Vol. 489 No. 2
3 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has received the report from the inspector investigating the activities of National Irish Bank; and if she will make a statement on the matter. [7744/98]
4 Mr. Broughan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will use her powers under section 8 of the Companies Act, 1990, to petition the High Court to appoint an inspector to examine the use of the Clerical Medical International Financial Instrument by National Irish Bank. [7746/98]
I propose to take Questions Nos. 3 and 4 together.
The Deputies will be aware that I appointed an authorised officer on Monday last, 23 March, under section 59 of the Insurance Act, 1989, for the purpose of obtaining further information from National Irish Bank in order to ascertain whether, where relevant, the operations of National Irish Bank and its associated companies meet the requirements of the Insurance Acts and regulations and whether breaches of that legislation may have occurred. I have asked the authorised officer to present his report to me within two months. The House will also be aware of the ongoing investigations being conducted on behalf of the Revenue Commissioners concerning allegations of tax evasion and by the Central Bank into the operations of National Irish Bank.
The decision to appoint the authorised officer follows ministerial and departmental inquiries from National Irish Bank and extensive and ongoing consultations between the Tánaiste and myself, our departmental officials, the Chief State Solicitor's office and the Attorney General's office, over the past seven weeks. The Attorney General's office has engaged counsel to advise on the basis of the information provided in response to our inquiries whether breaches of insurance law may have occurred, justifying the submission of the matter to the Director of Public Prosecutions.
The results of counsel's examination of issues raised by our Department and the Chief State Solicitor's office indicated, having regard to the complexity of the legislation involved, the need to obtain further detailed information from National Irish Bank. When I studied the initial information and the legal advice, it became clear that in order to obtain the further information prescribed by counsel the appointment of an authorised officer with statutory powers was necessary, notwithstanding the co-operation of National Irish Bank in the preliminary written inquiries.
The appointment of an authorised officer to examine the NIB CMI insurance arrangements was an appropriate response given the information available to us last Monday. We require more information to address the insurance issues and it is my intention that the authorised officer should continue his work.
As regards section 8 of the Companies Act, 1990, the section provides that the Minister may appoint an inspector, on petition to the High Court, to investigate the affairs of a company where there are circumstances suggesting that, inter alia, its affairs are being or have been conducted with intent to defraud its creditors or for a fraudulent or unlawful purpose. In previous section 8 cases, petitions were preceded by preliminary examinations.
The information becoming available yesterday from the RTE inquiries is a cause of serious concern to the Government. We are currently taking legal advice on the appointment of an inspector by the High Court under section 8 of the Companies Act and we hope to proceed with this as a matter of urgency.
I thank the Minister of State for his reply. Will he agree that the steps the Government took since 26 January have been extremely tardy and that if they had been taken expeditiously we might have got the information made available through RTE yesterday sooner? Will he agree he should have proceeded in January or February by using section 8 of the Companies Act? There was a clear indication by the banks in their public statements that they were concerned about the use of the CMI insurance bond schemes and the motivation for their use. Given that they ceased the practice of their use, they must have had some evidence that was something they should not have been using.
I wish to clarify with the Minister of State the exact sequence of events. I understand he wrote to the bank around 23 January when the information became available. The Tánaiste, in reply to an earlier question, said that the Minister of State did not get legal advice on what the banks had told him until 10 March. Why did it take from then until 10 March to get that? If he got that legal advice on 10 March why did it take from then until 19 March to use the very weak powers of the insurance Act to put in place an authorised officer? In view of the information that became available yesterday, does he consider the two months deadline given to his authorised official is now irrelevant and that he should ask the official to give him whatever information he has so that it can be used by the Tánaiste in her submission to the High Court for the appointment of an inspector under section 8 of the 1990 Act?
I reject emphatically the Deputy's allegation that there was any tardiness involved by myself, the Tánaiste, our officials or Department acting on behalf of the Government on this issue. I can give a blow by blow account of this situation. Under no circumstances were any difficulties created or any delay in the appointment of an exceedingly competent authorised officer to proceed with this matter. I have the utmost confidence in his ability to ascertain the most detailed information required under the law to pursue a conclusion to his report.
I wish to put some matters on the record which may take some time. Alleged irregularities regarding the selling of insurance products in Ireland by National Irish Bank, on behalf of an Isle of Man insurer, were contained in media reports emanating at 9 p.m. on the RTE News on Friday, 23 January. Those were subsequently carried in the national papers over that weekend on Saturday, 24 January and Sunday, 25 January. They first came to my attention on Saturday, 24 January when I purchased the morning newspapers. I immediately consulted my private secretary and told him to be available on Monday morning and to have relevant officials ready because I wanted to consult them on this matter.
I was in Northern Ireland at meetings on the Monday and I had consultations at the highest level with my Department on a number of occasions pertaining to this matter. The Secretary General of the Department and his officials had further consultations with the Chief State Solicitor's office regarding this matter on Monday, 26 January. A letter from me, drafted in consultation with the Chief State Solicitor's office, was issued to the chief executive of National Irish Bank on 27 January 1998 seeking answers to a number of questions. National Irish Bank responded to my letter on 29 January 1998 and its response was forwarded to the Chief State Solicitor's office for further advice. Internal Department inquiries and examination of the papers continued in conjunction with the Chief State Solicitor's office and the Attorney General's office and further information on sample policies was sought from National Irish Bank. The bank fully co-operated in this regard.
Counsel's opinion was furnished to the Department on 10 March 1998. Counsel advised inter alia that further information would be required from National Irish Bank relating to the precise steps undertaken by National Irish Bank Financial Services Limited in effecting the insurance policies. Counsel concluded that as matters stood there was a legal basis for seeking further information from the National Irish Bank to take a position on the legality or otherwise of the NIB's CMI operations. I subsequently got a request from the National Irish Bank to meet its management pertaining to the involvement by it in CMI emanating from inquiries instituted by the National Bank of Australia, its parent company.
The insurance legislation under which we are operating is complex. A particular difficulty arises from the statutory positions on which breaches of the insurance Acts and regulations could be pursued. Section 9 of the 1936 Act which prohibits the effecting of insurance with an unauthorised insurer still subsists though its original purpose was to protect the domestic insurance industry. It now must stand alongside section 6 of the European Community's Framework Regulations, 1994, which were introduced to liberalise the provision of insurance services across all the member states of the European Union.
After the request came in from National Irish Bank to meet its management the Attorney General's office and counsel were consulted and the advice available to us was it would be inadvisable to meet National Irish Bank for the meeting scheduled and requested for 19 March. The Tánaiste was out of the country. I considered this was a very serious matter. The Tánaiste returned to the country last Sunday evening. I left my home on Monday morning to come to Dublin, I met the Tánaiste and senior officials and we took a decision based on the information available to us to appoint an authorised officer, Mr. Cosgrave, an accountant in our Department who has an excellent track record, under section 59 of the insurance Act. The appointment was made for the purpose of obtaining information to enable me to exercise my functions under the insurance Acts and, in particular, to determine whether any breaches of the insurance Acts and regulations may have occurred. National Irish Bank has co-operated with the appointed authorised officer. I believe the appointment of an authorised officer was an appropriate action given the knowledge and the information which we had last Monday. We require more information to address the insurance issues and it is my intention that the authorised officer should continue his work under the section of the Act under which he was appointed.
I wish to follow up on a few points in the long answer of the Minister of State.
It was a detailed answer.
I accept it was detailed. Is the Minister of State satisfied that taking a six week period to deal with this matter can be considered dealing with it expeditiously? He said he wrote those letters in the latter part of January and he passed NIB's reply of 29 January to the Chief State Solicitor's Office and counsel, but it was not until 10 March he sought legal advice on a matter that was undermining the credibility of our banking system at that time. Little did we know how much it would be undermined by information coming into the public arena. A bank was under scrutiny for using a method for tax evasion purposes. Is the Minister of State satisfied that six weeks is a sufficiently speedy time within which to get counsel's advice? In view of the fact that the Tánaiste may well be in the High Court this afternoon or tomorrow morning seeking the appointment of an inspector under section 8, will he ensure the information his authorised official was examining will go before the courts tomorrow so that it can be included in the remit of an inspector who will hopefully be appointed?
I am not a lawyer or a judge and I do not have any qualifications in this field.
The Minister of State is a good historian.
That is a matter of opinion although I love history. Six weeks was not a long time. We are legislators and we must operate within the law. Deputy Owen will understand that when one is discharging one's duties in a Government office, as she did on one occasion, one must move carefully to ensure that one does not become a victim of the law erroneously, by misadventure or otherwise. I must be guided by the legal advice available to me, by way of the professional advice within my Department and the legal advice available to me. I cannot tell lawyers who get a brief how and when they should discharge it.
If the Minister of State wanted it quickly he could have asked for that.
If a matter is referred to a lawyer, one expects it to be examined in great detail. This was a matter of great complexity which was examined in detail and advice was submitted to us on 10 March and became available to me on 11 March.
Six weeks.
There was a subsequent request for a meeting with management of the bank. That again was referred for legal advice and the response, returned on 18 March, stated it would be inadvisable to hold the meeting scheduled for 19 March. As I told the Deputy at that stage the Tánaiste the relevant Minister, was out of the country. I was acting on her behalf and I was honoured to do so.
As soon as the Tánaiste returned, I had consultations with her and our officials and within one and a half hours we were in a position to act. That was a rapid response taking into account the complexities of the matter, the advice available, certain risks with which one must proceed and the track record of previous applications and appointments. The Deputy is not giving credit for the efforts made on the issue.
It had more to do with the rumours that were flying around.
Rumours never bothered me.
A Cheann Comhairle, one of the most astonishing aspects about the Minister of State's performance is that he answered in detail questions which you would not allow me to table, in particular where I asked for the details of legal advice which the Tánaiste had sought and received on NIB, including costs; if she had sought the advice of the Attorney General on the affair; if she disclosed to him that her political party had a business relationship with the same bank and if she sought any legal advice as to whether the Progressive Democrats Party's business relationship with NIB came under the scope of the Ethics in Public Office Act, 1995.
I do not understand why those questions were disallowed. The Minister of State has just given a convoluted response to a number of those questions. He knew on 23 January that the law was being broken by NIB in the CMI affair and that a massive fraud was taking place. I do not understand why he, or the senior Minister, did not take action because the House should be concerned about tax evasion of that order.
The Deputy must ask a question.
The Minister of State is lucky he appointed Mr. Cosgrave before these further revelations about NIB were made yesterday.
That is what lead to the appointment.
We may consider taking a vote of no confidence.
The Deputy can table it any day he wishes.
The Deputy must ask a question.
A belated decision has been taken to petition the High Court, as Deputy Owen and I urged at least four weeks ago. Why will the Minister of State not consider simply asking the National Bureau of Fraud Investigation to begin an investigation of NIB this evening on the basis that there are prima facie allegations of serious theft from the public by officers of this institution and then send the file to the Director of Public Prosecutions and get to the heart of the matter?
In view of the role NIB plays in our banking system was the Minister of State or the Tánaiste in touch with the Australian owners of the bank on the CMI matter and the latest horrendous revelations? Has he considered using the powers available to him under the Companies Act to suspend the current management of NIB and replace them with authorised officers to run the company until the High Court and the other three investigations have been completed?
I listened with interest to the Deputies. It appears that if one is prepared to provide information, one is condemned and if one does not, one is also condemned. The Deputies do not accept the facts.
The Minister of State should answer the question; there is no prize for oratory.
I do not want to be interrupted by the Deputy. I wish to answer questions and if the Deputy continues to interrupt, I will not answer them. I do not understand why Members will not listen to the replies. I am repeating for the third time that the irregularities which were alleged on Friday 23 January related to the selling of insurance products. I have acted on those allegations and discharged my responsibilities in that area. Other matters that have been raised involve other State agencies. Deputy Broughan's questions were adequately answered by the Tánaiste and the Minister for Finance during the earlier two hour debate.
We do not have any statutory responsibility for National Australia Bank and it would not have been proper for us to have consulted with it. Our function is to deal with its subsidiary in Ireland. It is a matter for others to make certain recommendations at the conclusion of the investigation. The Government is seriously concerned with regard to the complex matters which were brought into the public domain yesterday evening. All relevant Departments and State agencies have been alerted to take the necessary action. We will proceed with positive, practical action to ensure we get to the bottom of this and never have a repetition by any financial institution here.
Given that a member of the Minister of State's party, Deputy Cooper-Flynn, is publicly listed as one of the salespeople of the insurance bonds, did he discuss the matter with her or seek advice and information from her? What was her role?
Deputy Cooper-Flynn terminated her employment with the bank on her election to the House. Since becoming a Member, she has no role or involvement with the bank. It is a handy political point for the Deputy to make but it is irrelevant.
Deputy Cooper-Flynn was working in the bank when the bonds were sold. The Minister of State is afraid to answer the question.
I am not afraid of anything.
The Minister of State did not answer the question.
We have devoted 20 minutes to these questions and we must proceed to Question No. 5 which will be taken in ordinary time as the time for Priority Questions has expired.
