COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 23 Feb 2023

Comptroller and Auditor General Section 2 Report on Unauthorised release of funds from the Central Fund of the Exchequer

Mr. William Molloy (Director of Financial Operations, Central Bank of Ireland) called and examined.

Chairman: I welcome everyone to the meeting. Deputy Catherine Murphy sends her apologies for this morning's meeting but expects to join us in the afternoon.

Members and witnesses attending from within the committee room are asked to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19.

Members of the committee attending remotely must continue to do so from within the precincts of Leinster House. This is due to the constitutional requirement that in order to participate in public meetings, members must be physically present within the confines of the Parliament. The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee. He is accompanied by Ms Mairead Leyden, audit manager at the Office of the Comptroller and Auditor General.

This morning we will engage with officials from the Central Bank to examine the following: the Report on the Accounts of the Public Services 2020 - Chapter 14: Assessment and collection of Insurance Compensation Fund Levies; the Report on Administration and Movement of the Insurance Compensation Fund for the year ended 31 December 2021; and the Comptroller and Auditor General section 2 report, Unauthorised release of funds from the Central Fund of the Exchequer.

We are joined by the following officials from the Central Bank: Mr. Adrian Varley, director of prudential analysis and inspections and Mr. William Molloy, director of financial operations. We are also joined by the following representatives from the strategic economic development division of the Department of Finance: Dr. Colm O'Reardon, head of unit; and Mr. Paul Cotter, principal officer.

Representatives from the Office of the Revenue Commissioners, Mr. Eugene Creighton, assistant secretary, large corporate division, and Ms Angela O'Gorman, Comptroller and Auditor General and committee liaison person, are also joining us. They are all very welcome. I remind all those in attendance to ensure their mobile phones are on silent or switched off.

Before we start, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards reference witnesses may make to other persons in their evidence. As they are within the precincts of the Parliament, they are protected by absolute privilege in respect of the presentations they make to the committee. This means they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse that and it is my duty as Cathaoirleach to ensure they do not. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue. It is imperative they comply with that direction.

Members are reminded of the provision of Standing Order 218 that they should not comment on, criticise or inquire into the merits of the policies of the Government, or those of a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise, or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable.

I call the Comptroller and Auditor General, Mr. Seamus McCarthy, to deliver his opening statement.

Mr. Seamus McCarthy

I will start by discussing the section 2 report. The Central Fund of the Exchequer receives most of the State’s revenues and is the source of most State spending. The account of the Central Fund is held at the Central Bank of Ireland. Money can only be released from the Central Fund as provided for by law. As Comptroller and Auditor General, I am required to issue grants of credit before any withdrawals of funds from the Exchequer by the Minister for Finance, or his or her agent. These grants of credit are notified to the Central Bank, and are limits controlling the Minister’s right to access funds.

The special report before the committee outlines a failure of the controls over the withdrawal of money from the Central Fund on 28 October 2022. On the Friday before the October bank holiday weekend, the Central Bank issued to the Minister €738 million more than the amount of credit that remained available to him. The Department of Finance did not identify that the amount of the withdrawal requests it submitted on the day exceeded the value of the remaining credit. The Central Bank also did not identify that the credit limit would be breached and issued the requested funds. The Department could have applied earlier for an additional grant of credit, but this had not happened. Notwithstanding this, it is a matter of serious concern that a significant sum of money was released from the Central Fund without the necessary credit authorisation. Both the Secretary General of the Department of Finance and the Governor of the Central Bank have advised that a number of changes of control have been, or will be, made to prevent any recurrence. I welcome their assurances in this regard.

The insurance compensation fund was established under the Insurance Act 1964 to facilitate payments to insurance policyholders in Ireland when a non-life insurance company goes into liquidation. The Act allows the Minister for Finance to lend money from the Exchequer to the compensation fund, when required, and to recover such loans from the proceeds of a levy on insurance premiums. The premiums are collected by insurers and paid over to the Revenue Commissioners, which subsequently remit the receipts to the fund account. Payments out of the insurance compensation fund are made at the direction of the High Court. Up to August 2018, the insurance compensation fund was maintained and administered by the accountant of the High Court. Administration of the fund then statutorily transferred to the Central Bank of Ireland and was brought within my audit remit.

When Quinn Insurance Limited went into liquidation in 2011, the fund was unable to provide the amount that was forecast to be required to meet the insurance claims on the company. As a result, between 2011 and 2015, the Minister for Finance advanced Exchequer loans to the fund of just over €1 billion to allow it to meet those claims. Between 2013 and 2016, there were three further company failures resulting in claims on the fund.

The current levy rate is 2% of the value of non-life insurance premiums. This is additional to the standard 3% Government stamp duty payable on such premiums, which is also remitted to Revenue. In 2021, Revenue paid just under €93 million of levy receipts into the fund. This was down from the level of receipts in 2020, which was just under €101 million. The value of payments from the fund for the benefit of policyholders, in accordance with High Court orders, amounted to just over €11 million in 2021. The excess of receipts over payments allowed for the continued repayment of Exchequer lending. At 31 December 2021, the balance owed to the Exchequer, including accrued interest, was just under €554 million. The fund had cash reserves of €53 million, resulting in an overall deficit on the fund of €501 million.

Appendices to the financial statements indicate the balances owed by the various insurers whose policyholders were compensated through the fund. This indicates a total liability in respect of Quinn Insurance Limited of €1.13 billion. No estimate is provided of the amount that may yet be recovered from the company. The notes to the financial statements disclose that a substantial claim by the administrators of Quinn Insurance Limited against its former auditors was settled in 2022. The value of that settlement is not disclosed in the financial statements.

As outlined in chapter 14 of my 2020 report, the collection of the levy income by Revenue is a lengthy manual process that has led to delays in identifying and paying receipts over to the fund. The examination also found that controls over the assessment of levy income were not sufficiently robust to detect levy proceeds paid by insurers but not transferred to the fund. In 2019, a misclassification error was identified that resulted in €33 million of levy receipts being paid over late to the fund. At the end of 2020, €2.2 million of accumulated receipts relating to the period 2017 to 2020 was unallocated, with an undetermined portion relating to the fund. The examination also concluded that the fund’s accounts, which are prepared on a cash basis, did not provide the type of information required to properly manage and account for the fund. A review of the format of the account was recommended.

Chairman

Before I invite Mr. Molloy to make an opening statement on behalf on the Central Bank, I note it was the expectation of the committee that Mr. Gabriel Makhlouf, the Governor of the Central Bank, would attend this meeting as the accountable person in respect of the matters the committee wishes to examine. I understand we received a letter from Mr. Makhlouf, which was sent on Monday, explaining that he has an official engagement in Finland, but the Central Bank was given notice on 18 January. An official email of invitation was sent to the Governor on 20 January. I also express our disappointment that none of the three deputy governors are in attendance. The Governor's letter states that given the Central Bank's strong commitment to openness and accountability and to working co-operatively with the Houses of the Oireachtas, if the committee has further follow-up questions that it would like him to address, he is happy to make myself available to attend. I ask the Central Bank representatives to relay our disappointment that neither the Governor or any of the three deputy governors are present, and that we may take the Governor up on the offer made at the end of his letter dated last Monday, 20 February.

I do not wish to be rude to Mr. Molloy, but his opening statement is quite long. Members have it in front of them. He is entitled to five minutes and I ask him to comply with that.

Mr. William Molloy

I thank the Chair. Good morning to committee members. I am joined by my colleague, Mr. Adrian Varley, the Central Bank's director of prudential analysis and inspections. We welcome the opportunity to discuss with the committee the Comptroller and Auditor General’s separate and distinct reports on the insurance compensation fund, ICF, and the Central Fund of the Exchequer.

The Revenue Commissioners and the Central Bank are the two State bodies referred to in the report on the ICF, so we are appearing with colleagues Mr. Eugene Creighton and Ms Angela O'Gorman from the Revenue Commissioners. Similarly, the report relating to the central fund of the Exchequer refers to the Department of Finance and the Central Bank, so we are joined by Dr. Colm O'Reardon and Mr. Paul Cotter from the Department. The full opening statement and additional briefings have already been circulated, so my comments will focus on the key aspects. The two reports highlight the challenges and operational complexity of end-to-end processes where several agencies are involved and the need for these agencies to collaborate effectively on those processes, as well as having clarity on their individual roles and responsibilities within them.

The Central Bank takes an open, proactive and collaborative approach to identifying and resolving issues. If and when operational incidents occur, we review our processes to learn lessons and provide assurances as to the mitigation of any recurrence. While we seek to have robust control processes in place and review these on a regular basis, we are always aware that mistakes can happen in busy teams with competing demands and a human factor. However, we are committed to transparency and continuous improvement, whether that is for internal processes or those that involve other parties.

Members will be aware from the Comptroller and Auditor General's report of the respective roles of the Central Bank and the Revenue Commissioners in regard to the ICF. As part of the due diligence undertaken by the Central Bank following its appointment as administrator of the fund in 2018, it uncovered a potential discrepancy between amounts collected by the Revenue Commissioners and amounts transferred to the ICF. In November 2019, the Central Bank brought this to the attention of the Revenue Commissioners, which confirmed that ICF contributions totalling €33 million relating to the period 2016 to 2018 were initially misclassified as stamp duty and incorrectly transferred to the Exchequer account. Following the identification of this misclassification error, the Central Bank informed the Comptroller and Auditor General, who then performed an examination of the fund and made four recommendations to the Revenue Commissioners and the Central Bank. The recommendations have been accepted and implemented by both parties and are detailed in the report in our briefing document.

To mitigate the risk of a similar error recurring, the Revenue Commissioners have introduced a mandatory electronic pay-and-file system for both the stamp duty insurance levies and the ICF that will ensure the automated identification and allocation of stamp duty and ICF receipts and the timely transfer of ICF contributions to the Central Bank.

On the matter of the grants of credit and Exchequer payments, members will be aware from the Comptroller and Auditor General's report of the respective roles of the Central Bank and the Department of Finance in relation to the Central Fund of the Exchequer. The Central Bank takes its responsibilities with regard to the operation of the Exchequer account very seriously. In this regard, it is clear that the end-to-end process between the Department and Central Bank did not prevent a breach in the grants of credit limits in October 2022, and this is a matter of sincere regret. It is important to note that at no time was the actual Exchequer account overdrawn, and there was no financial loss.

With regard to the root cause, the Department has identified two factors on its side. First, there was an oversight whereby the Department did not seek a credit from the Comptroller and Auditor General earlier in the year, after Dáil Éireann had approved all of the Revised Estimates for 2022. At the time the payment orders were submitted to the Central Bank, no check was made of the existing credit to ensure sufficient credit was available to cover the request.

From the perspective of the Central Bank, we recognise that our payments process, which involves the execution of payment orders from the Department, and our reconciliation process, by which we update the grant of credit against executed payments at the end of the day, were not sufficiently integrated to prevent this breach from occurring. The Department and the Central Bank have worked individually and collectively to address the issue and introduce additional controls to prevent a recurrence. The Department has introduced changes and enhancements in relation to the monitoring and tracking of grants of credit together with internal systems improvements.

The Central Bank is now updating the grants of credit balance intraday, or in real time, and performing real-time checks before payment orders are executed, reconciled against both the grants of credit balance figures provided from the Department of Finance and our own independently calculated figures - that is, a four eyes check. This effectively integrates two previously separate processes, namely, the reconciliation process and payment process, strengthening controls in advance of executing time-critical payments.

The Central Bank and the Department will revise the service level agreement in the coming weeks once we are satisfied the new process is working effectively.

In respect of the ICF, the Central Bank and the Revenue Commissioners are confident that the measures taken are sufficient to ensure the issues identified will not recur and that the fund will function more effectively in future. In respect of the Central Fund of the Exchequer, the Central Bank and the Department of Finance are confident that the changes introduced ensure that the process is significantly stronger and robust enough to avoid a recurrence of the October incident.

I thank members for their time. We will be happy to take their questions.

Chairman

I thank Mr. Molloy. Before we hear from the members, I wish to convey the apologies of Deputy Munster. Deputy Catherine Murphy will join us later in the day. She is tied up with parliamentary duties.

Deputy Colm Burke

I thank the witnesses for the presentation and for making themselves available this morning.

The €738 million was paid out without all the proper procedures being followed. Mr. Molloy talked about two major organisations, namely the Department of Finance and the Central Bank. Not just one organisation, but two, made a mistake. Surely there should have been a checks-and-balances system in place to ensure such an error would not be made. The two organisations are managing substantial sums of money. A sum of €738 million was paid out incorrectly and proper paperwork was not in place. Surely the fault was on both sides. Are we satisfied that we will not have a glitch in the system again?

Mr. William Molloy

The Deputy is correct that there were two parties to this incident. I will allow the Department representatives to comment from their perspective. From my point of view, as I outlined in my opening statement and in the background material supplied, the Central Bank effectively had two processes that were not sufficiently integrated to prevent the incident. Effectively, we had a process through which we received payments from the Department of Finance. We regard these payments as time-critical payments. They fund social welfare and so on.

Deputy Colm Burke

Is Mr. Molloy saying there was a glitch in the system because it was in the run-up to a bank holiday weekend?

Mr. William Molloy

No. The bank holiday weekend had nothing to do with it. The process is exactly the same as it always has been. This incident is absolutely exceptional. As far as I am aware, it never happened before.

Deputy Colm Burke

Was there not a delay in notifying the Comptroller and Auditor General?

Mr. William Molloy

I do not believe there was.

Mr. Seamus McCarthy

I think it was on the next working day. If you like, that is the effect of the bank holiday weekend. If it had happened on a Thursday, we would have been told on Friday.

Deputy Colm Burke

The error was made on the Friday. When was it actually identified as an error?

Mr. Seamus McCarthy

I think it was identified by the Central Bank on the Friday evening, and it tried to contact the Department of Finance; however, possibly because it was late on a bank holiday weekend, the message did not get through to us until the following Tuesday.

Deputy Colm Burke

There was a delay in real terms from the time the error was identified until Mr. McCarthy's office was notified.

Mr. Seamus McCarthy

Yes.

Deputy Colm Burke

Is Mr. Molloy satisfied that there are enough mechanisms now in place to ensure an error like this will not be made again?

Mr. William Molloy

The root cause of this was that the Department and Central Bank did not identify in real time that a breach was going to occur. We have now put in place processes to ensure in real time that every time a payment order comes in from the Department of Finance, we directly refer to the outstanding grant of credit and then update it in real time. Effectively, if there is a grant of credit of €1 billion outstanding and payments of €600 million come in from the Department, we agree in real time that there is €400 million of the grant of credit left. That is done as the payment is being processed. There can be no difference, then, between the Department and ourselves regarding the grant of credit. This issue should not arise again.

Deputy Colm Burke

Is the Department of Finance satisfied it has enough checks and balances in place to ensure an error like this will not be made again?

Dr. Colm O'Reardon

Essentially, yes. We fully accept what the report of the Comptroller and Auditor General states. There was an oversight in the Department. The grant of credit should have been sought earlier, so it should have been in place long before the date in question. Our systems did not prevent us from seeking a payment from the bank without the relevant credit being in place.

When this occurred, the Department conducted an internal review. A senior colleague, the head of the banking division, reviewed the incident and the processes and systems in the Department. We have made a number of changes to those processes and systems which are intended to ensure this does not occur in the future.

Deputy Colm Burke

I will move to a completely different issue about the ICF and Quinn Insurance Limited. The State paid €1 billion to the ICF. There was litigation against the auditors of the company, PwC. My understanding is that the case has been settled. Is the Department able to disclose the settlement figure?

Dr. Colm O'Reardon

This is not my area of responsibility. However, I have a note on it. I am informed that this was litigation between the joint administrators and the auditors and that a legal condition of the settlement agreement is that the amount is confidential. Our legal advice is that it is not appropriate for us to disclose the settlement amount.

Deputy Colm Burke

Surely the figure appears somewhere in the books. In such circumstances, how can it be confidential? The figure that was paid over has to appear somewhere?

Dr. Colm O'Reardon

All I can say is that our legal advice is that I am not entitled to disclose the amount.

Deputy Colm Burke

This is a case where €1 billion had to be paid out by the State through the compensation fund. There is now a 2% levy on each policyholder. That will continue to be the case for quite some time. Surely we are entitled to know the settlement involved. A security of costs in an amount in excess of €30 million had to be lodged to allow the case to proceed. Are the taxpayers not entitled to information as to why we risked €30 million? We know there was a settlement but we do not know in what amount.

Dr. Colm O'Reardon

All I can say is that I have been advised I am not entitled to disclose that figure. The Department sought an opinion from the State Claims Agency as to the nature of that settlement. The opinion of the State Claims Agency is that the final settlement reached was an appropriate settlement, which included-----

Deputy Colm Burke

What is the story with the money that was lodged for security of costs?

Dr. Colm O'Reardon

I have no idea. As I said, that is not my area of responsibility in the Department. All I can is that my understanding is that this was litigation between the administrators and auditors. We have been told it is not appropriate for us to-----

Deputy Colm Burke

State money was provided as security of costs. Surely we, as taxpayers, are entitled to know if that money has now been refunded. We are also entitled to know was the risk worth taking. If the case settled for €1, the risk was obviously not worth taking.

Dr. Colm O'Reardon

I reiterate that the Department sought an opinion from the State Claims Agency as to whether the settlement agreed was appropriate. The agency was of the opinion that the settlement was appropriate. I take that to refer also to the confidentiality element. I am afraid I have no more information I can share with the committee.

Deputy Colm Burke

Surely the Department can come back to us with a note in respect of the security of costs issue.

Dr. Colm O'Reardon

I am very happy to do that.

Deputy Colm Burke

We need to know that the money came back.

Dr. Colm O'Reardon

I am happy to do that.

Deputy Colm Burke

I will ask about the whole insurance industry. PMPA was the first company to enter administration, which happened in the 1980s. In the period 2010 to 2016, four insurance companies went into liquidation or administration. The State had to intervene to provide support to policyholders. Are we now satisfied there are adequate systems in place in respect of insurance companies? Four companies found themselves in difficulty over a very short timeframe. A substantial amount of money was involved. With Quinn Insurance Limited, the amount in question was over €1 billion.

Dr. Colm O'Reardon

The background to all of this is set out in a useful way in the report of the Auditor and Comptroller General. It outlines some of the history to all of this. I understand that the ICF has its basis in legislation that dates from 1964. There has been an ICF arrangement in place for a very long time. The Quinn situation was exceptional in its scale. That created-----

Deputy Colm Burke

In respect of Quinn, a fund of €350 million was available at any one time and that fund was being gambled with, in real terms.

Dr. Colm O'Reardon

I am not sure it would be wise of me to get into the specifics of that. I will return to the question the Deputy asked. There have been a number of changes in the landscape. The Solvency II frameworks have been put in place so insurance companies are now subject to more rigorous standards in respect of provisioning and capital requirements. There is also a new European-level directive, the name of which I am trying to find, intended to improve the frameworks within which insurance companies operate so that when these situations arise, the arrangements for dealing with insolvency are improved. The Deputy asked whether the new regime is better. There are at least two pieces to point to in that regard. One is the Solvency II directive, which includes provisions for insurance companies. There is also a European Union directive, which is not yet concluded. I will find the name of the directive in a moment.

Deputy Colm Burke

Is the Department concerned about any activity in the insurance industry at the moment? In the period from 2011 to 2016, which is a very short time, four companies ended up in a position from which the State had to bail them out, or at least bail out the policyholders.

Dr. Colm O'Reardon

The Department's role is to ensure a strong policy framework and-----

Deputy Colm Burke

Have insurance companies sufficient mechanisms in place to cross-check?

Dr. Colm O'Reardon

I might refer that question to my Central Bank colleagues, if that is okay.

Deputy Colm Burke

My understanding in respect of the fund is that more than €1 billion was paid in for Quinn Insurance Limited. The Central Bank has been handling it since 2018. There is still more than €500 million owed and which remains to be collected from insurance policyholders. Is the Central Bank satisfied that we now have sufficient mechanisms in place across the board in the insurance industry?

Mr. Adrian Varley

I agree with our colleagues from the Department that the strengthening of the European regulation was essential. That was what was referred to as Solvency II, which is being reviewed at European level. It is important to add the local perspective, which is the supervisory side as well as the regulatory side. We are confident the system has been strengthened in the past ten years. It continues to be reviewed. There will always be smaller firms that fail and these compensation funds will be continued into the future. It is a European concept that is needed. However, the Deputy is absolutely right about the magnitude of the issue and the fact we are still paying down-----

Deputy Colm Burke

My understanding in respect of Quinn Insurance Limited is that a fund in the amount of €350 million was available and was being gambled with. There is no question or doubt about that. When the company was no longer able to pay out compensation claims, that fund was not there. Are we satisfied there are now enough checks and balances to ensure the security that is supposed to be provided by the insurance companies?

Mr. Adrian Varley

Are we confident in the regulatory and supervisory system? We are. I want to make the point that smaller failures will always happen. That is part of the system and the competitive landscape.

However, Deputy Burke is right. They have to be managed so they are not bigger than any fund and that it is not an onerous burden on paying back the fund. So, yes, we are confident, but it is with the limitation that there is no perfect system.

Deputy Colm Burke

There is also the issue of the accountability of auditors and of when they were not doing their job. Now we find that a settlement was made but no one is prepared to disclose to us what is returned to the State. The State ended up paying out €1 billion. Surely, we are entitled to some information, in particular where the State took a risk of putting €30 million as security for costs.

Mr. William Molloy

The first thing to say is that the outstanding amount has reduced to approximately €380 million.

Deputy Colm Burke

It is reducing.

Mr. William Molloy

That has been reducing. The second thing I would say-----

Deputy Colm Burke

But it is reducing because of the ICF.

Mr. William Molloy

The second thing I would say is that the accounts for the year ending 2022 will be put before the Houses of the Oireachtas in July or August. I expect that the net effect of the Quinn settlement will be reflected in the accounts.

Deputy Colm Burke

But will the amount be disclosed, or will it be in under general expenditure? Will the impression be given that it is part of the 2% collected or will it be set out as a separate sum? If it is going to be set out in the 2022 accounts, why can it not be given to us now?

Mr. William Molloy

As Dr. O'Reardon has identified, this is confidential. I have received the same advice. We are not at liberty to disclose it.

Deputy Colm Burke

But the State invested €30 million in this claim. Surely the taxpayers of this country are entitled to know that if we invested €30 million in litigation, we are now entitled to know the net outcome of that investment.

Mr. William Molloy

I think in terms of the net outcome from an economic perspective, that will be reflected in the accounts that are prepared and will be presented to the Houses of the Oireachtas.

Deputy Colm Burke

The Committee of Public Accounts is answerable to the electorate in making sure the finances of the State are managed in a proper manner. The sum of €30 million was put aside. A court decision said there had to be security of costs. That was €30 million that was risked on behalf of taxpayers. Surely we are now entitled to know the outcome of that risk taking.

Mr. William Molloy

I understand Deputy Burke's question and where it is coming from. I have empathy from that perspective, but from my perspective I am not at liberty to disclose that amount. I do not have any wiggle room there.

Deputy Colm Burke

Mr. Molloy says it will be reflected in the accounts in July. How will it be reflected?

Mr. William Molloy

That has still to be determined. The accounts are being prepared at this moment in time.

Chairman

We will revisit this matter.

Deputy Paul McAuliffe

I appreciate Mr. Molloy's empathy, but what we are looking for is his clarity. Empathy is very little help to us in trying to assess whether there is value for money for the taxpayer. That is ultimately what we are doing here. This is not about trying to push anybody to a wall; it is about trying to get to the bottom of this. Who made the decision to provide the funds for the security of costs?

Mr. William Molloy

I am not 100% sure.

Deputy Paul McAuliffe

The guts of €27 million was provided to Quinn Insurance to defend a case. My question is who made the decision to provide the funds.

Mr. William Molloy

I do not have the answer.

Chairman

If he does not have it, Mr. Molloy might ask one of his officials to check during the meeting to see if we can get an answer to that.

Mr. William Molloy

Yes.

Deputy Paul McAuliffe

I will ask a broader question then. Which of the organisations before us made the decision? Was it the Department or the Central Bank?

Dr. Colm O'Reardon

As far as I know, this was litigation between the administrators and the auditors. I assume the decision was made by the people involved in the litigation, but-----

Deputy Paul McAuliffe

That is incorrect. The auditors are independent of the Government and its resources. The company in question was also independent of the Government and its resources, yet somehow €30 million, or in fact more, of public money was on the table. It is a very simple question - who made the decision to make that public money available?

Dr. Colm O'Reardon

I do not know the answer to the Deputy's question. To be frank, I did not anticipate that we were going to have a discussion about this here today. We can come back to the committee with information in answer to those questions. We are happy to do that.

Deputy Paul McAuliffe

Perhaps the Comptroller and Auditor General could be helpful.

Mr. Seamus McCarthy

My understanding is that issues from the insurance compensation fund have to be at the direction of the High Court. The other witnesses will need to confirm this, but it may be that an application had to be made to the High Court to take money out of the fund to use to provide to Quinn Insurance so that it could lodge the funds with the High Court. There might be a bit of circularity here.

Deputy Paul McAuliffe

Is it correct that ultimately it would have been withdrawn from a fund managed by the Central Bank?

Mr. Seamus McCarthy

Yes.

Deputy Paul McAuliffe

So ultimately it was on the Central Bank's watch that the money was withdrawn from the fund it managed. It may have been directed to do so, but does Mr. Molloy accept that is where it fell? The Central Bank manages the insurance compensation fund and the money came from that fund.

Mr. William Molloy

Yes.

Deputy Paul McAuliffe

The insurance compensation fund is a public resource. As Deputy Burke says, it was used to defend a case against another party. It would be reasonable to expect that the outcome of the case would be of public interest, both to the Committee of Public Accounts and to the Central Bank. The money came from a fund administered by the Central Bank. I imagine the Central Bank has an interest in the outcome of the case. Does Mr. Molloy know the settlement figure?

Mr. William Molloy

Yes, I do.

Deputy Paul McAuliffe

The Central Bank is aware of the settlement figure. Is Mr. Molloy precluded by virtue of the settlement with PwC from revealing that? Is there a confidentiality clause? Why in God's name did a public body enter into a settlement which precluded the Central Bank from releasing the final figure of the settlement when there was public money involved in defending the case? Regardless of all the interest that would be there in terms of the €1 billion, Quinn Insurance, and all of that debacle, my question is just on the strict terms of the State ponying up €30 million and that the Central Bank might need to tell somebody about it. Why would the State enter into a settlement which precluded it from doing that?

Mr. William Molloy

From my perspective, I was not involved in the settlement process. To be clear, I am precluded because I have been informed that it is confidential and not to be disclosed. I am not involved in the settlement itself, but this is confidential, and I have been informed of the amount because it is relevant to the actual value for money.

Deputy Paul McAuliffe

Does Mr. Molloy, as the manager of the fund, accept that he effectively handed money over but he did not have any real control over it? The Central Bank was not party to the settlement. Were any conditions put in place in handing the money over to ensure that we would have some transparency and value for money? I do not expect Mr. Molloy to defend the decision as he was not party to it but he is in charge of managing the resource, which is the ICF.

Mr. William Molloy

I am in charge of the administration function of the fund, which is effectively, making payouts when directed by the High Court and collecting the funds that come in. My understanding is that these funds were used as a security. I do not think they actually left the fund.

Deputy Paul McAuliffe

They could equally have been lost to the ICF if the case or if the settlement had gone the other way.

Mr. William Molloy

The administrators of Quinn act independently of the Central Bank.

Deputy Paul McAuliffe

It is not for the first time that they are acting independently with our money. That is exactly my point. The State provided the assurance there would be funds to defend the case but I do not see the oversight arrangements that were put in place for that decision. Mr. Molloy is right, the Central Bank is the bookkeeper for the account. That is what he is effectively saying but my question is not to the bookkeeper, my question is who made the decision that State money would be used in this way and that there would not be sufficient oversight or guidance? Is that not a very understandable question from our perspective, Mr. Varley?

Mr. Adrian Varley

Just to confirm what Mr. Molloy said, we were not prepared today in terms of bringing the material for a discussion of the different aspects of the oversight function, including the very real aspect the Deputy talked about. I recommend that, given it was not on the agenda originally, we follow up on the clarity of the roles and responsibilities for that aspect of the oversight of the fund itself, as opposed to the administration of the fund, to make that distinction.

Deputy Paul McAuliffe

My understanding was the ICF was------

Deputy Neasa Hourigan

On a point of order, there are two subjects for discussion here. That is it. We do not a have very wide remit today.

Deputy Paul McAuliffe

I am not asking-----

Deputy Neasa Hourigan

I expect it to be comprehensively dealt with.

Deputy Paul McAuliffe

I am not asking about mortgage interest rates, I am not asking about borrowers, I am not going outside the remit. What we asked was very clear.

Mr. Seamus McCarthy

The financial statements for 2021 are an agenda item for this morning so, if you like, that goes beyond the chapter. The security of costs was a 2021 transaction.

Chairman

We are in a stalemate situation on this issue. I feel the committee is literally being stonewalled on it and Deputies McAuliffe and Colm Burke have not got satisfactory answers to this. Can we ask the representatives of the Central Bank of Ireland to convey this back and we may have to have them back in again on this matter, including the Governor of the Central Bank of Ireland, Mr. Gabriel Makhlouf? If the representatives are unable to answer the questions this morning, we certainly will not be able to. The two Deputies and I, as Cathaoirleach of the committee, want to hear the reason, okay?

Deputy Colm Burke

Chair-----

Chairman

Very briefly as we are in Deputy McAuliffe's time.

Deputy Colm Burke

For clarification, it was a Supreme Court decision that ordered the security costs so it was an order of the Supreme Court.

Deputy Paul McAuliffe

I will come back in later.

Chairman

That is fine and we have that but the actual outcome is the question.

Deputy Colm Burke

Yes, that is the question, and I mean-----

Chairman

What was the landing zone here?

Deputy Colm Burke

The Supreme Court decision is in the public domain and the amount for the security costs is in the public domain. As the State provided the security, what was the risk for the State? In fairness, we are entitled to know when that gamble was taken and it is a gamble.

Chairman

Yes, it is a gamble.

Deputy Colm Burke

We are entitled to know the final outcome.

Deputy Paul McAuliffe

We are dealing with two issues here. There are people here who have information they do not feel at liberty to share with the committee and that is really concerning, or they cannot point us to where we would be able to know that. Second, there appear to be people in the room who were not prepared for today's Committee of Public Accounts meeting because it was very clear we were going to deal with this issue. I echo the Chair's comments regarding the absence perhaps even of the deputy governors, because perhaps we would have been able to resolve that.

I have one other question regarding the negative interest rates on the ICF. The impact of the ICF being managed by the Central Bank is that there is a negative interest rate and I think that cost the figure of €288,000 in 2001. In total, that has cost €881,000. Where does that money go? What steps are being taken to ensure we move out of an arrangement where there are negative interest rates? I will leave it at that, as I am straying too far beyond my time.

Mr. William Molloy

In terms of negative interest, every effort is made to avoid negative interest but, as the Deputy will be aware, until recently the market environment was negative interest rates that were out to quite long maturities. If one had cash and wanted to place it anywhere, until recently it was at a negative interest rate. What we try to do is minimise the amount that we hold in cash to try to repay the Exchequer loan, which has an interest rate attached to it as quickly as possible, but at the same time limit the risk that we have paid too much of it back and then we have to go back to the Department and ask for a top-up again. In terms of what we have been doing, we have effectively been placing the funds at zero, so we have avoided quite a lot of potential negative interest rates, given the numbers involved. With any kind of cash balance that is held on the Central Bank account, the negative interest on that would effectively form part of the profits of the Central Bank.

Deputy Paul McAuliffe

Does the figure of €881,000 come out of the insurance compensation fund but ultimately find its way in the profits of the Central Bank?

Mr. William Molloy

Yes, any funds placed in the Central Bank. Effectively, as the Deputy is aware, at least 80% of the profits of the Central Bank come back to the State in the end.

Deputy Neasa Hourigan

I have loads of questions, so I hope I can come back in for a second round. If we just stick with the insurance fund for a moment, because - and I feel I am insulting the Central Bank by calling it the bookkeeper - ultimately I want to move back to the-----

Chairman

It is not an insult, the Deputy is right.

Deputy Neasa Hourigan

It is not an insult, the Chair is right. I want to move back to the Department because as I understand this process, the Supreme Court or the High Court make the decision that forces the State to act but ultimately the decision-maker that has agency in terms of acting is the Minister. Is that correct?

Dr. Colm O'Reardon

I do not understand the Deputy's question. Acting in what sense?

Deputy Neasa Hourigan

We are trying to follow the decision-making process whereby we decided to put the €30 million on the table and we entered into legal negotiations with a body, not necessarily having representatives - I still am not clear who was in that room and I am not sure if I will get the answer to that today. Ultimately the person who says yes to putting all of those things in train and in motion is the Minister, is that correct?

Dr. Colm O'Reardon

I do not wish to be unhelpful today Chair but I have no knowledge of this, okay, and-----

Deputy Neasa Hourigan

Does anybody from the Department have knowledge of what is on the agenda for today?

Dr. Colm O'Reardon

There are a number of items on the agenda today and we were asked particularly in respect of the issue to do with the Exchequer. Before I came to the meeting, I asked colleagues from the relevant section to give me some information about the ICF. The Deputy is asking a very specific question about a legal proceeding about which I do not have any information.

Deputy Neasa Hourigan

I am not asking a very specific question; I am asking whether ultimately, when any decisions are being made around the ICF, which is a fairly major fund, that lands on the Minister's table? That is not a very detailed question; that is a basic principles question.

Dr. Colm O'Reardon

To be honest, Deputy, I feel uncomfortable giving an answer because I do not know and I think it would be unwise of me to mislead the Deputy.

Deputy Neasa Hourigan

Okay, can we bring it back to basic principles. I would be very surprised if Dr. O'Reardon answered that question by saying no, the Minister ultimately does not have responsibility for this fund. I would be concerned if that was the answer. I would expect that as a basic principle because to be honest, that was just a question to set the scene and I assumed Dr. O'Reardon would simply say of course, the Minister ultimately has responsibility for the fund and he cannot say that.

Dr. Colm O'Reardon

I understood the Deputy to be asking about the specifics of the question about this litigation and I do not know anything about the litigation, who is involved in it or who made the decisions. I am afraid that I just do not know.

Deputy Neasa Hourigan

Can I ask the Comptroller and Auditor General whether I have the wrong end of the stick in terms of the basic principles of who ultimately has agency in terms of saying there is €30 million? Actually, let us take out the details of it. Who ultimately does the fund land on when it comes to somebody's desk?

Mr. Seamus McCarthy

The account?

Deputy Neasa Hourigan

Mr. McCarthy will say that it is him.

Mr. Seamus McCarthy

No, it is definitely not me. My understanding is that under law, the law creates the fund and provides for the Minister to lend money to the fund. The decisions around how the fund is to be used are decisions of the High Court in relation to insolvent-----

Deputy Neasa Hourigan

Does the High Court-----

Mr. Seamus McCarthy

The High Court has been given resources to control in order that it can manage liquidations of insurance companies. The Minister's only action, I would understand in relation to this action, is effectively to lend the money to the fund.

After that, I would be surprised if the Minister was involved directly in a decision to-----

Deputy Neasa Hourigan

Basically, something like a money order comes across his or her desk and he says that he is signing off on that money order on the basis that the court is instructing him to do so.

Mr. Seamus McCarthy

No. It is my understanding that the court, and now perhaps the Central Bank, will inform the Minister if there are sufficient funds there for the fund to operate. Therefore, looking at figure 14.3, the Minister made advances in 2011, 2012, 2013 and 2015 because he got a message that the fund needs resources in order to operate. I think even the levy rate is set at the direction of the High Court. That is the way in which the fund can replenish itself and pay back the Minister.

Deputy Neasa Hourigan

Mr. McCarthy said "he got a message". Can he join the dots for me of who the message is from?

Mr. Seamus McCarthy

From the High Court.

Deputy Neasa Hourigan

Okay. Can we go back to the bookkeeping bit? I apologise for continually using that term.

Deputy Paul McAuliffe

Can I ask a ten-second question?

Deputy Neasa Hourigan

Yes.

Chairman

Questions should go through the Chair.

Deputy Paul McAuliffe

Yes, sorry. Is there a structural issue there? With the separation of powers in the Houses, we are not in a position to criticise the Courts Service. Yet, it is administering a public fund and it would appear that it is the only body making decisions on that fund.

Deputy Neasa Hourigan

I was going to come to that. Exactly. We now have public funds that are not-----

(Interruptions).

Mr. Seamus McCarthy

Until 2018, the committee did not even get an account in relation to this.

Deputy Neasa Hourigan

So we should just be happy for that?

Mr. Seamus McCarthy

At least, it gives the committee the opportunity to understand what is happening with this level of resource. It is a significant-----

Deputy Neasa Hourigan

I missed that opportunity. I do not understand what is happening at all.

Mr. Seamus McCarthy

It is a significant amount. However, it is provided for in law, laws that are written in the Houses here.

Deputy Neasa Hourigan

That is a good point. I want to go to the other fund completely and return to the non-disclosure aspect of it. I know that the witness does not want to get into the legality of it and that is fine. Is that not a bit of a nonsense though, insofar as this will all be laid before the Dáil at some stage and if you were bookkeeping-minded, you could pull apart all of the numbers and surely come to some kind of an estimation of what the settlement is?

Mr. William Molloy

As I outlined to Deputy McAuliffe, I would expect that the accounts, when they are presented, will reflect the outcome of the case.

Deputy Neasa Hourigan

That is fine. I just wanted to be clear, not that I am minded to do it, but that we could pull apart all of the numbers and come to an estimation ourselves of what the disclosure was. I just think it is a nonsense. I would be interested to know from the Department whether the State Claims Agency is advising it to enter into those kind of non-disclosure agreements as a matter of course. Is that just standard?

Dr. Colm O'Reardon

All I can say to the Deputy is that in this instance, we were advised that the settlement was an appropriate settlement. That is the only information I have on this issue.

Deputy Neasa Hourigan

Just to be clear, I was not asking about numbers or the amount there. I am asking about the non-disclosure aspect of this, considering that these are accounts that will be laid before the House.

Dr. Colm O'Reardon

I would certainly find it more comfortable to be able to give the Deputy the number. The State Claims Agency has a job to do to give advice on what it thinks the right thing to do is in those circumstances. That is all I can say. That is-----

Deputy Neasa Hourigan

Does the Department always defer to the agency on these matters?

Dr. Colm O'Reardon

In this particularly instance, I think what we sought was its advice or assurance that this was a good settlement. In those circumstances, we took that advice.

Deputy Neasa Hourigan

Dr. O'Reardon is not entirely sure if it gave advice around non-disclosure previously on other cases. Are there other cases such as this that it has advised that non-disclosure is fine but we are still dealing with public money?

Dr. Colm O'Reardon

I am not aware of any particular examples.

Deputy Neasa Hourigan

I presume some of it would be medical. I apologise. Does the Comptroller and Auditor General want to come in?

Mr. Seamus McCarthy

One of the reasons that I wanted to do the chapter in 2020 was because I felt that the way in which the account is presented is not easy to understand, in terms of seeing what the balances are that are due to the Minster, where the cash is and so on. One of the things that is missing is accounting policies. I cannot say now that the accounting policy here means that the committee will see this figure next year. However, it is certainly open to the committee to request that there be proper transparency in the financial statements for 2022.

Deputy Neasa Hourigan

I will not get it in my minute, but I wanted to come back to Mr. McCarthy’s chapter from 2020, particularly around the registrations and the cash-based nature of some of this. Again, I am not sure I quite understand all of it. I will ask the Central Bank another question before my time runs out. Is it reviewing the process by which this is all undertaken? Just to be clear, has Mr. Molloy read the Comptroller and Auditor General’s chapter on this?

Mr. William Molloy

Yes.

Deputy Neasa Hourigan

Okay.

Mr. William Molloy

The Comptroller and Auditor General made four recommendations, one of which was around the accounting approach. I always work on the basis that reasonable people with the same information would come to the same reasonable conclusion. Therefore, I questioned why our accountants and the Comptroller and Auditor General would have a different view on the same thing. Effectively, I think it comes down to timing. As the Comptroller and Auditor General report indicates, there was a reasonably significant amount of unmatched funds in terms of revenue that was not yet identified as being for the ICF or not for the ICF. We did not feel it appropriate to move to accrual-based accounting until we had clarity that the issue in terms of the revenue misallocation of funds was finished. My understanding is that we will now move to an accrual-based approach for the next set of accounts the committee will see.

Deputy Neasa Hourigan

Is that 2022 or 2023?

Mr. William Molloy

It is 2022.

Deputy Neasa Hourigan

It will be an accrual account in 2022. Is that better?

Mr. Seamus McCarthy

The difference between cash accounting and accrual accounting is that cash accounting is about the money that was actually received or issued in the year. With accrual accounting, the Central Bank, in presenting it, would have to say that this is the correct amount, if you like, that we have the complete identification of the income for the year. That is the point that was of concern with the revenue. Until it was sure that it had systems that would identify the totality of the income in the year, it could not move to accrual accounting. All around, we are moving into a better space. We will have more appropriate accounts. Deputy McAuliffe asked earlier if the settlement figure would be rolled up into the levy. Specifically, that is the one thing that is clear. The levy amount can be seen. To roll any other income or return into that figure would be a retrograde step. They should be kept separate.

Chairman

That is helpful. I will ask Mr. Molloy about the Report on the Administration of Movement of the Insurance Compensation Fund for the Year Ended 31 December 2021. I was reading this last night. On page 17, it states: “The following amounts were owing to the Fund by companies under administration, or in liquidation.” The closing balance of amounts due from Enterprise Insurance Company plc, in liquidation, is €7,380,000. The Setanta Insurance Company, in liquidation, had a closing balance of €67,229,000. Gable Insurance – which I could call “gamble” – owed €1,491,000. Lemma Europe Insurance Company Limited, in liquidation, owed €29,000. Quinn Insurance, under administration, owed €1.133 billion. The amount due from Primor plc is €139 million. There is a note that states: “Due to large losses incurred by Primor plc (formerly PMPA), the full amount owing to Insurance Compensation Fund (ICF) will not be recovered.” Finally, the amount due from Icarom plc, which was formerly the Insurance Corporation of Ireland, as far as I can figure out, is €164 million. Am I reading all of those correctly?

Mr. Seamus McCarthy

Yes.

Chairman

I was flabbergasted when I read that. In my innocence as a taxpayer and motorist, I thought the only ones we were mopping up after were Quinn and PMPA. When I read this list and some of the notes on it, I was astonished. Was the Central Bank responsible for the regulation of Quinn prior to it going into liquidation?

Mr. William Molloy

Yes.

Chairman

This is all on the agenda for today so I expect some answers on this. When did the Central Bank realise the financial instability and precarious nature of the finances of Quinn Insurance?

Mr. William Molloy

With the greatest of respect, I am not competent to answer that question.

Chairman

Are any of the Central Bank staff here competent to answer it?

Mr. William Molloy

My understanding was that, today, we were being brought before the Committee of Public Accounts to discuss the accounts and specific incidents that occurred-----

Chairman

The insurance compensation fund.

Mr. William Molloy

-----regarding the insurance compensation fund, but not the regulation or supervision of good insurance.

Chairman

Can Mr. Molloy furnish us with a reply on that?

Mr. William Molloy

Yes.

Chairman

The Central Bank is the main regulator. What action was taken at that point? Maybe the witnesses do not have the answer. If they do, Mr. Molloy or Mr. Varley might answer.

Mr. William Molloy

I am more than happy to take any questions on the supervision or regulation of Quinn Insurance.

Chairman

That is what I am asking about.

Mr. William Molloy

I am happy to take them in writing and send a written reply. That is no problem. I am not the right person to try to answer those questions.

Chairman

We would have hoped the right person might have been here. As the main regulator of the financial institutions, will Mr. Molloy outline what has been put in place? I am reading this list. Trying to explain this to the public, this is jaw-dropping stuff, with the sheer amount of it and the number of companies involved over a relatively short period. There is a significant complaint from the public about it. The Central Bank is the regulator and Mr. Molloy is acting for the Accounting Officer here today. The Committee of Public Accounts wants to know what steps the Central Bank has taken since then to protect the public interest and ensure we do not have this kind of calamity on a rolling basis, affecting others next year? The taxpayer and public are mopping up after developers. We bailed out the banks and are paying every week for that. We are paying into numerous compensation funds due to a failure of regulation in this country. In this case, the buck for financial regulation stops at the Central Bank's door. Is that correct?

Mr. Adrian Varley

I can confirm, similar to before, that with regard to both European regulations and local supervision, the Central Bank regulates both domestic and international providers of insurance products. Over the past ten years, and longer, the entire system has been overhauled. As my colleague, Mr. Molloy, said, we are more than happy to discuss issues. Much is on the public record about Quinn. We can come back and discuss that. I suggest we do so in writing first. Second, as I mentioned before, part of the regulatory and supervisory regime for smaller firms, both across Europe and domestic, is that it is not a zero-failure regime, so things will happen, not just in insurance but in other sectors. Compensation funds are put in place to deal with that. The alternative is a zero-failure regime, which I do not think is possible and is also very expensive in different ways, meaning the prices of regulation, holding solvency amounts and capital amounts.

Chairman

The share number and the amount of money involved is concerning. Will the witnesses come back to us with a summary of the steps taken? On the landing zone for Quinn, of €1.13 billion, what is the final position that we will reach? Where does the Central Bank expect we will finish up?

Mr. William Molloy

As I mentioned earlier, I would expect that the next set of accounts produced by the bank, audited by the Comptroller and Auditor General and presented to the committee will provide it with a clear picture of the status of the fund at the end of 2022, which will include the Quinn issue.

Chairman

Maybe Dr. O'Reardon from the Department will want to answer or Mr. Molloy might have a view on the 2% levy. Are we likely to see that being reduced in the near future? How much longer is that expected to continue for? Hopefully we will not have to continue bailing out all these different corporations and companies. What is the hope or projection for that?

Dr. Colm O'Reardon

The way this works is that, in 2011, the Minister, Government and State loaned approximately €1 billion to the insurance compensation fund, which is being repaid from the proceeds of the levy.

Chairman

Collected from the public.

Dr. Colm O'Reardon

Absolutely. At the end of each year, we receive an account which the Minister then lays before the Houses of the Oireachtas. At a certain point, one would expect that the loan will be repaid, then a question arises of whether the levy needs to continue. We are not at that point yet so one would anticipate it continuing-----

Chairman

Is it anticipated that we may reach a point where that can be reduced or where we may reach finality with that?

Dr. Colm O'Reardon

We are a few years away from that yet but at a certain point we will reach a stage where the loan has been repaid and the opportunity presents itself to reduce the levy.

Chairman

With regard to the other companies, looking at the list, is the Central Bank concerned about the failure of oversight and regulation and what has happened with eight insurance companies?

Mr. Adrian Varley

I apologise for the repetition but there is not a zero-failure regime for the competitive landscape. I absolutely have to make a distinction between Quinn and the older cases compared with the things that are happening in more recent years. In more recent years, we are working hard to reduce the impact of anything similar happening again, but there will be cases. Ideally, they will involve smaller companies and ideally a much smaller impact. The goal here is to reduce the impact of the fund and to reduce that levy, as the Chair said. There will be ongoing cases.

Chairman

The total bill is substantial, at about €1.6 billion. Would the Department like to reply on that?

Dr. Colm O'Reardon

The Chair makes the point that the Quinn situation was particularly exceptional. The idea of an insurance compensation fund goes back to the 1960s. There is an expectation that these kinds of things can happen and there has to be an arrangement in place to deal with them. The reason for that is to protect policyholders for when these things arise. There have been reforms with the Solvency II rules meaning that insurance companies have to provide greater degrees of reserves.

A European Commission proposal for an insurance recovery and resolution directive is making its way through that process. Such a directive would strengthen the arrangements to improve the situation when these things arise. To go back to the point my colleague from the Central Bank is making, we cannot anticipate a situation where there will not be insurance insolvencies but improvements are being made.

Chairman

With respect, it is the scale of the Quinn Insurance Limited loans. There is no one here today from either the Central Bank or the Department who can tell us if anybody noticed any of this creeping up. If you are on the board of a small company, you would be watching the finances from month to month and your auditor would come in a couple of times a year. You would be in regular contact with your auditor. You would see the balance sheets at board meetings every month and you would see where things were slipping. What is alarming from the public's point of view is that we have a financial calamity in excess of €1.1 billion and nobody here is able to answer questions on it. Unfortunately, we do not have the Governor of the Central Bank or any of the three deputy governors with us to tell us when was this noticed, what action was taken at that point or if it was a wild-west scenario whereby people could carry on and do whatever they wanted. Was there an attitude that when it finally hit a brick wall, the taxpayer would step in and things would carry on as normal? Does Dr. O'Reardon see the point I am making?

Dr. Colm O'Reardon

I am not disagreeing with the Chair.

Chairman

That is what happened here.

Dr. Colm O'Reardon

A very serious failure that took place in advance of-----

Chairman

A number of failures.

Dr. Colm O'Reardon

Absolutely.

Chairman

And failures by the bodies that are supposed to regulate-----

Dr. Colm O'Reardon

In advance of what happened in 2011.

Chairman

-----and do oversight.

Dr. Colm O'Reardon

Yes. I would not disagree with the Chair.

Chairman

That has to do with the Central Bank and there is nobody here from the Central Bank who is able to answer when this was noticed, what was done, what action was taken and what has been done since. We want to get answers to this and we expect to get answers to it. We may have to bring in the Governor to deal with this.

Deputy Neasa Hourigan

I want to raise a point of order. In the context of there being a wild west culture, we are not getting any answers here. I am not sure there is any point in continuing the meeting when there is no information on the table for us.

Chairman

I want to let the other Deputies in.

Deputy Paul McAuliffe

With respect to Deputy Dillon, we are heading into the break in five minutes time. I suggest that the committee needs to meet in private session to discuss what has happened this morning. I agree with Deputy Hourigan's point. We need to suspend the meeting.

Chairman

That is up to the committee.

Deputy Paul McAuliffe

In advance of the next session. We need to have a discussion on this as a committee and we should do that in private session in advance of the break.

Deputy Neasa Hourigan

I second that.

Chairman

Is Deputy Dillon happy with that? I am mindful of the fact that he has come to the meeting and he is entitled to his opportunity.

Deputy Alan Dillon

Yes I am happy with that, and I have been observing the proceedings online so I am well aware of what has happened.

Chairman

We will suspend the meeting and go into private session.

Deputy Alan Dillon

Absolutely. We should go into private session.

Deputy Paul McAuliffe

The points the Chair raised are valid ones. He is the Chair of the Committee of Public Accounts and there should be somebody here to answer his questions. It is simple.

The witnesses withdrew.

Sitting suspended at 10.53 p.m. and resumed at 11.13 p.m.

Chairman

The committee has met in private session and we feel the situation is totally unsatisfactory as we are not getting to deal with the items on the agenda: the Report on the Accounts of the Public Services 2020 - Chapter 14: Assessment and Collection of Insurance Compensation Fund Levies; the Report on Administration and Movement of the Insurance Compensation Fund for the year ended 31 December 2021; and the Comptroller and Auditor General section 2 report, Unauthorised release of funds from the Central Fund of the Exchequer. We have decided we are rescheduling the meeting with the Central Bank and the Department of Finance. We will issue a letter in the coming days to invite the Secretary General of the Department to the next meeting. If there is a problem with the date, we would ask him to revert to the committee secretariat within the next five working days. The date on which we are setting to have the Secretary General in is 27 April. A similar letter will go to the Central Bank to invite the Governor, Mr. Makhlouf, to that meeting. Our guests from the Central Bank will convey the contents of today's meeting back to him. We will also request the Revenue Commissioners to come back on that date. I ask everybody to revert back as quickly as possible to the secretariat of the committee and inform us if that date is suitable.

The witnesses withdrew.

Sitting suspended at 11.15 p.m. and resumed at 1.30 p.m.