Cantillon: Project Eagle a Nama learning experience

One of the more interesting points that Nama chairman Frank Daly made in response to questioning by the Dáil Committee of Public Accounts on the Project Eagle sale was that it now takes steps to ensure that nobody who is buying a portfolio is paying money to anyone connected with the agency.

“One thing we did learn from this, and one change we have made, is that we now always ask for a declaration from whoever is buying any portfolio that there is no success fee or any money payable to anybody connected with Nama,” he told the committee.

“We pitch that very widely, whether it be a board member, an advisory committee member or a member of the executive or staff. We get declarations from them.”

In March 2014, the agency discovered that one of the Project Eagle bidders, Pimco, had discussed paying £15 million in success fees to a former Nama advisory board member, Frank Cushnahan, and two law firms, Tughans and Brown Rudnick.

Once Pimco left, the lawyers moved on to advise the successful bidder, Cerberus. Nama got a declaration from the US fund that no one involved in its bid had current or previous connections with the agency. Cerberus itself sought similar declarations from its advisers.

It was this step that allowed Nama to say the subsequent controversy over the deal is really nothing to do with it. That row is rooted in claims that business people and politicians were to benefit from £7 million diverted from Tughans to an Isle of Man account.

The fact that Daly told the committee the agency “learned” from the experience is an acknowledgement, of sorts, that Nama’s approach was, in fact, lacking in some way. That is a change from the position it has taken all along, which was that nothing at all was amiss at its side and that the problems are all really connected with those involved in the purchase. The reality is that it should have been seeking those declarations all along.

It is worth noting that the declarations it now seeks only cover fees paid to someone with some form of connection to the agency. Once bidders observe this, they can pay lawyers, accountants, advisers or anyone else whatever fees they please.