Nama trial told US firm had no choice but to leave deal

A fraud trial linked to the sale of the Northern Ireland loan book has heard how a US investment firm had “no choice other than to gracefully withdrawn” from a £1.1bn property deal.

On Wednesday, a solicitor from the National Asset Management Agency (Nama) gave evidence at Belfast Crown Court, where two businessmen are standing trial.

Frank Hugh Cushnahan, 83, from Alexandra Gate in Holywood has been charged with two counts of fraud spanning a period from 1 April to 7 November, 2013.

Co-accused Ian George Coulter, 54, a former managing partner of Tughans solicitors from Templepatrick Road in Ballyclare, has been charged with five offences over between 3 April to 1 December 2014. Both men have denied the charges.

It’s the prosecution case that they were both involved in brokering a deal to purchase the Northern Ireland loan book and were set to benefit from a multi-million pound success fee.

It’s also the Crown’s case they acted dishonestly and withheld information.

Nama was set up to take over billions of property development debts held by banks in the Republic of Ireland.

The Northern Ireland loan book involved loans bundled together into an enormous portfolio.

Solicitor Alan Stewart began working for Nama in August 2010 and that by 2014 he was a senior divisional solicitor.

He was asked by a prosecution barrister about US investment firm Pimco, who at the relevant time had expressed a serious interest in purchasing the Northern Ireland loan portfolio in its entirety.

The barrister enquired about both a conference call which took place on 10 March, 2014 involving representatives from both Pimco and Nama and about handwritten notes Mr Stewart made about what was discussed on the call.

Mr Stewart said a success fee was mentioned and one of the representatives from Pimco asked if Nama was aware of Frank Cushnahan potentially being one of three beneficiaries.

Referring to the handwritten notes, Mr Stewart confirmed that Nama was not aware of this.

He added that whilst he did not know Mr Cushnahan personally, he was aware that was an “external member of the Northern Ireland Advisory Committee”.

The jury has already heard this committee was set up by Nama to advise in respect of property debts in Northern Ireland and that Mr Cushnahan was an external member from May 2010 to November 2013.

The witness was then asked what else was discussed on the conference call and Mr Stewart confirmed concerns were raised about whether the deal could proceed.

The following day, the Nama board held a meeting where the only topic of discussion was the conference call.

Confirming this was “the focus of the meeting”, Mr Stewart said the success fee was discussed, as were the three potential beneficiaries – Mr Cushnahan, Tughans solicitors in Belfast and a law firm in London who had introduced the deal with Pimco.

Mr Stewart confirmed that during this meeting, Nama’s board members raised concerns about the payment of the success fee to Mr Cushnahan and whether the Pimco deal was fatally flawed as Pimco may have benefitted from inside information as a result of Mr Cushnahan’s involvement, which was not disclosed.

The Crown barrister then queried Mr Stewart about another conference call between Pimco representatives and Nama on 12 March, 2014 and when asked what happened, Mr Stewart said Pimco felt they had “no choice other than to gracefully withdraw”.

Two days later, a letter was sent from Pimco confirming its official withdrawal from the process.

Mr Stewart was also cross-examined by Mr Cushnahan’s barrister Frank O’Donoghoe KC.

The barrister spoke about the “allegation” made on March 10, 2014 about “former” external NIAC member Mr Cushnahan receiving “some form of payment” for the deal and whether or not there was a discussion within Nama’s legal department about this “potentially very serious matter”.

Mr O’Donoghoe then asked Mr Stewart “who called Mr Cushnahan to ask him if it was true?” and he replied that the priority that day was making sure the Nama board was informed.

The barrister again asked “surely somebody decided to pick the phone up to Mr Cushnahan and ask him if it was true or what were the circumstances”?

Mr Stewart said that from Nama’s end, he didn’t think that ever happened.

Mr Stewart was also queried about the Nama Act 2009 and if anyone from Nama’s legal department ever reported the matter regarding Mr Cushnahan to An Garda Siochana.

He replied: “Not that I’m aware.”