Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move:

That Dáil Éireann:calls on the Government to establish a Commission of Investigation under the Commissions of Investigation Act 2004 with regard to the sale of Project Eagle by the National Asset Management Agency.

There is simply no room whatsoever for any question marks when we talk about the sale of a State asset with a face value of over €5 billion, but shocking allegations have been made regarding NAMA's disposal of its Project Eagle portfolio. NAMA's Project Eagle sale of loans with a face value of £4.5 billion, or €5.4 billion, linked to Northern Ireland borrowers was announced in April 2014 and was the biggest sale since the agency was established in 2009. NAMA had paid €2 billion for the loans originally, and despite the fact that they were acquired at such a substantial discount on their face value, NAMA nevertheless agreed to sell them on at an even lower price of €1.6 billion, representing a further loss of €400 million for the taxpayer.

The US private equity firm Cerberus Capital Management bought the Project Eagle portfolio of loans secured on around 850 property assets, ranging from development land to state-of-the-art office blocks. The loans had been grouped together based on their connection to 55 Northern-Ireland-based debtors. Around half of the assets securing debts in the portfolio are in Northern Ireland, with the rest spread across this jurisdiction, the UK and the rest of Europe: 7% of the assets disposed of are located in the Republic, 50% in Northern Ireland and 37% in the rest of the UK. Clearly, therefore, Project Eagle did not just relate to Northern Ireland properties, which has often been said.

The law firm Brown Rudnick had been expressing a client's interest in purchasing the portfolio since at least June 2013. In September 2013 the firm made an unsolicited approach to NAMA to express the interest of its client, Pimco, in acquiring the portfolio. Pimco wanted a closed sale without an open tendering process, and in December 2013 it submitted a bid for the portfolio. The reaction of the board of NAMA was to decide to sell the portfolio but in an openly marketed, competitive sales process. Up until this point, Mr. Frank Cushnahan had been a member of NAMA's Northern Ireland advisory committee, stepping down on 7 November 2013. It has been alleged in this House that he had confidential information regarding Project Eagle and that it was discussed in detail a month before his departure at a meeting on 7October 2013. Four months after the decision had been made to offer the portfolio for sale, Pimco disclosed to NAMA that its proposed fee arrangement with Brown Rudnick included payments to Belfast firm Tughans but also to Frank Cushnahan, who had just stepped down from the NAMA advisory committee. NAMA acted immediately and the next day decided at the highest level that Pimco must withdraw from the sales process voluntarily or be removed unilaterally by NAMA.

Over the course of the sales process, a list of nine potential bidders was narrowed down to just three: Pimco, Cerberus and Fortress Investments. Pimco stepped back from the process and Cerberus won the sales process. This was announced on 4 April 2014. Cerberus submitted a bid of £1.24 billion sterling and Fortress Investments offered £1.1 billion sterling. Remarkably, the successful bidder Cerberus also used the services of Brown Rudnick, which was to share its fee for this with Tughans. The fees were in part for what has been described as "strategic advice". Fees of almost €8 million were also paid to Tughans as payment for legal work relating to title documents and due diligence. NAMA received confirmation from Cerberus that no fees were to be paid to anyone with a connection to NAMA, but somehow £7 million sterling of fees was diverted from Tughans to an offshore account in the Isle of Man, under the sole control of Tughans' former managing partner Ian Coulter. Allegations have been made in this House that these funds were earmarked for a prominent Northern Irish politician, but no evidence has been advanced to back this up. Mr. Coulter has denied that the funds were destined for either himself or a Northern Ireland politician, but has not disclosed whom they were to be paid to. Intriguingly, Mr. Coulter has stated that the money had been diverted for "a complex, commercially and legally sensitive" reason but has not yet offered a more detailed explanation, at least in public. Mr. Coulter has now left Tughans and the money has been transferred back to the firm, which has reported the matter to the Law Society of Northern Ireland.

It has further been alleged in this House that £45 million sterling was paid over to so-called "fixers" who would give developers the opportunity to purchase back their loans at half their face value, something that NAMA would be legally precluded from facilitating. A further allegation is that Frank Cushnahan also organised a secret meeting between Pimco and the North's First Minister, Peter Robinson, while he was still an adviser to NAMA. The National Asset Management Agency Act does not permit NAMA to sell assets back to borrowers where those borrowers are in default. There is a disturbing inference from some of these allegations that investment funds purchasing NAMA assets would seek to profit from exploiting the fact that they would not be bound by the provisions of the aforementioned Act.

All of this will be a cause for concern for the unsuccessful underbidder, Fortress, which I understand may be contemplating possible litigation relating to the Project Eagle sales process. While it is not directly related, an example of similar litigation is the case that I understand was lodged in the High Court today, whereby Patrick McKillen is suing IBRC, NAMA, the Minister for Finance and a number of other individuals, alleging misfeasance in public office vis-à-visthe handling of his loans.

NAMA has ultimate responsibility for the integrity of the entire Project Eagle transaction, both North and South. Its role must be the subject of a commission of investigation in this jurisdiction to ensure no question marks hang over NAMA's largest sale of assets to date.In its evidence before the Committee of Public Accounts and its public commentary on Project Eagle, NAMA has argued that no issue has arisen regarding the sales side of this transaction, but, to perfectly honest, that is not an adequate answer. Ultimately, the decision to proceed with the sale of Project Eagle was made by NAMA in Dublin, and NAMA must account for the entirety of that transaction. That is why we believe a commission of investigation is warranted in this case, if for no other reason than to either prove or disprove the very profound allegations that have been made about the integrity of the single largest commercial transaction entered into by NAMA since its foundation approximately six years ago.

NAMA has been a cornerstone of Ireland's response to the banking crisis. It has been funded by taxpayers and is under a mandate to act in their interest. Any suggestion that taxpayers are not receiving the return they should be getting, or that a transaction has taken place in a manner that is not entirely above board, must be thoroughly investigated. While there may have been no wrongdoing whatsoever on the part of NAMA, the agency must still accept responsibility for anything done by its advisers or former advisers relating to a transaction to which it was party. Serious questions will be asked about the policies and procedures NAMA put in place to avoid conflicts of interest and about how closely NAMA monitored its advisers and others with access to key commercially sensitive information or relationships with NAMA.

Unless the National Asset Management Agency is exonerated by an independent commission of investigation, a shadow will be cast over the agency and its entire approach to asset disposals. It is only fair to the individuals who have managed NAMA that a thorough investigation is instigated in which members of the public can have faith, as it is only through such a process that the reputations of the individuals in question will be fully protected. Specifically, we must ensure there is no information held by NAMA or any other party in this jurisdiction on the £7 million that was inexplicably transferred offshore to an Isle of Man account. Only a commission of investigation would have the power fully to exonerate NAMA in respect of that revelation.

It is also essential for the integrity of the House that a commission of investigation is established to find out the truth about the entirety of Project Eagle. The ability of members of parliament to communicate freely is an important privilege in all democracies. With this privilege comes great responsibility, however. When serious accusations are made in this House, it is important that they are subjected to close scrutiny to ensure they are not entirely baseless and parliamentary privilege has been used responsibly. I would have expected the Government to be happy to join the Fianna Fáil Party in calling for a commission of investigation into this matter given the promise it made in its programme for Government to "insist on the highest standards of transparency in the operation of NAMA". The allegations made in regard to Project Eagle are so serious and the integrity of the National Asset Management Agency so important that a commission must be established to investigate them.

It is also important that the ongoing investigations in the North are not hampered by their limited scope. Decisions made in Dublin should not escape scrutiny on the basis that the investigations being carried out by the Assembly Committee for Finance and Personnel and Police Service of Northern Ireland do not have jurisdiction to consider matters that took place South of the Border. Ideally, a commission of investigation in the Republic would adopt a collaborative approach with any Northern investigation, allowing for the sharing of information and the most comprehensive results possible. It is undoubtedly the case that a commission assessing what took place in this jurisdiction would be of great assistance to the various investigations under way in the North.

The primary civil investigation in the North is being undertaken by the Assembly's finance committee. It is deeply disappointing that the National Asset Management Agency has chosen not to send representatives to appear in person before the committee. I repeat my call for NAMA to co-operate fully with that investigation. Such co-operation must include NAMA officials attending the hearings at Stormont. If they will not attend of their own volition, the Minister should exercise his powers under section 14 of the National Asset Management Agency Act to direct them to do so.

To date, NAMA has suggested that, as it is not legally answerable to the Stormont Assembly, it will not require its staff to appear as witnesses before the committee's hearings. While this is strictly true, it is not in keeping with the spirit of the Good Friday Agreement, which envisaged closer co-operation and the development of an all-Ireland economy. I can understand the reason key political figures in the North would be reluctant to co-operate with a commission of investigation or the Committee of Public Accounts in Dublin at a time when NAMA was refusing to co­operate fully with the Stormont finance committee inquiry. NAMA's stated position that it will endeavour to provide answers to written questions from the committee falls well short of the level of co-operation which could be reasonably expected by citizens on both sides of the Border. Senior NAMA personnel should, if requested, appear in person before the committee to provide whatever information they can. This would be evidence of a partnership approach to an important economic and political issue affecting not only the Six Counties but the whole island of Ireland. I understand the reasons NAMA executives would take the conservative approach of not taking a politically sensitive decision to attend the Stormont committee in person without a clear direction or signal from the Minister to do so.

Representatives of the National Asset Management Agency informed the Committee of Public Accounts that the agency's decision to accept the winning bid from Cerberus was not influenced by pressure from any source. They also told the committee that each bidder had equal access to relevant information and that members of the Northern Ireland advisory committee had no access to confidential NAMA information. It is important that members of the public can have full faith in NAMA's position. This will only be possible after a thorough, independent, statutory commission of investigation review has taken place. Calling for a commission of investigation does not undermine the important oversight function of the Committee of Public Accounts. The simple reality is that the powers of a commission of investigation would allow it to look beyond the narrow focus of the Committee of Public Accounts.

Many questions need to be answered and only a commission of investigation in this jurisdiction will provide the necessary answers to the following questions, which are only a sample of the many questions that must be answered. What influence did NAMA's Northern Ireland advisory committee have on its decision to offer the Project Eagle portfolio for sale at a time when PIMCO wanted to buy it? Did the board of NAMA decide it was a good time to sell the portfolio because of the intense interest of PIMCO? What influence did Mr. Frank Cushnahan, as a member of the advisory committee until November 2013, have on that decision? Was Mr. Cushnahan privy to a detailed discussion of Project Eagle on 7 October 2013? Did he have access to any other confidential or sensitive information about Project Eagle? When exactly did Mr. Cushnahan become engaged with PIMCO? How extensive was the overlap in time, if any, between his involvement with PIMCO and his role as an adviser to NAMA? What information, if any, was given to PIMCO? Did Mr. Cushnahan give any advice to Cerberus given that Cerberus engaged Brown Rudnick, or did Brown Rudnick already have information which it could provide to Cerberus? Why did NAMA permit Cerberus to use the services of Brown Rudnick and Tughans when the reason PIMCO was ejected from the process was that part of Brown Rudnick's fees was to be paid to Mr. Cushnahan? Why was £7 million from Cerberus diverted into an offshore account in the Isle of Man and for whom was the money ultimately destined? Is there any substance to the allegation made in this Chamber that tens of millions of euro were to be paid to so-called fixers?

Many of these questions fall to be answered by NAMA or call into question the agency's performance and the conduct of its advisers. They are not questions that arise only North of the Border. Simply put, a cloud will hang over NAMA until all of the questions we have raised are answered by an independent and credible commission of investigation, working in close co-operation with the investigations under way in the North.

Given the seriousness of the allegations made and the fact that the value of the Project Eagle sale is measured in billions of euro, there can be no room for any questions to be left outstanding about any aspect of NAMA's dealings with this substantial portfolio of loans. A commission of investigation offers the best chance of getting to the bottom of these issues. The absence of a commission on this side of the Border means a cloud will remain over the Project Eagle transaction and the integrity of NAMA's approach to asset sales. This matter cannot go unaddressed. I commend the motion to the House.

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