(The Cash for Ash scandal has brought down the DUP’s Arlene Foster. But in this in depth investigation, author Kieran Allen takes a look at the other scandal the DUP was involved in – Project Eagle. This time they had help from their right wing friends across the border, Fine Gael)
The billion-pound sale of debt on nearly 900 properties in Northern Ireland and Britain is one of the biggest scandals ever to have engulfed this island.
The key players in Project Eagle included three DUP Ministers in the North, a Fine Gael Minister in the South, a former Vice President of the USA and a former leader of the UK employers’ organisation, the Confederation of British Industry (CBI) – as powerful a bunch of conspirators against the people as has ever been assembled in Ireland. So far, none of them has been called to account. And there’s no sign of anything such thing happening.
The story goes back to the property boom of the 1980s. Huge profits were being made from construction North and South. But the greed of the speculators was to bring them crashing down. When the crash came in 2008, more than €4 billion was owed to the banks by just 55 people in Northern Ireland, most of this sum by a handful of big operators.
Many had put up their homes as guarantee for loans from the likes of the dodgy Anglo-Irish Bank. Now they were fearful that the loans would be called in and they could be left penniless.
There was outright panic when NAMA – the Southern state agency which had taken control of the non-performing loans – closed in on the Ramada Hotel in Portrush in 2013. There was €48 million outstanding on the premises. But the Ramada was now worth only €3 million. NAMA was proposing to call in the guarantee and take possession of the owner’s home.
So the North’s top property speculators got onto an old friend, Sammy Wilson of the DUP. Within 24 hours, Wilson put through a call to NAMA chairman Frank Daly in Dublin. A few weeks later, the outline of a solution for the North’s business elite came into view with moves to sell off the whole of NAMA’s property holdings to just one investor, on the basis of a plan to then sell the properties back to the speculators at knock-down prices.
One problem they faced was Section 172 of the NAMA Act, passed by the Dail in 2009, forbidding the agency from selling property back to developers who were in default. Nama was also forbidden from selling off properties to any third party who was funded by these same debtors. This restriction was deeply frustrating for the very rich.
But there was a way around the problem. If all of NAMA’s properties in the North could be sold off to one major investor based outside the jurisdiction the investor could then sell the properties back to the developers at bargain basement rates. The investor might have to pay a sweetener to a middle man – but the rewards could make this very worthwhile.
Which is exactly what happened.
ENTER FRANK CUSHNAHAN
The key architect of the arrangement was Frank Cushnahan, a “fixer” close to senior DUP politicians. Cushnahan was regularly seen at DUP dinners and enjoyed privileged access to Stormont Ministers. Finance Minister Sammy Wilson described him as a “friend” and appointed him to the NAMA Northern Ireland Advisory Board in 2010.
Cushnahan was a former chairperson of Red Sky, a building company which had been beset by scandal arising from misuse of maintenance contracts with the Northern Ireland Housing Executive. A Public Accounts Committee had condemned him for “unethical behavior.”
Cushnahan was just the type of guy that the North’s property speculators needed. He teamed up with Ian Coulter, a managing partner in Belfast’s biggest law firm, Tughan’s, and a former head of the CBI. Both men made contact with major US legal firm Brown Rudnick. Cushnahan operated from an office in Tughan’s head office in Belfast.
Brown Rudnick had been previously involved in Ireland’s debt crisis when, representing bondholders at Anglo Irish Bank, it took legal action to ensure they got their pound of flesh from Irish taxpayers. It had also acted for property developers in their dealings with NAMA. So, Brown Rudnick had intimate knowledge of the inner workings of Ireland’s debt agency.
Cushnahan and Coulter’s aim was to use Brown Rudnick as an intermediary to send out feelers to US vulture funds which specialised in buying up “distressed property.” Although he was a member of the NAMA Northern Ireland Advisory Committee, Cushnahan apparently did not reveal any of this to his NAMA colleagues.
Brown Rudnick came back to Cushnahan and Coulter with a proposal that all of NAMA’s Northern properties could be sold off in a single lot to US “vulture fund” which they had identified, PIMCO. Cushnahan and Coulter then set up a meeting with DUP First Minister Peter Robinson and Sammy Wilson, the idea being that the DUP pair could use their political leverage to pressurise the Dublin government into letting the Project Eagle properties go for a price far below the estimated value.
After meeting with PIMCO, Wilson wrote to Dublin Finance Minister Michael Noonan to suggest a private sale. Noonan wrote back, noting the “potential for political sensitivities.” He covered his back by telling Wilson that NAMA rules forbade a private sale: instead, he suggested, PIMCO could write directly to Ronnie Hanna, Nama’s Head of Asset Recovery, to express an interest in the Northern properties.
PIMCO then entered into discussions with NAMA about buying all of Project Eagle. Simultaneously, Peter Robinson turned up the pressure by declaring publicly that NAMA’s Northern properties should all be sold in one go. He had never previously supported this idea. He followed it up with a meeting with Michael Noonan, where he again advocated a private sale to PIMCO.
There was a particular reason Robinson was pushing the PIMCO option. PIMCO had already agreed a Memorandum of Understanding with DUP Ministers, offering to forgive the personal guarantees on the homes of Northern debtors if PIMCO won ownership of Project Eagle. PIMCO also pledged that the Northern developers could continue day-to-day management of the indebted businesses. The Memorandum had been drawn up by Frank Cushnahan.
SKIDDING OFF TRACKS
The Dublin Government, in the person of Michael Noonan, then backed up the DUP in suggesting that NAMA let go its Project Eagle properties for as little as £1 billion – even though the same properties had been valued at £4.5 billion.
Unfortunately for all concerned, the arrangement skidded off course when PIMCO informed NAMA that they would be paying £5 million to Frank Cushnahan as his fixer fee as well as other payments to Tughan’s senior partner, Ian Coulter, and to Brown Rudnick .
This was to be Cushnahan’s reward for having set up the meeting with the DUP Ministers at which they were primed to pressurise Dublin. However, as a US firm, PIMCO was worried that they might be caught out by the Foreign Corrupt Practices Act (FCPA) – a powerful piece of US legislation that penalises companies that pay bribes. PIMCO wanted NAMA informed of the whole affair, so that there could be no comeback.
However, once NAMA was informed of a payment having been made to their own advisor, Cushnahan, they, too, had to move sharply to cover themselves. A special meeting of the NAMA board was called – and the PIMCO deal fell though.
The obvious course at this point might have been to set up an investigation into the role played by Cushnahan. If the NAMA board failed to do this, Michael Noonan should have stepped in and done it instead. Noonan had been informed by NAMA of PIMCO’s proposal to pay a “success fee.” That is, a bribe. But he did nothing.
With PIMCO out of the picture, a devious arrangement had to be set up to keep the DUP scheme open – but with a different buyer.
Enter another giant US vulture fund, Cerebrus, chaired at the time by former US Vice President, Dan Quayle. Quayle’s first move was, once again, to call in on Peter Robinson, who got onto Noonan to push the sale through again, this time to Cerebrus.
Cerebrus used the same lawyer as PIMCO – Brown Rudnick – and they in turn contacted the same Belfast legal firm, Tughan’s, to speed the sale. From their end , NAMA appointed City of London bank Lazards to act for them in the sale and paid them four million euro for their services.
Cerebrus offered Nama £1.241 billion for Project Eagle – just a tiny fraction above the reserve price of £1.24. They had met with Nama’s Ronnie Hanna a few days before making their bid. Cerebus insisted that the fact that their offer was so close to the reserve price was pure co-incidence. The sale was completed in just six weeks.
Following the PIMCO pattern, Cerebrus wrote a letter to First Minister Robinson saying that, “Cerberus will release personal and corporate guarantees as a key part of consensual workout plans with corporate borrowers.”
On this basis, Cerebrus got hold of Project Eagle and NAMA was left with a loss of €200 mi0llion, chalked up to the taxpayers of Ireland.
Cerebrus also paid fixer fees – only this time did nothing so crude as naming a member of the Nama board as a recipient.
The arrangement was that Cerebrus would pay £15 million in fees to Brown Rudnick who in turn would split it with Tughan’s. So Tughan’s would pocket around seven million – the equivalent of the legal fees for 941 murder trials or 74,500 hours in the High Court.
It soon transpired that much of this £15 million was in fact to be moved to an offshore account in the Isle of Man to fund other pay-offs. Tughan’s claimed that this diversion of funds had been organised by Ian Coulter without the knowledge of the firm’s other partners.
Once the deal was done, Irish taxpayers had to pick up a bill for €200 million. The way was now clear for more political influence to be exerted on behalf of Northern speculators.
This appears to have been the ultimate game plan – Cerebrus would get property at a knock down price through political influence and payment of fixer fees. And DUP Ministers, having played a key role, would be able to look after their own sidekicks.
Take Paddy Kearney. He has rejected allegations of corruption as “totally unfounded.” But he has admitted that he wrote to Peter Robinson asking him to intervene on his behalf with NAMA. By coincidence, he then received a €300 million write-down on debts from Cerebrus: as a result, his company, Kilmona Investment, was able to declare a substantial profit.
(Kearney was one of the “Maple 10,” a group of businessmen rounded up by Anglo-Irish Bank in 2009 to do a phony share purchase to artificially inflate the bank’s market value.
The BBC Spotlight programme broadcast last September recorded Cushnahan receiving £40,000 in cash from John Misekelly, another Northern property developer. In the recording, Miskelly indicated that the two men had been introduced by Garreth Robinson, son of Peter Robinson.
Cushnahan was taped claiming that he and Robbie Hanna, head of NAMA Asset Recovery Agency, were “as thick as thieves.”
There was a Golden Circle at work in the North. The fixers were people like Cushnahan and Coulter. The beneficiaries included some of the most prominent and influential political and business people in the land.
One of them was Garreth Robinson. The firm where Coulter was a partner, Tughan’s has long worked with Garreth Robinson and his PR firm, Vertext. The former DUP leader’s son carried out lobbying for Tughan’s when they received lucrative NI Housing Executive contracts. Tughan’s paid Robinson’s company a huge fee in 2012 to manage an exclusive event where his father, Peter, was a main speaker. Tughan’s routinely recommended that its clients deal with Garrett Robinson, particularly if they were in NAMA.
Garreth Robinson was also paid a fee by the Lagan Group of developers. The Lagan Group in turn had benefitted from a NAMA investment of €9 million in their Millmount development. When Coulter left Tughan’s under a cloud of controversy following the Isle of Man revelations, he quickly found an alternative number with the Lagan Group.
On the tape broadcast by the BBC, Cushnahan also remarked that, “I was up with Sammy Wilson working behind the scenes and that’s all very hush”.
North and South of the border, the Irish rich have had a long love affair with property. Instead of creating jobs though sustained long term investment, they want the quick buck. Property is the main method – because it is more open to political manipulation by their political friends
When they lose out in their gambles, the rich call in their political friends, who help them put together all sorts of shady transactions to ensure they don’t suffer too much, or at all.
All talk of loyalism or nationalism is dropped when it comes to cross-border efforts to protect the rich. The right-wing parties, Green and Orange, may usually be full of bombastic antagonism towards one another. But when it comes to channelling public money into private hands they are brothers and sisters under the skin.