Former Nama adviser stood to make £5m, PAC hears

Nama says ‘no undue political influence’ in Project Eagle sale

Nama chairman Frank Daly who told the Public Accounts Committee any money based in an offshore account did not come from Nama.

Nama chairman Frank Daly who told the Public Accounts Committee any money based in an offshore account did not come from Nama.


US fund Pimco agreed to pay former Nama advisory board member, Frank Cushnahan, £5 million if its bid for the agency’s northern Irish loans succeeded, a Dáil committee has heard.

Nama chairman Frank Daly told the Dáil’s public accounts committee that Mr Cushnahan resigned from his post six months early due to personal reasons to reduce his work commitments.

He subsequently became involved as an adviser with US investment firm Pimco.

Pimco withdrew from the auction of Nama’s northern Irish loans - dubbed Project Eagle - in March 2104 after telling the agency that it had agreed to pay Mr Cushanahan a success fee.

Nama chairman, Frank Daly, told the committee that Pimco confirmed it was planning to split the £15 million in success fees between Belfast solicitors Tughans, US lawyers Brown and Rudnick and Mr Cushanan.

Brown and Rudnick and Tughans went on to advise the successful bidder, Cerberus, which bought the loan book for €1.6 billion.

Mr Daly disputed Pimco’s claim that it left Project Eagle voluntarily after informing Nama of the fee agreement. “The whole tenor of their approach was that they wanted to stay involved,” he said.

“It’s just another kind of pretty startling fact in this process that something very odd is going on,” Deputy Shane Ross responded.

“And I would have thought that the sequence of events...would make you guys say, look this thing stinks.”

Mr Daly responded: “I agree with you, it’s an extraordinary amount of money but the real issue for us was the involvement, or possible involvement, of a former member of the Northern Ireland (advisory) committee and we wanted to deal with that, get him out of the way.”

The PAC is investigating claims that almost €10 million (£7 million) in an offshore account was intended as a payment to a Northern Ireland politician in association with the Nama sale of its Northern Ireland loans.

The State agency sold €5.7 billion worth of property loans in Northern Ireland for €1.6 billion - a 72 per cent discount - to US investment fund Cerberus following an auction dubbed Project Eagle in 2014.

Last week, Independent TD Mick Wallace claimed €9.8 million discovered in an Isle of Man account during an audit of Belfast law firm Tughans, which was involved in Project Eagle, was destined for a Northern Ireland politician.

“If a payment did find its way to an account in the Isle of Man, as has been alleged, then wherever such a payment came from it most certainly did not come from Nama,” Mr Daly said.

Mr Daly also told the committee that no undue political influence was brought to bear on the sale by Nama of a package of 850 loans linked to properties in Northern Ireland.

Mr Daly said if the sale involved any money based in an offshore account, this did not come from Nama.

“No pressure from any source, political or otherwise, influenced Nama in regard to the decision to sell the loans of Northern Ireland debtors” or the winning bid of Cerberus, Mr Daly said.

He also said Nama was in no position to comment on any alleged wrongdoing on the part of anybody advising on the sale.

Nama, he said, conducted a “robust and competitive” process and secured the best value for the Irish taxpayer.

Nama first became aware of interest in the loans by potential buyers represented by Brown Rudnick, in 2013.

This initial interest was expressed to the Minister for Finance Michael Noonan by his Northern Ireland counterpart Sammy Wilson. Mr Noonan replied by saying any such interest should be communicated directly to Nama and should be “openly marketed”.

“Nama did not favour granting exclusive access to any potential purchaser,” Mr Noonan had said.

Later the firm contacted Nama on behalf of Pimco, one of the initial interested parties, who later submitted a bid and said their preference was for a “closed transaction”.

The Nama board decided the sale should be openly marketed as part of a competitive process and set a minimum price.

In January, 2014 Nama received from the office of the Northern Ireland first minister a copy of a letter of intent in relation to the proposed management of the Northern Ireland portfolio.

It appeared to summarise and agreement between Pimco and the Northern Ireland Executive, Mr Daly said, “and its purpose was to require the purchaser of the portfolio to enter into a memorandum of understanding with the government of Northern Ireland confirming certain fundamental conditions relating to the future management of the portfolio. Nama did not engage further in relation to this draft letter.”

In March, 2014, Nama became aware that Pimco’s arrangement with Brown Rudnick included the payment of fees to the Belfast law firm Tughans and to a former external member of Nama’s Northern Ireland advisory committee named as Frank Cushnahan.

A special meeting of the Nama board was convened in March 2014 during which it came to view these disclosures by Pimco as “a very serious development”.

“Whilst the former NIAC member was no longer a member of the committee at the time of the disclosure (he had resigned on 8 November 2013) and never had access to confidential information, the board considered that the proposed fee arrangement could undermine the integrity of the sales process,” Mr Daly said.

“The Board decided that if Pimco did not withdraw, Nama could not permit them to remain in the sales process.”

The following day, Nama communicated its concerns to Pimco about the fee arrangement. Following this, Pimco told Nama it would withdraw from the Project Eagle process.

The Cerberus bid, which was found to be the best of those remaining, was accepted by the board in April 2014.

“No fee payment was made by Nama to Brown Rudnick. Nama had very limited engagement with Tughans on this sale and did not instruct Tughans to advise it on any aspect of the sale,” Mr Daly said.

He said Cerberus made a fee payment to Brown Rudnick which said it would be shared with Tughans as payment for strategic advice relating to the sale.

“From Nama’s perspective,” Mr Daly continued, “there would have been no reason to question why a purchaser of a loan portfolio would have been making payments to two law firms.”

“What did concern us, based on Pimco’s disclosure, was the possibility that a payment would have been made to a former member of the NIAC (Mr Cushnahan). We sought and received written confirmation from Cerberus at the time that no fees were paid to any party with a connection to Nama.”

Mr Daly the board had acted “quickly and decisively” and took measures to protect the integrity of the sales process as soon as the proposed fee arrangement came to light.