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Explosive £5m 'sale fee' revealed

Published 09/07/2015

Frank Daly's evidence about
Frank Daly's evidence about "fee arrangements" astonished committee members.
Frank Cushnahan
Nama chairman Frank Daly
Nama chief Brendan McDonagh
Mick Wallace, independent deputy for Wexford, said the Dail that a Northern Ireland politician was to benefit from £7 million diverted to a bank account in the Isle of Man. Pic: Tom Burke.

Some £5 million was to be paid to a former adviser of Ireland's bad-bank by an American investment fund if it won the bidding war for a massive property portfolio in Northern Ireland, it has been claimed.

In an explosive revelation, Frank Cushnahan was named by US financiers Pimco over a three-way split of a £15m pot for getting the billion pound Project Eagle deal over the line last year.

The others in line for payment were Brown Rudnick, the American legal firm acting for the investors, and Tughans, Northern Ireland's third largest commercial law firm.

Ireland's National Asset Management Agency - set up to clear large property and development loans from bailed out banks - disclosed the startling pay-off to a parliamentary watchdog, the Public Accounts Committee in Dublin, as it probed allegations that £7m linked to the deal and "earmarked for a politician or political party" turned up in an Isle of Man bank account.

It said Pimco - one of nine global funds asked to show an interest in the NI property package - told Nama about the "success fee" payment plan in March 2014, the final days of bidding for Project Eagle.

Nama chairman Frank Daly said: " There was £15m and we understood there was £5m each."

Under questioning from visibly astonished committee members, Mr Daly said: "I agree with your wow factor."

The disclosure was made as the National Crime Agency announced it would lead the criminal investigation.

Initially Mr Daly said the £15m was destined for Mr Cushnahan, Brown Rudnick and "a managing partner" at Tughans.

Nama suggested at the committee that it was not unusual that multi-million pound legal fees would be suggested for a deal of such a huge scale and it paid its own legal advisers 1.8m euro (£1.3m).

Brown Rudnick ultimately worked for Cerberus, the investment fund which paid £1.1 billion (1.5 billion euro) for Project Eagle while Tughans was sub-contracted by the US lawyers to do legal work this side of the Atlantic.

Mr Cushnahan retired from Nama's Northern Ireland advisory committee in November 2013 after being appointed in 2010 on advice from former Stormont finance minister Sammy Wilson. He had an office in the same building as Tughans in Belfast.

Ian Coulter, a former managing partner at Tughans who the firm said worked on the Cerberus/Nama transaction, has since left the company. Mr Coulter has not commented publicly on any of the claims.

Nama told the committee it understood fees paid by Cerberus to Brown Rudnick were shared with Tughans and that there was speculation this money found its way in to the offshore account which held £7m.

The agency was under pressure to explain why it pushed ahead with the sale after freezing out Pimco and expressing concerns about the "success fee".

"Our main concern all through this was the Frank Cushnahan element of this. He was a former member of the Northern Ireland Advisory Committee, that was the issue for Nama," Mr Daly said.

Nama said they countered that by getting written assurances from Cerberus that it was not paying third party fees.

Mary Lou McDonald, Sinn Fein deputy leader, told Nama bosses the repeated appearance of the same names in the bidding process was incestuous and an astonishing web of business and legal figures.

"The whole thing stinks to the high heavens," she said.

John McGuinness, chair of the Public Accounts Committee, said Nama should have pulled the sale after the alleged Cushnahan payment was discovered.

"Quite frankly it does stink but I would be deeply concerned about it," he said.

"When you have it explained the way it was explained this morning it just worsens - the plot thickens."

Jim Allister, hardline Traditional Unionist Voice MLA, asked Isle of Man authorities to investigate the source of the offshore £7m if it has not already.

Nama revealed nine funds were approached to buy 850 properties mainly in Belfast, Dublin and regional cities around Britain which 55 developers, investors and speculators originally borrowed £4.5 billion to finance.

Project Eagle was created after banks got 1.9 billion euro (£1.36bn) for NI property loans but then sold it to Cerberus for about £1.1 billion (1.5 billion euro) last June, at a loss of 283 million euro, after rents and interest payments were factored in.

The questions over the sale of Project Eagle and the allegations of the £7m fund in the Isle of Man were sparked by Mick Wallace, an independent politician in the Republic who said the money had been "earmarked for a politician or political party".

Mr Wallace has dismissed the opportunity to discuss his claims at the committee, instead calling for an independent inquiry.

Nama insisted that Mr Cushnahan would not have been privy to "inside information" on debtors, the Project Eagle portfolio or detailed plans for its sale through his role as an external adviser.

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