Vol. 481 No. 2
7 Mr. Noonan asked the Minister for Finance if his Department has yet received a reply from the Central Bank to its letter of 25 August 1997, in which his Department requested the bank to conduct a detailed investigation of the issues raised in the McCracken report in its references to exchange controls; and if he will make a statement on the matter. [15765/97]
Exchange controls existed in this country under the Exchange Control Acts which were in force from 1954 to 1992. Day to day administration of exchange controls was delegated to the Central Bank by the Minister for Finance in 1965.
My Department wrote to the Central Bank on 25 August last, the day on which the report of the Tribunal of Inquiry — Dunnes Payments — was published, asking the bank to instigate a detailed investigation of the issues raised by the references in the report to exchange controls.
I understand from the bank that the investigation is well in progress and is being given priority. However, in view of the volume of records to be examined and the need for the bank to consult a number of other banks, the process takes some time.
I am advised by the bank that it expects to receive shortly the material required to finalise the reply to my request which will then be submitted to my Department.
When that report comes to hand, will the Minister place it before the House and subsequently publish it?
What the Taoiseach said when this matter was debated here before — and as I said in a press release — was that when these details are submitted to my Department, if there is a prima facie case of any breach of exchange control regulations, the matter and all documents relating thereto will be forwarded to the Director of Public Prosecutions.
Does the Minister not consider it reasonable that Members of the Oireachtas should see it since several reports have already been published and placed before the Houses of the Oireachtas given simultaneously or at a later date to the Director of Public Prosecutions?
I have no objection in principle to placing the documents and the report of the Central Bank before the Houses of the Oireachtas if I am advised that their placement does not prejudge or prejudice any case that might be taken by the Director of Public Prosecutions.
In the debate here on the McCracken report the Minister indicated that his Department had written to the Central Bank on 25 August. In the same speech he also indicated he would discuss the issue of tax evasion with the Revenue Commissioners. Has he done so and will the Revenue Commissioners investigate the Ansbacher accounts?
There are a number of separate questions later on in relation to the Ansbacher accounts to which the McCracken report referred.
I have already outlined the position with regard to this question. My Department wrote to the Central Bank on the day the tribunal report was published and have had further communications with the Central Bank. The Central Bank had hoped to report back to me by end September. However, the bank wrote to me quite recently saying it hoped to be in a position to supply all information relating to the possible breach of exchange control regulations in the very near future. The report of the McCracken tribunal said that two Isle of Man bank accounts for the benefit of Mr. Michael Lowry were contrary to the exchange control regulations then in force. That section of the McCracken report and anything else relating thereto was forwarded to the Central Bank. When I receive its report I will consider it and gladly lay it before both Houses of the Oireachtas unless, as I said, I am advised to the contrary.
The Minister is now saying something different, that the Central Bank is basing its investigation on payments made to Mr. Michael Lowry. That was not what I understood to be the Minister's commitment given to this House on the day. Will the Minister correct me if I am wrong, that his commitment was that the issue of possible breaches of exchange controls in respect of the Ansbacher accounts would be investigated by the Central Bank? If I understand the McCracken report correctly Mr. Lowry was not paid through those Ansbacher accounts.
I am sure Deputy Noonan read the report of the McCracken tribunal which said that "two payments to Isle of Man bank accounts for the benefit of Mr. Michael Lowry were contrary to exchange control regulations then in force".
No such statement was made in relation to anybody else. My Department wrote to the Central Bank on 25 August saying:
You will note that the report of the tribunal published today, copy enclosed, contains references to exchange control issues. In view of the Taoiseach's statement today, attached, that the relevant State agencies should take all necessary action, I would like to formally ask the Central Bank to instigate a detailed investigation based on the bank's records of the issues raised by references in the report. Your report on the outcome of this investigation, together with all relevant supporting information, should be conveyed to the Department as soon as possible.
Therefore, in this respect the Ansbacher accounts constitute a "no go area" as well.
Yes.
The report of the McCracken tribunal referred to possible breaches of exchange control regulations. The letter sent by my Department to the Central Bank asked it to consider that report in so far as it related to exchange control regulations. It is for the Central Bank to make up its mind in this respect and I await its report.
Is my understanding correct that, before we left the sterling area, such accounts opened abroad were legitimate but, thereafter, would have to be called back on advice to the Central Bank and approved? Irrespective of what report the Minister receives back from the Central Bank to his letter of 25 August last, has he met the Governor of the Central Bank on the issues raised in the McCracken report? Was the Central Bank aware of the existence of the Ansbacher accounts or did it approve of the continued holding of those accounts in the manner described in the McCracken report? What did the Governor of the Central Bank advise the Minister, formally or informally? What information can he give the House with regard to any queries he directed personally to the Governor?
I repeat that we contacted the Central Bank whose report we await and it would not be correct to anticipate its contents. The functions in regard to exchange controls were delegated to the Central Bank from 1965 onwards. Exchange controls existed from 1954 until 1992. I shall be able to elaborate further on the matter if its report covers this issue.
Did the Minister meet the Governor of the Central Bank? Does the Central Bank have any knowledge of the existence of these accounts?
I met the Governor of the Central Bank on numerous occasions. The Central Bank is compiling a report for me in this regard.
Did the Minister meet the Governor on this issue?
Will Deputies please give the Minister a chance to reply?
In the past couple of days we have had experience of due process in this regard.
Will the Minister just answer the question?
It is a harmless one.
I took this matter up on the day the tribunal report was published and, even before its publication, wrote to the Central Bank when we were advised to await its publication. The Central Bank will be compiling its report on possible exchange control breaches on receipt of which I will be in a position to adjudicate on the matters raised by the Deputy.
I am calling Deputy McDowell and will later call Deputy Rabbitte.
What did the Minister say?
Deputy Rabbitte, please allow Deputy McDowell to put his question. I ask Deputy Rabbitte to please resume his seat.
Is the Minister saying that despite all the controversy he never bothered meeting Mr. Morrissey?
Deputy Rabbitte, please allow Deputy McDowell to ask his question.
Notwithstanding the specific letter referred to in the question, will the Minister, as a straight talking individual, agree that the operation of the Ansbacher accounts was a cause of considerable public scandal? It is amazing that he would have raised this matter simply by virtue of one letter and appears, from his responses this afternoon, not to have raised it since with the Governor. Does the Minister not consider it appropriate even now to contact the Governor, if he has not already done so, and suggest he should look into the operation of the Ansbacher accounts generally and the exchange control implications?
We have been in touch with the Central Bank on a number of occasions in this regard and as late as the other day——
When the Minister got my question.
——the Governor of the Central Bank was in touch with the Department of Finance because they had hoped to complete this report by the end of September but were not in a position to so do. The Governor of the Central Bank has written to us saying he hopes to be in a position in the very near future to complete this report. My Department has kept in constant touch with the Central Bank because we want to have this matter finalised as quickly as possible. The 25 August is approximately six or seven weeks ago. The Central Bank was the regulator in this particular regard. I understand from the Central Bank that a vast amount of documentation has to be gone through and it is reasonable to give it an appropriate period to bring its report to the Minister for Finance. As soon as it is completed I am sure it will be forwarded to me.
I will call Deputies Mitchell, Rabbitte and Quinn and then Deputy McDowell for a final supplementary.
My clear understanding is that the Minister is telling us he does not expect the Ansbacher accounts to be dealt with.
Deputy McDowell, we must have order during Question Time. We are making slow progress with the questions and it is important that we deal with as many as possible.
To answer Deputy McDowell——
I do not want the Minister to answer Deputy McDowell because we must have order during Question Time. He can answer the question when replying to Deputy Mitchell.
Arising from the revelations in the McCracken report, is it only the breaches of exchange controls highlighted in that report that are being examined or wider breaches of the exchange control regulations?
I will read out the letter of 25 August that was sent to the Governor of the Central Bank.
Will the Minister read out his reply?
It states:
You will note that the report of the tribunal published today . contains references to exchange control issues. In view of the Taoiseach's statement today . that the relevant State agencies should take all necessary action, I would like to formally ask the Central Bank to instigate a detailed investigation based on the bank's records of the issues raised by references in the report.
The Central Bank is investigating the references in the report to any of the issues that come under its remit and will report to the Minister for Finance.
Will the Minister give a simple reply to the following question? Has he personally met the Governor of the Central Bank and raised with him the desirability of the Central Bank examining the Ansbacher accounts? Yes or no?
No.
Wonderful.
I will tell the Deputy the reason for that.
The Minister does not have to tell us any more.
The report of the Central Bank may or may not include references to those particular issues.
Is it not the case that the Minister agreed with Deputies on this side of the House — I believe it was on 11 September — that this was the biggest financial scandal the State has ever uncovered? Am I to take it from his reply that apart from the Civil Service sending off the perfunctory letter on publication of the McCracken report, it was not until Deputy Noonan tabled a question to him that he lifted his little finger to establish whether laws relating to an important dimension of this scandal i.e. foreign exchange controls were operated? Am I to take it that the Minister has not met the Governor of the Central Bank and that he has not taken any proactive measures to uphold the tax laws of this country, and that the Ansbacher issue is considered to have been dealt with by McCracken? Is that the Minister's position as political head of the Department of Finance in respect of the biggest financial scandal in the State?
The tax questions relating to Ansbacher are dealt with in separate questions and are matters for the Revenue Commissioners.
I am not asking about tax.
Issues relating to exchange control are matters for the Central Bank. I have no doubt that the Central Bank has been diligently pursuing this matter since 25 August in order to compile a report.
The Minister does not know.
We have been in touch with the Central Bank on a number of occasions because it had hoped to complete its report by the end of September, which would have been five weeks from the time the request was made, but it was not in a position to do so. We should give the Central Bank more time to compile the report because I am sure it is experiencing considerable difficulty in trying to ensure that it is as broad as possible. Tax matters are the responsibility of the Revenue Commissioners. Exchange control matters are the responsibility of the Central Bank and I am awaiting its report.
The Minister's replies are very ambiguous and that is not like the blunt man we knew in Opposition. Does the Minister know whether the Central Bank is investigating the Ansbacher accounts in respect of breaches of exchange controls, or is it the case that he did not bother to find that out?
The Central Bank is investigating the McCracken report in respect of any possible breaches of exchange controls.
That means no.
That means they are investigating the matter.
The Minister said in reply to previous supplementaries that the sole references to breaches of exchange controls in the McCracken report are in respect of offshore accounts held in the name of Deputy Lowry. We are all fairly familiar with the McCracken report. Deputy Lowry was not connected with the Ansbacher accounts in so far as McCracken established. The Minister indicated to us when we debated this matter that he was raising it with the Central Bank and that the Central Bank was investigating the Ansbacher accounts. I am now asking the Minister to confirm to the House that the Central Bank is investigating the Ansbacher accounts in respect of possible breaches of exchange controls.
I am awaiting the report of the Central Bank. It is compiling the report on foot of the McCracken tribunal. It is investigating possible breaches of exchange controls relating to Deputy Lowry, any other persons mentioned in the tribunal report and, I assume, the Ansbacher accounts. Taxation matters that may arise from the Ansbacher accounts are matters for the Revenue Commissioners.
The difficulty we have in Opposition is that what the Minister is saying now is not what is stated in his scripted reply in which he states clearly that the investigations of the Central Bank will be confined to possible breaches of exchange controls as specifically referred to in the McCracken report. There is no specific reference to exchange controls in connection with the Ansbacher accounts. The Minister will not inform us whether the Central Bank is investigating those. He is simply saying that when the report comes to hand he will read it and will then be in a position to tell us.
He has not met the Governor.
Is the Minister totally passive on this? In his own words it is the greatest financial scandal ever to hit the State both in terms of tax evasion and exchange control breaches. The Minister seems to have come into the House today without informing himself of what the Central Bank is doing. That is not good enough.
The Deputy should calm down. I will read out the reply again.
The Minister does not have to do that.
We wrote to the Central Bank on 25 August last asking it to instigate a detailed investigation of the issues raised by references in the report to exchange controls. It is the responsibility of the Central Bank, on foot of the McCracken tribunal, to investigate those particular matters because the Central Bank was the organisation charged with monitoring exchange controls from 1965 to 1992. The Central Bank will investigate all matters relating to exchange control breaches and when that has been done it will forward its report to me. Taxation matters are for another State agency, namely, the Revenue Commissioners.
The Minister is not a passive observer. He is accountable to this House for the Central Bank.
As is our parliamentary responsibility, will the Minister not agree that we are trying to elucidate a concise reply to a concise question? Notwithstanding the letter to the Central Bank drafted by the Civil Service on behalf of the Minister for his signature — I presume it has his signature——
No.
Is it the case that the Minister has not at any stage, either formally or informally, indicated to the Governor that he wants the Central Bank to, inter alia, look specifically at the Ansbacher accounts in respect of exchange controls?
The Governor of the Central Bank and I met on a number of occasions and naturally the McCracken tribunal report was raised by us. The Governor and his staff are investigating possible breaches of exchange control regulations.
Can I take it that the Minister has not specifically said to Maurice O'Connell, "By the way I want you to look at the Ansbacher accounts from the Central Bank's statutory position"?
Deputy Quinn is a former Minister for Finance and he knows the relationship between the Department of Finance, the Minister for Finance and the Governor of the Central Bank.
That is precisely why I asked the question.
I have asked the Governor of the Central Bank to investigate possible breaches of exchange control regulations. I am sure his report will deal with the questions raised by Deputies on all these issues.
That is not what the Minister said in his reply.
On the day the Dáil was reconvened to debate this issue I listened to the Minister's speech. He began by saying: "There are three Charlie McCreevys speaking in this debate". That was a pretty awesome blow to the rest of us.
The blessed Trinity.
He went on to say that the first Charlie McCreevy had a very honourable record and had nothing to do with the former politician who was mainly concerned with the Ansbacher accounts. I accept that the Minister has an honourable record. He then went on to say that as Minister for Finance he regarded this as the worst financial scandal in the history of the State. He heaped praise on the McCracken report which found, on any reasonable inference, that there are questions to be answered by the Central Bank in connection with foreign exchange control as it relates to these memorandum accounts.
Is the Minister telling the House today that apart from the perfunctory letter from the Civil Service and until he received the question from Deputy Noonan he had done nothing practical to ensure that this important aspect of the McCracken report was pursued to the degree that it might reasonably be pursued? The public regards this as one important dimension of this financial scandal and the Minister for Finance has done nothing to ensure that the logic of McCracken is pursued in respect of foreign exchange control.
Like the Deputy, I do not suffer from humility. I thank him for his compliment, if that is the way it was meant. On 11 September I set out in the House exactly what I had done. I said I had taken up the matter with the Central Bank and had been in touch with it on a number of occasions since 25 August, the date of publication of the McCracken tribunal report. When I receive the bank's report I will take the action I outlined to Deputy Noonan.
We have Government by automatic pilot.
The Minister is a captive of the system.
Deputy Quinn must be referring to his period in office.
No.
The Central Bank had hoped to have all these matters investigated and a report compiled by the end of September. However, this was not possible due to the level of detail it has to go through in order to ensure that it produces a comprehensive report.
Does the detail include the Ansbacher accounts?
All possible breaches of exchange control regulations as raised in the McCracken tribunal report will be investigated by the Central Bank.
This is the very point I am asking the Minister to elucidate. I will ask my question in a different form. Is the Minister telling the
House that the Central Bank and the Revenue Commissioners are confining their consideration to the specific issues raised by the McCracken report? They should be taking their cue from the report and looking for other Ansbacher type accounts and other breaches of exchange control regulations. Has he asked the Central Bank and the Revenue Commissioners to investigate whether these are the only such breaches or if there are other possible breaches and accounts?
What happens to S1 to S7?
The Deputy may be interested to know that the licensing and supervision arrangements of the Central Bank are carried out independently of the Minister for Finance. These matters have to be taken up independently by the Central Bank as regards its licensing and supervision arrangements. These matters are not communicated to the Minister for Finance. On breaches of exchange control regulations, the Central Bank acts as the agent of the Minister for Finance.
Exactly.
It is investigating the breaches of exchange control regulations raised by the McCracken tribunal report.
And nothing else.
I am sure it is investigating other matters. However, under legislation enacted by this House many years ago the investigation of these under its supervision and licensing arrangements is a matter for the Central Bank. I have charged the Central Bank with investigating breaches of exchange control regulations which it monitored from 1965-92 as an agent of the Government.
Has the Minister made any attempt to establish whether there are accounts similar to the Ansbacher accounts elsewhere in the financial system?
The Revenue Commissioners will investigate matters relating to taxation measures. As the Deputy knows well, the Revenue Commissioners are totally independent of the House. On foot of the McCracken tribunal report breaches of exchange control regulations are being investigated by the Central Bank. The Deputies should control themselves. It is only a few weeks since the McCracken tribunal report was published and the Central Bank has to investigate an enormous amount of detail in order to ensure that its report is as comprehensive as possible. As I said on 11 September, if there are prima facie breaches of the exchange control regulations I will refer them to the Director of Public Prosecutions. I am sure the Central Bank is taking great care to ensure that its report is as detailed and comprehensive as possible.
It is a case of hear no evil, see no evil.
This matter has not crossed the Minister's mind since he spoke in the House in early September and the reason we are getting ambiguous answers is that he does not know whether the Central Bank is investigating the Ansbacher accounts. Will he give a commitment that he will return to his office after Question Time and ring the Governor to ascertain if he is investigating the Ansbacher accounts in respect of possible breaches of exchange control regulations and, if not, he will request him to do so and inform the Opposition spokespersons of the position?
I will not ring the Governor of the Central Bank. A letter I received from the Central Bank states: "The investigation is being given priority. In view of the volume of records, however, and the need to consult with outside institutions the process is inevitably slow".
Are the Ansbacher accounts being investigated?
All matters relating to possible breaches of exchange control regulations are being investigated by the Central Bank. I am sure the report will cover every possible combination and permutation.
The Minister only thinks this will be the case.
On 8 July I wrote to the Central Bank as a result of evidence which showed there could be possible breaches of exchange control regulations. It replied that it would be best to wait until the report was formally published, which took place on 25 August. Even before the matter was raised in the report I had raised it with the Central Bank.
I invite the Minister, who is sure but not certain, to avail of the opportunity suggested by Deputy Noonan to make certain that the Central Bank is investigating the Ansbacher accounts with regard to exchange rate control in the totality of its ongoing investigation. This will ensure we do not have a repetition of this debate after the publication of the report when the Minister will be open to the very serious political charge that in order to protect the Fianna Fáil Party and its former Leader, of whom he is not enamoured, he deliberately by way of obfuscation excluded reference to the Ansbacher accounts in the letter carefully drafted for him by a civil servant.
Deputy Quinn should not disregard the accuracy of the detail simply because he does not want to be upstaged by some of his partners on the far left of the political spectrum.
There is no need to refer to Deputy Mitchell.
There is no need for Deputy Quinn to lose the run of himself in this House. Maybe Deputy Rabbitte is moving more to the right and Deputy Quinn is moving more to the left of the political spectrum.
Will the Minister give a simple answer to the question?
As I said here on 11 September, the Central Bank was charged on foot of the report of the McCracken tribunal to investigate all possible breaches of exchange control regulations.
As referred to in the McCracken report, all records of breaches of exchange controls in respect of the Ansbacher accounts should be investigated. That is the nub of the issue.
Will the Minister indicate if possible breaches of exchange controls in respect of memorandum accounts S1 to S7 of the Ansbacher accounts, as reported by Mr. Justice McCracken, are being inquired into?
I asked the Central Bank to initiate a detailed investigation based on its records of the issues raised by the references in the report.
Does it include S1 to S7?
The Minister does not know. He should ring up and find out.
The Central Bank will investigate all matters relating to breaches of exchange control regulations. On 25 August I asked it to report. It is early October and I am confident the Governor of the Central Bank and his staff will present the report as quickly as possible.
May I refresh the Minister's memory? S8 and S9 refer to the Minister's namesake, S1 to S7 may or may not or may refer to others. Is S1 to S7 included?
The Central Bank is investigating all aspects of possible breaches of exchange control regulations as mentioned in the McCracken report. The memorandum accounts referred to were mentioned in the report of the McCracken tribunal and since that is covered by my letter to investigate all references in the report I am sure the Central Bank is doing that. The Revenue Commissioners and the Central Bank come within my remit. They are given their jobs independent of interference from the Minister for Finance. That has been the case since the foundation of the State and that will remain the position under my remit.
