The former chairman of the National Asset Management Agency (Nama) told a Belfast court on Wednesday he would have expected businessman Frank Cushnahan to declare his involvement in a deal to sell a Northern Ireland property loan book.
Frank Daly was giving evidence at the trial of Mr Cushnahan (83) and former managing partner of Tughans solicitors Ian Coulter (54) at Belfast Crown Court.
Mr Cushnahan has been charged with two counts of fraud spanning from April 1 to November 7, 2013 while Mr Coulter has been charged with five offences from April 3 to December 1, 2014.
Both men deny all the charges which relate to the sale of the Northern Ireland property loan book held by Nama.
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Mr Daly, Nama chairman for a decade up to December 2019, was the first witness to be called in the trial.
He confirmed part of the debts that Nama took over included those owed by both individuals and in respect of properties in Northern Ireland.
As a result of this the Northern Ireland Advisory Committee (NIAC) was established under the Nama Act 2009.
When asked by prosecuting barrister Jonathan Kinnear KC why NIAC was set up, Mr Daly said it was “a political decision”.
Mr Daly explained that there had been “representations” from the Northern Ireland Executive to the then minister for finance in the Republic, Brian Lenihan, to have representation from the North on the board of Nama.
Mr Daly said that while Mr Lenihan deemed this was “not appropriate”, it was decided that NIAC should be established to allow input “into the broad impact of Nama on Northern Ireland and any views on the strategies being pursued by Nama”.
Mr Cushnahan was appointed as an external member of NIAC in May 2010 and resigned in November 2013.
Mr Kinnear asked Mr Daly about a document regarding NIAC’s terms of reference which included points about the conduct of committee as well as its objectives and conflicts of interest.
Mr Daly said that, under the Nama Act 2009, if NIAC members had an interest that need to be disclosed, this should be done at the start of any Committee meetings.
Mr Kinnear then questioned Mr Daly about Nama and NIAC after it emerged that American investment fund Pimco was interested in purchasing the entire Northern Ireland portfolio.
Mr Daly said after Nama was approached by Pimco, a decision was made to market the deal and that during this process Pimco was “emerging as the highest bidder”.
He confirmed Pimco advised Nama of a success fee should its bid be granted and when asked when he first became aware that Mr Cushnahan was to be paid part of the success fee, Mr Daly said this was on March 10, 2014.
Mr Kinnear asked Mr Daly if Mr Cushnahan had ever disclosed any conflicts of interest in relation to Pimco and the Northern Ireland portfolio during his term of office or following his resignation.
Mr Daly said he had not and that Mr Cushnahan would have been aware of Nama’s strategy and “thinking” in relation to the sale.
Referring to an October 2013 NIAC meeting, Mr Kinnear asked Mr Daly if he would have expected any attendees to declare any involvement in the portfolio sale.
He replied: “I would have expected them to immediately raise their hand and say ‘I have knowledge, I have a connection or I have some involvement.’”
“Because in my view it would have been a clear conflict of interest on the part of the individual ... he should have raised his hand and declared an interest,” Mr Daly said.
He added that if it emerged that a member of NIAC was getting a success fee in relation to the sale, this would have “raised questions about the integrity around the sale”.
The jury of nine men and three women have already heard that, once Mr Cushnahan’s involvement became apparent, the deal with Pimco fell through shortly after.
Asked if he would have allowed Mr Cushnahan to attend the NIAC meeting if he had declared his involvement, Mr Daly replied “no ... because I would have perceived it as a significant conflict of interests”.
“I would have regarded it as just something he should not have been present at. He should not be aware of Nama’s thinking on it.”
