Dáil Éireann debate -
Tuesday, 17 Nov 1998

Vol. 496 No. 6

Written Answers - Administration Liabilities.

Austin Deasy

Question:

48 Mr. Deasy asked the Minister for Finance the basis of the £8.8 million being paid annually over a 20 year period by Allied Irish Banks to the administration of Insurance Corporation of Ireland as referred to in Parliamentary Question No. 114 of 5 November 1998. [23749/98]

Minister for Finance (Mr. McCreevy)

The annual contribution of £8.8 million over 20 years from AIB to the High Court administrator of Icarom plc — formerly Insurance Corporation of Ireland — is the amount provided for under the terms of an agreement entered into in December 1992 between the Minister for Finance, the Central Bank and Allied Irish Banks. Because of the large sums involved it was agreed that the necessary funding would be provided over a 20 year period.

The AIB contribution was calculated on the basis that it would meet approximately half of the liabilities of the administration. Under the 1992 funding arrangements the Exchequer provided an interest-free loan of £32 million and assumed responsibility for the £100 million loan which had been advanced to the administrator in 1985 and which is due to be repaid to the Exchequer in 2000. At the time the 1992 funding arrangements were agreed it was not expected that the administrator would be in a position to meet the £100 million repayment from the resources available to him. However, developments since 1992, including reduced interest rates and the settlement of the claim against the former ICI auditors, have resulted in a situation where the administrator is expected to be in a position to repay the £100 million loan from the resources currently available to him. These developments do not affect the AIB contribution. The administrator is also expected to be in a position to repay the Exchequer loan of £32 million.

As I noted in my reply to the Deputy's parliamentary question on 5 November 1998, the Exchequer share of the costs of the funding arrangements for the Icarom administration is estimated at 9 per cent and that this would be less if the Exchequer loan of £32 million were repaid earlier than the scheduled repayment date of 2012. Therefore, the final cost to the Exchequer cannot be determined until the administration is completed.