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Irish Government orders inquiry into Nama Project Eagle property assets sale

Published 14/09/2016

Taoiseach Enda Kenny has ordered an inquiry
Taoiseach Enda Kenny has ordered an inquiry

The Irish Government has ordered an inquiry into the controversial £1.2 billion sale of Northern Ireland property assets by bad bank Nama.

After months of allegations and revelations, Taoiseach Enda Kenny took the unprecedented step of asking opposition leaders to set out their concerns as he decides how the investigation should be conducted.

The Republic's spending watchdog found Nama lost up to £190 million on the Project Eagle sale to US investment fund Cerberus in 2014.

The Comptroller and Auditor General (C&AG) said Nama undervalued loans associated with the 800 properties in the portfolio when it slapped on a £1.3 billion price tag.

It warned Nama that it should have been concerned after one bidder, US investment fund Pimco, alerted it to a "success fee" payment of £15-16 million for three parties behind the scenes and pulled out of the process.

The C&AG said Nama was warned by Pimco that the money was to be shared equally by Frank Cushnahan, Nama's former Northern Ireland adviser, Brown Rudnick, a US law firm which ultimately acted for two bidders in the sale and a managing partner of Tughans, a Belfast law firm subcontracted to assist in the deal.

Mr Cushnahan has denied any wrongdoing.

The watchdog's audit found Nama was subsequently told by Cerberus that it had a separate "success fee" arrangement with Brown Rudnick and Tughans and money would be split 50/50.

The C&AG report also revealed that Nama reported a net loss of £162 million on sales of assets held by Northern Ireland debtors in 2014.

The Project Eagle deal with Cerberus has been dogged by scandal for more than a year, including £7 million linked to it being found in an Isle of Man bank account.

Former managing partner of Tughans, Ian Coulter, resigned after it was unearthed.

Nama said it categorically rejected the C&AG's findings and insisted it got the best price and one that could not be beaten today.

"There is nothing in the report that changes the unanimous view of the Nama board that the Project Eagle sale was the best achievable outcome for the state either back in 2014 or now in a post-Brexit environment," chairman Frank Daly said.

Project Eagle will first be examined by the Public Accounts Committee in Dublin. Meetings are planned for the end of September and early October, first with Nama executives and then Finance Minister Michael Noonan.

One of the big issues in the midst of the controversies has been the cross-border aspect of the deal, in particular the inability of parliaments to compel witnesses from overseas.

Investigations have been launched by the UK's National Crime Agency, the US Department of Justice's Securities and Exchange Commission as well as a parliamentary inquiry in Stormont.

Sinn Fein president Gerry Adams described the offer of an inquiry as welcome but belated.

He called for governments and statutory agencies in the north and south to give maximum co-operation to the inquiry.

Nama is the so-called bad bank set up in 2010 to take loans linked to property investments off bailed-out Irish banks at a discount.

It is on course to make a more than 1.75 billion euro profit on its deals by 2020 but has faced repeated questions over its handling of Project Eagle.

Cerberus offered £1.241 billion - just £11 million above a reserve price reduced by £70 million in the days before final bids were entered.

The only other bidder, Fortress, offered £1.075 billion.

Nama previously revealed some of the assets in the Project Eagle portfolio were worth as little as 5p in the pound.

The C&AG said there is no indication that Nama had considered a bulk sale of its Northern Ireland assets until US law firm Brown Rudnick wrote on behalf of US investment fund Pimco in June 2013 offering an exclusive deal.

Tughans insisted it was not aware of the £7 million transfer to the Isle of Man.

All parties involved in the 2014 transaction have denied wrongdoing.

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