US vulture fund Cerberus paid £15 million to lawyers linked to former Nama adviser Frank Cushnahan for extra information that the company believed would aid its bid for the State agency’s Northern Ireland loans.
Cerberus hired US lawyers Brown Rudnick and Belfast solicitors Tughans on March 24th, 2014, shortly before Nama accepted its £1.241 billion (€1.6 billion) bid for the loans, known as Project Eagle, on April 4th, and agreed to pay them a £15 million fee.
Another bidder, Pimco, had left the Project Eagle auction on March 12th after telling Nama that Brown Rudnick had sought a £15 million success fee from the company that was to be shared with Mr Cushnahan and Tughans managing partner Ian Coulter.
Cerberus chief operating officer Mark Neporent told the Dáil’s Public Accounts Committee (PAC) that Brown Rudnick partner Tuvi Keinan made an unsolicited approach to one of his company’s directors, Robert Falls, in mid-March 2014. Pimco last week told the committee that Mr Keinan approached it in April 2013 and introduced the company to Mr Coulter and Mr Cushnahan.
Mr Neporent told the committee that Brown Rudnick offered to provide Cerberus with information on Northern Ireland developers that owed money to Nama, their guarantees, assets and potential business plans, which the law firm had as a result of working with Mr Coulter over the previous 12 months.
‘Potential value’
Cerberus only began its bid for Project Eagle in February 2014, at the invitation of Nama’s agent, Lazards. Mr Neporent explained that it had only limited time and information, so it believed there was “potential value” in what Brown Rudnick was offering. He confirmed that Cerberus also wanted to ensure that no other bidder got that information, as the law firm intended offering its services to rivals if his company did not hire it.
“Brown Rudnick also offered to provide legal and strategic advice regarding the bid process, and to help Cerberus position itself effectively with key stakeholders,” Mr Neporent said. The lawyers arranged a meeting between the company’s chairman, former US vice president Dan Quayle, the then Northern Ireland First Minister Peter Robinson and Mr Coulter on March 25th.
Mr Neporent explained that his company engaged Brown Rudnick, but agreed that it would continue working with Tughans, and split the £15 million fee with the Belfast firm. Cerberus barred Brown Rudnick from hiring anyone else and it had no dealings with Mr Cushnahan at any point.
According to Mr Neporent, Brown Rudnick did not tell Cerberus about the proposed fee deal with Pimco, Mr Cushnahan and Mr Coulter. However, he told the committee that Mr Keinan explained that Pimco had dropped out of the auction after telling Nama that it intended to hire Mr Cushnahan as an adviser after it had succeeded in buying Project Eagle.
This is contrary to a letter from Pimco chief legal officer Tom Rice to the PAC, which stated that the company dropped out because Brown Rudnick sought the £15 million fee. Nama has always maintained that it was only concerned with the proposed payment to Mr Cushnahan.
Cerberus only told Nama that it had hired Brown Rudnick and Tughans two days before its bid was accepted, as it did not believe the agency’s rules obliged it to give this information.
However, it then assured the agency that no current or former executives, directors or advisers were working for it.
