November 30, 2021

DOJ probing Irish ‘Bad Bank’ deal involving Brown Rudnick

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NAMA-Article-201509081330By Jennifer Henderson, from The Am Law Daily
The U.S. Department of Justice has reportedly landed on Project Eagle.
The code name for the April 2014 transaction, which saw Brown Rudnick advise private-equity giant Cerberus Capital Management on its $1.82 billion acquisition of a $7.5 billion property portfolio from the National Asset Management Agency (NAMA), the Republic of Ireland’s “bad bank,” made headlines in the country this summer over allegations of political payoffs and monies stashed in offshore accounts.
Back in July, The Am Law Daily noted that an audit of Belfast-based Tughans—a law firm that had been retained by Brown Rudnick as local counsel on the deal with NAMA—reportedly revealed that the equivalent of $10.7 million in fees had been funneled to an account on the Isle of Man, set aside for a Northern Ireland politician and additional fixers.
The Financial Times reported Sunday that related investigations have now extended overseas, with the U.S. Department of Justice launching its own probe and sending a subpoena to Cerberus as the law enforcement body enters the early stages of its own inquiry. In a statement provided to The Am Law Daily, Cerberus reiterated its position that it has acted appropriately.
“Cerberus has not been accused of any wrongdoing and has welcomed any inquiry associated with the acquisition of the Project Eagle portfolio,” the deal-making private equity firm said in a statement. “We are confident that our conduct was entirely lawful and appropriate.”
Brown Rudnick declined to comment on the Financial Times report of another U.S. investigation into Cerberus’ 2014 purchase from NAMA. In a previous statement, the Boston-based Am Law 100 firm, which has an office in Dublin, said it “agreed in a formal mandate letter to share with Tughans our fee from Cerberus, and this arrangement was disclosed to both Cerberus and NAMA. We did not engage, or enter into any agreement with, any other party in connection with the transaction or in connection with the fee, nor did we share our fee or make any payment to any other party.”
A spokesman for Tughans told The Am Law Daily that the Belfast-based firm has yet to receive any official communication from the Justice Department. Tughans said in a July statement that the findings of an internal investigation conducted earlier this year into the circumstances surrounding the departure of its former managing partner Ian Coulter were turned over to the Law Society of Northern Ireland.
Coulter, who worked on the Project Eagle deal, is now a consultant to a Belfast-based construction company. He has issued his own statement claiming that no money was earmarked for a politician related to the Cerberus and NAMA property deal; rather, he had transferred fees to a bank account that he was the sole beneficiary of due to “a complex, commercially and legally-sensitive” reason, as noted in press reports this summer.
For its part, NAMA declined to discuss any potential Justice Department probe.
“There is no investigation on the sale side of this transaction and NAMA is not in a position to discuss the acquisition side,” said a statement by NAMA, an agency created by the Irish government in 2009 to absorb shoddy development loans in the aftermath of the country’s financial crisis.
The Justice Department declined to comment on its reported entry into the entire affair, and it remains unclear whether Brown Rudnick has now turned to outside counsel to handle the matter going forward.
As for Cerberus, the New York-based buyout firm previously stated that it does “not tolerate inappropriate actions such as the ones that have been alleged.” Even amid the current controversy, however, it seems that Project Eagle-related shenanigans have not deterred Cerberus from spearheading a bid for another NAMA loan portfolio sale.
A spokesman for Cerberus did confirm to The Am Law Daily in late August that Brown Rudnick is not advising it on its latest Irish asset initiative, the so-called Project Arrow.
IMAGE: Brendan McDonagh, chief executive officer of Ireland’s National Asset Management Agency (NAMA), poses for a photograph at the company’s headquarters in Dublin, Ireland, in October 2011. Aidan Crawley/Getty Images
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