Stormont assembly building in Belfast
Allegations of irregular payments around a £1.2bn property auction by Ireland’s “bad bank” to a top investment fund are being probed by US authorities.
The Department of Justice is in the early stages of scrutinising the deal, according to people familiar with the situation, and has sent a subpoena for information to Cerberus, the $25bn New York investment firm that won the 2014 auction dubbed Project Eagle.
The move by the DoJ adds a transatlantic dimension to a matter that has already sparked political scrutiny both in the Irish Republic and Northern Ireland, as well as a criminal investigation by the UK’s National Crime Agency.
The probes were launched following allegations this summer that one of the biggest auctions by Ireland’s National Asset Management Agency, known as Nama, comprising an 850-strong portfolio of property in Northern Ireland, was tainted by a £7m payment intended for a Northern Irish politician.
Cerberus instructed Brown Rudnick, the US law firm, on the deal, which in turn used a local solicitors firm called Tughans. It was the departure of Tughans’ senior partner, Ian Coulter, who advised on the auction, that first sparked a report to the solicitors’ watchdog.
Mick Wallace, an independent politician in the Irish Republic, then alleged in parliament in July that an audit of Tughans had revealed a £7m payment “earmarked for a Northern Ireland politician”.
Cerberus has denied wrongdoing and making any improper payments. It declined to comment on the DoJ’s subpoena. In July Cerberus said it never paid Tughans, which was instructed directly by Brown Rudnick.
Brown Rudnick said in July it had engaged Tughans as “local counsel in [the] transaction” and “agreed to share with Tughans our fee from Cerberus and this arrangement was disclosed to both Cerberus and Nama”.
The DoJ and Nama declined to comment. In July Nama said it “sought and received confirmation from Cerberus that no fee was payable by Cerberus to any person connected with Nama in relation to any aspect of the Project Eagle sales process” and that it was confident the deal “delivered the best possible return that could have been achieved for Irish taxpayers”.
The DoJ’s interest comes as one of Northern Ireland’s leading businessmen told a committee hearing on Thursday that Cerberus was “ruthless, unjust and unreasonable” in its handling of the transaction.
Gareth Graham — a property investor whose loans were acquired by Nama after Ireland’s spectacular property bust, and were included in the portfolio sold to Cerberus — launched an extraordinary attack on the way Project Eagle was handled. He also heavily criticised Frank Cushnahan, an adviser to Nama in connection with its Northern Irish assets between 2010 and 2013.
Mr Graham claimed before a committee hearing at Stormont, Northern Ireland’s devolved parliament in Belfast, that Mr Cushnahan had a “malevolent influence” on the transaction and in particular in the way Mr Graham’s loans were included in the sale.
Mr Graham and Mr Cushnahan were once close associates but their business relationship broke down in 2008. Mr Cushnahan could not be contacted for comment. However he previously issued a statement strongly denying he had done anything wrong in relation to Project Eagle.
Daithi McKay, chair of the Stormont finance committee, said Mr Graham’s allegations were “extraordinary” and raised “huge questions about the integrity of the sale of Nama’s northern property portfolio”. He said: “What we have here is the makings of a huge scandal surrounding the biggest property deal in the north’s history.”
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