Thursday 27 October 2016

'Nama nearly destroyed me' - top London hotelier

Paddy McKillen says the agency cannot survive the latest revelations, writes Dearbhail McDonald, Group Business Editor

Published 18/09/2016 | 02:30

Long battle: Paddy McKillen says his war with Nama has cost him several million Photo: PA
Long battle: Paddy McKillen says his war with Nama has cost him several million Photo: PA

The last time I saw property investor Paddy McKillen, I expected him to be on top of the world.

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In London in the lead-up to the Brexit vote, I bumped into him in the Connaught, one of three London hotels that he wrested control of back from his "enemies", the billionaire twins David and Frederick Barclay.

Five years ago the near reclusive businessman went to battle with Nama and won a Supreme Court case to prevent some €2.1bn of loans being transferred to the toxic loans agency. But that battle was only the beginning of a long war over the proposed sale of his loans and the acquisition by the Barclays of debt linked to the properties from Nama and other investors.

Last year, after 11 court actions in the UK (all of which McKillen lost) the Barclays caved in when Qatari investors allied to McKillen bought out his rivals. McKillen had won.

When we met last spring, I expected the Belfast-born investor, back in black after paying off €800m in debts owed to the former Anglo Irish Bank with the fresh support of a US hedge fund - and currently managing a £400m refit of Claridge's, The Berkeley and The Connaught - to be elated. Instead I found him to be pensive and almost post- traumatic after his battles with Nama and the Barclays. He felt betrayed that Nama, in his view, had attempted to sell him out to the Barclays. He also harboured fears, now fully realised, that confidential information about his loans had been leaked to outside parties by Nama. He was right.

Last May, Enda Farrell, a former Nama official, was given a suspended sentence for disclosing confidential information. The leak included information connected to McKillen and the O'Flynn group. Farrell, who pleaded guilty, told gardai of an email sent by a colleague to a representative of the Barclays regarding the sale of the Coroin loan.

Coroin was the holding company for the Maybourne Hotel Group, which owns the luxury Claridge's, Berkeley and Connaught hotels. "Prefer if all is kept below the radar until we have completed our business together," former Nama executive John Mulcahy wrote in the email which emerged in court proceedings.

Within days of Farrell's conviction, McKillen launched High Court proceedings for misfeasance in public office against the Minister for Finance, the former secretary general of the Department of Finance John Moran, Nama and its officials Paul Hennigan and Enda Farrell. He also launched separate proceedings over the leaks.

I reached out to McKillen again last weekend following a series of controversies that have engulfed Nama, including last week's damning report into Project Eagle - the sale of its Northern loan book - by the Comptroller and Auditor General.

In truth, Nama has been fighting fires for some time. It has been under pressure since it was revealed that Frank Cushnahan, a former member of its Northern Ireland Advisory Committee had sought a £5m 'success fee' from Pimco, a major US bidder for the Project Eagle portfolio. Nama didn't suspend the sale when Pimco informed the agency of Cushnahan's share of an overall £15m fee that was to be paid had it won the bid.

The portfolio was ultimately sold to Cerberus, another major US fund.

But there are now two criminal investigations under way after it emerged that Ian Coulter, managing partner of Tughans, a firm of Belfast solicitors which had worked for Cerberus, transferred £6m in fees from the deal to an Isle of Man bank account, without his firm's knowledge.

Cushnahan was recorded by the BBC's 'Spotlight' programme claiming that the £6m was meant for him.

'Spotlight' broke extraordinary ground last week again when it aired a recording of Cushnahan allegedly receiving £40,000 from a Nama borrower.

Watching events unfold, McKillen - who says he felt treated "like a criminal" by Nama - says Finance Minister Michael Noonan should disband Nama or remove its entire leadership.

"I think it's bizarre Noonan hasn't dealt with Nama," says McKillen, who has spent €50m to date in legal fees, despite never missing an interest payment.

"It seems he's either afraid or he believes they're untouchable. He should disband it or remove the top, because they've obviously failed in what they were set out to do.

McKillen says he has endured a seven-year "grief" where his business was at a standstill and predicts his war with Nama has cost him several million in costs and lost opportunities.

"It nearly destroyed my life," says McKillen, who hopes his legal action - the first of many launched by borrowers who believe their loan details were leaked - will set a precedent.

"Even in wartime... governments and civil servants should not and cannot do this amount of damage to the interest of tax-paying citizens," he says.

"They had too much power and they've used it in a terrible fashion, which isn't good for the taxpayer."

Whatever the furore over the establishment of a statutory inquiry, what is most troubling is what appears to be the near systemic leaking of information from Nama.

The prospect of third parties securing an advantage to the detriment of the taxpayer is unthinkable.

Sunday Independent

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