By Michael O’Farrell
Investigations Editor
EMBATTLED Nama bosses refused to explain last night why they did not carry out any background checks into controversial figure Frank Cushnahan (pictured right) before appointing him as an adviser to the bad debts agency.
At the time of his appointment in 2010 Mr Cushnahan was listed as one of the owners of a Northern property group whose Bank of Ireland debts had been taken over by Nama.
This apparent conflict of interest, revealed by the Irish Mail on Sunday last year, would likely have eliminated him as a suitable adviser had it been known.
This would have prevented him from playing any part in the Project Eagle sale, something that is now the focus of investigations by police in Britain and the PAC and Government in Ireland, as well as a regulatory probe in the US and a parliamentary inquiry in Belfast.
Yet Nama refused to answer specific questions last night about why no checks appear to have been run on Mr Cushnahan prior to his appointment and whether any changes to appointments procedures have been implemented since.
Finance Minister Michael Noonan was also under increasing pressure last night to explain why he did not act to call off the Project Eagle sale when he was told of disturbing allegations about success fees that resulted in the initial buyers pulling out of the deal.
In response to a series of MOS questions a spokesman for Mr Noonan said: ‘The Public Accounts Committee is the appropriate forum to deal with those questions.’ Nama remained unaware of Mr Cushnahan’s ownership of a 5% stake in four companies controlled by Gareth Graham, a Northern developer whose debts formed part of the Project Eagle sale, until this newspaper informed the toxic loans agency in the summer of 2015.
– that time Mr Cushnahan had concluded his two terms as a board member of Nama’s Northern Ireland Advisory Committee, at a time when the – agency dealt with the sale of Project Eagle. The episode remains an acute embarrassment for Nama, which spent more than €78m on due diligence fees between 2010 and 2014, yet failed to check the background of one of its critically placed advisers.
It took the MOS a single afternoon – and less than €100 in research fees – to establish Mr Cushnahan’s shareholdings in a Nama debtor firm via publicly available company records. He has since said he had relinquished the shares before becoming an adviser to Nama and did not realise he was still listed as a shareholder.
But Nama’s failure to check in the first place means a vital opportunity to head off what has become the toxic bank’s biggest scandal was missed entirely. The omission raises worrying questions about Nama’s due diligence processes for its own staff and associates and whether any further oversights may have been made.
It also shines a spotlight on subsequent occasions when Nama failed – according to this week’s C&AG report – to do enough when informed of other alleged conflicts relating to Mr Cushnahan.
While serving on the NIAC Mr Cushnahan failed to declare to Nama that he was allegedly in line to receive one third of a £15m success fee from Pimco, the original intended purchasers of Project Eagle. This apparent conflict of interest, when declared by Pimco to Nama, ultimately collapsed the deal forcing Pimco to pull out of its intended purchase.
Mr Noonan was informed of this on March 13, 2014, by Nama chairman Frank Daly – but the minister did not intervene to stop the Project Eagle sale process.
Concerned at potential conflicts of interest, Nama then asked the subsequent purchaser, Cerberus, to confirm in writing that no one associated with the agency – such as Frank Cushnahan – stood to gain from the deal.
This confirmation was duly received. However, Cerberus retained the same legal firms – Brown Rudnick and Tughans – that had allegedly been due to share a £15m success fee with Mr Cushnahan under the Pimco deal.
Nama was told by Cerberus that these firms were receiving a success fee which was to be shared equally. Nama knew that Mr Cushnahan retained an office at Tughans but did not seek to ask him if he stood to gain anything from the Cerberus deal.
The original Dáil revelation by TD Mick Wallace that £6m of the success fee paid by Cerberus ended up in an Isle of Man account – to be allegedly divided up between insiders and politicians – was the catalyst that first threw light on the scandal.
Further Dáil allegations and media revelations have since propelled the story to new heights of intrigue.
For example, just last week the BBC’s Spotlight programme broadcast tapes of Mr Cushnahan apparently receiving a £40,000 cash payment during a car park meeting with Northern developer John Miskelly in 2012, at a time when Mr Cushnahan was on the NIAC.
The recordings also appear to show Mr Cushnahan instructing the developer to lie to police from the National Crime Agency investigating the affair.
Mr Cushnahan has denied any wrongdoing saying he cannot comment further until the NCA investigation has concluded.
To date the NCA has as part of its investigation arrested and released Mr Cushnahan and Ronnie Hanna, a former Nama executive.
Mr Hanna was Nama’s head of asset recovery until 2014 and sat on the NIAC with Mr Cushnahan. Mr Hanna has also denied any wrongdoing.
After leaving Nama Mr Hanna set up a new private consultancy firm called Drive Financial Consultants Ltd registered at his home address in Co Down. It is not known what, if any, business this company is involved in.
investigations@newsscoops.org Noonan under pressure to say why he didn’t act Nama told about ‘success fees’ for legal firms
