonished committee members, Mr Daly said: “I agree with your wow factor.”
The disclosure was made as the National Crime Agency announced it would lead a criminal investigation into matters surrounding the deal in the North.
Mr Daly said the £15m was destined for Mr Cushnahan, Brown Rudnick and “a managing partner” at Tughans.
Nama suggested it was not unusual that huge legal fees would be suggested for a deal of such a huge scale.
Nama CEO Brendan McDonagh also said it was “not strange” for people to try and “hawk themselves” around and be a “middle man”, in order to get a promotion fee.
He said the nine bidders, all household names in the capital world, had initially expressed interest in Project Eagle.
Brown Rudnick ultimately ended up working for Cerberus, the winning investment fund which eventually paid €1.6bn, while Tughans was sub-contracted and paid by the US lawyers.
Mr Cushnahan retired from Nama’s Northern Ireland advisory committee in November 2013 after being appointed in 2010 on advice from the North’s former finance minister, Sammy Wilson.
Nama said its main concern had been whether a former official or anyone linked to the agency, namely Mr Cushnahan, was involved in the bid or would be a beneficiary.
It sought and received assurances from Cerberus that this would not be the case.
Mr Daly said he became aware of Mr Cushnahan having an office in Tughans’ offices in September 2013, after he offered Nama use of the room during a meeting in Belfast.
Mr Daly said Tughans was one of the North’s largest legal firms and that Nama had only become aware of the close relationship between it and Mr Cushnahan in March 2014.
The Nama chairman later described how Finance Minister Michael Noonan had become aware of the £15m fee in the Pimco bid and was “alarmed” and “very concerned”. Nonetheless, Mr Noonan did not ask that the sale process be suspended, the committee heard.
Nama told the committee it understood fees paid by Cerberus to Brown Rudnick were shared with Tughans and that there was speculation this money found its way into the offshore account which held £7m.
But the agency stressed this money had nothing to do with it or the actual sale of the loan book, but rather the purchasing side.
However, the agency faced questions as to why it pushed ahead with the sale after freezing out Pimco and expressing concerns about the “success fee”.
“Our main concern all through this was the Frank Cushnahan element of this. He was a former member of the Northern Ireland Advisory Committee, that was the issue for Nama,” Mr Daly said.
Labour TD Joe Costello said it seemed that Pimco had waited until the 11th hour — just a month prior to the eventual sale being approved — before revealing the involvement of Mr Cushnahan in the deal.
Nama told the committee that Pimco had rung the agency and said an internal check by the company had “triggered” the revelation that Mr Cushnahan was involved in advising it. After this, Nama had called a board meeting where it was decided Pimco must withdraw from the bid.
Sinn Fein’s Mary Lou McDonald said there had been a belief out that there that Mr Cushnahan had being giving out advice about Nama from the offices of Tughans.
“Isn’t that quite some web?” she asked.
The deputy party leader said the repeated appearance of the same names in the bidding process was “incestuous” and an astonishing web of business and legal figures.
“The whole thing stinks to the high heavens,” she said.
Mr Daly denied this saying Nama’s main concern had been to get value for money, which he said the agency did.
But Ms McDonald said the property portfolio sale had been on his watch and queried if the process was properly overseen.
She asked how “in the name of God when it came to round two...how did alarm bells, like Big Ben, not go off in your head.”
Mr Daly defended the eventual €1.6bn sale of Project Eagle, saying Nama had got rid of Pimco but it could not control third parties involved in purchases.
But Ms McDonald disagreed and accused him of “demonstrably failing” to protect the public interest
