10 things we now know about Project Eagle
The main points to emerge from the Comptroller & Auditor General's report
The Comptroller & Auditor General's report into the sale of Nama's Northern Ireland property portfolio Project Eagle is now published, with the Government saying itraised important issues which needed further investigation. Ian Guider looks at the key points from the report:
1. The Comptroller & Auditor General’s report found that the first time Nama considered selling off Project Eagle in one block was only after it received an expression of interest in June 2013 from law firm Brown Rudnick, which was acting on behalf of a client. Before that the plan was to manage the loan book out or sell in it parcels.
2. The eventual decision to sell Project Eagle to US investment firm Cerberus at a minimum price of £1.3 billion (€1.52 billion) involved a significant loss to the state of up to £190m. That figure is disputed by Nama.
3. Frank Cushnahan, the chairman of Nama’s Northern Ireland Advisory Committee, was providing consultancy services to five Northern Ireland Nama debtors who owed the agency £997m. This accounted for 50 per cent of the Project Eagle book. This was disclosed by Cushnahan to Nama, but was not previously publicly known.
4. Eight firms, apart from Pimco which started the ball rolling on the sales process, were involved in the bidding. Several later withdrew with some citing dissatisfaction with the time allowed for the sale and the level of information available.
5. Lazard, Nama’s financial adviser, was paid a total of £4.32m (€5m) for its work. The report said the money was in line with the fee structure agreed between the two sides and similar to the rates with the loan sales advisors on another portfolio called Project Tower. But the fees were almost double what were paid to the adviser in a separate sale known as Project Arrow and were in contrast to the lower level of work the agency required Lazard to carry out on Project Eagle.
6. As part of the sale process, Nama made available 2,800 documents about 850 properties that were for sale. However, as part of the Project Arrow deal, potential bidders were provided with some 22,000 documents on 1,900 property assets.
7. The C&AG found Nama did not keep an adequate record of key decisions and events even though the process for the Northern loans deviated from standard loan sales. The Nama board minutes do not record clearly the basis for the decision to set the minimum price for the portfolio, the report said.
8. Cerberus told Nama in 2014 that it had agreed a success fee with Brown Rudnick and that the legal adviser had sub-contracted some of this work to Belfast firm Tughans Solicitors.
9. When the allegations that Frank Cushnahan was involved in an arrangement to share fees with Brown Rudnick and Tughans came to light, the C&AG said that Nama did not seek advice from the unit within the National Treasury Management Agency that was responsible for providing compliance or writing to Cushnahan seeking an explanation.
10. When the sale of Project Eagle closed in June 2014, Nama then found assets which were sold but where the sale had not yet been finalised. The total expected sales proceeds for these assets was £33.1m compared with Cerberus’ bid of just under £19m – a difference of £14.1m or 74 per cent of the Cerberus bid. Nama sets out in its defence why there was a difference.
