Wallace calls on gardai to probe Nama decision in Project Eagle transaction
Independent TD Mick Wallace has called on the gardai to probe Nama's conduct in relation to the sale of its Northern Ireland loan book, Project Eagle, to the US private equity giant, Cerberus.
Mr Wallace is looking for an investigation into Nama's decision not to report its discovery that a rival bidder for Project Eagle, the US investment fund Pimco, had been asked to pay businessman Frank Cushnahan, a former member of its Northern Ireland advisory committee, Stg£5m.
The Sunday Independent understands the Wexford politician wrote to the chief superintendent of the Garda Bureau of Fraud Investigation last Tuesday asking for his concerns on the matter to be addressed.
News of Mr Wallace's complaint will be greeted with some discomfort within Government, coming as it does in the same week as Nama's selection of Cerberus as preferred bidder for 'Project Arrow' - a €6.25bn portfolio of property loans owed by 302 borrowers and secured on 1,906 properties across Ireland and the UK. Project Arrow is already the subject of some controversy, owing to the Government's decision to intervene to remove loans linked to Westport House estate, in Taoiseach Enda Kenny's Mayo constituency, from the sale.
Mr Wallace had already raised his concerns with Nama over its decision not to contact gardai over the proposed fee arrangements surrounding the Project Eagle transaction earlier this month.
In a response sent on October 8, Nama chairman Frank Daly flatly rejected the Independent TD's assertion that his agency had been under any obligation to report the information given to it by Pimco to the gardai, PSNI or to the Government.
In his letter, a copy of which has been seen by the Sunday Independent, Mr Daly wrote: "There was no reason to believe at the time that any wrongdoing had taken place and accordingly the question of referral to the gardai or the PSNI did not arise."
Mr Daly said it was Nama's advice that the proposed fee arrangements with Mr Cushnahan and the two legal firms involved in the transaction which had been brought to its attention by Pimco were not illegal. He said the fact that Pimco and the successful bidder, Cerberus, proposed to make fee payments to the law firms, Brown Rudnick and Tughans, was not a cause of concern to Nama as both firms "were well established and reputable law firms in their respective jurisdictions".
While Nama and Cerberus have both strongly denied involvement in any wrongdoing in relation to the Project Eagle transaction, the UK's National Crime Agency is currently investigating an allegation made by Mr Wallace under Dail privilege on July 7 last that a sum of Stg£7m had been lodged in an Isle of Man bank account and had been "earmarked" for a Northern Ireland politician or political party.
Owing to the involvement of US funds in the deal, a parallel investigation is underway in the United States involving the Department of Justice, the Securities and Exchange Commission and New York Attorney General.
The Government's plan for Nama to build 20,000 houses between now and 2020, meanwhile, is being called into question over fears that it may be in breach of the EU's rules on state aid.
While Finance Minister Michael Noonan has insisted the proposal complies with Nama's mandate to intervene where there is "market failure", Renua deputy leader Billy Timmins told the Sunday Independent he has written to the European Commission seeking urgent clarification on the matter.
He said: "I would be concerned that using Nama in this fashion may well be in contravention of EU rules on state aid. We need to tease this issue out urgently to be absolutely certain that what is now being proposed is in compliance with European legislation."
State aid is defined by the EU as any measure taken by a national authority which confers an advantage in any form whatsoever on a selective basis.
Under the terms of the Treaty on the Functioning of the European Union, state aid is generally prohibited unless a government can justify its provision on the grounds of general economic development.
In his letter to Margrethe Vestager, the commissioner with responsibility for state aid and competition issues, Mr Timmins has asked specifically if the Nama housing plan complies with the remit for the agency which was approved by the European Commission in 2010.
Mr Timmins's concerns were echoed by one of the country's foremost property developers, Michael O'Flynn.
He said: "There could be state aid and competition issues, but I assume they have been thought through."
Mr O'Flynn said the Nama proposal could hold back the restoration of a "viable developer sector".