Dáil Éireann debate -
Tuesday, 4 May 1993

Vol. 430 No. 2

Written Answers. - European Bank for Reconstruction and Development.

John Bruton

Question:

119 Mr. J. Bruton asked the Minister for Finance if Ireland's alternate director on the European Bank for Reconstruction and Development, or he himself as Minister for Finance, raised any objection to the excessive office and entertainment costs of the European Bank for Reconstruction and Development.

Minister for Finance (Mr. B. Ahern)

I have already expressed my concern about the expenditures of the European Bank for Reconstruction and Development to which the Deputy refers. As Governor I have responded by pressing for greater cost control and welcome the action taken by the Board of Directors in this regard.

Under the bank's statute, approval of the budget is a matter delegated by the Governors to the Board of Directors.

The Board of Directors for some time had seen a need to strengthen the budgetary process in response to the growth and complexity of the bank's organisation and operation. In the course of approving the 1993 budget in December last, the board instructed management to take steps to this end. The Board of Directors have now agreed on specific measures to strengthen budgetary control of all aspects of the bank's expenditure, including entertainment and travel costs. In addition, the Board's Audit Committee has been instructed by the board to conduct a detailed and comprehensive inquiry, with external support if necessary, into the procedures followed and the costs incurred in the fitting out of the banks' headquarters. Ireland's alternate director has been involved in formulating these measures.

In my statement at this year's annual meeting of the Governors I made it clear that Governors, as representatives of shareholder members, were ultimately accountable to taxpayers for the funds entrusted by the national authorities to the bank and I welcome the decisions taken by the Board of Directors to reinforce control of the bank's own budget.

Acting on my behalf and on the behalf of the other Governors, Governor Waigel, then chairman of the Board of Governors, had already expressed his concern to the Bank's President at the criticisms of the bank which was damaging its reputation. He referred to the board decisions on strengthening the budgetary process and was assured by President Attali that all the necessary information would be made available, that he would do everything to implement these measures and would work towards a more cost-conscious attitude on the part of the bank towards its expenditure. The Governor also told President Attali that a conclusive assessment of the criticisms that had been expressed would have to await the findings of the inquiry by the Board's Audit Committee.

My position was also reflected in the statement of the Danish Presidency made on behalf of European Community Governors which drew attention to the harm that could be done to the bank by any tendencies to unjustified spending, particularly given the hardship being experienced by the countries in transition to the market economy and the budgetary austerity in the bank's member countries. The Presidency stressed the need for cost consciousness and welcomed the strengthening of budgetary procedures decided on by the Board of Directors. The Presidency specifically welcomed the decision to have the Bank's Audit Committee carry out a special inquiry into the fitting out of bank's new headquarters and stated that the result of this inquiry would be considered very carefully and any necessary action taken.

I fully endorse the measures agreed by the Board of Directors to ensure that a more cost conscious expenditure policy is quickly put into operation in the bank in relation to all aspects of its expenditure. I expect to be informed of the outcome of the Audit Committee's inquiry and will fully support any appropriate action which may be called for as a result.