Seán Fleming (Laois, Fianna Fail)
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This is a letter from the New York office of Fortress Investment Group LLC, signed by Mr. David Meisels, managing director and head of litigation. It is dated 11 November and it was sent by e-mail to the clerk to the Committee of Public Accounts. It states:

Re: Special Report 94 National Asset Management Agency's Sale of Project EagleDear Mr. Lenihan:

I write in response to your letter, dated November 3, 2016, to Mr. Randal Nardone of Fortress. Fortress appreciates the opportunity to address the Committee's requests for information, which are reproduced in bold below, followed by Fortress's response.

The first question I asked was how Fortress became aware of the sale of Project Eagle. The response is:

Fortress learned of the formal Project Eagle sale through press reports on or around February 13, 2014 that NAMA was seeking to complete a sale of the NAMA Northern Ireland loan portfolio to PIMCO.

The second question I asked was how Fortress became involved in the sale process. The response is:

After learning of the Project Eagle sale process through press reports (described above), on February 13, 2014, Michael George of Fortress reached out to Andrew McDowell, Economic Advisor to the Prime Minister, and Brendan McDonagh, Chief Executive Officer of NAMA, to express interest in participating in the sale process. Mr. McDowell put Mr. George in touch with Ronnie Hanna, head of Credit at NAMA, and John Collison, Head of Residential Delivery at NAMA, who informed Mr. George that Fortress would be invited to bid, and that NAMA had engaged Lazard to oversee the bidding process. On February 14, 2014, a Fortress representative spoke with Lazard regarding the bidding process.

The third question I asked was about the basis on which Fortress made its bid. This is the response:

Consistent with its general approach, Fortress reviewed and analyzed available information, assessed the value of the assets for sale and the circumstances of the sale transaction, and exercised its professional judgment in determining its bid, taking into account its perception of the potential risk of the transaction in relation to the potential reward. Fortress devoted substantial resources to this effort, which involved the deployment of a large team of its investment professionals, and the engagement of a number of external advisors at substantial expense to the firm, including legal counsel, property and asset advisors, and insurance and environmental consultants.

The fourth question I asked was about Fortress's rationale in making a bid below the reserve price. It responded:

As described above, Fortress formulated its bid on the basis of its professional judgment and its evaluation of the assets for sale and the circumstances of the transaction. Considerations taken into account by Fortress included the quality and completeness of the diligence information made available to Fortress; that the portfolio constituted a large exposure in a very small, concentrated region: and that the bid process required an unconditional bid which could not be syndicated or financed pre-bid.

My final question was whether there were any other matters that might be of interest to the committee regarding the sale of Project Eagle. The reply is:

Fortress is not aware of any additional information that may be of interest to the Committee at this time.

We hope the information provided above is of assistance to the Committee.

The letter is signed by Mr. David Meisels, managing director and head of litigation. Since we received this, we wrote to Fortress representatives, at the request of the committee, to invite them to appear before us.

Let me highlight the issue that has just been mentioned, namely, the condition of the bid such that it "could not be syndicated or financed pre-bid". That is a very important issue we will have to take up with NAMA. The number of people who could bid was made very limited. NAMA has said here a few times that it wanted people to bid who, in their own right, could write the cheque for the full amount and would not have to borrow or work with other people to put the funding together. NAMA has said that was in the interest of confidentiality but, clearly, normal purchases of this kind would have some groups of people financing them. The NAMA bid specifically excluded that. It made it much more difficult for people to make a bid in that the person coming to the table had to write the cheque without recourse to any bank. That is a very clear issue. Is my interpretation reasonable?