Tuesday 23 January 2018

Former NAMA advisor was to get Stg£5m from loan sale deal, PAC told

Frank Daly, Chairman of NAMA
Frank Daly, Chairman of NAMA
Shane Phelan

Shane Phelan

A former member of NAMA’s Northern Ireland advisory board stood to make Stg£5m in fees from the proposed sale of the loans of Northern Irish debtors.

The Dail Public Accounts Committee was told global investment management firm PIMCO was to pay Stg£15m in acquisition fees, with a third of these set to go to former NAMA advisor Frank Cushnahan.

Mr Cushnahan had been a member of NAMA’s Northern Ireland advisory board until late 2013.

NAMA chairman Frank Daly told the committee PIMCO informed it in March 2014 of the proposed fees. These included proposed payments to Belfast law firm Tughans and to Mr Cushnahan.

Mr Daly said that after receiving the information, NAMA’s board decided PIMCO could no longer be a bidder for the loan portfolio as “the proposed fee arrangement could undermine the integrity of the sales process”.

The loan portfolio, relating to around 850 properties, was subsequently sold last year to US private investment firm Cerberus for €1.6bn.

The loans had once been valued at over €5bn.

Independent TD Shane Ross described the disclosure as “shocking” and questioned why the whole sale process wasn’t scrapped and started again when the apparent conflict of interest became known.

Mr Daly said: “If we knew then what we know now, a lot of things would have worried us.”

He said Mr Cushnahan had resigned from the advisory board in November 2013 for “personal reasons”.

He also insisted Mr Cushnahan, a banker who acts as a financial consultant, would not have had access to confidential information in relation to the loans portfolio.

Earlier, Mr Daly told the committee that NAMA did not come under any pressure from politicians or anyone else over its decision to sell the loans.

He also said that any alleged payments made to an account in the Isle of Man did not come from NAMA and that it received the full value of the sale.

Mr Daly said said NAMA had no knowledge of the alleged payment into the Isle of Man account of solicitor Ian Coulter by a US lawfirm, Brown Rudnick, in connection with the sale.

The comments came as the Comptroller & Auditor General, Seamus McCarthy, announced he would be examining the so-called Project Eagle sale of NAMA’s Northern Irish loans for €1.6bn last year.

Independent TD Mick Wallace alleged last week that Stg£7m (€9.8m) in the Isle of Man account was reportedly intended for a Northern Ireland politician or party.

Mr Coulter, then a partner at the Tughans law firm in Belfast, was involved in the Project Eagle sale to Cerberus.

The PSNI has launched a criminal inquiry into Mr Wallace’s allegations.

Tughans were retained by Brown Rudnick, which was representing Cerberus in the deal.

The committee also heard that Brown Rudnick and Tughans had also represented PIMCO, before it withdrew from the sales process.

Mr Coulter subsequently left Tughans and the money was retrieved.

Mr Daly told the committee that the sale was “robust, competitive and secured the best outcome for the Irish taxpayer”.

He said NAMA had not come under pressure from any source, political or otherwise, to influence its decision to sell the loans to Cerberus.

And he added: “If a payment did find its way to an account in the Isle of Man, as has been alleged, then wherever such a payment came from, it most certainly did not come from NAMA.

“In fact NAMA had no knowledge of this alleged payment to Mr Coulter by Brown Rudnick until recent days when it was put in the public domain.”

NAMA chief executive Brendan McDonagh defended the value for which the loans were sold.

“I believe that the commercial decision taken by the NAMA board to dispose of the Northern Ireland loan portfolio was the right one,” he told TDs.

“The board took the view that this option would provide the best financial outcome for Irish taxpayers, taking into account the quality of assets in the portfolio, the lack of liquidity in the Northern Ireland property market, the availability of a number of investors with the capacity to bid competitively on the portfolio and NAMA’s need to focus on its assets in the Republic and in London where were more likely to benefit from intensive asset management attention.”

He insisted the sale was “conducted in line with best international practice”.

“All bidders had access to the same detailed information on the portfolio,” said Mr McDonagh.

“NAMA took care at all stages to ensure that the integrity of the sales process.”

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