A SEVEN-YEAR INVESTIGATION into the handling of the sale of Nama’s Northern Ireland portfolio has found the ‘bad bank’ failed to adequately record and manage conflicts of interest in the procedure.

The National Asset Management Agency (Nama) was established to take over property loans from Ireland’s bust banks in 2009. It owned a portfolio of loans in the North, which was managed by an internal committee.

In April 2014, US property fund Cerberus secured the sale of Nama’s Northern Ireland loan book, known as Project Eagle, for nearly €1.6b.

It was subsequently uncovered in 2015 that a separate US firm, Pimco, had offered to pay a ‘success fee’ to businessman Frank Cushnahan, who was a member of the committee in charge of Nama’s portfolio in the North between 2009 and 2013, and two other people.

Pimco revealed it backed away from negotiations in March 2014 after it had disclosed the details of the £15m (€17.6m) arrangement between the US firm, Cushnahan and two others to Nama, which was unaware of the fees.

The revelation raised questions over the deal. It was also claimed at the time that the price point at which the portfolio was sold at had been significantly miscalculated and undervalued.

A public commission of inquiry was established in 2018 to investigate Cushnahan’s role in the sale, as well as claims that the price of the portfolio was undervalued in the deal.

The commission has found that Nama should have made more inquiries into Cushnahan’s involvement with Pimco before October 2013, but had insufficient information to manage conflicts of interest.

Its report, published today, notes that the fees posed a significant reputational impact to Nama. It adds that Nama’s management failed to fully probe Cushnahan’s potential encounters with Pimco before the sale was announced.

It also highlights that the then-chair of Nama’s board, Frank Daly, should have informed his colleagues once he was notified of the fee in March 2014.

While disclosures were carried out in “good faith”, and did not impact the subsequent sale of the loan book to Cerberus, the report stresses that the handling of such conflicts were inappropriate.

On the price of the portfolio, the report has found that the value of the loan book, used by Nama CEO Brendan McDonagh, was “not mathematically precise” but was a reasonable estimate.

However, the agency could not have recieved a better price for the portfolio, the report says, as there was limited interest in the purchase of the loan book (meaning that no other company, apart from Cerberus, was willing to pay €1.6b at the time).

Nama’s board also failed to record a meeting in which a minimum price for the portfolio was agreed, according to the report. While this did not have an impact on the sale process, it did raise concerns over record keeping within Nama.

More bidders may have been interested in the sale had the timeframe for the process been longer, the report notes.

Nama has welcomed the findings of the report in a statement this evening, claiming it reiterates what the agency has always maintained about the appropriateness of the sale and the price it sold the project for.