Journalist and author of the recently released ‘NAMA LAND: The Inside Story of Ireland’s Property Sell-Off and the Creation of a New Elite’, Frank Connolly writes in eolas about Project Eagle, the controversial Northern Ireland loans portfolio.
It is 18 months since arrests were made by the National Crime Agency (NCA) as part of its investigation into the 2014 sale of the Northern Ireland portfolio of distressed loans controlled by the Dublin based, National Asset Management Agency (NAMA).
In late May 2016, NCA officers arrested Ronnie Hanna, the former Head of Asset Recovery, and Frank Cushnahan, a member of the Northern Ireland Advisory Committee (NIAC) of NAMA, during its criminal inquiry into Project Eagle, as the Northern Ireland loan portfolio was known. Following their arrests, prominent Belfast solicitor, Ian Coulter, was also questioned by the NCA in late 2015.
All three were centrally involved in the process that led to the sale in mid-2014 of the 850 Northern Ireland property loan portfolio to US investment fund, Cerberus Capital Management. The heavily discounted sale prompted a major political controversy and a series of parliamentary and other inquiries, including the NCA investigation.
The seeds of the controversy were sown following the appointment of Cushnahan to the NIAC in May 2010. A prominent Belfast business consultant and former chairman of the Belfast Harbour Commissioners, Cushnahan was also a political adviser to former First Minister and DUP leader, Peter Robinson.
Along with a number of business associates, including Coulter a senior partner of Tughans solicitors in Belfast, property developer Andrew Creighton and accountant David Watters, Cushnahan devised a proposal that the NAMA controlled distressed loan portfolio should be sold in one single bundle and then explored potential buyers.
In late 2012, Cushnahan made contact with two US funds, Fortress, led by Belfast man and New York based, Mike George and California investor, PIMCO. Within months, PIMCO emerged as the most likely potential buyer and meetings were arranged by Cushnahan for the firm’s executives to meet with then First Minister, Robinson and Finance Minister Sammy Wilson to discuss a single sale proposal. Coulter and Cushnahan also attended the meeting along with Tuvi Keinan of US firm, Brown Rudnick, legal advisers to PIMCO.
Following the meeting in May 2013, Wilson wrote to Irish Finance Minister, Michael Noonan, outlining the proposal from unnamed investors to acquire the Northern Ireland portfolio in an exclusive, fast track process. Noonan passed on the letter to NAMA executives in Dublin and the agency’s head of asset recovery, Ronnie Hanna, a former executive of Ulster Bank in Belfast, took charge of the fast-moving negotiations.
The portfolio sale was named Project Eagle by the NAMA asset recovery team led by Hanna, who favoured an off market, exclusive sale of the loan book. In December 2013, the NAMA board baulked at the notion of an exclusive sale and agreed a ‘limited, focused and time bound open market process’.
In January 2014, the board set a reserve minimum price of £1.3 billion (discounted from a par value of £4.5 billion) for Project Eagle and appointed Lazard as its loan sale advisors. Lazard was tasked with approaching a limited number of other potential bidders. By mid-February it had accepted US funds, Oaktree, Loan Star and Cerberus to join the bidding with PIMCO. Fortress later joined the competition as it entered its final stages.
PIMCO had agreed that as part of any final successful acquisition of Project Eagle, it would pay fees of £15 million to be shared with Brown Rudnick, Tughans and Frank Cushnahan in equal measure.
The wheels came off the wagon of the process, however, when its own legal advisors expressed concern at the fee arrangements which they feared could breach US Foreign Corrupt Practices law if it involved PIMCO making payments to anyone connected to a foreign government. PIMCO withdrew from the process in early March 2014 causing a degree of consternation within NAMA in Dublin.
NAMA chairman, Frank Daly and chief executive, Brendan McDonagh advised Noonan of the dramatic development and they agreed, notwithstanding the potential negative fallout, that the sale process should continue.
Following the withdrawal of PIMCO, Brown Rudnick assisted Cerberus with its bid with a similar success fee of £15 million to be paid to the law firm, if the bid was successful, and to be shared with Tughans. It was also agreed that Cushnahan would not be involved in the fee arrangement or preparation of the final tender in order to avoid any of the potential conflicts which had ended the PIMCO bid so abruptly.
A flurry of political lobbying followed including by Cerberus Global Investments chairman and former US vice-president, Dan Quayle who met Robinson, Hamilton and Coulter privately in Belfast in March 2014 and without the knowledge of deputy First Minister, Martin McGuinness. Cerberus Capital Management chairman, and former US treasury secretary, John Snow, met Michael Noonan and his senior finance department officials and then NAMA chairman Frank Daly in Dublin in late March 2014, on the day before the bidding closed.
Cerberus was successful with a bid of £1.24 billion for the portfolio, with over £700 million in finance loaned to it by Nomura Bank of Japan. It paid the £15 million in fees to Brown Rudnick and Tughans in July 2014.
In July 2015, a political storm erupted when Wexford TD, Mick Wallace, alleged in the Dáil that a number of people including senior politicians were due to receive large ‘success fees’ and that some £7 million had been transferred to an Isle of Man account, in connection with the Project Eagle sale.
It soon emerged that Ian Coulter had resigned from Tughans after a disagreement with his partners who objected to his transfer of the monies offshore. Within days of Wallace’s claims, Peter Robinson denied that he, or any members of his family, were intended beneficiaries of funds arising from the Project Eagle sale.
The controversy did not go away and within months the finance committee at Stormont held an inquiry which raised serious questions surrounding the sale process and during which it was alleged under privilege by loyalist blogger, Jamie Bryson that Robinson, Cushnahan, Coulter, Watters and Creighton were to benefit from the sale process.
In two programmes broadcast during 2016, the BBC Spotlight team revealed that Cushnahan, in August 2012, had been paid up to £40,000 in cash by Northern Ireland developer, John Miskelly, in return for assistance with dealing with his NAMA debts. In one of two secretly taped interviews broadcast by BBC Spotlight, Cushnahan insisted that he was among those due to receive some £6 million of the funds placed offshore by Coulter. Miskelly has also been questioned by the NCA in connection with these revelations.
Cushnahan resigned from the NIAC in October 2013 while Hanna left NAMA in November 2014.
In September 2016, the Irish Comptroller and Auditor General published a critical report which suggested that NAMA could have made more than £190 million more from the transaction.
A subsequent inquiry by the Oireachtas Public Accounts Committee in Dublin was also critical of the process and suggested in a report, published in March 2017, that it was ‘not procedurally appropriate’ for Michael Noonan to meet Cerberus executives just before the closing date for bids in late March 2014 just a day before the closing date for bids.
In May 2017, the Fine Gael led government agreed to establish a Commission of Investigation into Project Eagle headed by retired High Court judge, John Cooke, which is ongoing. The US Securities and Exchange Commission and the FBI have also carried out investigations into aspects of the Project Eagle sale, the results of which are, as yet, unknown.
The NCA has also yet to release the results of its investigation known as ‘Operation Pumpless’ which its director general, Lynne Owens has described as “one of our highest priority operations in our serious and organised crime grid”. She told the Policing Board in October 2016 that six people were under criminal investigation while more than 40 witnesses had been interviewed.
The Project Eagle controversy has some road to go yet.
NAMA LAND by Frank Connolly is published by Gill Books.