Police in Northern Ireland opened a criminal probe of claims surrounding Cerberus Capital Management LP’s purchase of 4.5 billion pounds ($6.9 billion) of property loans from Ireland’s so-called bad bank, the National Asset Management Agency.
Northern Irish police said they will review allegations by Irish lawmaker Mick Wallace about the 2014 deal and other unspecified “concerns,” according to an e-mailed statement Wednesday. Wallace alleged last week that 7 million pounds of legal fees tied to the deal wound up in an offshore bank account and were earmarked for an unidentified politician or political party.
Some of the world’s biggest asset managers and their law firms are defending their roles in what was the largest deal in NAMA’s history. The probe adds to parliamentary inquiries on both sides of the Irish border as lawmakers review a transaction that gave Cerberus control over hundreds of properties across Northern Ireland and the rest of the U.K.
“There’s sufficient concern in relation to potential criminal activity surrounding this property deal to instigate an investigation,” Will Kerr, an assistant chief constable with the police force, said in the statement. The probe follows allegations by Tughans, a Belfast law firm involved in the deal, that a former partner left after having misappropriated fees.
The Irish government in Dublin set up NAMA in 2009 to purchase risky real estate assets from the nation’s lenders in an attempt to prevent their collapse, earning it the bad bank nickname. The agency is now selling loans under a strategy to wind up most of its operations by 2018.
Tughans was retained by Brown Rudnick LLP, Cerberus’ main legal adviser, for the loan deal. The Irish law firm alleged in a statement last week that ex-managing partner Ian Coulter had “diverted” fees to a personal account.
The law firm has since retrieved the cash and Coulter has left the practice, Tughans said in an e-mailed statement.
Tughans said it has contacted the police and will fully cooperate with their investigation, according to a law firm spokeswoman.
Coulter didn’t respond to requests for comment sent to his LinkedIn account. Tughans didn’t provide contact details. It was unclear if the law firm’s allegations were related to the new probe.
“Brown Rudnick is fully supportive of efforts to clarify the issues that have been raised over this matter and will give every assistance to the relevant authorities,” the law firm said in an e-mailed statement.
The firm said it “acted in compliance with applicable law and with the utmost propriety at all times throughout the transaction.”
The deal was the biggest loan sale by NAMA since it was set up in 2009. Cerberus bought the loans for a discounted price of about 1.6 billion euros ($1.8 billion), NAMA said last year.
Fortress Investment Group LLC and Pacific Investment Management Co. also considered buying the portfolio, NAMA officials told lawmakers in Dublin on Thursday.
PIMCO, which had also retained Brown Rudnick and Tughans while mulling the deal, withdrew after telling NAMA one of the bad bank’s former advisers was involved in the deal, NAMA Chairman Frank Daly said at the hearing.
The former adviser, Frank Cushnahan, stood to share an “acquisition fee” of 15 million pounds along with Brown Rudnick and Tughans’ Coulter if PIMCO was successful, Daly said.
NAMA executives were “appalled” when PIMCO told them about the potential fee, Daly said.
PIMCO pulled out because of the firm’s concerns about unidentified third parties involved in the process, said Jennifer Spivey, a London spokeswoman for the money manager.
Cushnahan, 73, was a member of NAMA’s Northern Ireland Advisory Committee until resigning in November 2013.
He didn’t immediately respond to voicemails left with a mobile phone number listed in Irish company documents.
A parliamentary committee in Belfast has scheduled questioning for parties tied to the Cerberus deal for next week.
Peter Duda, a spokesman for the New York-based firm, said it “welcomes” the investigation and will fully cooperate.
The firm, which manages about $25 billion, has said it’s “deeply concerned” by Wallace’s allegations and that no illegal or improper fees were paid on its behalf, “to the best of our knowledge.”
Ray Gordon, a spokesman for NAMA, declined to comment on the police investigation.
NAMA said on Monday that “attempts to conflate NAMA’s process with an internal Tughans issue are entirely wrong.”
Northern Ireland, which has a local parliament, is part of the U.K. while the Republic of Ireland in the south gained independence after a conflict that ended in 1922.