How Project Eagle became Nama’s Northern headache

US investor Cerberus’s winning bid for agency’s loans is now the subject of inquiries

The key architects of the deal that ultimately became Nama's sale of its Project Eagle loans to US investor Cerberus last year were accountant David Watters, businessman Frank Cushnahan, a former member of the State agency's advisory board, and lawyer Ian Coulter of Belfast solicitors, Tughans.

Cerberus Capital Management's purchase of the loans in April 2014 for £1.241 billion is now mired in controversy over claims northern politicians and businessmen were to share £6 million that was transferred from Tughans to an Isle of Man bank account last year.

The money was part of a £7.5 million payment which Cerberus classified as a success fee for advising on the successful bid.

Cerberus denies any wrongdoing, but the deal has sparked a number of inquiries.


The UK's National Crime Agency is investigating the £6 million transfer. The Law Society of Northern Ireland is also examining the transaction while the Northern Ireland Assembly's Finance and Personnel Committee is scrutinising the entire Project Eagle sale.

Meanwhile, one of the borrowers whose loans were sold, Belfast businessman Gareth Graham, who is in a legal battle with Cerberus, has formally complained to the US Department of Justice, Federal Bureau of Investigation, Securities and Exchange Commission and the New York State Comptroller's office.

Former Northern Ireland first minister, Peter Robinson, this week told the assembly committee that claims made to it by another witness, loyalist blogger, Jamie Bryson, that he was one those due to benefit from the money were "outrageous". He previously dismissed them as "scurrilous".

He maintains that he favoured selling the Nama loans as he believed it was good for the region’s economy.

His own statements, and documents released by the Government and the assembly inquiry, show that he supported both Cerberus’s bid and an earlier approach by another US fund, Pimco.

That company dropped out of Project Eagle in March 2014, after telling Nama that it had discussed paying £5 million to Cushnahan, who had left the agency’s advisory board the previous November.

The seeds for Project Eagle were sown in early 2013. By then, developers whose loans Nama had acquired were champing at the bit.

Some believed that their debts should not have been sold to the agency in the first place.

More complained that it was not interested in supporting them in projects that they believed were viable and would help to kick-start the north’s economy.

Many of the individuals felt vulnerable as they personally guaranteed their companies’ loans, making them liable if their businesses defaulted.

Robinson told the assembly committee there were fears at the time that the agency would start appointing receivers or administrators to some developers’ businesses, resulting in a flow of funds out of the local economy.

A number of sources, including a letter written by Watters himself, confirm that he came up with a proposal to sell all of Nama’s northern-linked loans in a single package.

He is managing partner of Belfast accountants RSM McClure Watters and would be familiar with many of the debtors. His firm was on one of Nama’s advisory panels, although the agency has not confirmed if it ever gave it any work.

He dubbed his proposal "Project Amani". The debts were bubble-era loans advanced by banks in the Republic, such as Anglo Irish and Bank of Ireland, to developers based mainly in the north, which were transferred to Nama in 2010-2011.

The unpaid balances stood at close to €6 billion, but by early 2013, their value was probably less than one third of this. Watters’s view was that they could be sold as one to a commercial investor willing to work with, and support, the borrowers involved.

Watters drafted in Cushnahan, who was then a member of Nama’s Northern Ireland Advisory Board, to work on the concept with him. Many people argue that this was a natural choice.

This week, Robinson told the committee investigating the transaction that the businessman was regarded as a financial “guru”.

He is a former banker. His career spanned Citi in London, Chase Bank Ireland and TSB Northern Ireland.

He is also well connected politically. He previously chaired Belfast Harbour Commissioners and had sat on the Northern Ireland Housing Executive.

In 2009, Robinson's Democratic Unionist Party colleague and then Minister of finance and personnel, Sammy Wilson, nominated Cushnahan to Nama's advisory board.

He would also have been familiar with many of the Nama debtors. Cushnahan was a corporate adviser to one of the biggest, Lagan Development (Holdings), an interest he declared.

He had been a director and shareholder in Graham’s property companies, although he disputes that he still owns those shares.

It is also understood that he and Coulter had access to information on the financial position and business plan of another big player, Paddy Kearney’s PBN – now Kilmona – in 2010, after its loans had transferred to Nama and Cushnahan had joined the advisory board.

The agency has always maintained that it gave no confidential information relating to its debtors to Cushnahan, or his fellow external advisory board member, Brian Rowntree.

Cushnahan brought in Coulter. He believed that the solicitor could bring the proposal to potential buyers via his contacts with lawyers in financial centres such as London and New York. Coulter was then managing partner of Tughans, Belfast’s biggest legal firm.

Its clients included a number of Nama debtors. He was also close to Cushnahan, who used an office in Tughans’s building, Marlborough House in Belfast. Like McClure Watters, the law firm was on a Nama advisory panel.

By April, the trio was working on Project Amani. A draft letter published earlier this year from Watters confirms that a success fee was expected for the successful conclusion of a deal.

It is understood that all three believed that this was legitimate. Sources say that while they felt what they were doing would benefit the north’s economy, it was also a commercial transaction, and thus they should be paid.

Success fee

There was no formal arrangement as to how this would be divided. However, the letter, intended for Tughans, states that Coulter set up a special purpose vehicle,

Cadogan Futures

LLP, into which this money was to be paid.

The document, in which the accountant lays claim to the £7.5 million, refers to Project Amani and his role in developing it.

They also approached Andrew Creighton, one of Nama's biggest clients, whose businesses had assets in Britain and Germany and owed £800 million. He has flatly denied claims to the assembly committee that he was a beneficiary of any success fee, or that he had any role in Project Amani or Project Eagle, as it became.

It is understood that they discussed the proposal with him in early 2013.

In a more significant step, Coulter approached Tuvi Keinan, a partner with Brown Rudnick, a US law firm with offices in Boston, New York, London and Dublin.

He came up with two clients interested in buying the loans, Cerberus and Pimco, both US-based private equity investors.

Pimco was particularly interested in a deal. Robinson told the assembly committee that he, Cushnahan, Coulter and Wilson met the US company on 22 May 2013 at Stormont. Cushnahan was still a member of Nama’s advisory board at this point.

The former first minister does not believe that meeting the bidder created a conflict of interest for Cushnahan.

Keinan then wrote to Wilson on June 24th 2013 confirming that Brown Rudnick had two clients interested in buying the Nama loans.

The letter details commitments that one in particular, now known to be Pimco, was willing to make when it came to managing the portfolio.

Those included cancelling developers’ personal guarantees.

Wilson forwarded this letter to the Republic's Minister for Finance, Michael Noonan, in July. Noonan's reply recommends that Brown Rudnick contact Nama and points out that the agency's policy is to market loans openly.

In the meantime, at a meeting on July 4th 2013, Coulter suggested to Watters that he step back from Project Amani as the contact with Brown Rudnick had yielded a potential buyer, Pimco.

It is understood that there was an agreement that the accountant would still share in any success fee.

Pimco then approached Nama directly in September 2013. At a meeting in Tughans's offices on October 7th, which Cushnahan attended, its chairman, Frank Daly, told the Northern Ireland advisory board of the approach and said the agency's main board would consider it at its meeting three days later.

It was then that the loans were christened “Project Eagle”.

Daly explained that the sale would involve a transparent, open process, with value as the key consideration.

The meeting’s minutes indicate that Cushnahan and Rowntree took part in this discussion. They also show that nobody present declared any interests.

Nama said this week that Cushnahan never disclosed any interest relating to Pimco or its attempts to buy Project Eagle.

Its rules obliged advisory committee members to disclose any beneficial interest in, or material to, any matter that the advisory board considered and to absent themselves from the meeting that discussed those matters.

Members also had to file yearly statements of their interests with the actual Nama board and Standards in Public Office Commission.

Cushnahan resigned from the board on November 7th citing personal reasons.

The following month Nama went ahead with Project Eagle. In January 2014, it hired London agency Lazards to run the auction and, in late February, three bidders emerged from a list of nine: Cerberus, Fortress and Pimco.

In March 2014, Pimco told Nama that it had discussed paying Cushnahan, Tughans and Brown Rudnick a £15 million success fee, which was to be split equally between the three (£5 million each).

There is debate about what happened next. Last July, Pimco said that it voluntarily walked away from the Project Eagle auction.

However, Daly told the Dáil Committee of Public Accounts that the State agency insisted that Pimco drop out.

Either way, it left the process. Brown Rudnick and Tughans then switched to Cerberus.

On learning this, Nama sought and received written assurances that nobody in any way connected with it was working on the US company’s bid.


Records show that a number of politicians were following the sales process in 2014.

In January of that year, in a phone call involving Noonan, Robinson and Deputy First Minister Martin McGuinness, Robinson said that he was not aligned with any buyer.

However, he stressed the “comfort” provided by the pledges that Pimco made regarding its proposals for managing the assets and added that he would favour any purchaser willing to make the same commitments.

They included cancelling developers’ personal guarantees, a key part of their security, and writing off debt, in return for borrowers’ co-operation.

Cerberus did make similar commitments, based on similar conditions, to Mr Robinson in a letter written on March 24th 2014 to his office ahead of a meeting the following day.

The guarantees had always been an issue. Wilson raised the matter with Brian Lenihan in 2009. Nama has said that cancelling them would amount to a "debtors' charter".

Both Cerberus and Pimco acknowledged to Robinson and the Northern Ireland Executive that the guarantees were preventing borrowers from raising money and investing in their businesses.

In any case, Cerberus won the day in April with a £1.241 billion offer, just over Nama’s reserve price.

Ahead of the deal going through in June, the US company's chairman, Dan Quayle, met Robinson and Coulter at Stormont.

Last January, Coulter resigned from Tughans in a dispute over diverted fees. Brown Rudnick, which engaged him as its liaison in Belfast, paid £7.5 million to the firm, half the success fee paid to it by Cerberus. Liam Strong, chief executive of Cerberus's European arm, confirmed that this was the arrangement in a letter to the assembly committee last month and described the money as a "success fee", although he does not specify an amount.

Tughans retained £1.5 million but Coulter transferred £6 million to the Isle of Man.

He has said that the transfer was a complex, commercially and legally sensitive issue.

He moved the money back to the firm in December. Tughans has said it disagrees with its former managing partner’s version of events.

It has given all relevant documents to the Law Society.

In April, Watters wrote his letter laying claim to the acquisition fee. He also states that he did not know about the attempts to divert the money abroad and was surprised when he heard of Coulter’s departure.

Tughans has not commented on the letter. For his part, Cushnahan has said he had no contact with Cerberus. His lawyer said he would not comment any further.

Nama says no external member of its advisory board, including Cushnahan, had access to confidential information relating to the sale of the Northern Ireland portfolio.

It also argues that no bidder could have had a competitive advantage, as they all had access to the same information.

Sources point out that by committing to cancel guarantees and promising to invest and create jobs, the bidders were making themselves attractive enough to politicians and business people without ever having to add any other incentive.

However, the belief that those incentives were on the table has made Project Eagle the focus of at least three investigations, none of which will end any time soon.