Deputy Pat Rabbitte has given me notice of his intention to raise on the Adjournment the subject matter of a private notice question today regarding an allleged leak on Thursday, 13 December 1990 of the inflation figures produced by the Central Statistics Office. Deputy Rabbitte knows the procedure.
Adjournment Debate. - Alleged Leak of Inflation Figures.
I thank you, Sir, for allowing me to raise this important matter. The leaking, in advance of their official publication time of any set of economic figures is a serious matter for a number of reasons. However, the leaking on Thursday last of the November inflation figures constitutes a matter of grave importance; one which merits the fullest possible investigation, including an investigation by the Stock Exchange, and on which a full report must be made to this House.
The level of inflation can determine how attractive it is to invest in Government stocks. If inflation is lower than expected the stocks become more attractive; if inflation is higher than anticipated, they are less attractive. The November inflation figures, which were due to be published at 5 p.m. on Thursday last were generally expected to show a slight increase over the August figure, particularly because of increases in fuel prices arising from the Gulf crisis.
When the figures were officially published at 5 p.m. they actually showed a decrease from 2.9 per cent to 2.7 per cent. However, it is now clear that much earlier in the day — as early as lunchtime, four hours before their official publication time — the figures were well known to a small number of people dealing in the Dublin financial market. This led to a surge of buying of Government gilts and stock by those who had access to this information. I understand that the entire Government supply of £75 million was taken up and a further £80 million was bought on the secondary market.
We do not know how much money was made on these deals as a result of having the inside track on this information, but it is likely to have been quite substantial. I believe it is outrageous that a small, select number of individuals should have been able to gain access to this sensitive information in such a way as to enable them to make a financial killing although this is not the major concern. This is, in fact, the equivalent of insider trading in Government stock. It is the same as if a broker or company executive, as a result of privileged information, was aware in advance that a particular company were to publish an impressive set of figures in their annual report and used that information to buy up shares in the knowledge that their value was likely to increase. This will be illegal here as soon as the recently passed Companies (Amendment) Bill becomes law. Unfortunately even when the new Bill becomes law last Thursday's sting may still recur with impunity.
It is not just the fact that a number of people were able to gain an advantage over their rivals and make substantial profits. There is a large overseas bond holding in the Irish market and these investors are known to be most unamused. For example, the chief economist at Riada stockbrokers, Dr. Dan McLoughlin, was quoted as saying that if we want to be taken seriously this sort of thing cannot happen.
This is not the first occasion on which concern has been expressed about the manner in which some commercial interests with the right political track record seem to be able to secure access to sensitive information and to use their political contacts to make greater profits. It is an issue that has, for example, figured prominently in the ongoing Goodman saga. It is believed in financial circles that this is not the first time that advance information on the inflation figures has leaked, but that it is the first time the information has spread so far. Many dealers have commented with wonder at the manner in which one firm of brokers, whose principal is known to be a keen admirer of this Government, has been able to forecast with such uncanny accuracy important economic figures in advance of their official disclosure. I have no particular admiration for stockbrokers or financial dealers, but I do appreciate the damage that can be done to our reputation internationally if it is believed that a small number of favoured dealers have the inside track to sensitive market information. The general manager of the Stock Exchange for example, Mr. Tom Healy, was quoted as saying that this was an unfortunate happening in terms of our international reputation.
Both the Central Statistics Office, who compile the figure, and the Government Information Service, who distribute them, report to the Department of the Taoiseach, and Deputy Haughey must, therefore, accept direct political responsibility for the leak. It is clear that the information would have been known by the Department of the Taoiseach, in advance of publication, and this Department, together with the Government Information Service and the Central Statistics Office, must be covered in any inquiry. There is clearly a possibility that the Official Secrets Act may have been breached and there could well be a case for calling in the Garda, should any internal inquiry prove inadequate.
I am not advocating any witch hunt against public servants, who do their jobs to the best of their ability, often under very difficult circumstances. I believe very strongly, however, that the source of the leak must be traced and plugged. This must include a tightening up of procedures for the release of market sensitive information. The Stock Exchange must not be let off the hook. A Government inquiry can establish who leaked the information. A Stock Exchange inquiry can determine who received and acted on that information. The exchange will have a full list of who bought and sold on Thursday and it should not be too difficult to establish who was acting with the benefit of insider information on the inflation figures.
It is a matter of concern that the Stock Exchange seems to want to wash its hands of the affair. Indeed, the record of the Stock Exchange in establishing any case of insider trading is similarly a matter of concern.
When the Taoiseach became aware of alleged leaks of the mid-November inflation figures, he immediately ordered an investigation to be conducted by the Director of the Central Statistics Office in relation to the official handling of the Consumer Price figures information prior to its release and the Secretary of the Department of Finance to consult with the Stock Exchange as to the alleged use that was made of the information in the financial markets.
The investigation by the director on the official handling of the information is under way. The Secretary of the Department of Finance has been in consultation with the Stock Exchange. He and the Director of the Central Statistics Office visualise that they will be in a position to report by the end of the week. The Taoiseach will then consider in the light of their report if any further action is required.
Until such time as these investigations have been completed and the facts established, the Deputy should not jump to conclusions about leaks, sources or people who benefited.
The matter is, of course, a serious one if there was a leak of official information leading to a monetary gain. We should, however, have a sense of proportion in our comments on the matter. The matters alleged pale into insignificance by comparison with recent major scandals on the New York and London Stock Exchanges. For anyone to suggest that this matter is one that would damage Dublin as an international financial centre is out of all proportion to what is involved. Anyone who suggests this is indeed doing a disservice to our reputation by making political capital in this way and by denigrating Dublin as an international financial centre.
The Deputy, and the House, can rest assured that this matter is being rigorously investigated. When the Taoiseach receives the results of this investigation, he will make a statement on the matter, including whether he thinks any further inquiries, investigations or action are justified in order to answer public concern about this matter.
Before concluding on this issue, I would like to say that the alleged leak should not obscure the fact that the mid-November figure showed that we now have the lowest inflation rate in the Community. This shows how successful the management of the economy has been since 1987 with the co-operation of the social partners.
I am astonished also that the Deputy in his remarks made no reference at all to this achievement of the lowest inflation rate in the Community which represents such good news for all citizens as regards the value of their earnings.