Nama 'must be held to account for handling of £1.2bn property sale'

The investigation found Nama undervalued loans associated with the 800 properties in the portfolio
By Brian Hutton, Press Association

Bad bank Nama must be held accountable for its handling of the controversial sale of a £1.2 billion Northern Ireland property portfolio, Ireland's spending watchdog has insisted.

The Comptroller and Auditor General (C&AG) Seamus McCarthy said the toxic assets agency could have taken more action when it learned of alleged multimillion-pound "success fees" from bidders being split with one of its advisers.

"There are actions they could have taken to find out more about what happened and the circumstances around Mr (Frank) Cushnahan's alleged involvement and they didn't do those things," he told a parliamentary committee.

"I think it is a significant issue and it is an issue that Nama has to be accountable for."

Mr McCarthy's probe into the Project Eagle sale to US investment fund Cerberus in 2014 found Nama undervalued loans associated with the 800 properties in the portfolio.

It said US investment fund Pimco, who pulled out of an earlier bid, alerted Nama to a "success fee" payment of £15 million to £16 million for three parties behind the scenes.

Pimco said the money was to be shared equally by Frank Cushnahan, Nama's former Northern Ireland adviser, Brown Rudnick, a US law firm, and a managing partner of Tughans, a Belfast law firm subcontracted to assist in the deal, the report found.

Mr Cushnahan has denied any wrongdoing.

Before Dublin's Public Accounts Committee, which is investigating the sale, Mr McCarthy robustly defended his findings in the face of an unprecedented attack from Nama.

"My concern was that Nama took quite a narrow view of what they were obliged to do by law and were not necessarily probing deeper and taking more positive action," he said.

"They didn't write to Mr Cushnahan at the time to seek an explanation."

He added: "I am happy with the report. I have presented the report I wanted to present."

Mr McCarthy also told the hearing:

  • International investment bank Lazard was paid £4.5 billion as an adviser for the sale.
  • There was much less advice sought from Lazard compared to other Nama sales.
  • Lazard advised on the best price from a small number of competing bidders but not on potential best price from other sales options.
  • The portfolio was bought by Nama for £2.5 billion sterling and had a "par value" of £4.6 billion at the end of 2013.
  • Nama applied more than its own recommended discount of 5.5% and the agency did not have the properties valued by market experts ahead of their sale.

Mr McCarthy also took issue with Nama's insistence that the properties in the Project Eagle portfolio were of poor quality and could not be compared with other assets in Dublin or London.

"They are not that poor quality, they do actually have value," he said, adding the properties took in rents totalling about £100 million.

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.

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