Money, power and politics: the extraordinary story of Namagate
The controversy over Nama's sale of its Northern loan book won't go away
It is a story of money, power and influence: an American investment fund circling a depressed economy for bargain loans; a State agency pressed into selling; a political and business elite allegedly getting in on the act, and a strong whiff of sulphur to excite the senses. It was all there at the Public Accounts Committee last week when the National Asset Management Agency was asked to account for the controversy verging on scandal that has now been dubbed "Namagate".
In short, it's a tale of how Nama put its Northern Ireland loan book on the market for £1.3bn and unwittingly stirred a storm of jockeying, lobbying and rumour that has led to political inquiries both sides of the border, and a police investigation in the North.
The controversy erupted 10 days ago when the Independent TD Mick Wallace claimed under Dail privilege that £7m in an offshore bank account was "earmarked" for a Northern Ireland politician or political party.
The implication was that the money was a pay-off linked to the sale of Nama's Northern Ireland loan book for £1.3bn, a sale which entailed a €280m loss to the taxpayer.
Since then, Wallace's claims have partly stacked up. A legal firm that worked on the sale confirmed that £7m due to it in professional fees had been diverted to an offshore account, by a partner who had since left the firm.
Nama itself revealed that one of its former advisers in Northern Ireland had been in line for a £5m fee. But the public is still none the wiser about who the £7m was intended for and what exactly they were supposed to have done to earn it.
TDs at the PAC meeting on Thursday reached for superlatives. Shane Ross, the Independent TD, called it the "most extraordinary sequence of events" involving a state body he had ever come across. The committee's chairman John McGuiness talked about a "set up" and a "stink". Mary Lou McDonald spoke of "incestuous" webs.
Even Frank Daly, the Nama chairman, agreed that some of what went on was "extraordinary".
And while no one questioned Nama's integrity, they were scrutinising its oversight and governance.
The "extraordinary" sequence starts in the summer of 2013, when a big American law firm cast its net into the dark pools of Northern Ireland's flagging economy and found a property-based loan book ripe for picking.
One of Brown Rudnick's "230 high octane lawyers" wrote to Sammy Wilson, the DUP politician and then finance minister in the Northern Ireland Executive. The firm said it had two clients interested in Nama's Northern Ireland's loan book. The proposal was to buy the loans in one lot in a closed sale. Wilson wrote to his counterpart in Dublin, Michael Noonan, in support.
Nama's involvement in Northern Ireland had the potential to create "political problems" and the debt was weighing down its economy, he wrote. But Mr Wilson wanted conditions attached to protect the local economy. These included releasing the local debtors from their personal guarantees so they could get on with business and investing in the local economy.
According to Daly, it wasn't much of a loan book; a "poor" portfolio of 850 properties, secured from 55 debtors, half in the North, another third in regional parts of the UK and a smaller percentage in the Republic of Ireland. It was so "granular" that only a handful of investment firms were interested in buying it.
With a bit of toing and froing, Nama put the loan book on the market in one lot for no less than €1.3bn, eventually getting nine bidders.
There was political interest but no political interference in the sale process, said Frank Daly last week.
At one point, Peter Robinson, the North's First Minister, spoke to him in a conference call about the "legally binding" conditions he wanted attached to the sale.
Mr Robinson's office later emailed Nama a "memo of understanding" that had been drawn up. The buyer was to release the 55 debtors from any personal or corporate guarantees they gave as security on their loans, they were to be allowed to continue to manage the properties, and would be paid a fee for doing so. They were also to get the option to buy back their properties later.
Frank Daly called this a "debtors' charter" that Nama would never in its "wildest dreams" have countenanced. "We ignored it," said Daly.
PAC chairman John McGuinness last week asked who stood to benefit. "Was it just an honest effort to free everyone or were there individuals who might benefit and would there have been well-placed insiders, as they are often described?"
By March, 2014, three big American firms, Pimco, Cerberus and Fortress Capital were the only ones left in the game. Pimco was in the lead.
Pimco claims it never actually hired Brown Rudnick - the law firm represented it.
Brown Rudnick in turn was working with Tughans, the third biggest law firm in Northern Ireland, to help out. Tughans shared its office space with Frank Cushnahan.
He is a prominent and politically well-connected former banker and financial consultant in Northern Ireland. He has served on numerous public and private boards and government committees.
When Nama set up a local advisory committee in 2010 to smooth over "political sensitivities" about its takeover of Northern Ireland loans, Cushnahan's name was put forward by Minister Sammy Wilson. Brian Rowntree was the other appointment.
Frank Daly and others at Nama knew that Cushnahan had a connection with Tughans. They had attended meetings in his "self-contained office" in the solicitor's firm. "It would have been generally known at that time, perhaps that Cushnahan had a relationship with Tughans, in that...he was a referrer of business," said Daly.
Sinn Fein TD Mary Lou McDonald went further, alleging that there was a "belief" that Frank Cushnahan was providing "advice, direction and information... in respect of matters pertaining to Nama and that he may have been doing so from that premises."
Daly said he knew nothing about this. In November 2013, Frank Cushnahan had resigned from Nama's Northern Ireland advisory board citing "family priorities".
"The next thing I heard," said Daly, "was Pimco telling us he was to get a fee."
That was on March 10 last year. As the sale deadline approached, the transaction was referred to Pimco's internal compliance department. They discovered a proposed £15m fee to be "split three ways" between the law firms and Mr Cushnahan
"They rang Nama. They contacted Nama and said we are paying a success fee to Brown Rudnick but we have subcontracted to Tughans, and also involved in that is Mr Cushnahan. First of all, they said we presume you are aware of it which we were not," said Nama chief executive Brendan McDonagh last week. "They asked what is Nama's view on this and we said we need to take it away. We called a board meeting and the board, as I said, took a very dim view of this."
Nama also disclosed that in a subsequent phone call a few days later, Pimco's lawyers told Nama's lawyers that the money was to be "split three ways" between Brown Rudnick, Tughans' managing partner Ian Coulter and Frank Cushnahan.
"Wow," said Shane Ross.
What did Cushnahan do to earn such a fee? Daly couldn't say - except that he and McDonagh were adamant that he was told nothing about the sale of the Northern Ireland loan portfolio.
"What use would he have been to Pimco then?" asked Ross.
"I do not know," said Daly. "Pimco have not told us..."
Nama wanted Cushnahan off the pitch. It asked Pimco to walk away from the transaction or be exited.
Pimco disputes Nama's account. It said that the "third parties" were seeking a fee. Pimco did not agree to pay it. Concerns about this fee arose during due diligence, and it withdrew from the transaction on its own accord.
In any case, Nama moved on to the next bidder, Cerberus, who took on Brown Rudnick and Tughans as strategic advisors. Several politicians at the PAC said surely this should have rung alarm bells.
No, said the Nama bosses. Their problem was with Cushnahan, not with Brown Rudnick or Tughans. As a precaution, they said, Nama sought written assurances from Cerberus that it hadn't paid fees to third parties.Cerberus provided this.
Mary Lou McDonald summed up her view of the situation as follows: "The net result and the concern for people trying to make sense of it and the taxpayer is that in the first scenario, there was an attempt at payola, Nama got wind of it and was concerned, not concerned enough to suspend the thing but enough to show Pimco the road.
"In the second scenario, although Mr. Daly had removed the purchaser and the identity had changed, the same cast of characters was involved in the final decision, including legal counsel, and the whole thing stinks to high heaven."
The sale went through in early April 2014. According to Daly, that was the end of it until last Thursday week and Mick Wallace's sensational allegations in the Dáil.
According to a statement issued by Tughans, the £7m was the professional fee due to the firm from Cerberus. It said the managing partner - later named as Ian Coulter - who worked on the sale diverted the fees into an Isle of Man account of which he was the "sole beneficiary".
Coulter was another high profile, politically-connected figure in Northern Ireland. Tughans said they discovered the "diversion" in January during an audit, and that they since retrieved the money, Coulter left the practice and his former colleagues reported him to the Law Society.
Was the money intended for Coulter or was it for political players in Northern Ireland?
Reports last week suggested that a number of people in political circles could have benefited from it.
Since the scandal broke, the agency has been at pains to put clear blue water between it and the £7m.
Frank Daly told the PAC: "As I said at the beginning of this meeting, wherever that £7m came from, it did not come from Nama and it did not come, in any way, from the proceeds of this sale that should have been due to Nama."
Nama has other potential scandals and plenty of enemies to contend with closer to home.
The Garda fraud squad investigated 16 criminal complaints relating to Nama last year. Four are closed, one is before the courts and 11 are actively under investigation.
Nama said it only knows about two of those cases - one of which is before the courts. Both involve the allegedly unlawful disclosure of confidential information.
Meanwhile the UK's National Crime Agency is set to follow the money trail and is likely to look for documents as it traces the route of the £7m.
The main protagonists have said they will cooperate with the investigation and have denied any wrongdoing. A statement issued by Frank Cushnahan's solicitor, Paul Tweed, on Friday said he "firmly denies any wrongdoing and will fully co-operate with any police investigation".
Brown Rudnick said it acted with utmost propriety; it added tht it shared its fee from the Cerebus deal with Tughans, and there were no payments to third parties.
Peter Robinson, the First Minister, denied again this weekend that anyone in his family hoped to benefit "one penny" from the Nama sale. He fuelled further political intrigue when news broke last week of his meeting with Dan Quayle, the chair of Cerberus and former US vice president, days before the sale.
It was all too much for the PAC last week. This was an "unfinished work" said John McGuinness at the end of last week's session.