Sunday 18 February 2018

Pimco accused of misleading Nama and the Public Accounts Committee about the €1.6bn Project Eagle deal

The National Asset Management Agency Treasury building in Dublin
The National Asset Management Agency Treasury building in Dublin

Ronald Quinlan and Simon Rowe

US law firm Brown Rudnick, which played a central role in the controversial €1.6bn Project Eagle deal, has accused original bidder Pimco of misleading Nama and the Public Accounts Committee about its knowledge of proposed “success fees” to be paid to fixer Frank Cushnahan.

In correspondence seen by the Irish Independent, Brown Rudnick chief executive Joseph R Ryan has written to the Public Accounts Committee disputing claims made by Pimco to the Dail watchdog as well as statements made by Tughans solicitor Ian Coulter.

In an 11-page letter, Ryan says that contrary to “repeated curious statements” by Pimco, senior bosses at the US fund were made aware five months before its withdrawal from the bidding process that a proposed success fee structure would have seen Nama’s former Northern Ireland Advisory Committee member Cushnahan sharing a €16m payment with Brown Rudnick and Tughans.

His account contradicts what Pimco legal officer Tom Rice said to the PAC in a letter dated November 8th last.

Pimco maintained the law firm first sought a fee in June 2013 and confirmed that this would be split between Mr Cushnahan, who was then a member of Nama’s Northern Ireland Advisory Committee, and Mr Coulter. Mr Rice said the company refused and asked if Nama was aware of its adviser’s involvement.

Mr Ryan, in his letter to the PAC states: “Pimco knew from the outset of the proposed transaction both that Mr Cushnahan would be involved in the deal and that it was contemplated he would split a proposed success fee with Brown Rudnick and Tughans (at least until a different structure was discussed in February 2014)."

“We are unable to reconcile Pimco’s statement that it “identified” Mr Cushnahan’s involvement and compensation in 2014 with the unassailable fact that it was aware of his involvement, and his proposed compensation, since the spring of 2013,” he adds.

“Notwithstanding the fact that no binding agreement was reached for the compensation of Mr Cushnahan, either on a success fee or asset management basis, it was always understood between Pimco and Brown Rudnick that Mr Cushnahan’s role and potential compensation would be disclosed to Nama at a time mutually agreed between Pimco and Brown Rudnick.”

Brown Rudnick’s account is consistent with Nama chairman Frank Daly’s account of his understanding of events.

In this letter to the Dail's Public Accounts Committee, Ryan says that although the matter of Cushnahan’s success fee “remained unresolved”, on February 27, 2014, Brown Rudnick sent a ‘Letter of Offer’ for Pimco’s consideration “in response to a request from Pimco that the compensation structure for Mr Cushnahan no longer be based on a success fee, but rather take the form of an asset management agreement predicated on contributions post-closing to the management of the portfolio”. This ‘Letter of Offer’ proposed the “creation of a Special Purpose Vehicle and a put option along with certain management fees for assisting in the management and disposition of the Northern Ireland loan portfolio.”

Nama has insisted repeatedly that it was responsible for Pimco's withdrawal from the  Project Eagle process after it became aware of the alleged success fee for Frank Cushnahan.

Pimco for its part has always insisted it withdrew from the deal only after it “discovered” the proposed success fee for Cushnahan.

Efforts to reach Pimco at the time of going to press were unsuccessful.

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