Sunday 25 August 2019

Former Taoiseach caught up in €1bn case taken in US against Nama

Asset management firm alleges John Bruton acted as liaison

Former Taoiseach John Bruton.Pic Tom Burke
Former Taoiseach John Bruton.Pic Tom Burke
John Mulligan

John Mulligan

FORMER Taoiseach John Bruton is caught up in a €1bn court case being taken in the US by a firm controlled by Irish developer Garrett Kelleher against Nama.

A US asset management firm has claimed in court papers that the former Taoiseach agreed to act as a liaison between it and Nama when it tried to buy loans linked to a major Chicago real estate deal dubbed the Spire.

The loans were initially made by Anglo Irish Bank.

Mr Kelleher's firm is suing Nama and one of its subsidiaries for $1.2bn (€1bn) in a dispute related to his planned development in Chicago of what would have been one of the world's tallest buildings - the Spire.

Former Nama official Enda Farrell, convicted two years ago of leaking potentially sensitive documents from the agency, has also submitted a declaration to the Illinois court.

He has claimed Nama senior executives never wanted Anglo Irish Bank loans attached to the Spire project transferred to the agency.

Former Taoiseach John Bruton. Photo: Tom Burke
Former Taoiseach John Bruton. Photo: Tom Burke

Speaking to the Irish Independent, Mr Bruton strenuously denied he ever acted as a liaison between Nama and the US asset management company, Point Capital Partners (PCP), between 2010 and 2011 as the American firm expressed an interest in acquiring the debt attached to the Spire project that had been advanced by Anglo Irish Bank.

In a declaration made this week to an Illinois court, the managing partner of PCP, Ted Williams, claimed that his firm engaged Mr Bruton in 2010 to liaise with Nama as efforts continued to refinance or find a buyer for the original $69m (€59m) in loans that had been given by Anglo Irish Bank to kick-start the development of the towering 116-storey residential scheme.

But speaking to the Irish Independent, Mr Bruton said he never acted in such a capacity.

He said he was never offered payment by PCP or Mr Williams, nor did he ever ask for any payment for any efforts on the US firm's behalf.

"It would be inappropriate to do that," he said.

Mr Bruton said he did assist PCP in making initial contact with appropriate people in Ireland who may have been able to assist the firm in securing relevant meetings, and he did meet Mr Williams on one occasion in Dublin around 2010 or 2011.

Mr Bruton said that Ireland was "on the floor" at the time, as the economy imploded following the crash and he was mindful to assist in any way to increase the market for Irish taxpayer-owned assets.

"The more bidders, the better," he said, adding that it was appropriate at the time to assist in whatever legitimate manner he could, given the economic climate.

Mr Bruton had been approached by a third party known to him to make contact with Mr Williams.

The former Taoiseach said he told Mr Williams Nama was not a body that could be approached informally, and encouraged him to first approach law firm McCann Fitzgerald. Mr Williams claimed he made contact with a lawyer from the firm, who it's claimed in turn introduced PCP's team to one of Nama's most senior executives, John Mulcahy.

PCP was keen to do a deal in relation to the Anglo loans connected to the Spire project.

But Mr Williams alleged in his court declaration that after the initial meeting with Mr Mulcahy in November 2010, nothing had been heard from the agency for three weeks.

"I gave a detailed brief of the situation to Mr Bruton via email," Mr Williams told the court in his declaration.

"There followed several email exchanges between us during which Mr Bruton offered to inquire of the situation with those Anglo Irish loans that were not being sold as part of the proposed US loan sale through Mr Alan Dukes, the chairman at Anglo Irish."

Mr Bruton said he doesn't believe he ever contacted Mr Dukes regarding the loans. Mr Dukes also said he had no recollection of ever being contacted by Mr Bruton in relation to any Anglo loans. Mr Kelleher's firm claims in the case against Nama that he's entitled to the $1.2bn as a result of losing control of the Spire project, and from future profits that would have been generated from the sale of residential units at the planned tower.

The agency insists that Mr Kelleher's claims have no basis and has sought for the case to be dismissed. A US lawyer for Nama told the Illinois court last month that National Asset Loan Management is currently prosecuting a case in Ireland, seeking to recover approximately €47m from Mr Kelleher based on his guaranties of certain loans. She also claimed that the demand for $1.2bn by Mr Kelleher's firm is "insupportable".

She said Mr Kelleher has "decided to do what many borrowers and guarantors do in order to get out from under debts they have voluntarily incurred - turn the tables and sue the lender."

Mr Kelleher has meanwhile withdrawn his demand for a jury trial in the case. Mr Williams has detailed in his court declaration some of the alleged high-level political manoeuvring in the corridors of power in Dublin amid the scramble to find a buyer for the Spire and other distressed loans.

PCP had teamed up with a Dallas-based investor with a capacity to do more than $5bn (€4.3bn) in property deals. In copies of emails provided to the court, Mr Williams told Mr Bruton in an email in December 2010 that the Texas partner was "dying to get their hands on any of the commercial properties in the US owned by Anglo... or, for that matter, commercial US assets owned by the other Irish banks in turmoil".

Mr Williams added in his court declaration: "In order to assist us in understanding the political and financial landscape in Ireland, Mr Bruton provided us some key insights

Mr Bruton said that Ireland was 'on the floor' at the time, as the economy imploded after the crash, and he was mindful to assist and reached out through his former political connections with the intention of putting our best foot forward with Nama and be introduced at the appropriate level.

"During our travels to Dublin, Mr Bruton arranged face-to-face meetings with several prominent individuals, including introductions to Mr John Moran [then a senior Department of Finance official], among others," he added in the declaration. Mr Moran left the department in 2014.

Mr Bruton said he never arranged any meeting between Mr Williams and Mr Moran, but may have given Mr Williams Mr Moran's telephone number or the number of someone within the department. When contacted, Mr Moran said that he can't recall any such meeting.

"I know as SG [Secretary General] my diaries were published and pretty much from memory anything before either published or FOIed before, so if it was a formal meeting it should be recorded," he said.

"You'll recall there are all sorts of sanctions against lobbying with relation to Nama assets. I'd imagine John Bruton would have been well aware of the extent of those too." The Spire was supported by Chicago's former mayor, Richard Daley.

"We had continually kept Mr Bruton apprised and in order to demonstrate our willingness to progress a transaction a meeting was co-ordinated through Mr John Moran to discuss the Chicago Spire project and other transactions in Ireland, where Mayor Daley would travel to Dublin and meet with the Taoiseach Mr Enda Kenny and Mr Michael Noonan, then minister of finance," Mr Williams told the Illinois court in his declaration.

Mr Williams said the planned 2011 meeting was cancelled at the last minute as Mr Daley's wife fell ill and subsequently died.

Mr Bruton said he was never continually apprised by Mr Williams.

Mr Williams has told the Illinois court that in 2011, PCP had a "high degree of confidence" that it might be able to complete a deal with Nama in relation to the Spire loans. That deal never happened.

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