Q&A - Project Eagle? Sounds like a secret military project
Project Eagle? Sounds like a secret military project. Financial types seem to like unusual names. Since the crash, Nama has been bundling and selling portfolios of property loans that were doled out by the banks during the boom. A lot of these portfolios have been given codenames.
One of those portfolios was Project Eagle. Eagle was a portfolio of property loans all tied to borrowers from Northern Ireland. Those loans had a par value of £4.5bn (€5.7bn). In April 2014, Nama sold Project Eagle to the US private equity firm Cerberus for £1.5bn. Another US firm, Pimco, was reported to have bid for the portfolio.
How did Cerberus pay only £1.5bn for something that was worth £4.5bn? The loans may have been worth £4.5bn when they were made, but once the crash came property prices crumbled. If a bank lent €10m for a developer to build a housing estate in the boom, those houses might be worth only €5m now. Nama has lots and lots of these bad loans and to sell them, it has to cut the price, sometimes dramatically.
Nama sold Project Eagle more than a year ago. Why are we talking about it now? Once Cerberus bought Project Eagle, that seemed to be the end of it. Nama has sold a lot of portfolios and most of the time they never appeared in the news again.
Last week though, Independent TD Mick Wallace told the Dáil that a routine audit of a legal firm involved in the Project Eagle sale process, Tughans of Belfast, revealed that "£7m had ended up in an Isle of Man bank account … reportedly earmarked for a Northern Ireland politician."
He then called for an inquiry into how the Project Eagle sale was conducted.
The allegation seems to be that the politician would be paid for effectively delivering the Project Eagle portfolio, although this has not been made clear.
Ooh, sounds juicy. What happened next? Tughans said the money had been retrieved and the employee responsible had left the firm.
Cerberus maintained it had not had any relationship with Tughans. Cerberus used international law firm Brown Rudnick to advise on the deal. Brown Rudnick used Tughans as a local law firm on the ground here. Cerberus said it did not pay any fee to Tughans. Cerberus (legitimately) paid its fee to Brown Rudnick. Brown Rudnick then paid Tughans.
What happened the £7m that ended up in the Isle of Man account? Tughans regained those funds and has retained them as part of fees legitimately paid to the firm.
OK, so was that the end of it? Yesterday Northern Ireland First Minister Peter Robinson denied he had received any payments of any sort.
What happens next? There are mounting calls for an inquiry into the sale. The Dáil Public Accounts Committee is to ask Nama officials to appear before it to discuss the matter, while Mr Wallace says he intends to make further information available to the public once he is "certain of all the facts". The matter may yet go to the police, with the Gardai and Police Service of Northern Ireland yet to receive a complaint.