David Cullinane (Waterford, Sinn Fein) | Oireachtas source

Appendix E continues as follows:

PIMCO informed NAMA that its external legal advisors, Brown Rudnick, had initially proposed the Project Eagle deal to PIMCO and that a success fee arrangement was in place between PIMCO and Brown Rudnick. Following enquiries, PIMCO had learnt that the fee was to be split three ways between Brown Rudnick, Tughans and Mr Frank Cushnahan, a former NIAC member. [This is the information that was relayed to NAMA's legal division.]

PIMCO asked the Head of Asset Recovery if NAMA was aware that Mr Cushnahan stood to gain in the event of PIMCO acquiring the Project Eagle loans. The Head of Asset Recovery [Mr. Hanna.] confirmed that NAMA was unaware of that situation and stated that NAMA would need to consider the matter further. [That is fair enough.]

The Head of Asset Recovery asked how the matter came to light and was informed that when PIMCO’s Legal and Compliance Unit reviewed the engagement letter, it had noted the success fee arrangement.

It goes on to state that PIMCO was still investigating the matter but wanted to be transparent. I read from this that there was a discussion around the concerns, that NAMA wanted to be transparent and that the head of asset recovery was being made aware of the existence of the success fees. The report goes on to state, "The Head of Asset Recovery asked whether PIMCO would continue to proceed with its work on the proposed transaction if what had been outlined was an issue for NAMA". He had to go back to the board of NAMA and he did so. It also states, "PIMCO confirmed that its legal due diligence would not proceed until NAMA's position was clarified". PIMCO is saying to NAMA's people that it cannot proceed unless it gets clarification from them. The next bit reads:

[I]f NAMA considered the fee arrangement to be an issue, PIMCO would have concerns over continuing to deal with the three counterparties and would need to consider if the transaction could be progressed without their involvement. The Head of Asset Recovery agreed to revert to PIMCO the next day if possible.

We know what the board minutes reflect and we have had a discussion on them, and maybe a disagreement. The conference call on 11 March 2014 is the important one.