Dáil Éireann Debate, Tuesday - 29 September 2015
119. Deputy Pearse Doherty asked the Minister for Finance the date on which the National Asset Management Agency notified him of an unsolicited approach by representatives of the Pacific Investment Management Company related to the sale of the agency's Northern Ireland loan book; and the action that he took after this notification was received. [33184/15]
View answerThis issue is being discussed on both sides of the Border. It relates to the sale of the Northern Ireland loan book by the National Asset Management Agency, NAMA, and the fact that it is alleged there were fixer fees in the sales process. On what date was the Minister informed by NAMA of the unsolicited approach by representatives of Pacific Investment Management Company, PIMCO, relating to the sale of the Northern Ireland loan book by NAMA and what action did he take on hearing that fixer fees were to be applied to this sale?
As the Deputy will be aware, it was I who initially received the unsolicited expression of interest for the NAMA Northern Ireland loan book, via the then Northern Ireland Minister for Finance, Mr. Sammy Wilson, from Brown Rudnick on behalf of its client, PIMCO, on 24 June 2013.
On 9 July 2015, I published on the Department of Finance website both the representation from the Minister, Mr. Wilson, the Brown Rudnick approach on behalf of PIMCO and my own response to the Minister, Mr. Wilson. My officials also provided these documents to the Committee of Public Accounts. The Brown Rudnick letter suggested a semi-exclusive sales process which considered a number of suggestions regarding the future management of the portfolio for the Minister, Mr. Wilson, to consider. This would not typically be a cause for concern. A buyer will often seek a closed or exclusive sales process because it is in their interest to remove competition and increase their chances of success. Therefore, while it may be somewhat naive to suggest such an approach to NAMA, it is not surprising and gave me no cause for concern, as I was aware NAMA would favour conducting an open market process for any sale process.
In my reply to the Minister, Mr. Wilson, on 25 July 2013, I advised that Brown Rudnick should approach NAMA directly with its expression of interest and clarified that NAMA would not run an exclusive process but would have to run a competitive and transparent sales process. At that time, I also referred the letter I had received to NAMA for its information. NAMA subsequently received a third party approach on behalf of PIMCO to sell the loan portfolio on an exclusive basis in September 2013. Following this expression of interest, NAMA, in line with its well-established policy on asset and loan sales, instigated a competitive market sales process in February 2014. NAMA appointed Lazard, a major international investment bank, in January 2014 to advise on and oversee the sales process for Project Eagle. Based on its assessment of the market, Lazard invited eight other major global investment groups, alongside PIMCO, to participate in the process.
Thank you, Minister. The time is up.
Allegations have been made about this. If the House would allow me, I would like to put my reply on the record.
Is that agreed? Agreed. I am only operating according to the Standing Orders.
I thank the Leas-Cheann Comhairle.
Regarding PIMCO's subsequent withdrawal from the sales process, I am advised that on 10 March 2014 PIMCO informed NAMA that PIMCO's compliance staff had discovered that PIMCO’s proposed fee arrangement with Brown Rudnick included a proposed payment of fees to Tughans and to a former external member of NAMA's Northern Ireland advisory committee, NIAC, who resigned in early November 2013. NAMA viewed this disclosure as a very serious development and I am advised that the NAMA board met on 11 March 2014 to consider the most appropriate course of action. The board decided that if PIMCO did not withdraw, NAMA could not permit it to remain in the sales process. NAMA advises that on 12 March 2014 it indicated serious concerns to PIMCO about the proposed fee arrangement and, in particular, the proposed fee payment to the former member of the NIAC. I am further advised that on the following day, 13 March 2014, PIMCO informed NAMA that it would withdraw as a potential bidder from the Project Eagle process.
We must credit PIMCO in coming forward to NAMA with this information when it was questioned by its compliance department. We must also credit NAMA for doing what was best for the integrity of the sales process.
I thank the Minister for putting that on the record. Now, hopefully, he will answer the question I specifically asked him, namely, when was he informed, in regard to the call from representatives of PIMCO about the sale of the Northern loan book, that there was a £15 million fixer's fee? When was he informed by NAMA of that? What did he tell NAMA to do on receipt of information to the effect that one of the potential bidders had a fixer's fee with somebody who was advising NAMA in regard to its Northern loan book?
I have given the Deputy the information he requested in his initial question but I will reread it for him.
No, that is not it.
Regarding PIMCO’s subsequent withdrawal from the sales process, I am advised that on 10 March 2014 PIMCO informed NAMA that its compliance staff had discovered that PIMCO’s proposed fee arrangement with Brown Rudnick included a proposed payment of fees to Tughans and to a former external member of NAMA’s Northern Ireland advisory committee who resigned in early November 2013. I was informed by the chairman of NAMA shortly afterwards - the following day or maybe two days later, but around that time. There was no delay.
Then PIMCO had discussions with NAMA. NAMA told PIMCO that if it did not withdraw, it would not proceed to deal with it, so PIMCO withdrew. That is the position.
From what we believe from Frank Daly, the Minister was informed on 13 March that one of NAMA's biggest sales processes had a potential conflict of interest. I know from the Minister's briefing notes which we obtained under a freedom of information request that this potential conflict of interest would have shone negatively on NAMA. The Minister was informed of this fixer's fee, this three-way split between Brown Rudnick, Tughans and Frank Cushnahan, the adviser on the Northern Ireland board of NAMA. What did he do at that point? Was he not concerned that the sale process should be halted? What reassurances did he seek that Mr. Cushnahan would not continue to be involved in the sale process as it moved along, as the allegations today suggest that these same parties or some of them were involved in the sale by Cerberus.
Is the Minister concerned, as stated in his briefing document in regard to the potential conflict of interest, that there should at least be a commission of investigation here? At the very least should the Minister not call, as he did for example when the ECB was refusing to present itself before the banking inquiry, for NAMA to present itself before the investigation currently ongoing in the Northern Ireland Executive? Can the Minister give us some specific details as to why he was not concerned, knowing there was a €15 million fixer's fee involved here with these firms and one of the advisers? Was it because they would drop out and, hopefully, Mr. Cushnahan or Tughans would not get involved with the other buyers and we would settle for whatever words of reassurance they would give us, such as "sure it was only €4 billion worth of assets involved in the sale"?
As I said in my initial reply, it was the compliance section of PIMCO that informed NAMA there was a potential conflict of interest. As a result of that, NAMA took action. It let it be known to PIMCO that under the new circumstances brought to its attention, it would ask PIMCO to withdraw from the sales process or, alternatively, it would not continue to negotiate with PIMCO. Either way, PIMCO was out. The Deputy asked what I did. I listened to the advice of the NAMA Chairman, who communicated with me the views of the NAMA board, and I fully agreed it should not continue with PIMCO. Since there were eight investors in all involved, the process continued and the other investors were considered. However, the lead bidder was out because of the potential conflict of interest.
On whether it is worth investigating this, the NAMA Act shows that NAMA is accountable to the Houses of the Oireachtas, specifically through the Committee of Public Accounts. I understand a meeting has been arranged and NAMA is quite willing to explain everything. Also, it has submitted all documentation in connection with this and answered all the questions presented by the relevant Northern Ireland committee investigating this on the website. In my view, NAMA acted absolutely properly. If other people acted improperly, it was on the purchasing side, not on the selling side.
