Some £5 million was to be paid to a former adviser of Ireland’s bad-bank as part of a massive portfolio sale in Northern Ireland, it has been claimed.
The Republic’s National Assets Management Agency (Nama) - set up to clear large property and development loans from the country’s bailed out banks - has made the explosive revelation and said an investment fund disclosed that the money was destined for Frank Cushnahan.
He retired from Nama’s Northern Ireland advisory committee several months before the Project Eagle sale was agreed with another New York investment fund Cerberus.
Chairman Frank Daly said one of nine bidders during the sale, US financiers Pimco, was forced to withdraw its offer for the huge property portfolio after it revealed third party “fee arrangements” were in place, including payment to Mr Cushnahan.
“The indication from Pimco was that it was to be split three ways,” he said.
Mr Daly said the investment house told Nama that £15m was due to be paid to Mr Cushnahan, American law firm Brown Rudnick which was acting for Pimco in the bidding and later acted for the successful bidder Cerberus, and “a managing partner” of Belfast law firm Tughans, which acted for both bidders from the Northern Ireland end.
The disclosure came at a powerful parliamentary watchdog in Dublin, the Public Accounts Committee, as Nama was called to account over allegations made last week that £7m was in an Isle of Man bank account and allegedly “earmarked for a politician or political party” in connection with Project Eagle.
It has been claimed the money was used while the sale of the portfolio of 850 properties was under way.
Mr Daly said Nama has repeatedly insisted it had no knowledge of the offshore money.
But it revealed today the extent of its knowledge of payments of fees to third parties after it barred Pimco from the sale after it revealed “fee arrangements”.
“A subsequent piece of information came to us that there was a fee of £15m to be split three ways, Brown Rudnick, Tughans’ managing partner and Frank Cushnahan,” Mr Daly said.
“That was after Pimco had exited or had been exited by us.
“Pimco told us. They told us after the withdrawal.”
Under questioning from visibly astonished committee members, Mr Daly said: “I agree with your wow factor.”
He added: “We were appalled.
“But our real concern was the involvement of, or alleged involvement of, a former member of our Northern Ireland Advisory Committee.”
Mr Cushnahan had resigned from the NIAC of Nama months before the bidding war for Project Eagle was finalised in April 2014.
Nama suggested at the committee that it was not unusual to suggest multi-million pound legal fees for a deal of such a huge scale and it paid its own legal advisors 1.8m euro.
The PSNI last night announced an investigation into the sale of Project Eagle.
Up to nine international investment funds were initially involved when the portfolio of 850 properties was put on the market for about one third of the £4.5 billion that developers, investors and speculators originally borrowed.
Three were left by March 2014 - Pimco, Cerberus and Fortress Capital.
Mr Daly also said some of the events around the sale process were exceptional including former NI finance minister Sammy Wilson being contacted by Brown Rudnick to say it had two investment funds interested in Project Eagle.
The Nama chair said they pressed ahead with the sale of Project Eagle, despite concerns over payments to third parties for several reasons, including the reputational damage that could be caused by pulling the plug,
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”.
It is understood the UK’s National Crime Agency will be involved and detectives in Belfast are also set to liaise with the Garda in Dublin.
Nama created Project Eagle by paying banks 1.9 billion euro for loans linked to the properties but then sold it to Cerberus for about £1.1 billion (1.5 billion euro) last June, at a loss of about 200 million euro, after rents and interest payments were factored in.
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.
“We are talking about Northern Ireland. We are talking about a relatively small business community where there’s an awful lot of information about debtors and properties who’s in Nama, who’s not in Nama, but it did not come from Nama,” Mr Daly said.
Mr Cushnahan was appointed Northern Ireland adviser to Nama on advice from former finance minister Sammy Wilson.
The committee heard that Mr Wilson was sent a letter from lawyers Brown Rudnick stating they had two clients who would bid for Project Eagle which he subsequently sent to Michael Noonan, Finance Minister in Dublin.
Mr Wilson left the finance ministry in Stormont in July 2013, a year before the Project Eagle deal was done.
Mr Noonan forward the letter to Nama and told Mr Wilson the sale process must be open, transparent and exclusivity would not be considered.