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Sunday 25 February 2018

US fund denies Cushnahan tie in Nama probe

Frank Cushnahan has denied any wrongdoing
Frank Cushnahan has denied any wrongdoing
Ronald Quinlan

Ronald Quinlan

US private equity giant, Cerberus, has once again moved to distance itself from the controversy surrounding businessman Frank Cushnahan and the alleged role he played in its €1.6bn purchase of Nama’s Project Eagle loan book following the publication by the Northern Ireland finance committee of its interim report into the affair.

In its report, the committee highlighted a potentially explosive claim made by property developer Paddy Kearney in relation to the alleged conduct of Mr Cushnahan and Ian Coulter a former managing partner of the Belfast-based law firm, Tughans.

The Sunday Independent understands Mr Kearney’s allegation that the men asked him to provide them with “private information” on his property portfolio, in order to assist the bid being made for Project Eagle by “people they were acting for” is now being investigated by the US Securities and Exchange Commission (SEC).

A source familiar with the matter said the SEC investigation of the allegation follows complaints from several Northern Ireland businessmen involved in the Project Eagle process,

Responding to Mr Kearney’s claim, Cerberus stressed in a statement that it had never “employed, paid or sought advice” from Mr Cushnahan in relation to its acquisition of the Project Eagle loan book.

While Cerberus denies having ever engaged Mr Cushnahan to act on its behalf, the businessman and former member of Nama’s Northern Ireland Advisory Committee (NIAC) seems to have believed he played a key role in its acquisition of Nama’s Northern Ireland loans.

That belief was highlighted in dramatic fashion two weeks ago with the BBC’s Spotlight programme broadcasting a covert recording of Mr Cushnahan appearing to admit he had been in line for a fee from the €1.6bn Project Eagle deal.

Mr Kearney’s claim in relation to Mr Cushnahan and Mr Coulter meanwhile was published in its entirety in last week’s Project Eagle interim report.

Questioned by the members of the Northern Ireland finance committee about his interaction with Mr Cushnahan in the lead up to the Project Eagle sale, Mr Kearney said: “They were acting for one of the bidders for the Northern Ireland portfolio and asked me if I would come home [from Spain] to give them some information because the people that they were acting for wanted to be in a position to make a proper bid. They needed some private information on the portfolio that was not public. It was private company information.’

Mr Cushnahan has consistently denied any wrongdoing in relation to the Project Eagle transaction, while Cerberus, for its part, strongly denies having ever had any involvement with Mr Cushnahan or knowledge of his alleged actions.

A spokesman for Cerberus stressed that its use of Tughans, the Belfast solicitors where Ian Coulter was employed as a managing partner, had come about through its “longstanding relationship” in the United States with the US law firm, Brown Rudnick.

Cerberus’s relationship with Brown Rudnick extended to Northern Ireland after Pimco, a rival bidder for Project Eagle withdrew from the process citing concerns raised by its compliance department, which it said had detected a request for a £15m success fee to be divided up between three parties – namely Brown Rudnick, Tughans and Frank Cushnahan.

Referring to Cerberus’s decision to engage Brown Rudnick, a spokesman for the investment fund said: “Specifically, we engaged Brown Rudnick as our lawyers to supplement our primary legal team from Linklaters and assist us in our bid for Project Eagle.”

“They informed us that they had been previously working with another interested party that was no longer involved in the process. We were not aware, and we were not made aware, of the reasons why their former client was no longer involved. Given the timing, and the complexity of the bid and the underlying assets, we believed that we could benefit from Brown Rudnick’s prior work,” the spokesman added.

While Cerberus says it was not aware of the reasons behind Pimco’s withdrawal from the Project Eagle process, Nama was certainly alarmed by the information Pimco’s compliance team had detected prior to its departure.

Nama expressed it concern to Cerberus on the issue of fees or payments to third parties, albeit without referring to the information it had received from Pimco.

Commenting on this, Cerberus said Nama had requested that “ we confirm to it that no fee, commission or other remuneration or payment was payable to any current or former board member of NAMA, any current or former executive of NAMA or any current or former member of an advisory committee of NAMA in connection with any aspect of our participation in the tender process”.

Having obtained confirmation that this was the case with Brown Rudnick and Tughans, Cerberus says it provided its own assurances on the matter to Nama.

“To our best knowledge, no improper or illegal fees were paid by us or on our behalf by our advisors,” a spokesman for the company said.

Elsewhere, the conduct of Cerberus in the Project Eagle process received something of an endorsement last week following the settlement of litigation brought against it by the Northern Ireland businessman, Gareth Graham.

Having previously been at the forefront of complaints against the private equity giant, Mr Graham took the unusual step of taking out an advert in national newspapers in which he apologised for any “inadvertent harm” which had been caused to the Cerberus brand as a result of that litigation.

Mr Graham said he was now “content that Cerberus is not (and was not) involved in any illegal conduct” involving “alleged illegal payments to fixers”.

But while the Belfast-based businessman has absolved Cerberus of involvement in any wrongdoing in the Project Eagle deal, he said that he reserved his position in relation to “other entities connected” to the process

Under the terms of his settlement with Cerberus, Mr Graham will retain control of his companies and their properties, but will pay Cerberus’s legal costs.

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