Two businessmen currently on trial on fraud charges arising from the sale of the Northern Ireland property portfolio “have not kept a cent” of a £7.5 million (€8.63 million) success fee, Belfast Crown Court heard on Monday.
As the former chairman of the Dublin-based National Asset Management Agency spend his fourth and final day in the witness box at Belfast Crown Court, a barrister representing one of the defendants also said “a rump” of that success fee remains in the bank account of a Belfast solicitor’s firm.
Frank Hugh Cushnahan (83), a former corporate financier from Alexandra Gate in Holywood, is standing trial on two counts of fraud spanning over a period from April 1 to November 7, 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 a timeframe of April 3 to December 1, 2014.
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Both men have denied the charges which arise from the sale of the Northern Ireland property loan book held by the National Assets Management Agency (Nama).
During Monday’s hearing, former Nama chairman Frank Daly was cross-examined by defence barrister Grey Berry KC, who is representing Mr Coulter.
The jury of nine men and three women have already heard a deal with US investment fund Pimco to buy the entire Northern Irish loan book fell through in March 2014.
The reason given by Pimco at the time was that Mr Cushnahan was set to benefit from a success fee and concerns were raised due to his position as an external member of the Northern Ireland Advisory Committee which was established by Nama to advise in respect of property debts in Northern Ireland.
After the deal with Pimco fell through, a second US investment fund, Cerberus, made a successful bid - and it’s this deal that Mr Daly was asked about by Mr Berry.
Both a law firm in London who advised Cerberus and Tughans solicitors in Belfast each received a payment of £7.5 million in success fees.
When Mr Daly was asked if he was aware that £7.5 million “was returned to Tughans account where it sits to this day”, he told Mr Berry he believed this was the case.
Mr Berry added that after Tughans paid tax on it, “the rump of that is what’s left in Tughans account.”
Mr Daly was then asked “You’re not aware of Mr Coulter or Mr Cushnahan having purchased a yacht over the last few years, or something like that, at a few million pounds?” and he replied “I’m not aware one way or the other.”
Mr Berry then said: “Can I suggest to you, in fact, that Mr Cushnahan or Mr Coulter have not kept a cent of the money. Do you know that? Are you aware of that?”
The witness replied: “I have no knowledge of that one way or the other.”
Mr Daly was also questioned about Nama’s views of Northern Ireland’s loan portfolio in 2013 and potential challenges.
This, the barrister suggested, was due to debtors in Northern Ireland being viewed as being more uncooperative than their counterparts in the Republic, the collapse of the property market and political aspect of Nama doing business in the north.
When asked if it was viewed as a “problem area” for Nama, Mr Daly said: “I would say that the Northern Ireland portfolio was difficult.
“The assets we held, a lot of cases were quite poor . . . and the challenge of operating in another jurisdiction was something that we would have been conscious of.”
Mr Berry then spoke of concerns at the time that Nama would conduct a ‘fire sale’ involving the Northern Ireland loan book which he said could have “attracted the ire of the Government in Belfast.”
Saying “that’s quite true”, Mr Daly said: “I spend a lot of my time at meetings and conferences in Northern Ireland assuring people we that would not conduct a fire sale.”
Mr Berry then raised the issue of the Nama Act 2009 which was enacted by the Irish Government following the property crash and banking crisis in the Republic in 2008.
When Mr Berry pointed out that, under the Act, Nama’s statutory duty was “not to the Northern Irish economy”, Mr Daly confirmed that the Act “did not legislate for Northern Ireland.”
He added: “Even though there was no statutory responsibility to Northern Ireland . . . Nama was always conscious of the impact of its activities in Nothern Ireland, both economically and socially.
“It’s something I personally feel quite strongly about it was also the strong view if the board, that we should not disadvantage Northern Ireland in any way.”
Following the cross-examination, Mr Daly was addressed by Madam Justice McBride.
After thanking him, the senior judge said: “You are now released from your oath. You can now leave the witness box.”
She then addressed the jury and told them to return to court on Wednesday morning when the trial will resume.
