Just how was Project Eagle Landed?

Since last Thursday when Mick Wallace TD made a statement in Leinster House which set out concerns over the sale of NAMA’s loan book for the north, we’ve seen a steady stream of statements from a number of parties involved. It’s been a slow strip-tease, revealing a little at a time, keeping us on tenterhooks like any good burlesque act, waiting on the final reveal.

Based on Mick Wallace’s comments to the house and other statements, we know a number of things about Project Eagle, NAMA’s fire-sale of loans on northern properties. We know that NAMA’s northern loans were valued at €4.5 billion was offloaded for €1.5 billion in 2014 to Cerberus, an American private equity firm. Nama lost €200 million on the deal; a shortfall which will have to be met by the Irish taxpayer. Mick Wallace alleges that £7 million in fees was reportedly earmarked for a northern Ireland politician.

We know that Ian Coulter, the managing partner at Tughans, left the firm in January and Tughans say he had “diverted to an account of which he was the sole beneficiary, professional fees due to the firm, without the knowledge of the partners. We have since retrieved the money.”

We know that the two members of Nama’s Northern Ireland Advisory Committee were Brian Rowntree, former Chairman of the Housing Executive (NIHE), who resigned prior to the publication of a critical Audit Office report and Frank Cushnahan, former Chairman of Red Sky, who undertook maintenance work for NIHE. Red Sky itself was a cause of trouble for the Executive. Oh and incidentally, Mr Cushnahan had an office in Tughans Belfast office building.

In terms of the fees on the transaction, we know that Cerberus paid fees thought to be in the region of £15 million to its US-based lawyers, Brown Rudnick, who advised Cerberus they wanted to share this fee with Tughans. Spotlight’s Mandy McAuley has said that her sources are telling her that the Law Society is seeking to establish exactly what work Tughans carried out to justify such a remarkable fee.

She further says that it’s believed the money was transferred to the Isle of Man to facilitate payments to non-lawyers: “fixers and influencers involved in putting the deal together.”
Thanks to statements from Nama itself, we know that “prior to confirming Cerberus as its preferred bidder, Nama sought and received confirmation from Cerberus that no fee was payable by Cerberus to any person connected with Nama in relation to any aspect of the…sales process.”

The Irish News revealed in its Saturday edition that it is aware of the existence of 30 hours of recordings relating to the Nama sale. As yet we don’t know what’s on those tapes or who holds them. The Irish News also revealed that an unsolicited approach was made to another asset management giant Pimco by Frank Cushnahan, Ian Coulter and allegedly an unnamed politician in late 2013. In a statement to that paper it said “Pimco…followed its usual due diligence processes, but as a result we decided not to proceed with, or agree to any arrangement with, those third parties.”

Finally, we know some of the politicians who say they are not involved. Ulster Unionist party leader Mike Nesbitt was first out of the traps stating categorically he was not the intended recipient of the £7 million and saying “If true, it represents abuse of power of a previously unimaginable scale.” His call for other politicians to state they had no involvement led to a rash of statements from Peter Robinson, Martin McGuinness, Jim Allister and others. Daithi McKay MLA who chairs the Finance Committee said he intended to call a hearing as soon as possible to question the key players.

So that’s what we know so far – now for what we don’t know.

Let’s see can we follow the money. Tughans say Ian Coulter “diverted” the money to an account over which he had sole control “without the knowledge of the partners.” Does this mean that Brown Rudnick paid funds directly into the Isle of Man account? If so, did they do their due diligence on whether that was an appropriate course of action?

Is it the case rather that Ian Coulter transferred money out of Tughans’ own accounts to the Isle of Man account? Good financial practice would say that senior figures in any organisation would have delegated spending limits and would have the power to authorise transactions only to a maximum amount, usually around £5-10,000. After that, a second person would be required to co-sign any financial transactions.
Did Tughans have appropriate good financial practice guidelines in place or did Ian Coulter have free reign over the firms’ finances? Alternatively, did someone else in Tughans co-authorise a transfer?

Tughans statement says that Ian Coulter’s actions were undertaken “without the knowledge of the partners.” Does this mean the other partners did not have specific knowledge or information on the manner in which the fees would be handled, but that they had given Ian Coulter the authority to act unilaterally on the firms’ behalf? What controls did they have in place internally to manage or monitor his actions?

It seems quite unusual that the missing money was only discovered during a routine audit as we have been told. Even in a firm the size of Tughans, a £7million hole in the accounts must have been noticed just in terms of monthly management accounts alone.

It would seem logical that Tughans gave Ian Coulter some measure of autonomy in terms of managing their proceeds from the Nama transaction, otherwise his diversion of funds to an account over which he has sole control would be deemed a theft and therefore a criminal matter. Any first year law student could tell you that, never mind a whole firm of experienced lawyers.  We know, however, that the PSNI have not received any complaints.

Is the Law Society undertaking any investigation of the internal financial control processes in Tughans or is it simply trying to figure out how they managed to pull off such a massive fee? Have they not erred on the side of caution and advised a criminal complaint be made? After all, it is the job of the Public Prosecution Service and not the Law Society to determine if sufficient evidence exists to prove any allegation and proceed to trial.

Why did Nama seek additional assurances from Cerberus that no payments had been made to anyone connected with Nama in respect of the sale? Is this something Nama would do as a matter of course, and if not, what made this case special?

Was Nama aware that Frank Cushnahan and Ian Coulter made an unsolicited approach to Pimco and what did they do about it?

Pimco’s statement that they decided not to proceed following their usual due diligence processes and that they informed Nama accordingly is interesting. Was Nama informed at that time that a member of its Northern Ireland Advisory Committee and a solicitor whose firm ended up acting for the winning bidder had made an unsolicited approach to a potential buyer? And if they knew, what did they do about it?

Nama has said that it was “fully satisfied that the Project Eagle sales process delivered the best possible return that could have been achieved” which is not the same thing as saying the process wasn’t potentially flawed. Will it now conduct a review?

A huge question has to be what exactly Tughans did to earn a fee of £7 million. Let’s put that fee in perspective. If they were representing a legally-aided client in the High Court, they’d get £94 per hour. If they were representing someone accused of murder who pled guilty there would be a flat fee of £7,440. So that £7 million would equate to fees payable for 941 murder trials or almost 74,500 hours in the High Court.  That’s way more than a lifetime’s work for any lawyer.

But the biggest question must surely be who were the “fixers and influencers” as Mandy McAuley refers to them? What did the fix and who or what did they influence? Who authorised it, who knew about it and is the whole Project Eagle transaction not now compromised as a result of these revelations?

If Mick Wallace’s statement that a politician was to receive any of these funds is proven to be true, not only will that individual have to face the full rigors of the law in respect of corruption in public office, but it is unlikely the political party to which they belong will survive unscathed.

Oh and the €200 million shortfall on the deal?  The Irish taxpayer is still faced with footing that bill.

The key players may dance about the stage for a little while longer, but the curtain is set to fall.

  • chrisjones2

    Never mind. A magic Petition of Concern will protect them, whomever they are

  • Patricia,

    “…we know a number of things about Project Eagle, NAMA’s fire-sale of loans on northern properties.”

    For starters, we don’t know that it was a “fire-sale”. We know that the book value of the loans was €4.5 billion. But there is no evidence that the sale value was less than the actual market value of the properties.

    The Housing Executive and Red Sky have nothing to do with this story.

    Following the money from the Isle of Man account could be tricky. Since Tughan’s have said that they retrieved it when they discovered it had been diverted to the account.

    Here’s what we actually know, from the BBC report

    BBC Northern Ireland’s Spotlight programme has been investigating the circumstances around the deal.

    It understands that Mr Coulter and Frank Cushnahan, a Nama Northern Ireland advisor until November 2013, had been involved in trying to set up the sale of the property portfolio to another US investment firm, Pimco.

    The firm has confirmed “an unsolicited approach” was made, but it did not progress a deal and said it raised concerns with Nama.

    Nama said it asked Pimco in March 2014 to withdraw from the sales process over the discovery of proposed fee arrangements between Tughans and its former advisor, Mr Cushnahan.

    It said it had “serious concerns… in particular” the proposed payment to a former advisor.

    A Nama spokesman added on Sunday that Mr Cushnahan “never had access to confidential information but the Nama board determined this arrangement could undermine the integrity of the sale”.

    His lawyers told Spotlight he is satisfied that at all times he complied with his fiduciary and statutory obligations as a member of Nama’s Northern Ireland advisory committee.

    Mr Coulter said he was unable to respond to Spotlight’s requests for a response, nor has he returned other calls from the BBC.

    Nama has insisted that the sale to Cerberus “delivered the best possible return” and that any issues are “internal” to Tughans and have “no relevance to Nama’s open, competitive sales process”.

    Sources told Spotlight that the Law Society of Northern Ireland has been unable to establish what work was carried out by Tughans to earn millions of pounds in fees.

    A Law Society investigation is ongoing.

    Anything else is speculation. But the possibility is that Mr Cushnahan may not have stopped with soliciting Pimco.

    Whether that constitutes anything other than ‘a cause for concern’ for Nama isn’t entirely clear.

    For his part, his lawyers say “he is satisfied that at all times he complied with his fiduciary and statutory obligations as a member of Nama’s Northern Ireland advisory committee”.

    That’s where we are.

    Curtain, or no curtain.

  • D99

    “Following the money… could be tricky.”

    What happens to the £7m now? Who does it belong to? Surely those who earned it will come forward to claim it. Maybe the details will be on the invoice for the work.

  • Good work, Slugger. Let’s hope this whole business acts as a laxative to Northern Ireland’s corrupt business/political practices.

  • WindowLean

    “free reign”?? “free rein” surely?

  • Dan

    £7 million?
    Isn’t that about the same amount of public money sdlp/Sinn Fein/GAA have blown trying to steamroller through the plans for Casement Park?

  • Cosmo

    self- regulation and investigation by Law Society – enough to restore confidence…?

  • Cosmo

    They are probably as nervous and ashamed as Irish bankers!

  • Englishman Abroad

    £7 million would exceed the annual profits of most firms of this size by a substantial margin. Extraordinarily nice work if those are the fees due to Tughans for acting as Brown Rudnick’s NI agents. But if it was never intended as part of Tughans’ fees it will be burning a hole in Tughans’ client account until the firm can work out who is the rightful owner.

  • paul graham

    What has that got to do with fraud on a property sale? A totally irrelevant comparison.

  • mickfealty

    I agree Paul. It is beyond facetious. But I’ve not yet seen *any* evidence of fraud here either. There’s an awful lot of feverish speculation going on very very little (ie, hearsay and logical leaps) solid never mind relevant information.

    My tip is not to get distracted by some of the more spectacular (and potentially very damaging) high wire acts, but (as I suggested on Friday’s Periscope version of the Slugger Report) keep an eye on Jim Allister’s (and his line of questioning) very carefully…


  • Dan

    Politicians fast and loose with public money. Nah, no connection whatsoever,

  • Gingray


    Mick, I understand that you continue to think there is nothing to see here, but …

  • Cosmo
  • mickfealty

    But, what exactly? Please, please, quit dancing round your handbag and get to the point (indeed any point, so long as it is legally defensible)…

  • Gingray

    Sorry Mick, perhaps where I see relevant information, you only see coincidence?

    Nama assets in Northern Ireland worth €4.5b sold for €1.5b.

    Tughan’s paid a substantial amount of money, some of which was diverted to a private account on the Isle of Man before being retrieved and partner sacked. No criminal case for theft tho.

    Sharing the same office as Tughan’s is one of Northern Irelands two reps to nama.

    As covered in my link to the Irish news, the son of Peter Robinson worked for the firm at this time.

    No speculation, just facts.

    The point is I don’t believe in coincidence, and honestly nor do you. The week of Maria Cahill you had 18 blogs up, based on allegation and fact, and maybe you cannot understand how disappointing it is when you are inconsistent.

  • mickfealty

    Check out the NI Water tag for a thorough investigation (which with the honourable exceptions of Sam McBride and Jamie Delargy) the rest of the press ignored.

    Like or not, there’s a lot of circumstance in this story and a prime shortage of fact. That may change. But you’d be making a very BIG mistake if you think I’m not watching it very carefully.

    But for me this story is a jellyfish. It’s hard to know where to pick it up first. You might consider my SluggerReport coming up this morning as my own first serious attempt to do so.

  • Peter Mc Evoy

    “free reign” is correct, means fredom to do as you like ,as in Kings of old…. the other “rein” free anyhow

  • Peter Mc Evoy

    Will problem not be that when you follow the money to its destination that will be a bank in IOM and no one will accept responsibility so that person will take the fall, as it had not yet reached its final resting place
    ie some Polititians private bank a/ct

  • mickfealty

    That both Tughans and the Law Society say the money has been fully returned would suggest there’s another more existential problem with that line of equiry…

  • Peter Mc Evoy

    yea They might put it down to a mistake by Ian Coulter in the transfer which has now been rectified and smack him on the wrist

  • Sharpie

    No its “free rein” – as in allowing a horse a loose rein to trundle along at its own pace. It’s from the old days when we used horses a lot more.

  • murdockp

    no it is not. the tab for casement will now be in the £ 15m + bracket

  • murdockp

    free reign….like a political party helping through political power, a developer to obtain planning permission for say an out of town superstore.

    have I interpreted free reign correctly.

  • paul graham

    Agree with your point. But given recent events (sweeney, red sky, double glazing contracts, small patches of front gardens sold for large sums, £50k “loans”, etc, etc.) I doubt anyone will face prosecution even if fraud does come to light. Roll on the “peace train”, irrespective of who’s breaking what law. Rob a bank, kill some innocent guy outside a bar, cover up sex crimes, it’s all cool.

  • paul graham

    This wasn’t public money, it was “potentially” a corporate sweetener.

  • mickfealty

    Well, that’s what is killing NI. The speculation that everything has been done for the benefit of insiders. For that reason and the reduction of any doubt, this case should probably be handed directly over to the NCA.

    A clean brush, and all that. And, I would argue, it might also be seen as setting a precedent.

  • Peter Mc Evoy

    When its quacks like a duck,walks like a duck etc.,etc but still think Mick Wallace should have kept his mouth shut until the Politician and his mates were spending their ill-gotten gains.
    No use saying someone has their sticky fingers in the honey pot you need to see the stains

  • paul graham

    Looks like your wish came true. With a bit of luck NCA will go at this with a desire to get a result. Peace is a noble cause, but so is integrity. Without it, no one can have faith in Govt.

  • Pigeon Toes