Mud sticks to Eagle’s wings

White-maned, independent Irish member of parliament (TD) Mick Wallace hit the headlines in July and dragged Cerberus Capital Management with him when he alleged that a corrupt payment had been made in relation to a portfolio of bad loans that the firm had acquired. 

Wallace, under parliamentary privilege, claimed that £7.5 million ($11.6 million; €10.2 million) of a larger fee payment to Belfast-based solicitors firm Tughans was redirected to an offshore account for the benefit of a Northern Irish politician. 

The former real estate developer turned politician, who is dogged by bad pre-boom debts (one of which is now reportedly controlled by Cerberus), did not name the politician or other beneficiaries he claimed the payment was intended for, but there was immediate fall-out. 

The UK's National Crime Agency is investigating the scandal, as is the US Department of Justice, according to reports. Meanwhile the Law Society in Belfast is looking into Ian Coulter, the former-managing partner of Tughans who is accused of directing the £7.5 million payment identified by Wallace out of his firm to an offshore account. Tughans fired Coulter in January – before the allegation was made – after it identified the financial anomaly following an audit. 

The Northern Irish Assembly has also appointed its personnel and finance committee to investigate the sale of the £4.5 billion in par value assets, dubbed Project Eagle, by the Republic of Ireland’s bad bank, NAMA.

It was at a hearing of the NI Assembly investigation that blogger Jamie Bryson claimed that Peter Robinson, the North’s First Minister, was among five intended beneficiaries of the redirected success fee paid by Cerberus to Tughans. 

Bryson claimed that the other four intended beneficiaries were Tughan’s Coulter, Frank Cushnahan, a member of NAMA’s Northern Irish Advisory Committee (NIAC) from 2010 until November 2013, accountant David Watters and property developer Andrew Creighton. Bryson did not provide the committee with documentary evidence of his allegations but did say that the evidence lies within Tughans. 

All five have denied that they were to benefit from any payment. 

Coulter released a statement in July confirming that he had directed that money be transferred to an external account which he controlled. “The reason for the transfer is a complex, commercially- and legally-sensitive issue and has been explained to my former partners at Tughans. It will be explained to the appropriate authorities and those entitled to that information as part of my continuing co-operation with any investigation,” Coulter said. 

He has not expanded on that explanation publicly since. 

Cerberus denies making any payments to fixers or politicians to facilitate the deal. 

There is little to link the global distressed giant to the financial irregularities in Belfast. Cerberus retained US law firm Brown Rudnick for the legal work on the deal. Brown Rudnick in turn used Tughans for the local work and it was Brown Rudnick that paid Tughans from its own fees before Coulter pushed a portion of that cash offshore. 

Several distressed loan investors confirmed to PDI that Cerberus has an excellent reputation in the sector. 

“Cerberus has a very good franchise and has been doing this for many years … They have a multi-billion-dollar business, no one would put that at risk over a £7 million payment,” says Paul Burdell, chief executive of LCM Partners, a European-based performing and non-performing credit investor. 

And as Burdell highlights, it is the potential repercussions of getting caught making illicit payments that are the best indicator that Cerberus had nothing to do with the shady-looking dealings in Belfast. 

Another US-based distressed investor who has invested in Ireland says that he has never been approached by “fixers” seeking a cut of deals anywhere his outfit has invested. The US authorities are notoriously tough on corrupt foreign payments, he notes. Skimming to expedite deals is more likely to hurt US investors’ deals than boost them. 

It’s clear that from Cerberus’s point of view there wasn’t any upside in the process being anything other than totally above board. But despite denials by the alleged beneficiaries of the payment and little evidence the story hasn’t died down. 

The NI Assembly investigation has gone some way to giving it the legs, but it is information disclosed by NAMA and others on how the deal got done that fuels the lingering questions. 

PIMCO, which had been the frontrunner in the sale, was represented by Brown Rudnick and Tughans, before it withdrew and the legal firms switched to Cerberus. It has become clear that Cushnahan, NAMA’s then NIAC member, was due to be paid a £5 million success fee by PIMCO. NAMA revealed that it was set to throw out PIMCO’s bid after the Cushnahan success fee emerged. Instead, PIMCO recused itself from the bidding. 

The committee hearings, fuelled by political point-scoring, have focused on identifying meetings between potential borrowers and First Minister Robinson and other politicians. In October, PIMCO said it sent representatives to a March 2013 meeting at Stormont with Robinson, Cushnahan, Coulter and others. The revelation was swiftly followed by a denial by NAMA that it was aware of any contact between PIMCO and Cushnahan until it heard about the success fee in March 2014. 

Politicians on opposing sides of Northern Ireland’s tribal divide are not wasting any chances to attack opponents, but no matter the political battles, there has been enough mud slung over Project Eagle to show that some money connected to the sale was misdirected. The situation will remain uncomfortable for Cerberus and any investor considering NAMA portfolios until the criminal investigations on either side of the pond come to a conclusion.


March 2013: PIMCO attends meeting at Stormont with First Minister Peter Robinson, NI finance minister Sammy Wilson, Tughan’s Ian Coulter and partner from Brown Rudnick.
June 2013: The Republic’s minister for finance, Michael Noonan, passes on to NAMA a letter he received from Wilson in which Wilson flags investor interest in the NAMA NI book. Noonan replies to Wilson that investors should contact NAMA directly.
September 2013: Brown Rudnick approaches NAMA about PIMCO’s interest in NI assets.
November 2013: Frank Cushnahan resigns from NAMA NI Advisory Committee.
January 2014: Peter Robinson writes to NAMA requesting that requirements for treatment of borrowers be built into any sale of NI book.
March 2014: Auction frontrunner PIMCO discloses success fee commitments with Brown Rudnick, Tughans and Cushnahan. Subsequently withdraws from sale.
March 2014: Robinson, new NI finance minister Simon Hamilton and Ian Coulter meet Cerberus chairman and former US vicepresident Dan Quayle at Stormont.
April 2014: Cerberus wins auction of Project Eagle with a bid of £1.24 billion, or roughly £100,000 over the reserve price.
September 2014: Robinson and the deputy first minister, Martin McGuinness, meet Dan Quayle.
January 2015: Coulter departs his role as managing partner of Tughans.
July 2015: Independent TD Mick Wallace tells Dáil that £7.5 million payment to Tughans ended up in an Isle of Man bank account and was intended for a politician north of the border; Criminal investigation announced;
NI Assembly launches investigation; NAMA chairman Frank Daly tells Dáil about Cushnahan/PIMCO fee arrangement.
September 2015: Blogger Jamie Bryson alleges that Robinson, Coulter, Cushnahan, David Watters and Andrew Creighton were set to split the money sent to the Isle of Man account by Coulter.
October 2015: PIMCO reveals 2013 contacts with NI Executive members and Cushnahan;
Robinson denies any wrongdoing in evidence to the committee and says meetings with potential buyers were arranged by others and in the normal course of his business as promoter of NI interests.