A fraud trial linked to the sale of a Northern Ireland loan book held by the National Asset Management Agency (Nama) heard on Wednesday how a US investment firm had “no choice other than to gracefully withdraw” from a £1.1 billion property deal.
A solicitor from Nama was called to give evidence at Belfast Crown Court, where two businessmen are currently standing trial.
Frank Hugh Cushnahan (83), from Alexandra Gate in Holywood, has been charged with two counts of fraud spanning a period from April 1st to November 7th, 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 time frame from April 3rd to December 1st, 2014.
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Both men have denied the charges levelled against them. The prosecution argues they were both involved in brokering a deal to purchase Nama’s Northern Ireland loan book and were set to benefit from a multimillion-pound success fee.
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It’s also the prosecution’s case that they acted dishonestly and withheld information.
After being called to the witness box on Wednesday, solicitor Alan Stewart said he began working for Nama in August 2010 and that, by 2014, he was a senior divisional solicitor.
He was then asked by Jonathan Kinnear KC, prosecuting, about US investment firm Pimco, which at the time had expressed a serious interest in purchasing the Northern Ireland portfolio in its entirety.
Mr Kinnear inquired about a conference call on March 10th, 2014, involving representatives from Pimco and Nama, and about handwritten notes Mr Stewart made on what was discussed on that call.
Mr Stewart said a success fee was mentioned and one of the Pimco representatives asked if Nama was aware of Frank Cushnahan potentially being one of three beneficiaries.
Referring to the handwritten notes, Mr Stewart confirmed that Nama had not been aware of this.
He added that while he did not know Mr Cushnahan personally, he was aware Mr Cushnahan was an “external member of [Nama’s] Northern Ireland Advisory Committee”.
The jury has already heard that Nama established this committee to advise on property debts in Northern Ireland and that Mr Cushnahan served as 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, with the only topic of discussion being 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 that had introduced the deal involving Pimco.
During this meeting, Mr Stewart confirmed, Nama 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 benefited from inside information as a result of Mr Cushnahan’s involvement, which had not been disclosed.
The prosecution then asked Mr Stewart about a subsequent conference call between Pimco representatives and Nama on March 12th, 2014. When asked what happened, Mr Stewart said Pimco felt it had “no choice other than to gracefully withdraw”.
Two days later, a letter from Pimco confirmed its official withdrawal from the process.
Mr Stewart was also cross-examined by Mr Cushnahan’s barrister, Frank O’Donoghoe KC.
He referred to the “allegation” made on March 10th, 2014, about “former” external member Mr Cushnahan receiving “some form of payment” for the deal and asked whether or not there was a discussion within Nama’s legal department about this “potentially very serious matter”.
“Who called Mr Cushnahan to ask him if it was true?” Mr O’Donoghoe asked Mr Stewart, who replied that the priority that day had been to ensure the Nama board was informed.
“Surely somebody decided to pick the phone up to Mr Cushnahan to ask him if it was true or what were the circumstances,” Mr O’Donoghoe asked. 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 had ever reported the matter regarding Mr Cushnahan to An Garda Síochána. “Not that I’m aware,” he replied.
Mr O’Donoghoe also questioned the witness about views within Nama about the Northern Ireland Advisory Committee.
Mr Stewart agreed that he had heard other Nama board members and committee members refer to it as a “talking shop” and a “sop to the Northern Ireland administration” and that it “served no purpose other than political collaboration”.
