IT WAS back to the future yesterday at the Public Accounts Committee hearing. Strange goings on at the interface of business and politics. Middlemen pulling in serious bucks. Offshore accounts. Apparent conflict of interest.
Frank Daly
The Isle of Man, the delightful bank-friendly Isle of Man. And cops belatedly shaking themselves awake to crack open an investigation. Come back to us, tribunals, all is forgiven.
There is a smell off a deal done by Nama which involved a major writedown of asset value and £7m resting in an Isle of Man bank account. There is no suggestion that any personnel in the National Asset Management Agency acted in a dishonest or corrupt manner. But there’s no getting away from the smell.
Yesterday, the PAC sniffed around the chapter and verse of Nama’s sale of its portfolio of loans in Northern Ireland, and why it’s a cause for concern.
It all began with Sammy Wilson, the minister for finance in the Northern executive. On June 24, 2013, he wrote to Michael Noonan, enclosing a letter from an American law firm, Brown Rudnick, stating that they were interested in acquiring the Northern Ireland loan portfolio. This was an unusual approach, which left Wilson open to a perception he was making a representation on behalf of the firm.
Noonan wrote back saying this was Nama business, nothing to do with him, and Nama only did business on the open market. That September, Brown Rudnick approached Nama on behalf of a client, Pimco, which wanted an exclusive deal to buy the portfolio.
“At a meeting on 12 December, the Nama board decided that the portfolio should be openly marketed as part of a competitive process,” Nama chairman Frank Daly told the PAC yesterday.
“The board also set a minimum price below which it would not be willing to proceed with a sale.”
That price was £1.3bn. The sale was given the name Project Eagle and off they went.
By March there were only three bidders still in the game. Then Pimco informed Nama that part of its process involved paying a fee to a former member of Nama’s Northern Ireland advisory committee, a Mr Frank Cushnahan. This gent had resigned his Nama position the previous November, and now he popping up advising a company buying Nama assets.
Mr Daly told the PAC he’d been informed that there was to be a £15m commission to be paid by Pimco, and split equally three ways between Brown Rudnick, the Belfast law firm Tughans and Mr Cushnaham. That’s nice gravy if you can get it. (By contrast, Nama CEO Brendan McDonagh told the PAC that Nama’s legal fee on the deal was £1.8m).
The retention of a former Nama committee member by a purchaser didn’t do it for Daly and McDonagh. They told Pimco they’d have nothing more to do with that bid because it would look bad, and perception is everything. Pimco was out of the game.
Three weeks later, the sale went through to the next highest bidder, another US outfit called Cerberus. And that would have been the end of that maybe, if Mick Wallace hadn’t stood up in the Dail last week and alleged that £7m had been lodged in an Isle of Man account in relation to the sale, earmarked for a northern politician or party. Tughans confirmed the money had been diverted by its former managing partner Ian Coulter, who had now left the firm.
The surprising thing is that both legal firms which had acted for the departed Pimco, also acted for the winner of the bid, Cerberus. That should have been enough to raise eyebrows.
Now the PSNI is also involved, having launched an investigation on Thursday.
Nobody in Nama appears to have acted improperly, but questions do arise. Daly told the committee that Nama asked of Cerberus whether any money had been paid to Cushnahan, and the response was in the negative.
“I am confident that the Nama board acted quickly, decisively and took every measure available to it to protect the integrity of the sales process as soon as the proposed fee arrangement came to light,” he told the PAC.
It also emerged yesterday that Mr Cushnahan had use of an office in Tughams. If that was known, then surely Nama needed more than just assurance from the purchaser that its former committee member was not paid a fee. And the biggest question of all is who was the seven million big ones earmarked for?
As elsewhere, it would seem that curiosity was not a feature of corporate governance at the agency.
Now it has got itself in a pickle, even though nobody at the agency did anything wrong. The smell emitting from the affair may well lead all the way to yet another inquiry.
Michael Clifford
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