Mr. Frank Daly:

I thank the chairman and wish him and the Deputies a good morning. The committee has invited us today to outline the background to the sale of the loans of Northern Ireland debtors, Project Eagle, and the process which was followed by NAMA in securing the sale. We welcome the opportunity to put the facts on the record, that is, the facts as they are known to us. In so far as there may have been some wrongdoing on the part of certain individuals at the periphery of the transaction in Northern Ireland - individuals who acted as advisers to potential purchasers - we are not in a position to comment as we have no knowledge of what may have taken place. The facts, as they pertain to those individuals and their activities, are a matter for authorities in Northern Ireland to establish. I note that in the past 24 hours, the PSNI has indicated it would be looking at that aspect of this issue.

However, in view of the very extensive commentary around this issue in recent days, which has conflated alleged wrongdoing involving individuals in Northern Ireland with the sale by NAMA of Project Eagle, I wish at the outset today to make four points very clear. The NAMA sale process for Project Eagle was robust, competitive, and competitive right to the end, and secured the best outcome for the Irish taxpayer. When NAMA became aware of a concern surrounding the participation of one of the bidders for Project Eagle, we immediately, and without hesitation, took steps to ensure that bidder withdrew from the process. The third point is that no pressure from any source, political or otherwise, influenced NAMA in regard to the decision to sell the loans of Northern Ireland debtors or the decision to accept the winning bid from Cerberus. The fourth point is that if a payment did find its way to an account in the Isle of Man, as has been alleged, then wherever such a payment came from, it most certainly did not come from NAMA or from proceeds due to NAMA under this sale. In fact, NAMA had no knowledge of this alleged payment to Mr. Coulter by Brown Rudnick until recent days when it was put into the public domain.

I will outline the sequence of events in this sale. As chairman both of the NAMA board and, since October 2011, the Northern Ireland advisory committee, I feel I am well placed to outline this sequence of events that led to the sale of the Project Eagle portfolio. We first became aware of investor interest in purchasing the portfolio after the Minister for Finance, Deputy Michael Noonan, passed to us a letter he had received from the Northern Ireland Minister for Finance and Personnel, Mr. Sammy Wilson, on 24 June 2013. Mr. Wilson enclosed a copy of a letter, of the same date, that he had received from a law firm, Brown Rudnick, in which Brown Rudnick indicated that clients of the company were interested in acquiring the Northern Ireland loan portfolio. In his reply on 25 July 2013, and after his Department had consulted with us, the Minister, Deputy Noonan, pointed out to Mr. Wilson that parties interested in acquiring NAMA loans or assets securing NAMA loans should make direct contact with NAMA. The Minister, Deputy Noonan, also drew attention to NAMA's policy that loan and asset sales should be openly marketed and he furthermore pointed out that NAMA did not favour granting exclusive access to any potential purchaser as that would militate against achieving optimal value for the assets concerned. I understand that the Department of Finance proposes to circulate copies of the Minister’s correspondence with Mr. Wilson.

In September 2013, Brown Rudnick made an unsolicited approach to NAMA and indicated that one of its clients, PIMCO, was interested in acquiring NAMA's Northern Ireland loan portfolio. In its subsequent engagement with NAMA, PIMCO indicated a preference for a closed transaction, which did not involve open marketing of the portfolio. The board agreed that senior NAMA staff should engage further with PIMCO but with a view ultimately to completing an openly marketed loan sale in line with board policy. On 4 December 2013, PIMCO submitted a bid expressed in terms of a price range with the final price to be determined after due diligence. PIMCO indicated that its preference remained that the sale would be a closed transaction.

At a meeting on 12 December 2013, the NAMA board decided that the portfolio should be openly marketed as part of a competitive process; the board also set a minimum price below which it would not be willing to proceed with a sale. This minimum price reflected NAMA's valuation of the underlying assets. At a further meeting on 8 January 2014, the board approved the appointment of Lazard to advise NAMA on the appropriate marketing approach and to oversee the sales process. It was envisaged that this would involve marketing to suitable targeted bidders who would have the financial wherewithal to submit credible bids on the portfolio. On 17 January 2014, NAMA received from the principal private secretary to the Northern Ireland First Minister a copy of a "letter of intent" relating to the proposed management of the Northern Ireland portfolio. The letter appeared to summarise an agreement between PIMCO and the Northern Ireland Executive and its purpose was to require the purchaser of the portfolio to enter into a memorandum of understanding with the government of Northern Ireland, confirming certain fundamental conditions relating to the future management of the portfolio. NAMA did not engage further in regard to the draft letter. I understand the draft letter of intent is also being released today.

On 10 March 2014, PIMCO informed NAMA that its compliance staff had discovered that PIMCO’s proposed fee arrangement with Brown Rudnick included also the payment of fees to Tughans, a Belfast law firm, and to a former external member of NAMA’s Northern Ireland advisory committee. PIMCO named that individual as Mr. Frank Cushnahan. Our understanding was that PIMCO and Brown Rudnick had been engaging since September 2013, and possibly earlier, but it appears that its compliance staff only became aware of the "fee-sharing" arrangement in early March 2014. It is not clear to us whether this late discovery arose because of internal communications issues within PIMCO or between PIMCO and Brown Rudnick.

A special meeting of the NAMA board was convened on 11 March 2014, the following day. The board viewed PIMCO's disclosure as a very serious development and it considered the most appropriate course of action. Whereas the former Northern Ireland advisory committee member was no longer a member of the committee at the time of the disclosure - he had resigned on 8 November 2013 - and never had access to confidential information, the board considered that the proposed fee arrangement could undermine the integrity of the sales process. The board decided that if PIMCO did not withdraw, NAMA could not permit it to remain in the sales process. On 12 March 2014, NAMA indicated its serious concerns to PIMCO about the proposed fee arrangement to the former member of the Northern Ireland advisory committee. On 13 March 2014, PIMCO informed NAMA that it would withdraw from the Project Eagle process. I understand that in recent days PIMCO has disputed the facts as outlined above and suggested that its withdrawal from the sales process was voluntary. I do not propose to enter into a debate with PIMCO as to the meaning of the word "voluntary". Suffice it to say that it was left in no doubt that if the withdrawal was not voluntary, it would have to be involuntary.

Lazard engaged with a total of nine potential purchasers, including PIMCO, during the first quarter of 2014 and, at the end of the process, the best bid from the two remaining bidders was received from Cerberus. I say in response to some insinuation in the past few days that the other remaining bid was not from PIMCO. The Cerberus bid was accepted by the board on 3 April and announced on 4 April 2014. The transaction was completed in June 2014.

For the avoidance of doubt, no fee payment was made by NAMA to Brown Rudnick. NAMA had very limited engagement with Tughans on this sale and did not instruct Tughans to advise it on any aspect of the sale. Fees totalling €7,839 were paid to Tughans as payment for delivery of title documents and assistance with due diligence queries. NAMA's legal adviser on Project Eagle was Hogan Lovells.

Cerberus has stated that it made a fee payment to Brown Rudnick and that Brown Rudnick advised that the fee would be shared with Tughans. Cerberus state that this was payment for strategic advice relating to the sales process and for work that Brown Rudnick and Tughans had already carried out on the portfolio. From NAMA's perspective, there would have been no reason to question why a purchaser of a loan portfolio would have been making payments to two law firms. What did concern us, based on PIMCO's disclosure, was the possibility that a payment would have been made to a former member of the Norther Ireland advisory committee. We sought and received written confirmation from Cerberus at the time that no fees were paid to any party with a connection to NAMA. Cerberus confirmed the position as follows:

We confirm that no fee, commission or other remuneration or payment is payable to any current or former member of the board of the National Asset Management Agency (NAMA), any current or former member of the executive of NAMA or any current or former member of an advisory committee of NAMA in connection with any aspect of our participation in the Project Eagle sales process.

I am confident that the NAMA board acted quickly and decisively and took every measure available to it to protect the integrity of the sales process as soon as the proposed fee arrangement came to light.

Tughans, in its recent statement, indicated "that a former partner diverted to an account of which he was the sole beneficiary professional fees due to the firm without the knowledge of the partners". Tughans also confirmed that the individual in question no longer works for the firm and that the company has "reported the circumstances of the departure of the former partner to the Law Society". These disclosures by Tughans are a matter for that company and they had no impact on the competitive sales process run on behalf of NAMA. If there are suggestions that there was wrongdoing by certain parties, it is a matter for the Northern Ireland authorities to investigate them. Given the facts as outlined above, it would be entirely wrong and dishonest to conflate NAMA's process with the unrelated Tughans issue.

I will outline the role played by the Northern Ireland advisory committee with regard to NAMA's activities in Northern Ireland. NAMA has four statutory committees – the audit committee, the credit committee, the finance and operating committee and the risk management committee - established under section 32 of the NAMA Act. Section 33 of the Act provides that the board may establish such advisory committees as it considers necessary or desirable to advise it in the performance of its functions.

The NAMA board established two such committees, the planning advisory committee and the Northern Ireland advisory committee, the NIAC. The latter was established in 2010 at the suggestion of the late Minister for Finance, Mr. Brian Lenihan. The Minister felt the committee would be useful in advising the board on the strategy for Northern Ireland assets. Following consultation with the Minister, who in turn I understand had consulted the Northern Ireland Executive, the NAMA board decided in May 2010 to appoint Mr. Brian Rowntree and Mr. Frank Cushnahan to the NIAC. From 2010 to 2011, the NIAC was chaired by Mr. Peter Stewart, who was a member of the board of NAMA. After Mr. Stewart's resignation from the board and from the NIAC in October 2011, I became chairman of the committee until its dissolution in September 2014.

I would like to clarify a few points regarding the role of the NIAC. Its role was to advise on the broad economic and social context in Northern Ireland in which NAMA was operating and on the overall state of the property market. The NIAC had no role in relation to NAMA debtors or the assets securing their loans. No discussion of particular debtors or particular assets was permitted at NIAC meetings. No specific information relating to debtors or assets was ever provided to external members of the NIAC and the NIAC had no decision-making powers. I am aware a former member of the NIAC, Mr. Brian Rowntree, has said in recent days that the NIAC was "kept in the dark" about the Project Eagle transaction. I agree. While the committee was informed at its meeting on 7 October 2013 that PIMCO had made an unsolicited approach to purchase the portfolio, it was made clear that key information and decisions relating to the portfolio were matters for the board of NAMA only. For the avoidance of any doubt, therefore, it is important to point out that external members of the NIAC did not have access to any information about the portfolio that would have been of value to a potential bidder. The board took the view for reasons that Mr. Brendan McDonagh will outline later that the best commercial option was to sell the portfolio on the basis that there was a limited prospect over a medium-term horizon of a significant improvement in values.

The sale of the Project Eagle portfolio received a broad welcome when it was first announced. The extent to which the sale has acted and may continue to act as a catalyst to stimulate activity in the Northern Ireland property market and in the economy more generally is to be welcomed. I am confident that the transaction will ultimately be seen as benefiting Northern Ireland and the taxpayers in the Republic. We have no difficulty in discussing NAMA's commercial rationale for the sale. All documents and records relating to the sale of Project Eagle were available to the Comptroller and Auditor General as part of his audit of the 2014 financial statements. We are aware that, as required by the NAMA Act, he is planning to initiate his second section 226 triennial review of NAMA, covering the 2012-15 period, over the coming months. The Comptroller and Auditor General has confirmed this plan this morning. He has also confirmed my assumption that this transaction will be one of those assessed as part of that review. On behalf of NAMA, I welcome the Comptroller and Auditor General's forthcoming review. I am confident it will show that we have acted commercially and properly. Regardless of the commercial aspects of this sale, we take great exception to any suggestion that anyone representing NAMA - a current or former board member, or a current or former member of staff - was engaged in wrongdoing. I reiterate that if there has been wrongdoing at the periphery of this transaction in Northern Ireland, it has nothing to do with NAMA. In the absence of any evidence to the contrary, it is wrong and dishonest to claim otherwise.

I have read my statement as it was submitted to the committee. Before I conclude, I wish to make three short points about the coverage of this issue over the past 24 hours. First, there is no PSNI investigation of the sale of these loans by NAMA. The PSNI is investigating activities relating to the purchase of these assets, rather than their sale. That is a critical distinction. Second, there is no truth in the suggestion that €7 million of the sales proceeds of this transaction ended up in an Isle of Man account. NAMA received the full proceeds from this sale. The origin of that €7 million is not NAMA. There has been no suggestion that NAMA is the origin. Many media outlets are continuing to make this error. Third, it has been mistakenly claimed in the media that NAMA sold assets that were valued or worth approximately €5 billion for approximately €1.5 billion. Again, this is simply wrong. It is a very serious error. NAMA sold the assets for exactly what they were worth and not a cent less. The assets may or may not have been worth more years earlier. We will go into that in more detail later. The fall in their value resulted from the property crash. They were not worth anything more than the price achieved by NAMA when it sold them for €1.5 billion. Such errors are damaging NAMA and are misleading. I just wanted to put that on the record at the end of my statement.