John McManus: Nama’s worst nightmare comes a step closer

As climbdowns go it was at the lower end of the scale, but the consequences could be far reaching. In emerged this week that Frank Daly, the chairman of Nama, wrote to the Standards in Public Office Commission (Sipo) last March to say that Northern Irish businessman Frank Cushnahan might have contravened the Ethics in Public Office Act when he was a member of its Northern Irish advisory board of Nama between May 2010 and November 2013.

Now, Sipo is not quite the FBI, but as Ivor Callely found out, breaches of the Ethics in Public Office Act can have serious ramifications. But that is not the real issue here.

What is significant about Daly’s letter is that it knocked on the head the notion that the controversy around the 2014 sale of its Northern Irish assets has nothing to do with Nama.

The agency had stuck grimly to this line ever since it emerged last July that some £7 million in fees associated with the sale were diverted to an Isle of Man bank account for the benefit of some unnamed individuals.

The money had been lodged by Ian Coulter, the then managing partner of Belfast law firm Tughans. Along with US law firm Brown Rudnick, they had advised the US investment fund Cerberus, which bought Nama's Northern Irish portfolio, dubbed Project Eagle.

Cushnahan was soon linked to the payment and although he was not a member of the advisory committee when the sale to Cerberus went through, his involvement was seen to be controversial.

Nama maintained the issue was nothing to do with it. Its line was pretty simple: they were just the seller and whatever shenanigans did or didn’t go on between the buyer and its advisers were no concern of theirs.

It may have been a legally correct position, but it did not fit well with the notion of Nama as an agent of the Irish State. Neither did Nama’s refusal to appear before the Stormont committee investigating the deal.

Change of heart

The trigger for the change of heart and letter to Sipo may have been a BBC

Spotlight

programme in late February of this year in which Cushnahan was secretly recorded saying that £6 million moved to the Isle of Man bank account was destined for him.

The letter to Sipo issued a few days later. In it Daly said that Cushnahan may have breached the ethics Act in dealings with Pimco, another bidder for Project Eagle.

Pimco had pulled out of the sale process in March 2014 and told Nama that it agreed to pay £5 million to Cushnahan if its bid succeeded. Tughans and Brown Rudnick were also to get £5 million each.

Tughans and Brown Rudnick subsequently went to work for Cerberus on its bid and Nama was happy to deal with them, although they sought – and got – an assurance that Cushnahan was not involved.

In the letter to Sipo, Nama also drew its attention to the fact that Cushnahan might have held shares in a company, Graham Group, whose loans were acquired by Nama.

Minor aspects

These are in truth only minor aspects of the ongoing investigation being carried out by the UK National Crime Agency, but they make it clear that Nama can’t and perhaps more importantly should not have tried to distance itself from the problem.

The agency now needs to explain why it waited until March of this year to write to Sipo when it was aware as far back as March 2014 – according to Daly’s testimony to the Public Accounts Committee – that Cushnahan stood to get a fee from Pimco if it was successful.

Nama’s reluctance to get sucked into the Project Eagle fiasco is understandable given the enormity of the job it had to do and the pressure it is under to wind itself up as soon as possible. But its “see-no-evil, hear-no-evil” approach has backfired.

Mick Wallace, the TD who first raised the story in the Dáil, has been vindicated and Nama can no longer assume it will get the benefit of the doubt regarding further allegations by Wallace and other critics – such as this week's claims around the sale of the Garda offices on Harcourt Street.

It makes Nama's worst nightmare – a full-blown inquiry into its activities – more rather than less likely. Fianna Fáil has set its face against an inquiry, but given that it is back in full-blown populist mode, a change of heart is quite possible.

Nama may well come to regret its decision to stick its head in the sand over Project Eagle.