Project Eagle interest soars

National Asset Management Agency (NAMA)

In a month when Stormont chose to probe Finance Minister 
Máirtín Ó Muilleoir’s role in the Jamie Bryson coaching scandal, south of the border may well have taken its most damaging hit to date on the sale of its Northern Ireland portfolio.

michael-noonan“I had no involvement whatsoever with this particular affair – none, zilch, nada, nothing,” were the words of the Finance Minister as he faced questions about a back channel of communication which recently threatened to de-rail the working partnership of the DUP and Sinn Féin. Up until Finance Committee Chair, Daithí Mckay, was forced to resign in August over allegations that he had coached a witness prior to questioning, the NAMA scandal had appeared to drift from public consciousness. However, fresh impetus in the South has again put the deal back in the spotlight.  

A report by Ireland’s Comptroller and Auditor General (C&AG) has led the way for heavy criticism of NAMA’s handling of the Project Eagle portfolio and its eventual sale in 2013. Most notably the report found that the sale resulted in the probable loss of £190 million to the Irish taxpayer and pathed the way for intense questioning at a special meeting of the Public Accounts Committee.

Project Eagle, the name given to the portfolio containing 850 properties and development lands once valued at £4.5 billion, incurred a haircut of 70 per cent when sold for almost £1.3 billion. The C&AG has estimated that even after the write down in value of the Northern Ireland loans that occurred between 2010 to 2013, had the loans been held and sold off individually, the potential extra value was close to £200 million.

The sale of the portfolio has been bathed in controversy from the outset. TD Mick Wallace alleged that the eventual sale to New York investment firm Cerberus had led to Belfast law-firm Tughans having £7 million in a bank account reportedly earmarked for a Northern Ireland politician. Jamie Bryson’s appearance before Northern Ireland’s Finance Committee suggested that there was at least five people set to receive payment on completion of the deal.

Other key findings that have become the focus of political attention include:

•    NAMA had not previously considered the bulk sale of the portfolio until interest was expressed from PIMCO in 2013 and despite the complexity of the portfolio, did not seek formal external expert advice in relation to the strategy;
•    Two reports to the NAMA board valuing the Project Eagle loans underestimated their value;
•    PIMCO withdrew, rather than were removed from the bidding process after revealing the “finder’s fee arrangement” which is being investigated by the National Crime Agency;
•    Days after NAMA dropped its reserve price to £1.23 billion, Cerberus offered £1.24 billion and the only other bidder, Fortress, offered £1.075 billion.

Even before the report was discussed at the Public Accounts Committee, NAMA had released a statement describing it as “fundamentally unsound and unstable”, adding that it could not be left unchallenged. They also said that the report was carried out by staff with no market experience of loan sales.

The head-to-head between the state bodies was a unique scenario and as pointed out by Irish Times’ columnist Noel Whelan, brought into greater focus the lack of scrutiny enforced on NAMA. When Brian Lenihan, the then Finance Minister, helped establish Ireland’s biggest state entity in NAMA, he stopped short of forming a new parliamentary scrutiny procedure, citing potential interference and impediment of its work. Instead, it was left to the existing Comptroller and Auditor General to take the lead, and it has done, establishing a permanent team of staff within NAMA. The powers of the C&AG are such that they are often cited as a counter-argument to calls for greater transparency.

By, as Sinn Féin’s Mary Lou McDonald put it, only slightly falling short of accusing C&AG of “Incompetence and malice” NAMA have called in to question the body responsible for monitoring themselves and adding weight to calls for there to be a new, potentially government-led, scrutiny mechanism.

The Public Accounts Committee also heard calls for a separate investigation in a report compiled by Ulster University matching confidential details about properties within the Project Eagle portfolio against emerging housing and development trends in Northern Ireland, including future values, breached corporate governance or confidentiality.
Brian Rowntree, an ex-advisor to NAMA claims that the report was shown to him, Frank Cushnahan and other board members. Describing how valuable such a document would be to bidders, Rowntree explained his surprise that having seen the document, the portfolio was sold just months later. He added that up until that point NAMA’s focus had been on “betterment of Northern Ireland” in terms of property value and “working against a fire sale”.

Last month Taoiseach Enda Kenny announced the establishment of a commission of investigation into the sale of Project Eagle, aiming to be complete by the end of 2017. It will run alongside separate investigations launched by the National Crime Agency, the US Department of Justice’s Securities and Exchange Commission and the parliamentary inquiry at Stormont.

The NCA revealed that six people remain under criminal investigation and have been deemed as suspects.

£4.5 billion the value of Northern Ireland’s property loans portfolio (Project Eagle) acquired by NAMA

70% the estimated haircut applied to the sale of Project Eagle

£1.3 billion paid by Cerberus for Project Eagle

33.5% the average haircut applied to the entire £77 billion NAMA portfolio

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