Two inquiries into Nama’s Project Eagle deal to be set up

Two separate inquiries into Nama are in preparation after the State’s spending watchdog found shortcomings in the sale of its Northern loan book.

The Comptroller and Auditor General said the sale led to probable losses of more than €200 million to the State.

The C&AG has found a number of shortcomings in "Project Eagle", the sale for €1.6 billion of Nama's Northern Ireland loan portfolio to American investment fund Cerberus in 2014.

An inquiry by the Dáil Public Accounts Committee will now proceed, while the Government said in a statement it would make preparations for a separate investigation.

Legal difficulties

Taoiseach Enda Kenny has invited Opposition leaders to meet with him today to discuss the nature and scope of an inquiry into the Project Eagle sale. Political sources suggest a commission of investigation headed by a judge is a possibility, though the cross-Border nature of Nama’s operations on Project Eagle presents legal difficulties.

The report, discussed by the Cabinet and then published yesterday, found that the process of selling the loans – secured on more than 900 properties in Northern Ireland, the Republic and the UK – differed in several respects from other Nama sales.

The C&AG also found that the price sought by Nama gave a return that was lower than the potential return for selling the loans differently and over a longer period. “The decision to sell the loans at a minimum price of £1.3 billion involved a significant probable loss of value to the State of up to £190 million,” the report found.

It was also critical of Nama's management of the potential conflicts of interest presented by the commercial relationships a member of its Northern Ireland Advisory Board, Frank Cushnahan, had with Nama borrowers and with a bidder for the Eagle portfolio.

Nama furiously rejected the C&AG’s findings, opening up a war of words with one of the State’s most trusted and independent agencies.

In a statement, Nama said its board “categorically” rejected the findings of the report and suggested that the C&AG staff were unqualified for the exercise they carried out.

Outside expertise

Nama chairman Frank Daly returns to this point in an article in The Irish Times today, where he says he is certain the report would have been different if the C&AG had hired outside expertise, as it had originally intended.

“It opted instead to use its own in-house staff, who from my experience are very capable and professional, but who unfortunately do not have any experience of loan sales,” Mr Daly writes.

The aggressive and determined response by Nama puts the Government in the middle of a row between two of its most important agencies. Yesterday, Minister for Public Expenditure Paschal Donohoe said the Government accepted the report findings, but insisted it had confidence in Nama.

Chairman of the Public Accounts Committee Seán Fleming announced the PAC would host a series of meetings beginning on September 29th to examine the report.

Both Fianna Fáil and Sinn Féin called for a commission of inquiry, while Sinn Féin also said that all Nama sales should be immediately stopped.

Independents for Change TD Mick Wallace said that the proceeds of the sale should be frozen under the proceeds of Crime Act.