Noonan backed Nama plan to sell Northern loans
Published 10/07/2015 | 02:30
Finance Minister Michael Noonan did not object to Nama proceeding with the sale of its Northern Ireland loan portfolio, despite learning the process had run into controversy.
Mr Noonan was informed in March of last year that a former Nama adviser stood to earn stg£5m in fees if one of the bidders, global investment management firm Pimco, was successful.
Former banker Frank Cushnahan had been a member of Nama's Northern Ireland Advisory Committee until the previous November, when he resigned for "personal reasons".
Nama decided to exclude Pimco from bidding after learning of Mr Cushnahan's involvement.
Its chairman, Frank Daly, said Mr Noonan had been "very concerned" about the development and agreed with the decision taken by Nama.
However, he told the Dail's Public Accounts Committee (PAC) that the minister did not request that the entire sales process to be suspended.
Nama subsequently sold the portfolio, known as 'Project Eagle' and comprising loans on 850 properties, to US private investment firm Cerberus for €1.6bn. The loans had once been valued at more than €5bn.
As part of the deal, Cerberus used the same lawyers who had been engaged by Pimco, US firm Brown Rudnick and Belfast solicitors Tughans.
The managing partner of Tughans, Ian Coulter, subsequently left the firm after an audit found fees of Stg£7m had been diverted to an account in the Isle of Man.
Independent TD Mick Wallace claimed in the Dáil last week that the money had been reportedly earmarked for a Northern Ireland politician or party.
Several members of the PAC, including chairman John McGuinness, Independent TD Shane Ross and Sinn Fein's Mary Lou McDonald, said they believed the sale process should have been abandoned when Nama learned of the proposed payment to Cushnahan.
Ms McDonald said the process was "incestuous", with "the same actors, the same players" involved. "The whole thing stinks to the high heavens," she said.
Mr Noonan defended Nama last night, saying he believed it had acted correctly at all times.
"There are certainly grounds for an inquiry, and in my view there are grounds for a police inquiry," he said.
"If actions are found to be improper or criminal, it was at the purchaser side, not at the seller side. Nama did everything possible and got best price for the Irish taxpayer. They had a fully competitive tender process and they sold to the highest bidder."
His comments came as the PSNI confirmed the UK's top law enforcement body, the National Crime Agency, would be inquiring into allegations that money was set aside to make payments on the fringes of the sale.
Earlier, the PAC heard that Pimco had been poised to pay Stg£15m in acquisition fees, with a third of these set to go to Mr Cushnahan. The remaining Stg£10m was to be paid to Tughans, via Mr Coulter, and Brown Rudnick, provided the bid proved successful.
Mr Daly said that after receiving the information, Nama's board decided Pimco could no longer be a bidder as "the proposed fee arrangement could undermine the integrity of the sales process".
He said it made this decision despite being satisfied Mr Cushnahan would not have had access to confidential information in relation to the loans portfolio.
Independent TD Shane Ross described the disclosure of the proposed payment as "shocking". "It's just another kind of pretty startling fact in this process that something very odd is going on," Mr Ross said.
"I would have thought that the sequence of events would make you guys say, 'look, this thing stinks."
Mr McGuinness said he was "deeply concerned" about what had happened and questioned the judgment exercised by Nama.
Responding to TDs, Mr Daly said: "If we knew then what we know now, a lot of things would have worried us."
The Nama chairman told the committee that it had not come under any pressure from politicians or anyone else over its decision to sell the loans.
He also said that any alleged payments made to an account in the Isle of Man did not come from Nama and that it received the full value of the sale.
Nama chief executive Brendan McDonagh defended the value for which the loans were sold.
"I believe that the commercial decision taken by the Nama board to dispose of the Northern Ireland loan portfolio was the right one," he told TDs.
"The board took the view that this option would provide the best financial outcome for Irish taxpayers."