Dáil Éireann debate -
Thursday, 5 Nov 1998

Vol. 496 No. 2

Written Answers. - Exchequer Costs.

Austin Deasy

Question:

114 Mr. Deasy asked the Minister for Finance the cost to the Irish taxpayer brought about by the collapse of the Insurance Corporation of Ireland in 1985; if the moneys involved have been paid in full; if not, the portion paid by Allied Irish Banks; and if he will make a statement on the matter. [22252/98]

The Exchequer advanced an interest-free loan of £32 million to the administrator of Icarom plc in 1993 following the conclusion of an agreement with AIB in 1992 for additional funding of the Icarom administration. The £32 million loan is repayable in 2012. Under the 1992 agreement AIB makes an annual contribution of £8.8 million to Icarom over the 20 years to 2012. This contribution is in addition to the annual contribution of £5.5 million which AIB makes under the 1985 funding arrangements.

The cost to the Exchequer of the £32 million interest-free loan advanced in 1993 and repayable in 2012 is represented by the interest forgone which is estimated to amount to £2.1 million annually. This is a continuing cost until the loan is repaid and is the only cost borne by the Exchequer in respect of the funding arrangements for the Icarom administration.

It is estimated that the net present value (NPV) of the costs of the funding arrangements now in place for the Icarom administration, i.e. the sum of all past and known future payments to the Administrator, is £357 million in 1998 terms. It is estimated that 56 per cent of this cost is borne by AIB, 8 per cent by the other banks, 27 per cent by Ernst & Whinney (former auditors of ICI) and 9 per cent by the Exchequer. The Exchequer share of this cost would be less than the figure indicated if the Exchequer loan of £32 million were repaid at a date earlier than the scheduled repayment date of 2012. Therefore, the final cost to the Exchequer cannot be determined until the administration is completed.