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HomeBankersNama Advisor On Three Sides of 5.7bn Deal

Nama Advisor On Three Sides of 5.7bn Deal

By: Michael O’Farrell 

Investigations Editor

THE man at the centre of the scandal over €5.7bn of Nama loans sat on the state bank’s board of advisers in Northern Ireland for four years while owning shares in a company that is itself a Nama debtor.

The revelation puts Frank Cushnahan, who at one point was due to receive a £5m ‘success fee’ for the sale of the Nama ‘Project Eagle’ loan book, on three sides of the dealbroking. He sat on the Northern Ireland Advisory Committee advising Nama on its assets in the North since 2010; he had a shareholding in four companies that owed money to Nama; and when those loans were included in the Project Eagle sale, he acted for the US investment firm, Pimco, that attempted to buy them.

And in a further sign of what has been dubbed an ‘incestuous’ relationship among the players involved in the multibillion-pound deal, the Irish Mail on Sunday can reveal that Tughans Solicitors was the firm used to register at least some of the loans taken out by the firms in which Mr Cushnahan had an interest and that ended up in Nama.

A partner in Tughans is under investigation in relation to the payment of £7m in ‘fees’ to an Isle of Man bank account in his own name after the sale of Project Eagle.

The Irish Mail on Sunday front page - July 12, 2015
The Irish Mail on Sunday front page – July 12, 2015

Last night when told of the apparent conflict of interest, a spokesman for Nama admitted that the agency had not known Mr Cushnahan had shares in Nama debtor firms and had never received any declaration of interest from Mr Cushnahan about it.

Mr Cushnahan had shares in four companies controlled by Lehill Properties Ltd, one of the 55 Nama debtors whose loans were in the Northern Irish portfolio sold at a discount of 72% in a £1.3bn deal, the largest single sale of loans by Nama to date.

This week it emerged in the Public Accounts Committee that he was also one of those who stood to gain a £5m ‘fixer fee’ in the event that Pimco succeeded in buying the portfolio. He has denied any wrongdoing, saying he will fully co-operate with any police investigations and reserving his right to take legal action to protect his reputation.

Pimco was barred from the deal once it informed Nama of the extraordinary fee arrangements and another firm, Cerberus, ultimately bought the portfolio using the same legal teams.

Separately, allegations of corruption surrounding other aspects of the deal are now the focus of an investigation by the National Crime Agency in Northern Ireland.

Complaints have also been made to the FBI and separate inquiries have been launched by the PAC and the Finance Committee of the Northern Ireland Assembly.

But in a new twist, the MoS can reveal that Mr Cushnahan held shares in Nama companies at the same time as he sat on the NIAC.

During the boom, Mr Cushnahan went into business with developer Gareth Graham, a member of the family behind the famous SP Graham bookmaking chain. Company records show that Mr Cushnahan became a director and 5% shareholder of four multimillioneuro property companies controlled by Mr Graham in 2005.

That group of companies, controlled by a firm called Lehill Properties Ltd, acquired Bank of Ireland loans in 2006 to develop sites in Belfast but after 2010 those loans were taken over by Nama.

Tughans, whose partner Ian Coulter was found to have transferred fees of £7m into an Isle of Man account during the Project Eagle sale, filed the paperwork for the Bank of Ireland loans to Lehill.

nama deal 4
Irish Mail on Sunday – July 12, 2015

The loans, secured on developments called College Court Central and Lyndon Court, were ultimately sold as part of Nama’s Project Eagle deal with Cerberus. Gareth Graham, the majority owner of Lehill and its associated companies, resisted the loans being transferred to Nama and is now engaged in a court battle with Cerberus, which has put several of the companies into administration.

In a statement last night, a lawyer representing Mr Graham confirmed that Lehill Properties Ltd and an associated company, STH 500 Ltd, ‘are challenging the validity of the transfer into Nama of a series of Bank of Ireland loans… together with the sale of those loans to Cerberus Capital Management.’ Company records confirm that Mr Cushnahan retained his shareholding throughout the period that he served on the NIAC though he resigned as a director in 2008.

But a source close to Mr Cushnahan said: ‘Mr Cushnahan relinquished all equity interests in the group and associated companies seven years ago. ‘The fact that his name remains on company documentation has only been brought to his attention recently. This administrative error will be corrected as soon as possible and he has instructed that his accountant do that right away.

nama deal 5
Irish Mail on Sunday – July 12, 2015.

‘It came as a surprise to him that his name was still there.’ Mr Cushnahan was appointed to NIAC in 2010 having been recommended by then Northern Executive finance minister Sammy Wilson, who said: ‘I am confident that Mr Cushnahan… will bring a wealth of experience to the table, and will help ensure that Northern Ireland’s interests are best protected.’ He was reappointed in 2012 but resigned in 2013 citing family reasons. He subsequently became involved as an adviser with Pimco.

It appears that upon his appointment to the NIAC he would have been required to declare any potential conflicts of interest under Nama’s code of conduct.

According to the code, Nama’s board and committee members ‘must be seen at all times to be beyond reproach in the area of actual, potential or perceived conflict of interest situations.’ Under the Ethics in Public Office Act 1995 and the Nama Act 2009 board and committee members have a statutory obligation to ‘provide a list of potential conflicts of interest’ and to update it annually.

The declarations must be provided to Nama’s chairman, Frank Daly, and to the Standards in Public Office Commission though they are not made public.

But appearing before the PAC this week, Mr Daly downplayed the significance of NIAC, saying it had ‘no role in relation to Nama debtors or to the assets securing their loans.’

‘No discussion of particular debtors or particular assets was permitted at NIAC meetings. No specific information relating to debtors or assets was ever provided to external members of the NIAC and the NIAC had no decision-making powers,’ he said.

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Michael O'Farrell - Investigations Editor
Michael O'Farrell - Investigations Editor
Michael O'Farrell is a multi-award-winning investigative journalist and author who works for DMG Media as the Investigations Editor of the Irish Mail on Sunday newspaper.

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