Project Eagle: Inside the £1.24bn Nama deal in the North

Peter Murtagh on the threads that link rival US funds, Northern politicians, legal firms and middlemen to the property sell-off that cost the State hundreds of millions

Moving east out of Belfast, the terraced houses in the lee of the now silent cranes of the Harland and Wolff shipyard gradually yield to the leafy, middle-class suburbs of Knock, Stormont and Dundonald.

On the far side of Dundonald, on the Comber Road, a new housing estate is emerging, one of the largest constructed to date in Northern Ireland. It is called Millmount Village and eventually it will cover a 90-acre site and be home to some 700 detached, semi-detached and terraced houses.

Those already built, about 90, are stylish – “a fusion of tradition and contemporary”, as the advertising patter puts it. They are an elegant mix of red brick, stucco, front-facing gables, rectangular bays, shrubs and patches of lawn.

It was with a verbal flourish that Lagan Homes announced, on September 8th, the new phase of the £120 million development.


"The project is good news for both the growing demand for family homes in Belfast and for the building sector with local tradesmen and operators being employed on the site for the next 10 years," gushed the company's managing director, Conor Mulligan.

The Millmount Village site is intimately connected to Project Eagle, the name given by the National Asset Management Agency to the sale of its entire Northern Ireland property portfolio – actually, a collection of more than 900 properties, half of them physically located in Northern Ireland but almost 40 per cent of them elsewhere within the United Kingdom, mostly outside London.

Fifty-six debtors – individuals and companies – were associated with the £4.5 billion worth of loans secured against the properties taken over by Nama as a result of the property crash and the banking collapse it precipitated.

It is somewhat ironic that Millmount Village should emerge from the miasma and fog surrounding Project Eagle on the very day after BBC Northern Ireland current affairs programme Spotlight broadcast the latest of its ground-breaking revelations.

In this new and grubby instalment, viewers listened to a surreptitious recording of Frank Cushnahan. He is an associate of former first minister Peter Robinson and, as a member at the time of Nama's Northern Ireland advisory committee, was one of Project Eagle's most senior figures as Nama's main man in Northern Ireland.

What was on the tape was Cushnahan accepting £40,000 – "in bundles of two" – from John Miskelly, a developer whose assets had been taken over by Nama.

The August 2012 payment was, as far as Miskelly was concerned, to assist Cushnahan in sorting out his (Miskelly’s) problems with Nama.

“Nobody else knows now?” Cushnahan asks Miskelly as he takes the cash in a bag sitting in his, Cushnahan’s, Jaguar car. “Nobody?” he repeats.

Miskelly assures him that their secret is safe. Cushnahan goes on to tell Miskelly: “Don’t worry, I’ll work with Ronnie. See, the great thing is we have Ronnie.”

Ronnie was Ronnie Hanna, a former senior banker with Ulster Bank but then head of asset recovery at Nama – the man charged, perhaps more than any other single individual within the agency, with getting the best deal out of the property mess for the Irish taxpayer. Hanna has denied any wrongdoing on his part.

Lobbying Nama

Long before the birth of Project Eagle, business and politics in Northern Ireland were moving in concert to try to sort out the property mess there. As loyalist campaigner and blogger Jamie Bryson told the Northern Ireland Assembly's committee for finance and personnel, as early as 2012, the North's then finance minister Sammy Wilson was lobbying Nama about the Millmount site.

Much that is known now about Millmount shows it to be emblematic of the links and relationships, long-standing and temporary, that attend much of what has gone on inside Project Eagle.

The Millmount site was owned originally by Noel Murphy and Adam Armstrong, two of the three names behind the MAR Group (the other being William Rush). In 2007, Murphy and Armstrong sold Millmount to another Northern Ireland developer, the brothers Michael and John Taggart, in a £96 million deal financed by Anglo Irish Bank.

According to Bryson, the Taggarts were already sinking, a fact that should have been known – must have been known, according to him – to Anglo. The fact that less than a year later the Taggarts did indeed go bust lends credence to this view.

“Anglo had effectively financed a company that was heading for administration to purchase the Millmount site,” Bryson said in evidence to the Assembly committee last September. “The site was then placed under the control of an administrator chosen by Anglo Irish,” he said. “This administrator, along with Anglo Irish Bank, came to an agreement which would have resulted in Lagan Homes developing the site.”

Lagan Homes is owned by Kevin Lagan, who is involved in at least one joint venture, Lagmar Properties, with Noel Murphy.

However, with the nationalisation of Anglo in 2009, its metamorphosis into Irish Bank Resolution Corporation in 2011 and the parallel creation of Nama, the development of Millmount, the loans for which were now in Nama, was thrown into doubt.

Enter, on behalf of Lagan, Gareth Robinson, son of former first minister Peter, one-time DUP councillor for Castlereagh and owner of Verbatim Communications, a public-relations company for which he appears to be the only asset. By 2012, Gareth Robinson's efforts were bearing fruit as Wilson went into overdrive on behalf of Lagan Homes.

It is unclear, as Bryson has acknowledged, whether credit goes to Gareth Robinson or Wilson but in April 2013, Nama released £9 million which allowed Lagan begin the Millmount development.

‘Highly confidential’

The extent of Wilson's efforts to sort out the problems for Northern Ireland property and developer interests caught up in Nama is apparent in a letter to him, marked "Highly Confidential" and dated June 24th, 2013, from the London office of Brown Rudnick, a US law firm that specialises in serving major corporations, banks, fund managers, and governments.

As one lawyer familiar with the saga of Nama and Northern Ireland puts it, the June 2013 letter is the “Genesis of what became Project Eagle”.

The letter was written by Tuvi Keinan, described by Brown Rudnick as a partner in the firm and head of their “special situations team”. Keinan, a former chief financial officer for Morgan Stanley real-estate investing group, is a US-qualified lawyer and at Brown Rudnick specialises in property deals above $200 million in value.

His letter to Wilson followed discussions between the two. Keinan said Brown Rudnick had two clients who “have each confirmed that they would, independently, be committed to a process of a potential outright purchase of the Nama Northern Irish Borrower Connections Loan Book”, the internal Nama title for the Northern Ireland property portfolio.

A lawyer seeking, in the US, to represent two clients at the same time would be highly unusual, to say the least, but nonetheless, Keinan wrote that “one in particular is highly committed and will be well known to Nama as highly competent”.

Although not identified at the time, one of the two clients was Pimco, the Pacific Investment Management Company, a California-based fund with assets of $1.5 trillion which eventually became the opening bidder for Project Eagle.

Keinan’s letter said Brown Rudnick’s client/clients wanted to move as fast as possible, on a “cash only” basis, and a “short 4 week due diligence process” for the top 20 loans. The letter said that if the entire Nama Northern Ireland stock could be bought in a single transaction, local suppliers – trades people and professionals – would be used by the purchasing fund to maximise the value of the deal for the Northern Ireland economy.

Perhaps crucially, the letter also said that “all contingent liabilities and/or personal guarantees from the Borrower Connections would be capable of being released. Consequently, the underlying assets, which are the principal subject of the underlying debt, would be retained as security and the existing guarantees will no longer be impeding borrowers from undertaking new business ventures.”

“He’s saying the magic words,” commented one insider who has made a detailed study of the evolution of Project Eagle. “He’s saying the magic words: ‘We don’t need personal guarantees.’ He was boxing off political support.”

Why Brown Rudnick approached a government minister in Northern Ireland on a matter over which control rested with a State institution in another jurisdiction, the Republic, is not clear. However, the very day Wilson received the Brown Rudnick letter, he wrote to Minister for Finance Michael Noonan, recommending acceptance of the the overture, copying the letter to him and suggesting that he had already met the two potential investors mentioned by Keinan.

Noonan’s reply (it took him and the department a full month to write it) pointedly said that anyone interested in buying loans from Nama should make direct contact with Nama and that “as Brown Rudnick will be aware” it was Nama policy that loans “should be marketed openly”.

Pimco went ahead and tried to buy Project Eagle, using Brown Rudnick as its US law firm and Tughans, a Belfast law firm, as its lawyers in Northern Ireland. The solicitor who handled Pimco's affairs in Tughans was Ian Coulter.

On December 4th, 2013, Pimco submitted an indicative bid to Nama, saying it would pay between £1.1 billion and £1.3 billion for everything in the Project Eagle portfolio. Eight days later, Nama announced it would accept bids of more than £1.3 billion, Pimco’s upper figure, and sat back waiting for takers.

As part of their bidding and internal accounting, Pimco set aside £15 million for what was, in effect, a success fee. Apparently not widely known within the company at the time, the fee was to be divided between Tughans, Brown Rudnick and Frank Cushnahan, who had resigned his Nama position in November 2013 only to re-emerge shortly after as an adviser to Pimco.

Of the £15 million, £5 million was pencilled in for Cushnahan.

Conference calls

In early January 2014, if anyone in Nama had any doubts about the support within the government of Northern Ireland for the Pimco bid, they must surely have been banished after two conference calls between the key players, North and South, suggesting both unionist and Sinn Féin support for what was being proposed.

The call was between Simon Hamilton, Wilson's successor as Northern Ireland minister for finance, and Nama chairman Frank Daly. In a conversation for which a record exists in Dublin, Hamilton told Daly that both Peter Robinson and the North's Deputy First Minister, Sinn Féin's Martin McGuinness, supported the proposed Nama deal with Pimco.

That call was followed some days later by another, this time between, on the Northern side, Robinson, McGuinness and Hamilton, and, on the Republic's side, by Noonan, Hanna and Declan Reid of the Department of Finance.

A record of this conversation is also understood to exist.

In that conversation, it was stated by the Northern side that a memorandum of understanding with Pimco over the imminent sale of Project Eagle to the company had been circulated to members of the Northern Ireland Executive, including McGuinness.

The conversation is remembered by some for its lighter moments, including a quip by McGuinness to Noonan – “Now Minister,” he is reported to have said, “its time you stood up for the Ulstermen” – an apparent twist on the green jersey edict of the dying days of the Celtic Tiger, merged with the then titanic struggle between the Ulster and Munster rugby teams.

By the end of January, Nama told nine bidders that they were in with a chance. By early March, this number had been whittled down to three – Pimco, Fortress and Cerberus – by Nama’s advisers, Lazard, the international financial advice and asset management company.

But just as Lazard narrowed down the bidders, a red flag was raised inside Pimco.

Any US-based company involved in trading stocks, managing funds and doing such business internationally rides roughshod over the Foreign Corrupt Practices Act (FCPA) at its peril. It is one of the most powerful tools available to US law-enforcement agencies against bribery. In simple language, it prohibits giving a benefit to a foreign official that could confer an advantage on the giver.

Any US company, or its agents, suspected of breaching the Act is likely to find the Securities and Exchange Commission (SEC), the US justice department, attorneys general and the Federal Bureau of Investigation crawling all over them.

Inside Pimco, the company’s bid for Project Eagle was going through its compliance department for final checking when concerns were raised over the proposed £15 million payment to Brown Rudnick, Tughans and Cushnahan. There are differences of emphasis as to what happened next: Pimco says it withdrew at its own volition; Daly says it was shown the door by the Nama.

Last July, to the Committee of Public Accounts, Daly said: “On 13 March, 2014, Pimco informed Nama that it would withdraw from the Project Eagle process. I understand that in recent days Pimco has disputed the facts as outlined above and suggested that its withdrawal from the sales process was voluntary. I do not propose to enter into a debate with Pimco as to the meaning of the word ‘voluntary’.”

Pimco questions

A different picture emerges from the report into Project Eagle by the Comptroller and Auditor General (C&AG). In a detailed appendix, appendix E, the report reveals how, during a series of phone calls to Hanna, it was Pimco that first raised questions about the £15 million payment being split three ways and Pimco that said it was unacceptable.

Pimco asked Hanna if he knew that Cushnahan, Nama’s former man in Northern Ireland, “stood to gain” if the deal went through; Hanna said Nama was unaware of this. Pimco said that while a success fee was not of itself unusual, inquiries by its legal and compliance unit revealed the three-way split between Brown Rudnick, Tughans and Cushnahan.

The Tughans part of the fee was to be paid to an individual in Tughans whose identity was known to at least some in Pimco.

Pimco “wanted to be transparent”, said the company.

Hanna asked if Pimco would proceed with the purchase of Project Eagle if “what had been outlined was an issue for Nama”, according to the C&AG report.

“Pimco confirmed that its legal due diligence would not proceed until Nama’s position was clarified and that, if Nama considered the fee arrangement to be an issue, Pimco would have concerns over continuing to deal with the three counterparties and would have to consider if the transaction could be processed without their involvement,” says the report.

Nama’s board met on March 11th, 2014 and, according to Hanna, viewed the fee arrangement “to be a very serious issue”, a view he passed to Pimco by telephone.

Later that evening, Pimco called back and “expressed its disappointment that disclosures of interest had not been made by relevant parties to Nama”.

“Pimco stated that it did not want to remain in a process that could be associated with impropriety for either Pimco or Nama and that it was willing to withdraw completely from the process,” says the C&AG report.

Hanna mentioned the possibility of “other options”. When Pimco asked what this meant, Hanna replied that maybe the deal could be “shaped differently for the arrangement fee to come out”. (In a footnote to the C&AG report, Nama disputes this, claiming the comment had been reported out of context and that it had been made by Hanna during an earlier exchange the day before.)

On March 12th, Pimco told Nama during a conference call “that it had no option but to withdraw from the process” and that it could not see “how any ‘change’ would allow the organisation to continue with the transaction”.

But if the spat over the questionable £15 million payment and Pimco’s withdrawal came as a jolt, an even more startling surprise was in the offing.

Legal teams

Extraordinarily, within days of Pimco’s departure, its legal teams of Brown Rudnick and Tughans had been retained, lock, stock and barrel, by rival Cerberus, which was declared the winner, less than a month later on April 3rd with a bid of £1.241 billion.

Whatever implications remain for Pimco and the fact that, inside the company, someone was willing to pay some £5 million to a vested interest (Cushnahan) before the company's internal checks spotted the potential breach of the FCPA, the SEC-FBI investigation is also very interested in the role of the chairman of Cerberus.

He is former US vice-president Dan Quayle and he visited Belfast early in 2014 to meet politicians and get the deal over the line for his company. The SEC-FBI investigation is trying to decide if Quayle's role was an abuse of office given the status conferred on Quayle by his bring a former vice-president.

An FBI agent involved in the US investigation said those leading the investigation with the SEC regarded it as “very serious”, his own involvement being indicative of that.

“We were here [gives date] at a briefing and were told that Dan Quayle’s private diary was wiped for a week so that he could attend a meeting in Ireland with Peter Robinson and some guy in the South. They deem that here [in the US] misuse of the vice-president’s office.”

The SEC-FBI investigation involves the US department of justice and the US attorney for the southern district of New York. It has been going on since shortly after the Cerberus deal went through.

The move of advisers at the 11th hour from Pimco to Cerberus is seen as extraordinary by one expert of the FCPA. It creates a thread in the minds of the US authorities, linking all of the players, from the unsuccessful withdrawn bidder Pimco and their advisers in the US, London and Northern Ireland, to Cerberus, who retained the same legal team, plus Cushnahan.

“I can’t think, ever in my life, of the legal teams of a withdrawing bidder being hired by the remaining bidder, particularly when the withdrawal was based on compliance concerns,” said one observer close to the multipronged investigation that has since been launched in the US under the FCPA.

“Under any circumstances, (a) there is no plausible business rationale for hiring [Brown Rudnick’s] Tuvi [Keinan] when Cerberus had its own international legal team and Northern Irish counsel; and (b) there is no way that, for the two weeks’ work they allegedly put in for Cerberus, they could command a fee of £15 million.”

The C&AG report disclosed that Project Eagle had fewer than 2,800 documents in Nama’s data room – well within the capacity of Cerberus’s original legal team (Linklaters of London and A&L Goodbody of Belfast) to deal with.

There is another imponderable to the absorption by Cerberus of Pimco’s legal experts. Brown Rudnick and Tughans’ legal work for Pimco would also have had legal privilege attaching to it and, in theory, would have needed client permission (ie permission by Pimco) for it to be shared with Cerberus.

The question is was the information shared and, if so, was that permission sought?

Despite Pimco's withdrawal over legal and ethical concerns, at least some of the £15 million payment that caused the company's exit was in any event made – by Cerberus. Some £7.5 million was paid by Brown Rudnick to Tugans. The Belfast firm kept £1.5 million with the remaining £6 million being lodged, in September 2014, to an Isle of Man bank in the name of Ian Coulter of Tughans.

Cushnahan has since claimed this money was earmarked for him and is rightfully his.

When the fact of the transfer of money was revealed in January 2015, Coulter was forced to resign from Tughans.

Millmount Village

This weekend, Northern Ireland home-hunters will be dropping into the show house at Millmount Village, where available properties range in price from £162,000 to £210,000.

All during the week, teams of hard-hat workers in highlighter vests were working like a colony of ants, forging ahead building new houses, making sure those ready for sale are looking their best.

For Bryson, the saga behind Millmount, its multiple owners over recent years and the connections that extend into the highest reaches of Northern Ireland politics is in microcosm the story of Project Eagle.

“It was all ‘You scratch my back and I’ll scratch yours’,” he says.

Within months of leaving Tughans after his link to the Isle of Man £7.5 million was revealed, Coulter ceased being a practising solicitor. He was appointed to no fewer than five boards within the Lagan group, the builders of Millmount Village.

Peter Murtagh

Peter Murtagh

Peter Murtagh is a contributor to The Irish Times