Project Eagle: Nama bowed to political pressure, report shows

Political pressure led Nama to limit the information it gave potential buyers for Project Eagle, deterring some companies from bidding for the loans, a report by Comptroller and Auditor General shows.

Project Eagle was the name given to more than 900 loans secured on properties in Northern Ireland, with some in the Republic and the UK, that Nama sold in April 2014 to US firm Cerberus for £1.3 billion.

A report by Comptroller and Auditor General (C&AG) Séamus McCarthy says that the agency’s sale of the loans could have lost the State up to £190 million (€220 million).

Northern Ireland's then minister of finance and personnel, Sammy Wilson, contacted Nama chairman Frank Daly before the sale to say the agency should not be seen to be publicly "auctioning" the portfolio.

Records of a subsequent Nama board meeting show it intended sticking to its policy of selling assets on the open market and getting the best value, but was conscious of the “political sensitivities and confidentiality concerns” involved.

That led to Nama giving less information than it did on subsequent sales, a move that deterred some potential buyers from bidding for Project Eagle.

Assets

The report shows those asked to consider bidding only saw detailed information on the top 55 properties and summaries of the remaining assets.

The better assets included commercial properties, and shopping centres in Northern Ireland, the Republic and English cities such as Manchester and Leeds. However, Project Eagle also involved small properties and development sites on both sides of the Border that some interested buyers complained were difficult to value without full information and third party aid.

Nama's agent for the sale, UK investment bank Lazards, told the agency that the limited information would affect bidders' ability to borrow cash to pay for the portfolio.

The C&AG’s report states that while Nama provided 2,800 documents dealing with 850 properties in Project Eagle, when it sold another portfolio, Project Arrow, it provided 22,000 documents covering 1,900 properties. In another sale, it allowed site visits.

Declined

Mr McCarthy notes that six out of nine potential buyers either pulled out or declined to enter because of the limited information and the lack of time allowed to table a bid.

Those that declined to enter or withdrew included high-profile investors, mostly from the US, such as Apollo, Blackstone, Goldman Sachs and Lone Star. The process started out with nine likely bidders, but only three, Cerberus, Pimco and Fortress, actually went ahead with offers.

One of those that declined to enter was put off by the fact that Pimco had been in contact with Nama before the sale began, giving it a “material advantage”.

That company, also from the US, wrote to the agency in September 2013 but had actually met with the then first minister, Peter Robinson, in Stormont a year before the sale.

Pimco subsequently dropped out of the auction in March 2014 when Nama discovered it had agreed to pay a £15 million success fee to a former member of the agency's advisory board, Frank Cushnahan, and two law firms, Tughans and Brown Rudnick.

That left two bidders, Cerberus, which bought the portfolio with a £1.3 billion bid, and Fortress.

Nama rejected the C&AG’s finding and said it got the best deal possible for the Irish taxpayer.